An $18.5 million affordable housing fund seeded by Facebook could quadruple over the next five years with the help of the Local Initiatives Support Corp. (LISC).
LISC leaders hope to grow the new Catalyst Housing Fund to $75 million, an amount that would help finance the construction of more than 500 housing units in the Northern California communities of East Palo Alto and Menlo Park.
Selected to administrator the fund, the national nonprofit plans to use its balance sheet as well as its extensive network of corporate and philanthropic partners to expand the fund. Housing Trust Silicon Valley will contribute capital and lending capacity to support the effort.
Of the initial $18.5 million, $10 million will be invested in East Palo Alto. The remaining $8.5 million will be used more regionally but will support projects within 15 miles of the Facebook campus, according to Elise Balboni, LISC senior vice president for lending.
Officials hope to begin financing affordable housing developments this fall. The financing will include permanent subsidies such as early-stage grants or low-cost debt capital.
The Catalyst Housing Fund comes as the Silicon Valley faces a severe housing crunch. In San Mateo County, where East Palo Alto and Menlo Park are located, there are more than 21,300 extremely low-income renter households but just 6,408 affordable and available rental housing units, according to data from the Urban Institute. That means there’s only 30 affordable rental units for every 100 extremely low-income renter households.
And, that’s just looking at those earning no more than 30% of the area median income. That’s not counting households who earn more but are still low income and struggling to find and afford housing.
The fund also comes at a time when Facebook is expanding its area campuses, and local groups have raised concerns that the social media company’s growth will displace residents. Last December, Facebook announced a partnership with Envision Transform Build—East Palo Alto (ETB), a community coalition group, and the cities of East Palo Alto and Menlo Park to work on affordable housing issues. The Catalyst Housing Fund comes out of that partnership.
The emergence of the new fund could signal some possible larger trends. Balboni cites seeing communities and residents coming up with local solutions to affordability issues.
In this case, ETB advocated for the new fund, but many other community groups in California and other states have come together to pass recent ballot measures to support affordable housing, she says.
LISC, which will be paid an initial fee of $250,000 and $62,500 annually, is an experienced fund manager, just one aspect of its overall community development work. Since 1980, LISC has invested $17.3 billion to build or rehab 366,000 affordable homes and apartments and develop 61 million square feet of retail, community, and educational space.