(Photo Credit: Robert Campbell/Wikimedia)
Funding affordable housing projects will now be easier in three California counties. Today, the Monterey Bay Economic Partnership (MBEP) and Housing Trust Silicon Valley announced the establishment of the Monterey Bay Housing Trust, a $10 million loan fund for the development of both affordable rental and ownership housing projects in Monterey, San Benito and Santa Cruz counties.
Like much of the state, the Monterey Bay region is an expensive place to live and housing costs are increasing. In recent years, the area has seen an increase of people who work in Silicon Valley, but live in Santa Cruz and San Benito counties because they are more affordable compared to Santa Clara County.
Last year, the median, market-rate two-bedroom rental in Santa Cruz County was $3,132 a month ($2,252 in San Benito County and $2,289 in Monterey County), which is not affordable to a wide array of residents from moderate-income earners to very-low income earners, many of whom work in agriculture and tourism, two of the region’s biggest industries.
“We feel it is absolutely critical to bring resources into our region that can improve the supply of available housing,” said Bud Colligan, MBEP co-chair and California Economic Summit Steering Committee member. “A thriving region is at the core of our mission and we know that having an affordable place to call home is an integral part of achieving that.”
MBEP Project Manager Jodi Nunes hopes the Monterey Bay Housing Trust will help the region reach the goal set by the Association of Monterey Bay Area Government’s Regional Housing Needs Assessment (RHNA) of creating 12,624 affordable housing units for above moderate-income earners to very-low income earners by 2023.
“Our region has typically been underserved by CDFIs [Community Development Financial Institutions] particularly with creating projects,” said Nunes. “We do have some CDFIs that provide mortgage assistance and grants, but there was just no money for the builders to actually construct projects. So we thought that by leveraging what Housing Trust Silicon Valley is already doing, we could get on their radar and bring those funds here.”
The Monterey Bay Housing Trust is a collaboration between MBEP and Housing Trust Silicon Valley. MBEP has committed to raise $2 million in donations, which will be matched with funds from Housing Trust Silicon Valley lending capital in a four-to-one ratio. As the affordable housing developers repay the loans through construction financing, the Monterey Bay Housing Trust will re-invest the funds in other new projects within the three counties of the Monterey Bay region. The reinvestment will leverage the $10 million fund many times.
“The current housing shortage has escalated the need for new models of lending,” Housing Trust Silicon Valley CEO Kevin Zwick agreed. “With our solid banking relationships and outstanding credit rating, the Housing Trust is in a perfect position to market to affordable housing developers and manage the loan program.”
The Monterey Bay Housing Trust is also an example of expanding the use of local financing options to develop affordable housing, one of the actions recommended in the California Economic Summit’s Roadmap to Shared Prosperity.
The Monterey Bay Housing Trust has hit the ground running according to Nunes. “We actually have $500,000 in the fund right now. So we’re lending. The terms of our agreement with Housing Trust Silicon Valley is an 80-20 split. So whatever they decide to loan, they will fund 80 percent and the Monterey Bay Housing Trust will fund 20 percent, so we actually have a good bit on money to get started and we’re already talking about the first project to be funded.” MBEP is also looking for legacy donors to complete the $2 million donation commitment that will help fund even more affordable housing projects.