OCTAVIA STREET IN Hayes Valley is a jumble of weedy parking lots and trash-strewn sidewalks, the kind of place you might want to avoid walking through after dark. It's hard to imagine that this same strip will one day be Octavia Boulevard, a broad roadway lined with lush trees and family housing.

But that's exactly what city planners envision. After a prolonged battle at the ballot box, the Central Freeway overpass will finally be demolished later this year. And while the project is inching along slower than some would like, the plan itself represents the vast potential of San Francisco's surplus land supply. The city plans to build close to 1,000 units of housing on the site, with approximately half set aside as affordable.

But Octavia Boulevard is an anomaly. Most city departments sell or lease their excess land to make as much money as possible. And though it's hard to fault the departments for looking at ways to bring in revenue, critics say a crowded city, perpetually short of space, shouldn't be so quick to forfeit such an important resource.

With that in mind, Sup. Chris Daly recently finalized legislation that, if passed, would dramatically change the process by which city departments dispose of land. Rather than let departments make the decisions on their own, an independent body would get to decide which land is actually surplus and weigh in on how it should be used.

No one knows exactly how much of this land is out there – and that's part of the problem – but the law would likely free up dozens of city sites worth millions of dollars for affordable housing.

If it's not too late.

Train wreck

San Francisco Municipal Railway is, by all accounts, a real estate gold mine. According to the department's "Short Range Transit Plan," released in October, Muni has six properties throughout the city (totaling close to 30 acres) now being considered for "asset development."

Of these, the furthest along is a 31,250-square-foot terminal at Mission and Steuart Streets, where Joie de Vivre Hospitality plans to build a 201-room hotel. According to the report, the hotel will provide an estimated $4.7 million in revenue each year for the next 65 years. Not surprisingly, the department is now eyeing its 2.6-acre Kirkland Yard near Fisherman's Wharf as another possible hotel site. "Muni expects to gain significant revenues from this valuable property," the report states.

Just as tempting is the agency's 5.4-acre Presidio Division headquarters at Geary Boulevard and Presidio Avenue. Though Muni plans to retain the property as a maintenance facility, it also wants to encourage additional development on the site. Adjacent to the Richmond and zoned for buildings as tall as 160 feet, the land seems like a developer's dream. But will it be used for a 12-story luxury condo tower or for 12 stories of affordable housing?

That's the big question, said Tom Wetzel, a member of Muni's Citizens Advisory Council. "Surely they will argue that they could get more revenue by going with a for-profit developer." He pointed out that with the passage of Proposition E in 1999, Muni is supposed to become more financially independent. "But you have to balance that out with the public good of affordable housing." Wetzel told us he hopes that if the city passes a proposed $250 million housing bond in November, some of that money could be used to make up the difference in revenue between market-rate and affordable development. "Muni doesn't have to lose out," he said.

But Wetzel worries that some of Muni's plans are on the fast track and may be decided before Daly's legislation is passed. He said Muni has already put out a "request for qualifications," to see which developers might be interested in developing the Presidio Division site.

School daze

The San Francisco Unified School District controls another sizable chunk of city land. Last August squatters with Homes Not Jails, a local advocacy group, took over a huge SFUSD building at 170 Fell St., the former High School of Commerce, abandoned since the 1989 Loma Prieta earthquake. After a day and a half with limited electricity and no running water, nine squatters were arrested by the San Francisco police. District officials announced that the building was unsound.

Members of Homes Not Jails acknowledged the old school would not be easy to repair, but they said it still exemplifies a problem with the system. "It is outrageous that there are vacant buildings when people are dying on the streets," the group wrote in a public statement on the occupation. "It is even more outrageous when the vacant property is owned by the government – which is supposed to provide for the needs of its citizens."

This isn't the first time SFUSD has been pushed to make use of its excess land. In May 2000 the San Francisco Board of Education endorsed a plan to build affordable housing for teachers on the grounds of a Sunset elementary school. Five months later the board shelved the idea after fielding complaints from teachers and Sunset residents who felt excluded from the process.

Similarly, plans to move Phoenix Middle School and develop land at 1950 Mission St. are at a standstill. After years of negotiations with both for-profit and nonprofit developers, the district simply decided not to sell.

Critics say these near misses have left potential housing sites sitting empty for several years. Will they stay that way? Tony Irons, chief operating officer for the SFUSD, said he could not estimate the amount of surplus land owned by the district until later this year, when its new master plan is drafted.

Since the SFUSD is not a city department, it would not be covered by Daly's legislation. Irons told us the district wants to encourage public participation and might voluntarily comply with aspects of the law, but only on a "case by case basis."

Land in hand

Daly's legislation, tentatively scheduled to be heard by the Board of Supervisors' Health and Human Services Committee May 16, would mirror the federal McKinney Act, which states that surplus or underused land should first be made available to house homeless people.

"I think it's one of the most proactive things we can do to address homelessness and the housing crisis in San Francisco," Daly said. "As a $5 billion organization, the city has a lot of holdings. I strongly believe that if any department is not using a building or property or lot that it has, the best thing the city can do is consider that property to provide housing."

Under current city policy, land can't be declared "surplus" until it has first been offered to all other city departments. If nobody wants it, the Real Estate Department will eventually auction it off, but that's rare. According to the department, there is only one site in San Francisco currently considered surplus: 10,000 square feet in Sea Cliff owned by the San Francisco Public Utilities Commission.

Housing activists have long argued that this time-consuming process keeps valuable property off the radar – property like the old Potrero police station at 3rd and 20th Streets, which has been vacant for years.

Under the new law, city departments would no longer have that discretion. All departments would be required to report vacant or underused land to the Assessor's Office on a quarterly basis. Their lists would then be reviewed by a nine-person board with the power to override a department's findings.

If a site was considered unsuitable for housing, it would be auctioned off, with the proceeds going into a special housing fund. Otherwise it would be developed as permanently affordable housing for homeless people. In some cases, homeless people could even help rehabilitate property in exchange for tenancy.

Daly anticipates the law will draw opposition from some city departments, particularly those with a lot of property. And even if it does pass, new housing development will likely be slow. Consider what's happened at Octavia Boulevard: although the Board of Supervisors passed a resolution two years ago urging the project to move forward quickly, the boulevard isn't expected to be completed until 2005.

Robin Levitt, a professional architect and a member of the Central Freeway Citizens Advisory Committee, told us it's worth the wait. He hopes Octavia Boulevard will provide a model for how the city can best use surplus land. "I'm excited," Levitt said. "There's going to be a lot of housing. We're getting rid of the blight of the freeway and building what could be a really beautiful street."

E-mail Cassi Feldman at cassi@sfbg.com.