Today we’re announcing a new strategy to address time and cost challenges facing affordable housing development, offering an alternative to the frequently slow and sometimes inefficient financing system currently in place. It’s harder than it should be to develop the housing our community needs, which has fueled homelessness and continues to hamper our ability to solve the crisis.
The Bay Area Housing Innovation Fund offers private gap financing to affordable housing developments that can meet aggressive cost and time goals set about 40% lower than Bay Area project averages. This translates to completion within 3 years and less than $550,000 for a typical studio.
Destination: Home launched this fund in partnership with San Francisco Housing Accelerator Fund, Sobrato Philanthropies and Apple. Our initial $50 million pilot will support at least four projects in the Bay Area, serving roughly 400 households. Importantly, nearly half of the homes will be reserved for formerly homeless or extremely low-income households.
Typically, affordable housing developers rely on Low Income Housing Tax Credits (LIHTC) to completely fund their projects. Demand for these credits has surged in recent years, especially in the Bay Area, leading to increased competition as developers vie for limited resources. Forcing otherwise “shovel-ready” projects to wait in line for scarce resources can push the price tag for a development way up while stretching out timelines significantly.
The Bay Area Housing Innovation Fund demonstrates the catalytic potential of private dollars to provide gap financing, bypassing the need for traditional tax credits and expediting the delivery of these units to residents in need.
The Fund has already approved its inaugural loan to help build a 145 unit affordable housing development in the Mission District in San Francisco, which will break ground later this month. Projects in Santa Clara and Santa Cruz Counties are also in the planning phases. We look forward to sharing more about these vital housing developments and the many other milestones ahead made possible through this strategic effort.
The Bay Area Housing Innovation Fund represents one of the many opportunities to accelerate the housing production our communities need to thrive. When we work together – across sectors and jurisdictions – it’s possible to overcome the barriers to addressing our housing and homelessness crises.
Leveraging Private Funds to Spur Critical Housing Production
This fund builds on a body of collaborative efforts to ramp up the production of deeply affordable housing in our community and address challenges that impede the pace of development.
With Cisco and Apple’s private funding support, we’ve catalyzed 33 supportive and deeply affordable housing developments representing more than 3,300 new homes by providing zero- or low-interest acquisition and pre-development financing.
We’re also expanding capacity within eight non-profit mission-driven developers to help accelerate a development pipeline that collectively includes 1,600 affordable units. And to demonstrate how we can reduce planning review timelines, we’ve helped fund a dedicated planner position at the City of San Jose focused solely on developments that include supportive and extremely low-income units, shaving an average of two months off approval time.
Providing a Basic Human Need
Let’s remember, the efforts we’re celebrating today are about getting people into safe, stable homes as quickly as possible, and not just efficiency. No one shoulders the impact of our housing crisis more than those who’ve been pushed into homelessness and we must act with urgency to end and prevent this senseless suffering.
Together we have the opportunity to chart a brighter future with abundant housing for all who call the Bay Area home.
In the coming months, you’ll hear more about a $20 billion Regional Affordable Housing Bond. It would build on the success of the Measure A bond passed by Santa Clara County voters and will need our full enthusiastic support this November.
From providing private funds to catalyze solutions to saying “YES!” to the new development in our neighborhood, we all hold power in this collective effort.
