The initial 115-unit building at 880 McAllister St. would provide affordable homes for seniors. City officials have dubbed it “Phase 0”: it is intended to give current co-op residents a place to move as construction proceeds, starting with those considered most vulnerable.

Mayor Daniel Lurie’s office said it would introduce legislation to establish the development agreement. Paired with project-specific zoning, the agreement would set rules and construction phases for the four-block redevelopment and permit towers of up to 345 feet. It is a proposed framework, not a completed agreement.

The plan calls for nearly 2,400 homes on the 10-acre site near Jefferson Park. The project includes 1,885 market-rate units and 267 replacement co-op homes; 17% of the homes overall would be income-restricted. Existing buildings would be demolished and replaced.

Freedom West’s roughly 1,000 shareholders include more than 500 seniors. The limited-equity cooperative was established after urban renewal in the 1960s displaced thousands of residents in the Fillmore and Western Addition, including Black and immigrant families. Its board president, Mattie Scott, said residents should share in the neighborhood’s redevelopment rather than be displaced by it.

“Our families will not be moved out to make way for progress,” Scott said. “We will be part of it, in new homes we own, for our children and grandchildren.”

The city’s $23 million commitment from the Mayor’s Office of Housing and Community Development adds to financing support from the Crankstart Foundation, the Housing Accelerator Fund and CommonSpirit Health. The project has been in the works since 2020 and has been valued at $2.3 billion, but its developer, MacFarlane Partners, has struggled to cover nearly $600 million in upfront costs.

The co-op’s limited-equity ownership structure makes it harder to use tax-credit programs commonly used to finance affordable rental housing. A state law authored by state Sen. Scott Wiener gives the city another potential tool: the Office of Community Investment and Infrastructure can use some future property-tax revenue generated by the redevelopment to help pay for replacement affordable homes. The city intends to direct millions of dollars in that revenue to Freedom West, subject to required approvals.

Freedom West Homes Corp. has agreed to sell two-thirds of its property for market-rate development, but only after replacement homes and additional affordable housing are built. The developer and city say the plan would replace aging homes after decades of deferred maintenance while preserving cooperative ownership and allowing most current shareholders to remain homeowners.