Metropolitan Transportation Commission Approves Creation of Bay Area Preservation Pilot
Enterprise is pleased to announce the creation of the Bay Area Preservation Pilot (BAPP)! BAPP will help nonprofit developers finance the acquisition and preservation of existing multifamily housing properties located in areas that have high-frequency transit service and are considered affordable for lower- and moderate-income renters. The Bay Area Preservation Pilot will be capitalized with $10 million from the Metropolitan Transportation Commission (MTC) and $39 million from Enterprise Community Loan Fund and the Low Income Investment Fund (LIIF), for a total of $49 million in available debt financing.
A Targeted Approach to Affordable Housing Preservation
The majority of low-income Bay Area working families live in unrestricted, multifamily housing susceptible to soaring rents. Quality, affordable housing in the Bay Area is increasingly scarce, making it difficult for the region’s most vulnerable residents to stay in their homes and communities. Preservation is a strategy that emerged through partnerships among local governments, affordable housing developers and advocates seeking to ensure housing remains affordable to low-income residents. The strategy seeks to acquire and protect homes on the market that are affordable to low-income households but not subject to affordability restrictions and therefore are at risk to speculative investors.
How the Bay Area Preservation Pilot Came to Be
In fall 2015, 15 cities sent a letter to the MTC requesting that the commission commit $10 million in seed funding to create preservation finance tools. This request was further bolstered by advocacy support from several Bay Area organizations active in housing, land use and transportation issues that have helped shape Plan Bay Area and the One Bay Area Grant Program.
In July 2016, MTC voted to commit $10 million on two conditions:
- The funds must be leveraged five to one.
- The funds must be deployed in the targeted geography of Transit Priority Areas and Priority Development Areas.
Enterprise, LIIF and MTC have been working closely with a range of expert partners in the field – including mission-driven developers, community land trusts, advocates and public agencies – to create a preservation finance tool seeded with MTC’s $10 million investment.*
*Working Group members include representation from: Association of Bay Area Governments, East Bay Asian Local Development Corporation, California Housing Partnership, City and Country of San Francisco, City of Oakland, Contra Costa County, MidPen Housing, Mission Economic Development Agency, and the Northern California Land Trust.
An Innovative Tool that Addresses Financing Gap
BAPP offers a loan product with a term of up to 10 years that addresses a specific financing gap in the housing preservation system. Once a property is acquired, developers will have up to 10 years to stabilize the property making sure residents are not displaced and also determine a financial plan to ensure the long-term affordability of the property. The debt financing will play the critical role of providing financing needed to quickly acquire a property and will finance acquisition costs and repair costs related to life and safety, as well as reserves.
Beyond 10 years, developers will secure Low-Income Housing Tax Credits (LIHTC) and/or other existing sources of affordable housing financing at the local, state and federal level to ensure long-term affordability. This may include funding from the various housings bonds recently approved across the region (city and county) and sales tax measures passed. BAPP was specifically designed to complement local programs such as the Small Sites Program in San Francisco, Measure KK in Oakland and the Alameda County A1 Housing Bond Measure.
Hundreds of Homes Taken Off the Speculative Market
The MTC estimates that 200 to 400 homes will be taken off the speculative market without displacing residents and ensuring long-term affordability through BAPP. The initiative’s aim is to demonstrate that public sector investments can help stabilize communities and mitigate displacement pressure for the region’s most vulnerable residents. If expectations are met, BAPP can then be scaled for greater impact.
Enterprise is committed to providing a range of solutions to address the Bay Area’s affordable housing crisis. There is no singular solution; we must preserve our existing affordable housing, produce new affordable housing for our growing population, protect existing tenants from displacement and consider the equitable distribution of affordable housing choices and access to opportunities for low-income families.
For more information, contact Geeta Rao, senior program director, at 415.400.0978 or firstname.lastname@example.org.