The money and the rooms
San Francisco would pay up to $40 million toward the conversion of the Hearst Building at 5 Third Street into a hotel. The payment equals the General Fund hotel tax the property generates, capped at $40 million in net present value, over a period of up to 20 years. 48 Hills published the agreement text on 1 February 2026.
The developer's own arithmetic sits in the agreement. The project returns about 3.8 percent a year without the subsidy. With the subsidy the return runs to about 17.9 percent.
Group sellers should price the project as pipeline. It carries an approved programme, a long-term lease and a subsidy structure. It carries no construction start, no general contractor and no signed opening date.
The address
The site sits at the corner of Third Street and Market Street. JMA Ventures holds the long-term lease through its affiliate Bespoke Hospitality, LLC. The property is three mostly vacant, internally connected commercial buildings at 5 Third Street and 17-29 Third Street. The Hearst Building itself is the 13-story tower on that corner.
The envelope that gets the rooms
William Randolph Hearst commissioned the main tower in 1898 as the San Francisco Examiner Building. San Francisco YIMBY reported the building history in March 2023. The first building stood seven stories in Mission Revival style. The 1906 earthquake and fire destroyed it. Kirby, Petit and Green rebuilt the tower on the same site in a twelve-story steel frame with a granite base, a marble podium and a terra cotta shaft. Julia Morgan remade the entrance, the lobby and the cornice in 1938.
What the approved programme names
The Planning Department has approved up to 170 hotel rooms, restaurant and bar space, office, retail, seismic and structural upgrades, and restoration of historical building features. San Francisco YIMBY reported the approved numbers in March 2023: a 121,470 square foot complex carrying 170 hotel rooms, 5,920 square feet of office, 11,390 square feet of retail and 21 bicycle parking spaces. Forge is the project architect. Page & Turnbull and Knapp Architects handle historic preservation.
The list names restaurant and bar space and retail. It names no ballroom, no junior ballroom and no meeting-room block.
The dates on the file
The city first approved the application in mid-April 2019. The developer filed a three-year extension that runs to mid-April 2026. The 2023 filing puts construction at about 20 months once work begins.
What to put to the developer
Ask for the room count in writing. Ask which spaces the hotel will sell to groups and on which floors. Ask who holds the sales contact. Ask whether the restaurant and bar will contract for private events. Ask which brand will operate the hotel. Ask how many of the 170 rooms the group block will hold and on what terms.
Ask for the construction start, the general contractor and the opening date.
The disclosure file
Section 67.32 of the Sunshine Ordinance bars the city from granting a subsidy to a private entity unless that entity agrees in writing to publish financial projections and annual audited statements. 48 Hills asked the Mayor's Office and then OEWD for that material and reported finding none in the public record at the time of the committee vote. OEWD replied that the request was not simple, routine or readily answerable and would be answered on or before 13 February 2026.
The Budget and Finance Committee sent the plan forward without recommendation on Wednesday 4 February 2026. 48 Hills reported the outcome the following day. The full board vote falls before the records response date, so the projections arrive after the decision.