Bay Area Housing Innovation Fund launches with $50 million in initial investment to accelerate affordable housing at significantly lower costs
[SAN FRANCISCO, Ca, July 17, 2024] – Today, the San Francisco Housing Accelerator Fund, Sobrato Philanthropies, Destination: Home, and Apple announced the launch of the Bay Area Housing Innovation Fund with $50 million in initial investment. The Fund has already approved its inaugural loan to help build a 145 unit affordable housing development in the Mission District in San Francisco, which will break ground later this month. The initiative represents a unique collaboration among these partners, who share a commitment to championing strategies that will significantly speed up the creation of affordable homes in the greater Bay Area.
In the Bay Area, new affordable developments often take over five years and cost more than $800,000 per home. The Bay Area Housing Innovation Fund will provide favorable loans to projects that can deliver deeply affordable homes faster and more cost-effectively, with a goal to achieve cost and time savings of around 40%. Backed by $50 million from the founding partners, the pilot fund will support at least four projects, serving 400 households—double the number of people housed compared to traditional methods. Nearly half of the homes will be reserved for formerly homeless or extremely low-income households.
“Getting projects financed through the state has been creating both long delays and massive funding escalations,” said Destination: Home CEO Jen Loving. “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.”
To qualify for a loan from the Fund, projects must meet key criteria. First, the majority of homes must be reserved for vulnerable residents, as measured by income (the Fund will maintain a portfolio average income below 60% of area median income). Projects must also show they are on track to meet ambitious cost and time goals, set about 40% lower than Bay Area project averages: completion within 3 years from entitlement and at $550,000 or less per studio, or $700,000 for larger family units. Projects must be located in Santa Clara, San Mateo, San Francisco, Alameda, or Santa Cruz counties. Additionally, developers must demonstrate that they have secured community and local public sector support for the project, and that they have sufficient experience to see it through.
In a significant milestone, the Fund has already approved its inaugural loan. The first loan supports a 145-unit permanent supportive housing project in San Francisco’s Mission District, developed by Mercy Housing California. Financing from the Fund allows the project to begin construction quickly to achieve its goal of having the homes ready for residents to move in by January 2026. The Fund will celebrate its official launch at the project’s groundbreaking, held on site at 1633 Valencia Street later this month.
“Our founding investors unanimously agree that we cannot effectively address the homelessness and affordability crises in the Bay Area if we continue building and funding affordable housing in the same way,” explained Rebecca Foster, CEO of the San Francisco Housing Accelerator Fund, which will manage the Bay Area Housing Innovation Fund. “We must think outside the box to significantly reduce costs and timelines.” To achieve its goals, the Bay Area Housing Innovation Fund will work closely with developers and local government housing agencies who share its vision of producing deeply affordable housing while driving down costs and timelines.
Typically, affordable housing developers rely on Low Income Housing Tax Credits (LIHTC) to complete the capital stack for their projects. Demand for these credits has surged in recent years, especially in the Bay Area, leading to increased competition as developers vie for limited resources. Forcing otherwise “shovel-ready” projects to wait in line for scarce resources can push the price tag for a new affordable unit up tens to hundreds of thousands of dollars while stretching out timelines.
The Bay Area Housing Innovation Fund demonstrates the catalytic potential of private dollars to provide gap financing, typically in place of or substituting for a full allocation of LIHTC, expediting the delivery of these units to residents in need. “This fund is designed to showcase what is possible when we have clear goals, a shared commitment from local government, developers, and funders to meet these targets, and a simplified financing structure that encourages more efficient project siting, design, and construction approaches,” Foster said. As an example of a similar strategy at work, she pointed to Tahanan Supportive Housing, which her organization helped to develop. The project added 145 studio apartments for formerly homeless residents, realizing 41% savings by setting clear cost and time goals.
“We believe everyone deserves a place to call home, and we’re proud that Apple’s $2.5 billion initiative is supporting more affordable housing options across the state,” said Kristina Raspe, Apple’s vice president of Global Real Estate and Facilities. “Increasing access to safe and affordable housing is essential for thriving communities here, and we’re excited to help launch the Bay Area Housing Innovation Fund as part of our long-term commitment to our home state.”
“Our region has the resources to meet its housing crisis, but it requires a collaborative effort. In this spirit of partnership, we are proud to anchor the Bay Area Housing Innovation Fund as part of our family’s and our company’s philanthropic efforts to support increasing affordable housing,” said John A. Sobrato, Board Chair Emeritus of Sobrato Philanthropies.
Through conversations with developers and government partners, the Fund has already identified several more eligible projects that serve very low-income families and meet the initiative’s guiding criteria for timelines and costs. The Fund’s anticipated second project is expected to break ground in Santa Cruz later this year, emphasizing the effectiveness of this streamlined financing approach and its potential to swiftly deliver tangible solutions to Bay Area communities in need.
For inquiries about the Bay Area Housing Innovation Fund, please contact the Housing Accelerator Fund: info@sfhaf.org.
About the San Francisco Housing Accelerator Fund
The San Francisco Housing Accelerator Fund is committed to the preservation and expansion of quality affordable housing for economically disadvantaged individuals and families throughout the greater San Francisco Bay Area. An innovative nonprofit public-private partnership and certified Community Development Financial Institution (CDFI), HAF works with community-based organizations, local governments, and private and philanthropic institutions to provide powerful new financing tools that accelerate housing solutions for the Bay Area’s most vulnerable residents. Visit us at www.sfhaf.org.
About Destination: Home
Destination: Home is a public-private partnership ending homelessness in Silicon Valley. Through our collective impact model, we incubate new ideas, advocate for policies, and fund impactful strategies that address the root causes of homelessness and help ensure that our most vulnerable neighbors have a stable home. Learn more at: www.DestinationHomeSV.org.
About Sobrato Philanthropies
Sobrato Philanthropies is part of The Sobrato Organization, a multi-generational, family-owned firm that has played a dynamic role in the emergence and growth of Silicon Valley for nearly 70 years. Sobrato Philanthropies’ mission is to partner with communities to meet immediate needs, address systemic barriers, and pursue social justice to build a more equitable and sustainable world.