A long-planned, LGBTQ-affirming senior housing tower at 1939 Market Street is suddenly within striking distance of reality, with state staff recommending roughly $47.6 million to help build the 187-unit project at Market and Duboce near the Castro.
The money recommendation comes from the state’s Affordable Housing and Sustainable Communities program, and the Strategic Growth Council is set to vote on it next Wednesday. Developers say that if the award is approved, it would clear a major hurdle toward a possible 2026 construction start. The project would be Mercy Housing California’s third collaboration with Openhouse.
According to the staff packet from the Strategic Growth Council, the 1939 Market proposal is one of 21 recommended AHSC awards and is slated to receive $47,579,100 to support a transit-oriented development. The packet shows the project earned a score of 87 and is estimated to deliver roughly 38,527 metric tons of greenhouse-gas reductions under the program's calculations.
As reported by the Bay Area Reporter, the state posted its list of recommended awardees this week, and the council's meeting materials include the AHSC Round 9 item on the agenda. The outlet noted that the project had applied in two previous rounds and missed out, which makes the staff recommendation a notable turnaround.
The triangular parcel at Market and Duboce was purchased by the city in 2020 for about $12 million, according to the City of San Francisco. The Mayor's Office of Housing and Community Development later selected Mercy Housing and Openhouse to develop the lot through a multisite Request for Qualifications, per the Mayor's Office of Housing and Community Development.
Who Will Live Here
Design plans call for 106 rent-restricted studios and 79 one-bedrooms, plus one one-bedroom and one two-bedroom unit reserved for on-site managers, according to project materials from Swinerton. The Mayor's Office has already put predevelopment dollars into the effort and previously allocated a $52,360,000 preliminary gap reserve that is contingent on state financing, as reported by the Bay Area Reporter.
When built, 40 units will be subsidized for formerly homeless seniors, 75 units will serve extremely low-income seniors, and nine units are set aside under the city's Plus Housing program. The remaining apartments will target households at 50-60% of area median income, and tenants will be selected through a city-run lottery.
Why State Money Matters
The AHSC Round 9 competition is specifically designed to fund projects that cut greenhouse-gas emissions by building affordable homes close to transit, and Round 9 had roughly $835.3 million available statewide. That structure, along with the program's scoring system, is why staff tied the Mercy project’s climate and transit benefits to a large recommended award, according to the Strategic Growth Council staff packet.
Next Steps And Timeline
If the council signs off on the staff recommendations next week, Mercy Housing and the city will move to lock in state and tax-credit financing along with other needed approvals. City loan-committee documents indicate a target to begin construction in 2026 if state and tax-credit allocations come through, per City of San Francisco materials.
Advocates say the tower would bring much-needed, LGBTQ-affirming housing to a longtime hub for older queer residents. Mercy Housing and Openhouse previously partnered on the Laguna Street campus that created 119 units and added community programming, and Openhouse says that experience helped shape the plans for 1939 Market.
