Affordable housing in SF can cost up to $1.2M per unit

Land, labor and material prices are compounded by city’s slow approvals.

Tenderloin Neighborhood Development Corp's Maurilio León (TNDC, Getty)
Tenderloin Neighborhood Development Corp's Maurilio León (TNDC, Getty)

Building an affordable apartment in San Francisco doesn’t come cheap. A recent estimate pegged the cost at nearly $1.2 million per unit.

New state housing funding applications show the daunting cost of developing all-affordable projects in San Francisco, the San Francisco Chronicle reported.

The application for California Department of Housing and Community Development funds includes three affordable projects: a 90-unit complex at 2550 Irving Street; a 160-unit development at 730 Stanyan Street; and a 73-unit building at 2530 18th Street.

The Irving Street project, developed by Tenderloin Neighborhood Development Corp. of San Francisco, would cost $1.17 million per unit, or even higher with the developer seeking overall funding of nearly $166 million.

The project, slated to break ground in spring 2024, would house residents who earn between 20 percent and 60 percent of area median income, with 22 units set aside for homeless families and 15 units for veterans with housing vouchers.

The Stanyan Street project, developed by TNDC and the Chinatown Community Development Center, would cost $1.02 million per unit.

The project, slated to break ground in 2024, would house 50 formerly homeless households and residents earning between 20 percent and 80 percent of area median income.

Housing researchers say the city’s high building costs are compounded by acute worker shortages, pandemic-era inflation and long and unpredictable housing approvals.

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State housing officials have launched an unprecedented probe to find out why San Francisco takes 15 months to approve a new housing project, the longest period of any city in California.

Voters are set to decide this fall on dueling ballot measures to streamline affordable housing.

“Building affordable housing in San Francisco is usually very expensive,” Muhammad Alameldin, a policy associate at UC Berkeley’s Terner Center for Housing Innovation, told the Chronicle. “They haven’t built housing for decades. They’ve pushed out all the workers. Now if they want to build housing, it’s going to come at a premium.”

Alameldin said development costs are driven by “hard costs” such as labor and materials; plus “soft costs” such as permitting fees, fluctuations in land value and unanticipated delays.

While hard costs have surged during the pandemic, because of complications like supply chain issues, Alameldin said San Francisco has long been “practically infamous” for driving up soft costs with long, volatile planning debates.

City planners face a daunting task: how to pay for the construction of nearly 33,000 affordable units for very low-income and low-income families by the end of the decade, at an estimated cost last spring of $1.3 billion.

— Dana Bartholomew

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