Former Hemlock Tavern site, now 54 empty housing units, finally moving forward after condominium conversion compromise


More than 50 homes have stood empty for two years on a property that was once home to Hemlock Tavern, but can now be occupied as the appeal board rules on a developer who said he was building apartments then went to condominiums.

It’s a San Francisco story that’s been told countless times over the past few decades: a longtime popular nightclub closes because a landlord wants to convert the land into a much more lucrative housing project. But this one is being called “unprecedented”, thanks to some very unusual extenuating circumstances.

The former Polk Street Hemlock Tavern bar was demolished in 2019 to make way for 54 residential units. The new building with these 54 apartments was built quickly and was mandated to include eight affordable, below-market-price (BMR) units to meet city requirements. Over 2,500 households applied for these units, and a few lucky winners were rewarded.

It’s all the usual scenario of a San Francisco housing estate, but then the scenario was reversed. Developer Dolmen Property Group decided to turn the units into much more lucrative condominiums instead of apartments, after the rental market was hit by the pandemic. And as the Chronicle reports, that led to legal fights that kept the building empty for two years, fights that were finally resolved at the San Francisco Appeals Board meeting on Wednesday.

The Dolmen Property Group still licensed the eight affordable units. But their shift to a condo-for-sale model upended the economics of it and meant that people who got the affordable rental apartments suddenly couldn’t afford to buy there.

“Going from renting to selling would essentially force these lottery winners to try to qualify to become landlords – something many of them may not be able to do or not want to do,” the Chronicle explains. “Furthermore, the developer initially argued that units for sale should target households earning 90% of the area’s median income, rather than the 55% that would have been needed as rentals.”

The fight went on for years, with at least two of the affordable housing lottery winners suing. In the compromise agreement approved by the appeal board on Wednesday, Dolmen Property Group agreed to maintain that lower threshold of 55% of median income for BMR units, so that lottery winners could still potentially get the homes.

In voting to lower the threshold for them, Appeal Board Chairman Rick Swig noted that buyers and renters are “absolutely different” and “live in different worlds,” adding that the condo rate ” left behind a significant portion of our residents.”

SF Planning Department zoning administrator Corey Teague said the situation was “unprecedented,” but come on…it shouldn’t have been! It was the obvious, common-sense compromise the developer should have made years ago. You can totally and rightly complain that there is too much bureaucracy to get built in San Francisco. But in this case, the developer withdrew the switcheroo and opted to go back on what they had already agreed. These units certainly did not sit empty for two years because of bureaucracy.

It won’t bring the Hemlock Tavern back. But fortunately, at least the question is now resolved and the limbo, the vacancy period for the new building is over.

Related: Development of an eight-story condo with a replacement Grubstake restaurant on the ground floor wins planning approval [SFist]

Image: Google Street View


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