For nearly a decade California has been in the grips of a housing crisis, however, despite the urgent need for affordable housing, the NBC Bay Area Investigative Unit found hundreds of vacant lots and empty sites meant to provide affordable housing to thousands of Bay Area residents, currently being used for nothing.
Research conducted by the non-profit Enterprise Community Partners found 214 affordable housing projects in the Bay Area that are shovel ready, but still stuck in the pre-development stage due a lack of funding. If built, these sites could add 18,920 units, housing 289,938 low-income residents over the lifetime of the project. But many of these developments are likely years away from even starting construction, let alone providing a permeant home.
The Investigative Unit visited nearly a dozen of these sites throughout the Bay Area and found fenced off hills, concrete lots and grass fields. Some sites were located just blocks away from homeless encampments.
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WHAT’S THE HOLD UP?
“Delays like this, they don't just cost that project money, it denies our ability to create more housing. It denies families from getting into housing,” First Community Housing CEO Geoff Morgan told NBC Bay Area during a tour of the site where he plans to build 365 affordable units.
Morgan blames the delay on California’s complex system for funding affordable housing. When traditional developers build, they can get financing from a bank and the cost of construction is passed on to the renters. But you can’t charge high rent when building affordable housing. Those developers have to apply for funding from various local, state, and federal programs before they can start construction. Nonprofit organizers tell the Investigative Unit it can take up to a decade to navigate through all the red tape and cobble together enough funding to finish the job.
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Morgan estimates it took three years to complete an affordable housing project when he began his career 20 years ago, but times have changed.
“The rules got more complicated, life got more complicated, construction costs started climbing 10 percent a year,” Morgan said. “So we went from a three year timeline, to maybe a six year timeline now, so it's doubled.”
And if that wasn’t challenging enough, developers say the state is now removing a critical piece of funding for hundreds of projects in the Bay Area, potentially leaving them in limbo for years to come.
DENY AND DELAY
Few have ever heard of the California Debt Limit Allocation Committee, but the agency plays a huge role when it comes to funding affordable housing. The Committee gives developers access to tax-exempt bonds which can fund as much as 40% of the construction cost. The approval process is usually a rubber stamp, however, in recent years, CDLAC has received so many applications, the state now has to pit the projects against each other in a fight for funding. For the first time, qualified projects are getting denied.
“Right now we have a competitive process and sometimes (qualified projects) don't get funded,” California Treasurer Fiona Ma told NBC Bay Area. As state treasurer, Ma is also the chair of CDLAC. “In a competitive environment, in government, we just can't pick and choose which projects we like, so they have to compete.”
Developers say that competition has become a race to the bottom where projects with the cheapest construction costs get ahead. In the notoriously expensive Bay Area, developments in San Francisco, Oakland and San Jose stand little chance to receive funding.
“The governor recognizes this problem as well,” Ma said. “And he allocated $1.7 billion the Department of Housing Community Development to decrease the backlog for some of these big projects.”
Since taking office in 2019, Ma says she and the governor have also made changes to speed up the process to fund projects stuck in the pipeline. Still, Ma believes it’s going to take whole a new attitude in Sacramento to fully address the housing crisis.
“It has been challenging because you're going against what has always been done,” Ma said.
Ma estimates it will take another two to four years for the state to fully get rid of the backlog. In the meantime, many of those housing projects will remain stuck, along with the people who need them.
If you have a tip for the Investigative Unit, email theunit@nbcbayarea.com or call 888-996-TIPS. Follow Candice on Facebook and Twitter at @CandiceNguyenTV, or send her an email at Candice.Nguyen@nbcuni.com
