Catalyzing Affordable Housing with Flexible, Pre-Development Financing
Too many people in California are having to choose between making rent, buying groceries, going to the doctor for medical attention, or meeting other basic needs. The cost of living has soared while wages for people with skills that we rely on every day ‒ child-care providers, janitors, bank tellers, nurses’ aides, etc. – have not kept up.
Abode Communities has been working to address the disparity between income and housing affordability throughout California since 1968. The organization creates supportive housing to ensure that families, seniors, and homeless populations have the housing and social service support needed to remain stable as they work toward self-sufficiency and upward mobility. It currently owns and operates 38 affordable housing developments with 2,567 units serving 7,345 people.
“One of the most critical needs for the development of supportive housing is access to flexible capital – especially during the pre-development phase,” said Robin Hughes, President and CEO of Abode Communities.
With increasing need for affordable housing, as well as the growing acknowledgement that housing is a central driver of better health outcomes, organizations like Abode Communities are doing everything possible to accelerate the availability of places for people to call home. Even so, it can sometimes take up to five years to complete a housing project, partly due to the lack of financing available to developers.
In conjunction with Program Related Investment and below market loans from the California Community Foundation and the Weingart Foundation, NFF provided a $2-million loan to Abode Communities for flexible, enterprise-level pre-development financing to support their development pipeline which includes nearly 600 homes for some 2,500 people in need. NFF’s loan was made possible by Bank of America, which helps connect community-based organizations like Abode Communities, a 2016 Bank of America Neighborhood Builder®, to low-cost capital that will further sustainable growth.
“We believe there’s potential to accelerate the creation of affordable and permanent supportive housing market by offering unsecured, flexible, pre-development capital that can be used in multiple projects in the pipeline and recycled as needed during the life of the loan,” said Emily Weissman, Senior Investment Officer for NFF. “This type of loan provides flexibility to affordable housing developers to manage their pipeline and allocate capital where it is most needed during pre-development, therefore requiring less patching together of other financing sources.”
“When people are situated in supportive housing that’s truly affordable for them, they can focus on other life priorities while building connections and neighborhoods that strengthen our communities,” said Robin. “The flexible financing we received from NFF will help us expedite pre-development work so that we can drive projects forward to meet the housing needs of Angelenos.”
Borrowers interested in learning more about NFF’s pre-development financing options should email firstname.lastname@example.org, and investors interested in bringing more capital to the market can contact Jennifer Kawar.