California Developers Opt for Privately Funded Affordable Housing

“Across California, efforts to address the homelessness crisis by building more affordable housing with government money have been plagued by sky-high costs,” reveals an article by Christine Mai-Duc and Will Parkers in The Wall Street Journal, prompting some developers to forgo government subsidies to bring down construction costs for affordable housing.

“Some affordable-housing veterans worry whether privately funded construction can scale quickly enough to match the scope of the homelessness problem and whether its backers will maintain their commitments to serve the needy.” But developers argue sticking with private financing cuts millions in ‘soft costs’ and makes affordable housing production faster. “Advocates have also questioned how many buildings reliant on renters with housing vouchers can be sustained unless the federal government greatly increases funding for them.”

In California, recent legislation is making it easier for privately financed affordable housing developments to move forward. As the article points out, “Though construction doesn’t use public financing, many privately funded buildings would likely still depend on government funds to operate. Formerly homeless residents at SDS-financed properties, for example, are expected to use federal housing vouchers or other rental assistance to pay rent. The properties can also qualify for property-tax exemptions.”