The plan would replace the decades-old waterfront grocery store at 15 Marina Blvd. with a large mixed-use complex featuring two towers reaching 22 and 18 stories, a new Safeway store and 848 homes. Records show the city granted approval Friday on a timeline expedited by Assembly Bill 2011, a state law that requires eligible housing projects on commercial land to receive streamlined approval without the public hearings or environmental review that typically accompany major developments.

"We appreciate the diligent work of city staff in moving this important project forward," said Dave Balducci, a principal with project developer Align Real Estate. "This approval brings us one step closer to welcoming new families to a neighborhood that has seen far too little housing development, while delivering a modern grocery store for the entire community."

Align declined to say whether it has secured financing for the project or when construction could begin. Large-scale housing construction has been mostly frozen in the city for years, though rents have been rising and the market is showing early signs of thawing. Many developers say the economics remain challenging and raising capital remains a major hurdle: a city analysis earlier this year placed development costs, excluding land, between $700,000 and $1.2 million per home across its market-rate housing models.

The fight over the project is not over. Opponents are challenging the city's approval process in federal court. The lawsuit, which names Align, the city and PG&E, argues that the city determined the project's eligibility under AB 2011 before more than 40,000 square feet beneath the Safeway store had been tested for environmental factors, despite petroleum contamination already found in soil and groundwater. PG&E operated a steam power plant on the site before the Safeway was built in 1959.

Align has said it will comply with all environmental testing requirements under the state law, while city planners say further assessment and any necessary cleanup can happen during the permitting process and before future residents move in. State regulators have said known contamination at the site poses no current exposure risk.

The project has become a political flashpoint since it was proposed a year ago, drawing opposition not only from Marina residents but also from the city's top officials. Mayor Daniel Lurie has accused Align of trying to "sneak in" the redevelopment plan before the city's Family Zoning Plan took effect earlier this year. The massive rezoning effort replaced the Safeway site's density formula, which the developer used alongside state housing laws to propose 848 homes in towers up to 22 stories. City officials have estimated that, under the new rules, Align's project might have included 500 to 600 new homes and been substantially shorter.

Marina Supervisor Stephen Sherill has characterized the project as out of scale for the neighborhood. He also argued earlier this year that nearby parks and open spaces—including Fort Mason and the Marina Green—do not count as "urban uses" under AB 2011, which requires at least 75% of the site's neighboring parcels to have urban uses for a project to qualify for streamlined approval. City planners have rejected this reading.

The approval marks a major milestone in the yearlong fight over whether the project qualifies for the state law, but with a federal lawsuit pending and financing uncertain, the future of the site remains unsettled.