How is affordable housing built?

Affordable housing is a core government service, but few people understand how affordable housing developments are built. To build a single unit of affordable housing in California, using our existing system of tax-exempt debt and tax credits, a developer has to:

1. Read and understand guidelines issued by three levels of government:
   • Federal
   • State
   • Local (city or county)
     • TEFRA Approval
       • Publish legal notice
     • Issuance Approval
       • City publishes an agenda
2. Apply and report to at least three state agencies:
   • California Debt Limit Allocation Committee
   • California Tax Credit Allocation Committee
   • California Debt and Investment Advisory Commission
3. Apply to at least two different city departments (often more):
   • The department that approves the building permits (Building and Planning Department)
   • The department that issues the bonds (Housing and/or Community Development department or Finance/Treasury Department)
4. Secure funding from at least two lender banks and one investor:
   • Construction lender, permanent lender, subordinate lender
     • Construction Lender
     • Permanent Lender
     • Subordinate Lender
   • Tax Credit Investor

5. Hire and pay for at least five attorney firms:
   • Developer’s counsel, city attorney, bond counsel, construction lender’s counsel, permanent lender’s counsel, tax credit investor’s counsel
   • Review hundreds of pages of legal documents

6. And of course, hire all the experts and do all the things that you normally have to do when you build a new housing development:
   • Architect
   • Engineer
   • General Contractor
   • Surety Bond
   • Builder’s Risk Insurance
   • Title and Escrow Company

And that’s all before developers can even break ground.

According to the U.S. Department of Housing and Urban Development, there were 151,278 homeless people in CA in 2019.  People who work on the ground with the homeless population believe that number is closer to 250,000.

Last year, developers paid an average of $664,455 for a single unit of affordable housing. Now you understand why there’s so many homeless on the streets of the bay area.

It’s time to do things differently: that’s why we’re pioneering people-powered public finance.