Mayor says it would take 300 years to house Sacramento’s homeless, asks for options
Under the current way of doing things, it could take the city of Sacramento 300 years to build enough affordable housing for all the homeless people, Mayor Kevin McCarty said Tuesday.
McCarty, whose term began Dec. 10, asked Sacramento Housing and Redevelopment Agency leaders to return to the council with options to build affordable housing for cheaper, and without the “bells and whistles.”
“We give a lottery ticket to 5% of the people and what about the other 95%?” McCarty said during the council meeting. “We’re building a BMW solution for a small subset when we’re in a crisis. Maybe we need to be focusing on, you know, Toyotas, Honda civic versions.”
McCarty did his calculations by taking the roughly $600,000 cost per door to open the 52-unit Central Sacramento Studios Phase 2 downtown, for which the council approved loans during the same meeting. He took that figure and multiplied it by 4,000, to represent the estimated number of homeless people in the city of Sacramento, based on the most recent count, combined with the city’s shelter bed inventory.
SHRA executive director La Shelle Dozier responded that a big part of the high cost is the cost it takes to pay contractors to provide services to residents of those units.
“If you put people into housing with no services, it’s not going to be successful,” Dozier said.
In response, McCarty then ran the numbers just for construction alone. For Central Sacramento Studios, that number is nearly $400,000 per unit, according to a city staff report. That would still take 175 years, he said.
“So what I’m asking is that (you) come back to us and be like, ‘hey we hear you, we wanna do more, and these are some options to do more,’” McCarty said to SHRA leaders. “We are in an absolute crisis here and we’re making incremental progress.”
Central Sacramento Studios Phase 2, is being developed by the Danco Group, with LIFESteps providing resident services, the staff report said. It will be built near 11th and H streets. The building will have 52 units, comprised of 35 studio units and 17 one-bedroom units. The studios will be 420 square feet, while the one bedrooms will be 800 square feet. It will also have a lounge, fitness room, a laundry room on each floor, a dog park and roof terrace. Tenants will have swimming pool access shared with the adjacent Central Sacramento Studios Phase 1, which was converted into homeless housing from a motel in 2023.
There have been several other affordable projects that have come to the council in recent months that have also cost a similar amount.
Donner Field, an affordable apartment project for seniors in Oak Park being developed by Eden Housing, Inc., is costing about $576,000, including about $366,000 in construction costs, per door, according to a city staff report. The Sakura, an affordable housing complex being developed by the Capital Area Development Authority and Mutual Housing on 16th Street, is costing about $418,000 per door, including about $249,000 in construction costs per door.
Non-construction costs include things like permit fees, developer fees, engineering, and financing costs.
The cost of building affordable units are a big reason the city is lagging behind its goals. Last year, the city issued 407 housing permits for new units for extremely low or very low-income tenants, a new city report stated. That was less than half its goal of 1,308 units for the year. CADA executive director Danielle Foster previously told The Sacramento Bee that high interest rates is likely a big reason, as it makes it harder to get construction financing done. Construction costs and tariff impacts could also be playing a role, she said.
Other jurisdictions around California are also asking the same questions to try to reduce costs to reduce affordable housing costs, McCarty said.
Several affordable housing projects in the Bay Area cost over $1 million per unit to build, the Los Angeles Times reported in 2022.
Market rate apartments, which don’t receive government funding, typically cost less to build, said John Vignocchi, managing partner of Urban Capital LLC.
Urban Capital’s new Studio30 market rate apartment complex at 16th and E streets cost about $250,000 per unit to build, Vignocchi said.
Vignocchi said he is in agreement with the mayor’s call for new options.
“The old way of funding affordable doesn’t work, it doesn’t scale, and it needs to change,” Vignocchi said. “The best way to make affordable (units) cheaper to build is to not have the government subsidize building it. They should just buy existing buildings, not be in the business of building new projects from scratch (such as Central Sacramento Studios Phase 2). Tariffs will negatively impact costs. As will interest rates.”
The next combined SHRA and City Council meeting is scheduled for 2 p.m. on May 13.
This story was originally published April 10, 2025 at 3:04 PM.
