San Diego Foundation launches a $100 million partnership to finance affordable housing

The San Diego Foundation (SDF) has launched a $100 million financing partnership with Bear Creek Fund Advisors to get affordable homes built faster in San Diego, the foundation announced on October 6. The announcement came with the groundbreaking of Louisiana Street, a 38-home development in the city's North Park neighborhood.

Under the partnership, Bear Creek Fund Advisors will provide construction financing for affordable housing projects in San Diego. The announcement does not say where the $100 million comes from, how much of it is the foundation's own or donors' money, or whether it goes out as loans, equity or both. We have not seen the partnership agreement.

The first of four projects

Louisiana Street is the first of four projects that together will create 257 affordable homes in North Park and Normal Heights, according to SDF. The other three, Kansas II, Oregon and Kansas III, will break ground later; no dates were given. Naturally Affordable Housing is the third partner on Louisiana Street.

All 38 homes at Louisiana Street are studio apartments that must stay affordable over the long term for San Diegans earning up to 80% of the area median income. The foundation says they are meant for the city's workforce, including teachers, healthcare workers and first responders.

Why financing is the bottleneck

SDF says affordable and workforce housing can take years to move from plans to construction, in part because traditional financing programs often require lengthy, competitive funding cycles. The partnership is meant to give qualifying projects another path to construction money, and builds on city initiatives such as Complete Communities.

"An approved housing project is not yet a home. It takes financing and committed partners to get construction started," Mayor Todd Gloria said in the announcement. He said the partnership "creates another path to move affordable housing forward faster."

"Addressing San Diego's housing needs requires bringing together partners with different strengths and using every tool available," said Mark Stuart, SDF's president and CEO. Jonathan Stern, a partner at Bear Creek Asset Management, said the team "created a flexible financing structure tailored to the unique elements of the project."

The partnership is part of SDF's goal of helping 1,000 households a year, for the next 10 years, secure and keep stable, affordable housing. The foundation says it has granted more than $2 billion since 1975.

What donors and boards can ask

In our view, the notable part is the role: the foundation is acting as a convener of capital, not only as a grantmaker. That raises questions donors and boards can put to any deal like this: whose money is at risk, who is repaid first, and how results will be reported. Donors who hold donor-advised funds at a community foundation may want to ask whether their fund can take part. For how very large donors think about long, patient bets, see our piece on slow philanthropy.