https://www.sfchronicle.com/bayarea/article/sf-sutter-street-tower-20102886.php
Demolition crews descended on the 1100 block of Sutter Street in San Francisco’s Lower Polk
neighborhood last month, turning the former Halsted N. Gray-Carew & English Funeral Home
into a heap of wood and rebar and bricks.
By the end of the week, all that could be seen from the street was what looked like a row of
golden organ pipes.
It turned out that the pipes were decorative.
“We had an expert come in to tell us if there was any value there. She said they were fake,” said
developer Patrick McNerney, CEO of Martin Building Co. “Sheet metal.”
While some of the funeral home decor may have been of suspect authenticity, the 22-story tower
that is set to rise on the property is very much real — and one of the most ambitious
development projects to break ground in San Francisco since the pandemic.
With demolition complete, Martin Building is set to start construction on ElevenEleven, a 303-
unit tower at 1111 Sutter St. that is noteworthy for its size and complex financing.
At a time when 70,000 approved housing units are languishing in San Francisco’s development
pipeline due to lack of investor interest, McNerney managed to attract financing from the U.S.
Department of Housing and Urban Development, California Housing Finance Agency, AFL-CIO
Housing Investment Trust and several private groups.
The key to financing the building was bifurcating it into two projects. While all the tenants in the
235-foot tower will have access to the same amenities — the two-story gym, game room, view
lounges, hot tub, co-working rooms, roof deck — on paper the development is two projects: 101
deeply affordable units for those with extremely low incomes, plus 202 market-rate apartments.
Having a separate 100% affordable project allowed Martin Building to qualify for tax credits and
state and federal money.
The $142 million HUD loan on the project, which was arranged by Berkadia Affordable
Housing, is tied for the largest loan the federal agency has made in California in the past 25
years, McNerney said.
“It’s a market-rate project and a below-market-rate project,” he said. “Two loans, two financing
entities, two sets of applications, two building permits. Everything is double.”
In addition to the razed funeral home, the site includes a historic former auto repair shop at the
corner of Sutter and Larkin streets, currently being used as a garage. The developer will preserve
the building as a parking structure, making it available to residents and neighbors. Having
parking available next door will lower construction costs on the tower because the developer
won’t have to build a subterranean garage. The ground floor will have a 4,000-square-foot child
care center.
The project is unusual in part because of where it is being built: in the heart of a historic
neighborhood rather than an emerging enclave such as Mission Bay or Treasure Island, where
other high-rises have sprung up in recent years.
“It’s a high-rise in a real historic neighborhood,” McNerney said. “Very rarely do you get that in
San Francisco.”
Martin Building planned a 12-story building before the pandemic and faced resistance from
some neighbors. While you would think Martin’s decision to build 100 feet higher would make it
more controversial, it didn’t turn out that way, according to project architect Pedram
Farashbandi, a principal with David Baker Architects.
“Before the pandemic, everyone was really concerned about the height,” Farashbandi said. “I got
emails from people wanting to stop it. The attitude changed during the pandemic. I started
getting emails from people asking, ‘Why are you not starting construction?’”
While the tower has the same footprint and height as a building Farashbandi’s firm designed for
Treasure Island, the projects couldn’t be more different. The design team wanted a “settled and
calm” building to feel like a retreat from busy Lower Polk. While the kitchen and living rooms
are light-filled with great views, the bedrooms tend to be in the back of the units, away from the
street.
“A lot of people prefer that because you are not right against the street,” he said. “It’s quieter and
more private.”
Now that Martin Building has figured out how to finance a mixed-income building by splitting it
into two separate projects, McNerney said he would like to replicate the model and see other
developers do it as well.
“Once you do something successfully, you want to do it again, right?” he said. “We’re extremely
proud of getting to this point.”
