Last Friday, Rebecca Foster, the City lead on the Mayor’s Housing Working Group’s Funding Sub-Group, spoke at our Regulatory Committee on identifying new sources of gap financing for low and middle-income housing – a central question facing our city. Currently, housing built for folks at or below 55 percent of Area Median Income (AMI) level has various financing tools at its disposal, such as Low Income Housing Tax Credits. There are no resources for middle-income housing projects between the 55 percent AMI level and market-rate.
The Mayor’s Office is working to create a philanthropic, or accelerator fund, that would hopefully provide additional assistance for developers to buy land, build more affordable projects or rehabilitate existing buildings to keep them permanently affordable. Ms. Foster suggested that the City would commit to investing in the fund first to provide credit enhancement and ask others to join. In particular, there’s interest in whether this investment fund could then attract large commercial banks as an avenue for them to satisfy their Community Reinvestment Act requirements. The target size for the fund is unclear, but would likely need at least $50 million to cover its internal costs. The City continues talks with locally-based individuals and organizations, particularly in the tech sector, to encourage them to invest in this fund.
Mayor Lee’s goal is to have this accelerator fund as a companion to his rumored $250 million general obligation bond this November. The SFHAC strongly supports a bond like this to provide funding tools to build new housing for the middle-income sector (up to 120% AMI)
Other ideas include using a new local density bonus ordinance to help deliver more middle-income housing. New York City, for example, builds housing that includes 50/30/20 split among market-rate, middle-income and low-income. However, they can offer property tax abatements, something not allowed in California. Also, NYC has its own income tax, a powerful financial tool on its own.
The folks in the Mayor’s Office appear to be moving fast to deliver a formal proposal. We commend their commitment to finding innovative solutions to this challenging dilemma. The SFHAC will track their progress and keep you updated.
Thank you to both our guests for speaking to our Regulatory Committee. Tom Lockard of Fundrise also presented on the rise of crowdfunding in real estate.
Image credit: Bruce Damonte