Building affordable housing is not a high-profit business. Recently it has become difficult to make any profit at all, which has led to a sharp reduction in the supply of affordable housing while the demand continues to escalate.
This is being felt in many markets across the country, more sharply in some than others. It’s felt by the public, by local government and by locally based organizations that cannot attract talent to hire. So, many organizations are starting to do something about it, some through strategic collaborations but all through thoughtful programs that are raising capital to put behind efforts to develop housing that is more attainable at lower income levels.
Here are six of those most recent programs.
- Microsoft announced a $500 million affordable housing fund for the Seattle area. The applications for this program aren’t out yet, but they are promised soon. The organization will support projects with a minimum of 100 units where 40% of units are designated for middle-income families or 80% of units target low-income families. Supported projects also have to be geographically located within a 60-minute commute of Bellevue during peak traffic hours. Developers must commit to keeping units affordable for a minimum of 10 years. The request for proposal process will also take into consideration innovation, diversity, and services for residents.
- The Terner Center for Housing Innovation at the University of California, Berkeley, in partnership with the Chan Zuckerberg Initiative, launched the Housing Lab, a new accelerator program that will financially and operationally support new approaches to housing challenges. Early-stage entrepreneurs will get support from this leadership team, such as the creation of a business model, help understanding regulatory issues, technical network access, and access to seed funding. The Terner Center is accepting applicants now to choose five organizations to participate in an inaugural six-month cohort that starts in the fourth quarter 2019.
- Clark Ivory, chairman of Ivory Homes, has been a huge advocate for innovation for more affordable housing. This year he launched The Ivory Prize, an annual award that recognizes ambitious, feasible, and scalable solutions to more affordable solutions. The prize is designed to award innovators for their efforts and provide material support to advance their projects that combine elements of finance, policy, and design and construction. Applications for next year’s Annual Ivory Prize for Housing Affordability will open October 1, 2019. This will include an updated category for blue-sky and startup nominations.
- Although not directly focused on affordability, a recent $33.5 million pledge from the U.S. Department of Energy would support early-stage research and development of advanced building construction techniques to reduce energy bills, and therefore reduce the cost of living. The Advanced Building Construction with Energy-Efficient Technologies & Practices Funding Opportunity Announcement set out to develop deep energy retrofit and new construction technologies to rethink a combination of envelope, heating, cooling, water heating, and ventilation issues. Concept papers were due June 10.
- The Wells Fargo Foundation also announced a $1 billion commitment of philanthropic funds through 2025 to address more affordable housing. The financial services company will offer a myriad of grants and other initiatives to deliver hundreds of millions in annual funds to address rental, transitional, and supportive housing. The organization also pledged to commit 2% of its after-tax profits toward affordable housing objectives, small business development, and financial well-being. Wells Fargo is vetting a list of cities to receive its philanthropy, which will be announced at a later date.
- This week Amazon also announced a major donation in its headquarter city to fight homelessness. The organization committed a total of $8 million, which will be divided between two recipients--$5 million will go to Plymouth Housing in Seattle and $3 million to the Arlington Community Foundation. At the same time, Amazon pledged to match employee donations, up to $5 million through Sept. 30, to 20 nonprofits working on homelessness issues.
In another example of affordable housing solutions financing, a group in Texas is seeing that these examples of philanthropic spend on affordable housing solutions can have a modest return for its investors. The non-profit, Affordable Central Texas, created a private equity fund to purchase and conserve affordable housing rather than redevelop it, is attracting accredited investors who appreciate that it is low-risk with a modest return. They also recognize and appreciate that there is a positive social impact.
The organization’s goal is to preserve 5,000 affordable housing units in five years for Austin’s working class.
Hope for the future of affordable housing seems to be on the horizon. We’re definitely looking forward to the short and long term impacts of these initiatives.