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Updated: December 15, 2025 @ 6:14 am
A rendering of the proposed project at 7 Linden Ave. in South San Francisco.
South City rejected a developer’s proposal to change the number and rental rates of low-income units on a 543-apartment project on Linden Avenue, after an incorrect underwriting assumption led to financing challenges.
The city approved the massive project at 7 S. Linden Ave. in 2023, with 81 affordable units, 54 of which would be priced at 60% of the area median income and 27 priced at 50% of AMI. The apartments will be a mix of studio, one- and two-bedroom units.
The project is currently under construction, but recently, Essex asked the city to amend its agreement to allow for either slightly higher rents in some of the below-market-rate units or allow for fewer BMR units.
Leaving the agreement as is would result in a 2.2% reduction in value of the project, according to an independent analysis the city commissioned.
“Essex, in their project financing and underwriting, assumed that in the 54 low-income units, the rents would be calculated at 80% area median income, not 60%, so they’ve come back … to account for that cost to the project of the lower-priced units,” said Nell Selander, director of Economic and Community Development, during a meeting Dec. 11.
Lauren Krause, vice president of Development at Essex Property Trust, said the project will be completed regardless, but recent lending conditions have made it difficult to find an additional capital partner under the current terms of the agreement.
“Due to challenging market conditions, Essex has not started a new construction project from 2020 to 2025. After almost five years we decided to move forward on a single project at the end of 2024, and it was 7 South Linden,” Krause said. “We made this decision despite tough economic market conditions and political uncertainties at the federal level.”
Krause added that they still decided to break ground on the project, despite the financing challenges, due to tariffs and inflation potentially worsening in the near term.
Most councilmembers were hesitant, or outright opposed, to the proposal to change the number of low-income units, stating that it would set a risky precedent to relax affordable housing requirements, especially as the project has proven to be financially feasible enough to move forward.
“Why should we grant it to you when you've broken ground?” Councilmember James Coleman said during the meeting. “We’d need some sort of guarantee that there will be some future investment in South San Francisco in our community beyond the project here.”
Mayor Mark Addiego said Essex’s argument is “less than compelling.”
The project will move forward as originally planned, with no updates to the level and amount of affordable housing units.
(650) 344-5200 ext. 102
Daily Journal staff
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