A proposed housing project in the Mission District has shrunk by about 85 percent after the Planning Department told developers the building on the site is worthy of preservation because of its historic value.

“The main reason [the project was reduced] is that the Planning Department determined that the building is a historic resource that they thought should be preserved,” said Steve Vettel, a land-use attorney representing the developers at 3140 16th St., a market-rate housing project that would have added 28 units to the neighborhood but will now bring in just four.

The site is currently home to Superior Automotive, a car repair shop with a facade from 1926. It’s that facade, the Planning Department said, that would prevent the demolition of the building for housing.

Doug Vu, the city planner assigned to the project, said the building was given a “Category A” historic resource designation, which meant that if the developer wanted to proceed with demolition as envisioned in the original proposal, he would need to hire a consultant to determine the significance of the alteration being done.

“If they wanted to demolish the building, it would require a more detailed environmental review,” Vu said. “It could have been that they didn’t want to go through that process.”

Architects sometimes preserve the historic facade of a building and construct housing within it, like a project at 2750 19th St. There, developers hope to maintain the red-brick exterior of an old furniture maker while putting 60 units of mostly market-rate housing in the industrial heart of the Mission District.

Another project at 235 Valencia St. was not deemed to have a historic facade, but some of the potential plans for the 55 units that will replace the former motorcycle shop there preserve the exterior walls anyway. The same tactic could have been used at 3140 16th St. to build housing while maintaining the historic resource.

But Vettel said that the architecture firm hired for the project, BAR Architects, had “looked at that” and decided it “wasn’t a practical solution.” Instead, the building will be almost entirely preserved. Vettel said the developers had not yet pulled a building permit, and that construction would likely start next year.

The original proposal sought to build a five-story, 28-unit housing complex at the corner of 16th and Albion streets, replacing the two-story car repair shop with a 55-foot tall building. The units would have been mostly market-rate, with three affordable units to fulfill the city’s mandate that 12 percent of units on-site be below-market-rate.

That proposal would have also built out some 7,300 square feet of ground-floor retail facing 16th Street, 17 parking spaces, and a residential lobby for the market-rate condos.

Instead, the corner will remain almost the same, keeping the original facade of the 20,500–square-foot, two-level auto garage in place. The first-floor interior will be divided into some 5,900 square feet of retail space facing 16th Street, a residential lobby, and four parking spaces.

The second floor will be divided into four two-bedroom units, ranging from 2,147 to 2,330 square feet each. The units will rise slightly above the 30-foot building as it stands now, reaching 46 feet and looking out over the Mission District.

Two of the units will have interior patios of 190 square feet near a light court, while a third will have a 560 square foot private courtyard looking out above the building with a view to the north.

The downsizing, first reported by real estate news site Socketsite, followed delays in April 2015 also reported by Socketsite. Mx3 Ventures purchased the site in 2014 for $8.7 million, or $350,000 per potential unit, the Chronicle reported at the time.

It’s unclear how much the four second-floor units will sell for. Mx3 Ventures did not respond to requests for comment by press time, and Vettel did not know.

3140 16th St. Project Plans by MissionLocal on Scribd