Mercy Housing, Related California start construction on 184 units in San Francisco neighborhood

Two of California’s largest affordable housing developers have started construction on 184 new homes at San Francisco’s Sunnydale neighborhood, part of a years-long effort to rebuild a 50-acre public housing site in Visitacion Valley.

Cranes now rise above blocks seven and nine — the latest phase in a 1,700-unit redevelopment that ranks among California’s largest public housing transformations.

Mercy Housing California and Related California are leading the project with the Mayor’s Office of Housing and Community Development and the San Francisco Housing Authority.

Roughly $500 million has been invested so far in the mixed-income neighborhood, which sits beside McLaren Park and now includes a 30,000-square-foot community center with study spaces, a library, a recording studio and classrooms for the Boys & Girls Club and Wu Yee Children’s Services.

“This has been two decades of community-led transformation,” said Tiffany Bohee, president of Mercy Housing California.

Ann Silverberg, CEO of Related California’s Northern California Affordable and Northwest Divisions, said the redevelopment emphasizes access to fresh food, early education and public gathering spaces.

Two new buildings, Amani and Nia, recently opened with 170 apartments and 24,000 square feet of ground-floor commercial space, including a grocery store, food hall, health and wellness center and early childhood education facilities. The units target low-income families earning 30% to 60% of the area median income. Most are reserved for existing Sunnydale public housing recipients.

Redevelopments as large and complex as Sunnydale are rare in an affordable housing industry known for its financial hurdles. Market-rate developers might work with just a handful of funding partners, and affordable housing deals often triple that number. The private sector can be tapped for funds, but affordable housing often depends on stretching public sector dollars.

The AI boom has also put affordability in the spotlight. San Francisco is the nation’s hottest rental market, with rents across the metro jumping close to 5% over the past year, while prices in the city itself have spiked closer to 12%.

Some affordable housing projects are advancing thanks to a recent federal policy change. Earlier this year, Congress passed the “Big Beautiful Bill,” which cut the amount of bond financing projects must use to qualify for 4% low-income housing tax credits.

The Sunnydale redevelopment focuses on deep affordability. It has completed almost 400 affordable units so far, with roughly three-quarters designated as replacement homes for current Sunnydale residents. When complete, the project will replace 775 public housing units and add new streets, open spaces, and neighborhood services.

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