With any project, learning from success and failure is important. In real estate, paying attention to and making adjustments based on what works and what doesn’t can have a major impact on the success of both current and future projects. This is especially true for projects that involve unique problems or complex issues that lack clear solutions. In these cases, the ability to learn by doing, and to effectively and quickly implement new knowledge, is crucial.
The affordable housing crisis is an example of one such problem. It is becoming an increasingly urgent issue in urban areas throughout the country. It has put millions at risk of losing their homes and their quality of life. Many different factors have had an impact on the current housing crisis over the last few decades and as a result it’s become an increasingly complicated issue with no simple answers.
Innovative financial tools
The good news is that many people are working to find ways to address it. As different communities, organizations and individuals work to preserve and create affordable housing in their own unique neighborhood, we can learn from their experiences. Leveraging the successes (and failures) of different affordable housing solutions is one of the most effective ways for communities to learn multiple and comprehensive solutions to this crisis.
One solution is to address financial issues in building affordable housing. Rebecca Foster, the CEO of the San Francisco Housing Accelerator Fund, is a great example of this. Her fund focuses on this specific issue – how to innovate financial tools to ensure that affordable housing is produced in the face of a competitive real estate market.
The Accelerator Fund has two primary programs: bridge loans and providing homeless housing.
Bridge programs are supported through a mix of private, public and philanthropic funds. Rebecca’s team understands that public funding is necessary to fund affordable housing in the long-term. At the same time, they appreciate the fact that the private sector’s speed, flexibility and comfort level with risk is needed for the acquisition and development of those projects. By combining private and public funds they can act quickly in order to more effectively preserve and create affordable housing in the Bay Area. Private funds go in first, to acquire properties quickly, and once stabilized public funds provide long term loans so that private investors can be repaid.
Just as with bridge loans, Homes for the Homeless, uses philanthropic capital to create housing for the homeless community. The Accelerator Fund is currently working on a 146-unit project in San Francisco’s Fillmore neighborhood. The project aims to build each unit well-below the market costs in the neighborhood, and on a tight timeline.
Always learning and getting better
At the heart of all of their work, the Accelerator Fund’s focus is first and foremost on how they can help their partners. They have some big hairy goals which include how they can help to get a project completed, how to make sure that a building isn’t lost, and how to make sure that homes aren’t left vacant.
At the same time as they see project success, they remain laser-focused on how they can do better on the next one. They must remain vigilant about lowering costs, reducing the amount of time that it takes to build or rehab housing, and finding better ways to use capital to complete projects. Foster and her team understand that small differences can make a big impact on their ability to fund and complete projects. Thus, learning from successes and failures is a critical part of their process.
The Accelerator Fund’s current goal is to preserve 15,000 units in the Bay Area and to build 30,000 new ones. As Foster and others work to close the gap on affordable housing in the Bay Area, their constant progress and improvement in both funding and building techniques is something that others can learn from and build off of. Listen to our full interview with Rebecca Foster to learn more about what the Accelerator Fund is doing in San Francisco and how this model can be applied to other communities.
Image courtesy of Jonathan Greene