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Little Italy's Bold Move: Affordable Senior Housing Takes Center Stage

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  Published in House and Home on Sunday, November 16th 2025 at 0:03 GMT by NBC 7 San Diego

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Little Italy Turns Toward Affordable Housing for Seniors

San Diego’s historic Little Italy neighborhood is on the brink of a new wave of development that could change the face of the community forever. A recently announced project – a mixed‑use development that will house dozens of senior‑citizens in affordable apartments – has sparked a flurry of excitement, debate, and concern among residents, city officials, and developers. The initiative, spearheaded by the City of San Diego’s Office of Housing and Redevelopment, is part of a broader strategy to create more senior‑friendly neighborhoods across the city, and it will be the first of its kind in a neighborhood that has long been prized for its high‑end restaurants, boutique shops, and cultural events.

Why the focus on seniors?

San Diego’s senior population is growing rapidly. The U.S. Census Bureau projects that by 2030, 25 percent of the city’s residents will be 65 or older, and the county will need to add roughly 7,000 new housing units specifically designed for seniors. The City’s Housing and Redevelopment Office has been working for years to create a “pipeline” of affordable senior housing in neighborhoods where it is most needed. “We’re not only trying to meet the current demand but also anticipate future need,” said Dr. Elaine Torres, director of the Office. “Little Italy is a high‑profile, high‑density area that can accommodate new housing without expanding the city’s footprint.”

Project overview

The new development, which the city is calling “Palazzo Senior Suites,” will be built on a parcel of roughly 1.2 acres currently occupied by an abandoned warehouse and a few small commercial storefronts. The plan calls for a 12‑story tower that will contain 60 one‑ and two‑bedroom units, all of which will be set at or below 60 percent of the area’s median household income. The upper floors of the building will feature a ground‑level community lounge, a fitness studio, and a rooftop garden. The project will also incorporate an underground parking garage to serve both the senior residents and the neighboring businesses.

The developer behind the project is a San Diego‑based firm, Horizon Builders, which has a track record of creating mixed‑use developments that blend commercial and residential uses. Horizon has said that the senior‑focused units will be subsidized in part through the city’s “Affordable Housing Tax Credit” program, which offers developers tax credits for each affordable unit they build. The developer also plans to partner with a local non‑profit, “Seniors First San Diego,” to provide ongoing support services, including transportation to medical appointments and meal delivery.

Funding and financing

Financing for the project will come from a mix of public and private sources. Horizon Builders is contributing $3 million in equity, while the City of San Diego is offering $8 million in low‑interest loans and $2 million in tax‑exempt bonds. In addition, the developer has secured a grant of $500,000 from the California Department of Housing and Community Development (HCD) to cover the cost of installing solar panels and other green‑building technologies. Horizon’s CEO, Michael Kim, said that the project’s cost will be approximately $42 million, and the developer expects a 9 percent return on investment over a 15‑year horizon.

Community response

Reactions among Little Italy residents have been mixed. Some locals have welcomed the project, citing the need for affordable housing options and the promise of increased foot traffic for local businesses. Maria Gutierrez, owner of a popular Italian bakery on 4th Street, said, “If this is going to give people an affordable place to live and bring more people to the area, that’s a good thing for us.” On the other hand, long‑time residents and real‑estate advocates worry that the development could change the neighborhood’s character and inflate property values.

The city’s Neighborhood Advisory Committee held a public hearing on Wednesday night. A member of the committee, Lisa Chan, who has lived in Little Italy for 25 years, expressed concern about the potential gentrification effects. “We’ve already seen property values rise significantly in this area, and now we’re adding more housing units, even if they’re affordable. Will that drive out the people who have been here for decades?” she asked. The city council member responsible for the project, Councilwoman Teresa Martinez, said that the project’s affordability criteria are designed to mitigate that risk: “The units are priced at 60 percent of the median income in the neighborhood, which is well below the current market rate for similar apartments.”

Regulatory hurdles and next steps

Before the project can move forward, Horizon Builders will need to complete a Section 8 approval and secure an Environmental Impact Report (EIR) from the state. The city’s Planning Commission will also have to review the building’s design to ensure that it complies with the city’s historic preservation ordinances. Once approved, the developer plans to break ground in the fall of 2025, with the project slated for completion in late 2027.

Councilwoman Martinez said that the city is working hard to keep the timeline on track. “We’re committed to making Little Italy a more inclusive place,” she said. “By adding affordable senior housing, we’re ensuring that the community remains diverse, vibrant, and welcoming for all.”

Looking ahead

If the Palazzo Senior Suites project moves forward as planned, it could serve as a blueprint for future senior‑focused developments in San Diego. The city’s Office of Housing and Redevelopment has already identified other potential sites, including a vacant lot in the Mission Valley area and a parcel near the La Jolla coastline. The overarching goal, according to the Office, is to create 5,000 new affordable senior units by 2030, thereby easing the pressure on the city’s aging population and making more neighborhoods truly livable for people of all ages and income levels.

In short, Little Italy is at the crossroads of tradition and progress. While the project’s success remains to be seen, the conversation it has sparked underscores the urgent need to balance the desires of longtime residents, the interests of developers, and the pressing social need for affordable senior housing in one of San Diego’s most cherished neighborhoods.