We are facing a unique and complex set of problems that have combined to create the perfect storm for housing – an affordable housing crisis that is affecting not just US citizens, but people everywhere. We need to find plentiful and innovative solutions. Because the lack of affordable housing is the result of so many different factors, it’s going to take a multi-faceted approach to effectively address the crisis.
One solution is the utilization of public and private partnerships to both create and sustain affordable housing development. These partnerships combine the speed and flexibility of the private sector with essential subsidies and support from the public sector, both of which are needed to acquire, build, operate, and maintain affordable housing projects in urban areas.
In San Francisco, the Housing Accelerator Fund provides a good example of how these partnerships can be used effectively to have a meaningful impact on individuals and a community.
The Accelerator Fund
The San Francisco Housing Accelerator Fund, led by Rebecca Foster, provides “innovative financial tools to preserve and expand affordable housing.” Notably, the Fund was created and developed in the San Francisco Mayor’s office, and from its inception it has been centered around private and public partnerships. Foster is quick to note that these partnerships have been one of the Fund’s essential keys to success.
Using a mix of private, philanthropic and public sector funding to address needs in public housing, Foster’s team has been able to create unique financing tools and use private funding to help with issues that the public sector cannot address on its own. The result has been more permanently affordable housing in the Bay Area.
Why do we need partnerships?
What Foster and her team have learned is that in places like San Francisco you can’t simply finance permanently affordable housing. The reason is that the costs of acquiring or building and then operating such projects are just too high to be covered by middle-income rent, much less low-income rent. What this means is that you need the power of the public sector and the tax base to cover the long-term costs.
Yet, at the same time, the public sector does not move quickly, it is risk-averse, and it cannot deliver capital quickly. So, while the public sector is needed for long-term funding, it’s less effective when it comes to acquiring or building affordable housing.
This is where the Accelerator Fund comes in and bridges that gap. The Fund uses private and philanthropic capital to be the first money into a project. The Fund helps nonprofits compete, even in the face of cash buyers and foreign buyers, offering the flexibility to close within 60 days. This speed and flexibility is essential for acquisitions, especially in situations where residents are at risk of displacement. Similarly, the Fund supports new builds, and offers affordable housing developers the chance to be innovative, fast and creative.
Using this model, the Fund is able to provide funds for the acquisition and development phase of a project. Once a project is under the control of a nonprofit, the government can come in 12 to 24 months later and provide long-term funding.
Every month, Foster is seeing families that are positively impacted by the work that her organization is doing. While she is quick to note how substantial the problem of affordable housing is, especially in California, she is encouraged by the results that she is seeing from her team’s efforts to date. As she describes it, they are “on the ground in a real blocking and tackling transactional way, and in a way where [they] see the impact on families.”
To learn more about the San Francisco Housing Accelerator Fund and how their model is successfully utilizing public-private partnerships, listen to the full interview with Rebecca Foster.
Image by David Bernabo