San Francisco philanthropists Chuck and Helen Schwab have donated $65 million to build supportive housing for formerly homeless people — the gift that will help fund a 145-unit, South of Market apartment complex as well as the conversion of two hotels on Lower Nob Hill.
“We must respond to the homeless crisis with strategies that fundamentally change the equation,” Schwab, founder of the Charles Schwab financial services company, said.
The project is being constructed with modular units manufactured at Factory OS on Mare Island in Vallejo. Developers say the modules allow them to build for $380,000 a unit, about $220,000, or 30%, less than similar wood-frame housing developments.
While the city will master lease the building once it is completed, the project didn’t include any up-front public funding. Income from city master lease will allow some of the private philanthropic money originally invested to be pulled out and applied to the next affordable development.
“The impact of Chuck and Helen’s investment goes far beyond the initial 145 units,” said Daniel Lurie, Tipping Point’s chairman. “Not only have we successfully tested a new approach to construction, but we are now able to extract philanthropic dollars to reinvest in more housing.”
The two hotels that will be reconfigured for housing for the formerly homeless are the 232-unit Granada Hotel at 1000 Sutter St. and an unidentified hotel with about 275 rooms near Geary and Mason streets.
The announcement comes as the first two dozen modular boxes have been trucked over the Bay Bridge and set on the concrete foundation at 833 Bryant. The building is scheduled to open next fall. Lurie said the project is a test case that could be replicated elsewhere in the Bay Area and around the state.
“At the end of the day we need to prove it’s possible to build in a much more efficient and cost-effective manner,” he said.
Rebecca Foster, who heads the Housing Accelerator Fund, said speed is the most important element in the business model.
“Public-private partnerships like ours are at their best when they enable the fast moving, flexible approaches we desperately need to accelerate the delivery of homes to those who need them most,” she said.
Tipping Point launched its $100 million Chronic Homelessness Initiative in 2017. The Schwabs’ investment will also fund several programs like the Flexible Subsidy Housing Pool which buys up private housing units and converts them to supportive housing. People experiencing homelessness move into these units and are provided rental subsidies using a flexible pool of funds.
Lurie said goal is to find ways to build even faster and at lower cost than three years and $380,000 a unit.
“It’s still really expensive relative to what we want to get down to,” he said. “We are by no means where we want to be. We need to build faster. But we are starting to get real efficiencies and real scale. The example this sets is going to inspire a lot of copycats.”