New San Diego Affordable Housing Breaks Ground Using Mass Timber

Construction begins Monday on a 124-unit affordable housing building at the corner of Island Avenue and 16th Street.

The eight-story structure is the first development in San Diego to use mass timber, an engineered wood product. Father Joe’s Villages initiated the project two years ago as part of a goal to build 2,000 affordable units for vulnerable residents. The original financing plan collapsed in 2024, halting progress on the site. Arete Development, which manages the project for Father Joe’s, identified mass timber as a solution to lower construction costs. Joowan Lee, founder of Arete Development, said the organization is introducing the material to the city.

oWOW Construction, which is building the tower, has tested the technology in other California projects, including a 20-story tower in Oakland. CEO Danny Haber stated that the company began using the material before it was fully legalized in the state. The switch to mass timber reduced the cost per unit from $530,000 to $380,000. This reduction saved more than $10 million on the overall project. The lower cost also allowed Father Joe’s to add 22 additional units without increasing the building height. The final development includes 68 studios, 55 one-bedroom apartments, and one two-bedroom apartment.

The units are restricted to residents earning 30 to 60 percent of the area median income. Deacon Jim Vargas, who leads Father Joe’s Villages, said the income level targets people at risk of losing their housing. He noted that preventing homelessness is less costly and traumatic for individuals than intervening after a person is on the street. Vargas said the high cost of food, gas, and housing has put many neighbors in a precarious state. The nonprofit estimates that the building will open in March 2028, although oWOW projects completion by the end of 2027.

The property was donated by God’s Extended Hand, another homeless-serving nonprofit, after the city declared the old building a hazard. The donation alone was insufficient to finance the project. Arete Development CEO Jodi Rothery said the economics of building affordable housing have become difficult. The switch to mass timber made the $47 million project more competitive for state tax credits, grants, and private investment. The city issued an updated building permit through a program that fast-tracks 100 percent affordable housing projects at the Department of Development Services. Councilmember Stephen Whitburn, who represents the East Village, said the city is streamlining the process to help build more homes.

Financing for the project includes a construction loan from California Bank & Trust and a permanent loan from Citibank. Raymond James provided tax credit equity. Philanthropic gifts from Irwin Jacobs and the David C. Copley Foundation completed the funding. Rothery said the team is excited to be standing with shovels instead of spreadsheets after years of planning and redesigning. Father Joe’s Villages currently has 1,100 affordable homes in its pipeline. The organization also plans to build 150 units for seniors with Jacobs and is considering mass timber for a 15-story building on pilings above a former skydiving center.

Another developer, PROTEA/Malick, has pitched an 11-story building for the San Diego Unified School District headquarters in University Heights using the same material. Mass timber offers a lower environmental impact and is fire resistant, which can reduce property insurance costs over time. The pre-fabricated nature of the material also allows for faster construction compared to traditional steel and concrete. The new building will serve residents who are holding on to their housing by their fingernails, according to Vargas. The project marks a shift in construction methods for the East Village.