Sobrato Philanthropies, the Mountain View-based nonprofit affiliated with developer Sobrato Organization, has partnered with other firms to launch a $50 million fund to build affordable homes across the Bay Area.
The San Francisco Housing Accelerator Fund has also recruited Apple in Cupertino and San Jose-based Destination: Home to back the Bay Area Housing Innovation Fund, the Silicon Valley Business Journal reported.
The pilot fund will pool $50 million from the founding partners to help finance at least four projects, with nearly half the homes for extremely low-income households for formerly homeless residents.
The fund aims to offer favorable loans to projects that can build affordable homes faster and more cost effectively to achieve a cost and time savings of 40 percent.
“Getting projects financed through the state has been creating both long delays and massive funding escalations,” Jennifer Loving, CEO of Destination: Home, told the Business Journal.
“But through this new fund, we are excited to pilot an alternative financing model for affordable housing production, and demonstrate how it is possible to bring down both the cost and time of new deeply affordable housing development.”
The money will be managed by the Housing Accelerator Fund and loaned to Bay Area projects that meet certain criteria, including setting aside a majority of homes for vulnerable residents. The fund said the loans will help get “shovel ready” projects off the ground.
Projects must show they can meet cost and time goals, with completion within three years of approvals at a cost of $550,000 or less per studio, or $700,000 for larger family apartments.
The fund has approved its first loan to Mercy Housing California for a 145-unit affordable housing complex at 1633 Valencia Street in San Francisco’s Mission District. The developer is expected to break ground this month. Terms of the loan were not disclosed.
In recent years, competition has peaked for low-income tax credits, which typically round out funding for affordable housing projects, leaving more developers fighting over fewer credits, according to the Business Journal.
“Our founding investors unanimously agree that we cannot effectively address the homelessness and affordability crisis in the Bay Area if we continue building and funding affordable housing in the same way,” Rebecca Foster, CEO of the San Francisco Housing Accelerator Fund, told the newspaper.
“We must think outside the box to significantly reduce costs and timelines.”
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The fund launch comes after an Orange County philanthropist, frustrated by the cost and red tape involved with building affordable housing, set up a similar fund.
This month, billionaire Ron Simon kicked in $100 million to help build affordable workforce housing for nurses, firefighters and teachers in OC, where a typical home tops $1.2 million.
— Dana Bartholomew