S.F. reaches deal for housing, retail at Schlage Lock site

Graffiti covers the windows of the shuttered Schlage Lock factory in S.F. Graffiti covers the windows of the shuttered Schlage Lock factory in S.F. Photo: Paul Chinn, The Chronicle Buy photo Photo: Paul Chinn, The Chronicle Image 1 of / 19 Caption Close S.F. reaches deal for housing, retail at Schlage Lock site 1 / 19 Back to Gallery

After 15 years of arguing, negotiating and scrambling for financing, city and local residents will finally see the old Schlage Lock factory on Bayshore Boulevard become the showplace community Visitacion Valley residents have yearned for.

An agreement calling for construction of a neighborhood of nearly 1,700 low- and middle-income apartments and condominiums - along with a couple of parks, a restored and repurposed community building, and a long-promised grocery store - will be announced Monday by Mayor Ed Lee and Supervisor Malia Cohen.

"At long last the 20-acre Schlage Lock site, one of the largest available housing development sites in our city, will be reborn and transformed from an old rail yard and factory into a new mixed-use community in Visitacion Valley," the mayor said in a statement.

The project is expected to generate about 2,800 construction jobs over the next 10 years and provide housing for 3,800 residents. The development agreement with United Paragon Corporation, the property's owner, spells out the details of the project, including almost $12 million in city subsidies, some required zoning changes, height limits and design controls for the site.

The agreement will go before the City Planning Commission in May and then to the Board of Supervisors, with all approvals expected by the end of June, said Ken Rich of the Mayor's Office of Economic and Workforce Development, which shepherded the project.

Construction could begin next year.

Getting there has been quite a journey, city officials admitted, with money the ultimate stumbling block.

"It's been hard," said Cohen, whose district includes Visitacion Valley.

When Schlage Lock, which had been in the city since 1926, closed its San Francisco facility in 1999, the site was targeted for a huge Home Depot store. But loud protests from merchants worried that the big-box store would devastate their businesses and nearby residents looking for a more neighborhood-friendly development persuaded the Board of Supervisors to keep Home Depot out.

The supervisors approved a mixed commercial-residential plan for the site in 2005 and designated it a redevelopment area. After long-running discussions with the owner and the community, an environmental impact report was approved and a final agreement was prepared that provided $50 million in redevelopment subsidies.

But in 2012, about six months before the papers were signed, Gov. Jerry Brown shut down every local redevelopment agency in the state. With Brown's order, the subsidy disappeared.

"The project sat around for a while while we asked ourselves where we were going to get $50 million," Rich said.

Unlike most land in the city, the Schlage site had no power, no water and no sewers or any other infrastructure. The price for doing the underground work combined with the cost of demolishing the buildings and doing the environmental cleanup needed on the former industrial site meant there was no feasible way to get the project done without some sort of city subsidy.

"It just didn't pencil out," Rich said.

But with the mayor and Cohen pushing to get more housing built in the city, city officials got creative.

The city agreed to increase the number of homes from 1,250 to 1,679, boosting the potential profit for the developer. Since the new streets, sidewalks, bicycle routes and off-site intersection improvements will help traffic circulation, the city credited some of those costs against the transportation impact fees the developer otherwise would have to pay.

The development also received $2 million in Proposition K local transportation funds for the improvements, which include a direct east-west route that will allow people to walk through the development from Bayshore Boulevard to the Bayshore Caltrain Station.

"We got a project that was going to cost $50 million done for $12 million," Rich said.

But other planned amenities had to disappear, victims of the needed cost-cutting. Community groups were asked to list their priorities.

It wasn't a contest.

"The supermarket was the one thing everyone agreed with," said Russel Morine, a local resident involved in the talks from the beginning. "We argued about open space, height and number of units, but the supermarket was the bottom line."

The supermarket is locked into the development agreement, which calls for a full-service grocery of at least 15,000 square feet, located along the extension of Leland Avenue. Other important elements include a pair of one-acre parks, along with the restoration of Schlage Lock's historic office building, which will be at least partially devoted to community use.

But in a city where housing prices are soaring, the prospect of a new development of reasonably priced homes is the most welcome news, said Cohen.

"I'm a native San Franciscan with four sisters, none of whom can afford to live in San Francisco and who all want to be here," she said.

With 15 percent of the condos and rentals earmarked as below-market-rate housing and the rest expected to be within reach of middle-income households, "this is one step," Cohen said.

"It's a joyous day," she added. "But it will be even more joyous when we cut the ribbon and walk into the new units."