Solution to affordable housing in San Francisco could be modular units, construction company says

SAN FRANCISCO (KGO) -- With the economy in its second recession in 12 years, the need for and cost to build affordable housing have multiplied.

Experts project 700,000 units are needed in the Bay Area.

RELATED: Building a Better Bay Area: The Housing Shift

Housing advocates don't want to see a repeat of what happened during the 2008 recession when affordable housing construction slumped. Only a fourth of the needed units were built in California. In today's pandemic-fueled recession, the obstacle is cost, rising 10% each year.

"The affordable housing industry, left without any innovation, in San Francisco was getting to $800,00 per unit," said CEO of Factory OS Rick Holliday.

Innovators believe the solution is modular units that are being built in a factory at Mare Island in Vallejo. Factory OS incubated the idea four years ago, and its concept is starting to win approval for projects such as one on Bryant Street in San Francisco.

"The project we're building now will yield a unit at a cost less than $400,000," noted Holliday.

VIDEO: Sheltering while homeless: Streets in one SF neighborhood lined with tents amid pandemic
EMBED More News Videos

ABC7's Phil Matier has been covering and going into San Francisco's Tenderloin District for decades and he's never seen it in the state it was on Friday.



Instead of framing units on site, a module is built indoors in a cavernous space. Each module contains two living units. There are no weather delays. The modules are later transported to the building site.

The new approach is winning praise from people like Carol Galante, faculty director of UC's Terner Center for Housing Innovation and an adviser to Factory OS.

"It can translate into less subsidy per unit to make that project work, and that means we can build more housing units with the same amount of money," said Prof. Galante.

RELATED: City report shows 285-percent rise in homeless tents, structures in San Francisco's Tenderloin

The process of design and construction is non-traditional. The floor plans come first so they can be standardized. Then the architect designs the exterior. The inside first, outside later concept took time to win over critics and skeptics, including city planners.

"It's a different form of what they see," said Factory OS's Holliday. "Neighborhood groups are concerned because they're worried that it's not as good quality. Unions have issues about work rules."

With those concerns addressed, Factory OS has produced 750 modular units. It has $150 million in orders. It gets a steady stream of visitors from other cities wanting to learn how it works. If imitation is a good thing, competitors are starting to pop up to fill a growing need.
Copyright © 2020 KGO-TV. All Rights Reserved.