A groundbreaking housing project in San Francisco is set to transform a vacant lot into permanent supportive housing, with a total development cost of $84.6 million. The project, located at 1633 Valencia, will utilize a design-build approach, which allows for early locking of design and pricing, resulting in significant cost savings. The construction costs are projected to be 30% lower per unit compared to similar projects, with a total development cost reduction of 20%.

The city will provide a $41 million loan to support the development, alongside an $80 million local operating subsidy grant. This funding structure is designed to streamline the project, allowing it to bypass the lengthy wait for state funding awards. The project is expected to be completed in under three years, a faster timeline than comparable developments.

Despite the substantial investment, the city will not retain ownership of the land, a decision made to avoid complex procurement regulations. This approach has raised concerns among some officials about the long-term implications of not owning the asset, especially given the high per-unit subsidy of $372,000.

The project aims to serve older adults aged 55 and over, addressing the pressing need for affordable housing in the city. While some city officials expressed concerns about the concentration of high-needs individuals in similar developments, project representatives from Mercy Housing assured that lessons learned from previous projects, such as 833 Bryant, have informed the design and operational strategies for this new initiative.

The resolution to move forward with the project received a positive recommendation from the board, highlighting the urgent need for housing solutions in San Francisco. As the city continues to innovate in its approach to affordable housing, this project represents a significant step towards addressing homelessness and providing supportive living environments for vulnerable populations.