New HUD Grants Focus on Best Practices for Building Conversions

The US Department of Housing and Urban Development has announced a new grant program to develop case histories of office-to-residential projects that have been undertaken since the start of the pandemic.

HUD said in its release that it will provide up to $860K for case studies that will “improve understanding of the financing limitations associated with conversions and the policy reforms and subsidies that can make projects more economically viable.”

Applicants for the grants also are being asked to propose metrics to evaluate the impact of conversions on housing affordability and other outcomes, and to develop a best-practices guide for local leaders and developers.

Proposals for the new HUD grants are due on October 12.

“There has been a surge in interest in office-to-residential conversions since the pandemic-induced shift to remote work and as many cities face a softening demand for office space and escalating demand for housing,” said Solomon Green, principal deputy assistant secretary for Policy Development and Research, in a statement.

“[This research] will help understand the financial and structural barriers associated with conversions and will provide key stakeholders with examples of how best to overcome them,” Green added.

Last month, San Francisco passed an ordinance amending the city’s Planning Code to establish a Commercial to Residential Adaptive Reuse program, including relaxing certain requirements for eligible conversion projects and streamlining the permitting and approval process.

The ordinance exempts eligible conversion projects from requirements that the adaptive reuse projects reserve space for rear yards, have a certain percentage of two-and three-bedroom units and have a hearing before the Planning Commission.

Earlier this year, Rich Hillis, San Francisco’s planning director, told the San Francisco Chronicle that the changes are aiming to speed up office conversion projects by 18 months.

One of San Francisco’s historic old office buildings will be undergoing a conversion. Developer Group I, a Taiwan-based investor, in December filed plans to apartments at 988 Market Street, home to the Warfield Building.

Group I restored the building, which opened 100 years ago next to the Lowes Warfield theater. According to urban legend, the penthouse in the Warfield Building served as the West Coast regional office of Chicago gangster Al Capone, shortly before Scarface relocated his national HQ to Alcatraz.