Group Launches Ambitious Housing Plan : Construction: A nonprofit group, lenders and pension funds plan to build as many as 5,000 affordable units in state.
California’s largest nonprofit housing group and a consortium of lenders and pension funds launched a novel $300-million program Monday to build as many as 5,000 affordable homes in the state over the next three years with no direct government subsidies.
The program, known as the World/Bridge Initiative, is the brainchild of Bridge Housing Corp. in San Francisco and World Savings in Oakland.
Clinton Administration officials hailed it as a prototype for other plans that could lead to the construction of tens of thousands of affordable homes across the country at a time when federal money for these projects has largely evaporated.
“In this period of severe budget deficits, this initiative is a major step forward,” U.S. Housing and Urban Development Secretary Henry G. Cisneros told reporters at the news conference in San Francisco on Monday.
If other groups start similar programs, he said, “we have the potential to unleash billions of dollars nationally for desperately needed affordable housing.”
The first two projects will be a 344-unit apartment complex for low-income families in the San Diego County city of Carlsbad and a 34-unit townhouse project for first-time buyers in the Bay Area city of Richmond.
Seed money for the program was provided by World, the nation’s third-largest savings and loan, which started the construction fund with an interest-free $15-million loan.
Bank of America and Wells Fargo Bank then pledged to make a combined $100 million in market-rate loans through the fund, and the Ford Foundation contributed nearly $4 million in grants and low-rate loans.
The $82-billion California Public Employees Retirement System then agreed to lend $150 million under the program, and the California State Teachers Retirement System has added $75 million in credit guarantees designed to attract even more money to the fund.
Construction duties will be handled by Bridge Housing, which has built more than 5,000 low-cost houses and apartments in California since its inception a decade ago. It now ranks as the second-largest nonprofit developer in the United States.
The Administration has been pressing pension funds to become involved in the construction of affordable housing, citing the funds’ combined $4 trillion in assets and the reluctance of many traditional lenders to finance such projects. The two California pension funds’ involvement with the Bridge project is the latest sign that the Administration’s efforts are beginning to pay off. Last month, the AFL-CIO said it was nearing an agreement with HUD to use at least $500 million in union pension funds to build urban housing in 20 cities across the United States.
The $300 million pledged by the consortium will immediately finance the construction of about 5,000 affordable homes across the state, Bridge President L. Donald Terner said.
But to leverage its investment and build even more houses, Terner said, the construction money Bridge borrows from the fund will be repaid as soon as each project is completed and permanent, long-term financing can be arranged.
“Basically, the $300-million fund works like a revolving line of credit that we can use over and over again,” Terner said. “The money will finance about 5,000 homes right away, but that number will grow as the money is ‘recycled’ into new projects in the future.”
