By Vanguard Staff
SAN FRANCISCO — A new affordable housing development in San Francisco is being touted as a model for accelerating the production of affordable housing, delivering supportive homes for formerly homeless seniors in a fraction of the time and at substantially lower costs than many traditional projects.
Local officials, housing advocates and nonprofit developers gathered this week to celebrate the opening of 1633 Valencia, a 145-unit affordable housing community for formerly homeless seniors in San Francisco’s Mission District. The project is the first development financed through the Bay Area Housing Innovation Fund (HAF), a financing initiative designed to reduce the time and expense associated with affordable housing construction.
According to project partners, 1633 Valencia was completed in just 19 months and cost approximately $525,000 per unit. Organizers said the development demonstrates a potential alternative to the traditional affordable housing model, in which projects often require years of financing applications and can take close to a decade to complete.
Mayor Daniel Lurie said the project addresses a longstanding housing shortage while providing supportive housing for older adults.
“Our city has not built enough housing, and the price has fallen to our seniors—people who spent decades contributing to this community and deserve stability, dignity, and care. Today, I’m proud to open 145 new supportive homes for San Francisco seniors,” said Lurie.
“This space used to sit largely unused, and now it will be a site where people can age with dignity, build connections with their neighbors, and find the stability they need to thrive. We will continue building a system where housing comes with healthcare and where success is not just about whether someone has a place to sleep but about whether their life is actually getting better.”
The development was led by Mercy Housing California in partnership with the Housing Accelerator Fund and a coalition of public and private partners.
Housing advocates have increasingly raised concerns that the Bay Area’s affordable housing delivery system is hampered by fragmented financing structures that require developers to compete for multiple public funding sources over several years before construction can begin. Those delays, combined with escalating construction costs, have pushed development expenses for some projects toward $1 million per unit.
Project leaders argue that the Bay Area Housing Innovation Fund was designed specifically to address those challenges.
The effort builds on lessons learned from Tahanan Supportive Housing, a previous affordable housing project completed in less than three years and for under $400,000 per unit. Organizers described 1633 Valencia as an expansion of that model.
The Bay Area Housing Innovation Fund was launched in 2024 with an initial $50 million investment from the Housing Accelerator Fund, Apple, The Sobrato Organization and Destination: Home. The fund provides early, flexible financing for projects that incorporate design, construction and financing innovations intended to reduce both costs and timelines.
Rebecca Foster, CEO of the Housing Accelerator Fund, said the traditional affordable housing development model is unsustainable.
“We will never deliver the homes our communities need if they take a decade to build or cost a million dollars a door,” Foster said.
“By bringing developers and mission-aligned funders together around a new financing model anchored in ambitious cost- and time-saving goals, we are proving that another way is more than possible. We are so proud to dedicate 1633 Valencia today, and to celebrate 145 new neighbors moving in.”
With financing secured early through the Innovation Fund, Mercy Housing California focused on construction and design efficiencies. The organization assembled the same team that previously worked on Tahanan, including David Baker Architects and Cahill Contractors, and employed a design-build and design-replication strategy intended to streamline delivery.
The project includes 145 studio apartments equipped with private bathrooms, kitchenettes, furnishings and air conditioning. Developers said the design-build approach allowed subcontractors to become involved earlier in the process, generating both cost savings and faster construction timelines. The project also incorporated prefabricated components where practical.
According to project partners, those combined innovations reduced costs by hundreds of thousands of dollars per unit and shortened development time by more than a year compared to similar projects.
Tiffany Bohee, president of Mercy Housing California, said the project demonstrates how collaboration and innovation can accelerate housing production.
“We are constantly looking for ways to build smarter, faster, and with greater impact for residents,” Bohee said.
“1633 Valencia reflects what’s possible when trusted partners come together with a shared commitment to innovation and equity. We are grateful for HAF’s strategic partnership and financing support, and for the strong collaboration across our project team—all of which enabled us to move this vision forward with speed and certainty. We look forward to scaling these approaches so more seniors, and more communities, have access to quality, stable, and affordable homes.”
The development serves seniors age 55 and older who meet the San Francisco Department of Homelessness and Supportive Housing definition of homelessness. Residents will pay no more than 30% of their income toward rent, with eligibility capped at households earning up to 50% of area median income.
Residents are referred through the city’s Housing Ladder Program and the Mission Action Access Point. Supportive services and onsite case management are provided by the Felton Institute.
“It’s an honor to announce the opening of 1633 Valencia, a groundbreaking housing program designed specifically for older adults facing or experiencing homelessness,” said Shireen McSpadden, executive director of the San Francisco Department of Homelessness and Supportive Services.
“This program fosters a sense of belonging and connection, ensuring that every resident feels valued and empowered. Together, we are building a place to call home where older adults can live with purpose and independence.”
Al Gilbert, president and CEO of the Felton Institute, said the organization plans to provide services tailored to the needs of older adults transitioning into permanent housing.
“Congratulations to Mercy Housing on this major milestone,” Gilbert said.
“Felton Institute is excited to bring our agency’s expertise in supporting older adults, unhoused individuals, and mental wellness to the residents of 1633 Valencia. Guided by an age-friendly supportive housing model, our services and case management will also offer opportunities focused on aging in place, digital literacy, and community building.”
The project was developed on part of a larger site owned by nonprofit housing provider Sequoia Living. Residents will share access to landscaped outdoor space featuring a restored 1936 “Chevy” mural and a newly commissioned mural created by artists Max Marttila and Pablo Ruiz Arroyo with assistance from Pancho Pescador and Kipling Basilon. The restoration and production effort was directed by Susan Cervantes of the Precita Eyes Muralists Association.
Housing Accelerator Fund officials said the opening of 1633 Valencia comes amid growing momentum for the Innovation Fund. Last week, the organization broke ground on another Innovation Fund-supported project, RISE at Berryessa Station in San Jose, a 195-unit affordable housing development for low-income families and formerly homeless households located near the Berryessa BART Station.
In December 2025, fund partners announced an additional $50 million commitment, bringing total investment in the Bay Area Housing Innovation Fund to $100 million. Organizers estimate the expanded fund could help deliver more than 1,000 affordable homes across the Bay Area over the next two years.
As housing affordability and homelessness continue to challenge communities throughout California, proponents of the Innovation Fund argue that projects such as 1633 Valencia demonstrate that affordable housing can be built more quickly and at lower cost when financing, design and construction strategies are aligned from the outset.
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