When then-Gov. Jerry Brown shut down California’s redevelopment agencies—government organizations that owned and oversaw the rehabilitation of large pieces of real estate—in 2014, he was responding to mismanagement that was often rife within those agencies, which could lead to high spending and little impact.
But he also left a hole that would change the way the real estate industry operates. The process for building affordable housing in particular had to shift.
“Redevelopment funding used to be a really big source of funding for building affordable housing, but California eliminated redevelopment areas and agencies so that funding went away,” Suny Lay Chang, who serves as president and COO of Long Beach nonprofit Linc Housing, said by phone.
Since then, nonprofit developers in California like Linc have had to figure it out on their own, searching for the right bonds and grants to fund their projects—and finding out, at times, that those funds might not be available. In other cases, restrictions on grants and other funds can make it difficult to find a suitable site to start development.
“Developers will build it if they can put together the financing to make it happen, but there is a limitation of resources that we have available,” Chang said.
One way nonprofit developers have worked around this combination of money and land problems has been by purchasing already existing properties that are vacant or underused, often sites like churches or preschools, and redeveloping them into housing.
But there’s more flexibility for for-profit developers who are looking to include affordable housing in new mixed-use projects to satisfy city requirements. Long Beach’s inclusionary housing law, for example, requires new developments in Downtown and Midtown to have a certain percentage of units set aside as affordable housing.
These “inclusionary developers,” while not necessarily pursuing a mission to develop housing for the greater good, play their own important role in sustaining a balanced housing market.
“What’s really nice about those units is they are built basically where the market-rate units are built,” Chang said. “So what you’re getting is a mixing of incomes, in one building, and in a neighborhood.”
This blending of backgrounds is beneficial to both sides of the spectrum, adding diversity to the community while providing an affordable home in a central location for people who need it.
“I guess you could have a community of just lawyers and doctors, but who would make the coffee?” Chang said.
On the other hand, nonprofit developers bring two important pieces to the picture: scale and focus.
When it comes to dedicated affordable housing, most large projects in Long Beach—like the 47-unit Vistas Del Puerto that celebrated its grand opening late last month, along with the 95-unit Spark at Midtown and the 160-unit The Beacon—are undertaken by nonprofit developers. There are a few reasons why.
First, funding: While there is no fund explicitly set aside for affordable housing in California, there are various bonds and grants that can only be accessed by developers whose projects meet certain scale requirements. Since these projects require large allocations of project space for affordable housing, many inclusionary and private developers do not reach the scale needed to qualify.
“You would never put a tax credit program on a 10-unit building, it just doesn’t make sense,” Chang said. “But if I am building a $50 million project, that makes sense.”
Beyond the financing of projects, nonprofits are also better positioned to focus on the overall well-being of their tenants.
Linc Housing’s Spark at Midtown, for example, includes a four-room exam clinic provided by St. Mary Medical Center, a space for several remote services provided by the YMCA of Greater Long Beach and a community kitchen space.
“The aspect of being a nonprofit factors in,” Chang said. “We want to make sure that when we are building, we’re always building space for the residents to gather, to form a community.”
Another recently opened affordable housing project—Vistas Del Puerto—has a design that reflects an expanded focus on tenant wellness both directly and indirectly. Clifford Beers, the nonprofit developer of the property, emphasized the importance of tackling interconnected issues like racial equity and climate change when building affordable housing.
Vistas Del Puerto takes these challenges on through several unique features, including a rooftop solar panel array that cuts down on natural gas usage by helping heat water and gas in the building and commercial spaces on the ground floor reserved for “BIPOC and women owned businesses that have been disproportionately affected both by the pandemic and the historical racial inequities around housing in the LA area.”
“For a long time, they have been treated as mutually exclusive problems, and here, we feel it is important to address them all together, because they are interconnected issues,” Clifford Beers Aaron Perry-Zucker said in a phone interview.
Aesthetics, though, also matter—particularly when it comes to how a project fits into the surrounding area. Chang said it’s an even more important factor for nonprofits and dedicated affordable housing projects than for other developments.
“Often when you drive down the street, you’ll see that the affordable projects are the newest looking, or the nicest looking, or the best maintained buildings, because we want to make sure that we are showing well,” Chang said.
Taken together, every aspect of a project that these builders must consider—financing, location, tenant services and aesthetics—speaks to the greater mission behind Linc Housing, Clifford Beers and other nonprofit developers.
“It’s about not only housing people, but serving them so that they are set up for greater opportunity, economic mobility, access to resources, better health and wellness, and better educational opportunities,” Chang said.
“We start with housing, but then we provide much more than just housing,” she added. “Housing is just a base and an anchor for the kind of services that we provide.”