Spring 2021 Issue - 64

tions and as is necessary to qualify for a property
tax exemption.

M U L T I V I S TA C O N S T R U C T I O N D O C U M E N TAT I O N

Five floors of efficient
factory-built residential
space are set above a firstfloor commercial space
built using traditional
concrete construction
methods.

U R B A N LA N D

AFeature_Kenny_SP21.indd 64

housing an eligible use. The site is located near
public transit options, grocery stores, and community
parks that provide the infrastructure essential to the
success of resilient affordable housing.
Tipping Point and HAF then turned to Mercy Housing California, an experienced local affordable housing developer that has been working in this arena
since the 1980s, and San Francisco-based firm David
Baker Architects to design and build the housing.
In addition to the land acquisition, Tipping
Point's funds made it possible to pay upfront costs
to Factory OS, a manufacturer of modular housing
based in Vallejo, California-something that would
have been more challenging to do within a typical affordable housing finance schedule. Tipping
Point's funds also covered other pre-development
expenses. A mortgage, funded with tax-exempt private activity bonds, repaid some of the HAF money,
the rest of which will be repaid using equity from
low-income housing tax credits (LIHTCs).
Once Tahanan is completed, San Francisco will
master lease the building from HAF for 30 years
and subsidize operations; when the lease term is
up, the city will have a right of first refusal to buy
the property from HAF. The building will continue
to be owned by the Mercy Housing-led partnership
833 Bryant L.P., in compliance with LIHTC regula-

Together HAF and Tipping Point Community set dual
goals: complete the project in three years from purchase of the site to resident move-in, and contain
costs to no more than $400,000 per unit (including
land costs). These goals will be met in part because of
eased regulations instituted under California Senate
Bill 35. Passed in 2017, S.B. 35 requires local governments to approve qualified affordable housing projects
within 90 days after an application is submitted. The
timeline also benefited from the fact that modular construction allows for concurrent work to be done both
in the factory and on site. Built into that accelerated
schedule was the critical step of troubleshooting a
completed factory prototype unit before production.
Support from Tipping Point and HAF meant
that Mercy Housing was able to give Factory OS
the go-ahead to start building units seven months
before bonds for the project were issued. This not
only sped construction, but also eliminated seven
months of interest costs and the cost of escalation
over the same period-an estimated savings of
about $600,000.
Tipping Point and HAF also assumed the sometimes difficult-to-insure risk of using modular construction. Typically, general contractors are unable
to extend their insurance to cover modular companies in case those companies go bankrupt, suffer
damage in a fire, or simply fail to deliver units in
time. Similarly, most lenders will not provide a loan
to a project that is not fully insured. Tipping Point
and HAF were willing to assume this risk because
they are mission-driven organizations; over time, as
modular companies become more mainstream and
factories more established, securing insurance will
likely become easier.
To maximize cost containment, the design of the
building had to be optimized for modular construction. The ground floor, with large irregular spaces like
those for retail and residential services, is significantly different from the upper floors and was best
realized with site-built Type-1 fire-resistive concrete
construction standards. The upper five floors, all residential, are entirely modular and set on the level-two

DAV I D B A K E R A R C H I T E C T S

M U L T I V I S TA C O N S T R U C T I O N D O C U M E N TAT I O N

Coordinating Construction

SPRING 2021

3/30/21 2:20 PM

Spring 2021 Issue

Table of Contents for the Digital Edition of Spring 2021 Issue