The Excelsior neighborhood is poised to get something San Francisco hasn’t seen in decades: a new development with rent-controlled apartments.

The developer, SST Investments, is proposing a 103-unit development at 915-917 Cayuga Ave. that would feature 51 permanently rent-controlled units. While state laws exempt new construction from rent control — along with all buildings erected after 1978 — the city is hammering out a development agreement that would give tenants permanent protections under the city’s rent control laws.

In exchange, the developer would get to build 24 more units than the 79 apartments the current zoning allows.

In addition to the 51 rent-controlled apartments, the other 52 units would be rented for below market rate: 25 percent would be affordable to households making 120 percent of area median income ($103,000 for a two-person household); 15 percent would be for families making 55 percent of AMI ($47,400 for a two-person household); and 10 percent for families making 80 percent of AMI ($68,900).

“This is a monumental project for the city, unique to San Francisco and California,” said Jeff Buckley, who advises Mayor Ed Lee on housing. “The reason we were able to do it is that we have a willing partner who is interested in doing something inventive to help take the burden off moderate- and middle-income families feeling the squeeze.”

For the city, the deal seems to be an unusual combination of the right developer buying the right piece of property at the right time. SIA picked up 915-917 Cayuga, a 25,000-square-foot parcel, in 2009 for $1.8 million, less than the average price of a single-family home in Noe Valley. At the same time, while housing prices have skyrocketed throughout the city, the Excelsior has remained relatively affordable. Despite having good access to the Balboa Park BART Station and a lively retail corridor on Mission Street, the area has not seen new housing popping up or widespread gentrification.

Developer Siavash Tahbazof said the concept grew from a conversation about middle-class housing he was having with a family friend, Ahsha Safaí, a neighborhood activist who is running for the Board of Supervisors in District 11.

“The idea just hit me,” he said. “What if we went over and beyond for this one? What if we created a special place for 100 families in a neighborhood that so desperately needs new housing they can afford?”

In an email, Tahbazof said he considers the deal a philanthropic legacy project for the family, which left Iran during the 1981 revolution and came to San Francisco.

“This country, and San Francisco in particular, has done so much for my family since we arrived over 35 years ago,” he said. “I came to this country with very little and was lucky to catch a few breaks that helped me succeed. Hopefully, this building can be that break another young family needs to propel themselves to a better life.”

Buckley said the project “sets an exciting precedent with great policy implications for us.” While the Cayuga situation is unusual, he hopes other property owners may be willing to take a similar deal in exchange for more density.

Tahbazof said he doubts it would be a workable model for other developers, saying it’s “not a feasible business model.”

The Mayor’s Office of Economic and Workforce Development will work on the final development agreement and hopes to have the project at the City Planning Commission for approvals by late 2017.

Safai said middle- and working-class housing has been one of the top issues as he has run for supervisor, and District 11 is the right place to create it.

“The market out here for two-bedroom or one-bedroom apartments is still accessible to the average family,” he said. “We are not talking about Mission Bay or Nob Hill or Fillmore. This is working-family housing for people like you and me.”

Janan New, executive director of the San Francisco Apartment Association, said she doesn’t have a problem with property owners voluntarily agreeing to rent control, even if it technically goes against state law. She pointed out that two other development deals, Trinity Place and Parkmerced, have included new rent-controlled units, but only as replacement for units that are being knocked down.

“If it’s done voluntarily, we are fine with that,” she said. “If the developer chooses to do a higher level of inclusionary (units) or commit to rent control, as long as they get to build and we are providing more housing units, we are happy.”

New doesn’t expect anyone will oppose the deal. “We are the bringer of lawsuits, and we are not going to sue,” she said.

Supervisor John Avalos, who represents the neighborhood and is supporting Safai’s opponent, Kimberly Alvarenga, called the timing of the deal — two weeks before the election — “dubious.”

Avalos accused Safai of “using an insider deal and personal relationship to show he has juice and get maximum benefit during election season.”

Avalos said he doesn’t have a position on the project but wants “a strong community process to ensure people I have worked with on affordable housing in District 11 can have a say and help support the project down the line.”

J.K. Dineen is a San Francisco Chronicle staff writer. Email: jdineen@sfchronicle.com Twitter: @sfjkdineen