Affordable housing project in Mission breaks ground, backed by $50M fund

An affordable-housing development will soon stand on the site of a former Sears parking lot in the Mission district , thanks to a new public-private partnership aimed at expediting the Bay Area’s construction of affordable housing.

City officials and development partners gathered on Tuesday for the groundbreaking of 1633 Valencia St., a 145-unit project that will offer five floors of studio apartments for seniors experiencing or at risk of homelessness. The Valencia Street project is the first to be funded through the Bay Area Housing Innovation Fund , a $50 million investment fund financially backing projects that meet goals pertaining to cost and time. Initial backers include the San Francisco Housing Accelerator Fund, Apple, Destination: Home, and Sobrato Philanthropies.

“This is exactly what a public-private partnership looks like when it’s done right,” Mayor London Breed said at Tuesday’s ceremony. “Having people who are willing to invest the money on the front-end, willing to make projects like this happen faster so that we can get people indoors — this is a game-changer.”

Low-income seniors making up to 50% of the area median income will be eligible for residency, which will be conducted through The City’s coordinated entry system. Prospective tenants already living in the Mission community will be prioritized, and no resident will pay more than 30% of their income in rent.

“It’s housing done right,” Breed said. “It’s housing of the future. It’s housing of opportunity.”

According to local leaders, new affordable-housing developments in the region can take more than five years to build and cost more than $800,000 per home. A majority of homes eligible for the housing innovation fund must be reserved for vulnerable residents and located in Santa Clara, San Mateo, San Francisco, Alameda or Santa Cruz counties.

Developers must show that they have backing from the community and the local public sector, as well as enough experience to materialize their projects. Projects must also be completed within three years of entitlement and at $550,000 or less per studio. Larger family units would have to cost $700,000 at most.

Construction of 1633 Valencia St. is scheduled to be completed by December 2025, with residents moving in by May 2026. The space will feature a residential lobby with elevators, common spaces, a supportive services suite, bike parking and property-management offices. Development is being handled by Mercy Housing Corporation .

In a statement, Supervisor Hillary Ronen said, “Our community’s unhoused seniors deserve to age well in dignified housing.”

“I am so proud that we are breaking ground at 1633 Valencia Street today and that 145 homeless seniors will soon have compassionate, permanent and supportive housing right in the middle of District 9,” she said. “I am deeply grateful to the project team’s incredible work in advancing the project’s milestones and breaking ground so quickly.”

Backers of the housing investment fund said that affordable housing in the Bay Area has a tendency to slog because developers rely on low-income housing tax credits to cover some of the capital needed. They said demand for these credits has surged in recent years, forcing more developers to competitively vie for limited resources. The housing fund’s initial $50 million investment will support at least four projects, which would serve up to 400 households.

Rebecca Foster, CEO of the San Francisco Housing Accelerator Fund , said that even before development begins, projects have to navigate dozens of building requirements and funding sources.

“The complexity of our affordable housing system creates noise and static, but we hear our top priority loud and clear — deliver more homes where people can thrive, urgently,” Foster said. “Being crystal clear on this urgency is key to solving our housing and homelessness crisis.”

The 1633 Valencia St. project is part of a larger development, which will see nonprofit housing provider Sequoia Living also build its own low-income senior housing development on the same site. The 126-unit undertaking will break ground in 2026.