Bay Area partnership seeks to raise $540 million to develop affordable housing
A new partnership of Bay Area businesses and foundations is planning to raise $540 million for two funds to help build and preserve affordable and workforce housing, the latest example of major employers taking dramatic steps to try to solve the region’s housing crisis.
Partnership for the Bay says it will raise the money to preserve and produce more than 8,000 Bay Area housing units over the next five to 10 years as well as invest in policy and planning that will protect an additional 175,000 vulnerable households.
So far the partnership has raised $260 million for the investment fund, with contributions from the San Francisco Foundation, the Chan Zuckerberg Initiative, the Ford Foundation, Local Initiatives Support Corp., Facebook, Genentech, the William and Flora Hewlett Foundation, Morgan Stanley, the David and Lucile Packard Foundation and the Silicon Valley Community Foundation.
The formation of the fund comes after years of criticism that fast-growing tech companies like Google and Facebook have exacerbated the Bay Area’s jobs-housing imbalance by luring thousands of residents to the region with high-paying jobs while doing nothing to help create new places for the workers to live.
The partnership says the region’s “escalating regional housing crisis is threatening to undermine the diverse, inclusive, entrepreneurial and open spirit that has made the Bay Area such a special place.”
Recently, several companies have taken steps to address those criticisms in the Bay Area and other markets. Microsoft promised to spend $500 million for Seattle-area housing, while Facebook plans to build 1,500 units for employees near its Menlo Park headquarters. In November, Cisco, LinkedIn and Pure Storage collectively pledged $20 million to build affordable homes in the Bay Area. Earlier this month, health care giant Kaiser Permanente pledged to invest $200 million in affordable housing and homelessness over the next two to three years.
The partnership is raising money for two funds: the $500 million investment fund and a $40 million policy fund. Proceeds from the investment fund could go toward site acquisition, the financing of design and predevelopment work or the purchase of existing affordable buildings whose tenants are vulnerable to displacement because of rising rents.
That fund will be managed by the Local Initiatives Support Corp., known as LISC, which is the largest nonprofit community development financial institution in the country.
LISC Chief Executive Officer Maurice Jones said the partnership would “help the Bay Area protect, preserve and produce quality, affordable places to live for our teachers, nurses, first responders, and other hard-working individuals and their families.”
On Thursday, the new fund confirmed its first transaction — a line of revolving credit to the East Bay Asian Local Development Corp., an affordable housing developer. The line of credit will help support six projects over the next five years, according to a statement from the partnership, which said that affordable housing builders “often miss opportunities to purchase available property” because they can’t arrange financing in time.
Cindy Wu, deputy director of the Chinatown Community Development Center in San Francisco, said that the revolving loans such as the one approved for the East Bay Asian developer is exactly what is needed.
“Time and again, in almost every opportunity we look at, we have seen ourselves outpaced by speculators,” she said. “Having access to quick capital makes you so much more nimble in competing in the marketplace.”
The $40 million policy fund will support the preservation and expansion of housing, with a focus on strengthening low-income tenant protections. Administered by the San Francisco Foundation, the policy fund will offer two programs: challenge grants, which are larger awards to pursue comprehensive housing protection and preservation solutions; and breakthrough grants, which will provide technical assistance to jurisdictions that have the potential to develop affordable housing at scale. So far the policy fund has secured almost $20 million.
“This is a defining moment for the Bay Area region,” Fred Blackwell, CEO of the San Francisco Foundation, said. “We cannot make meaningful progress toward equity and inclusive prosperity in the region without addressing the affordable housing crisis.”
Fernando Marti, co-director of the Council of Community Housing Organizations, which works for affordable housing, applauded the formation of the partnership, but said it needs to be combined with new taxes that would provide a more dependable source of funding.
“If our approach to a solution is simply waiting for these big charitable contributions and not looking at sustainable, permanent sources of funding, it’s going to be up and down depending on the economy,” he said.
He said that the most useful service the fund could provide would be the funding needed in the early stages of an affordable housing project. While affordable developers can get bridge and construction loans through mechanisms such as low-income housing tax credits, those sources of money are not available for site acquisition or design and development.