When a market-rate apartment development went up for sale in San Diego, Community Solutions took action to purchase the property and transform it into 229 affordable and supportive housing units.
The bold step is resulting in the creation of 114 units for residents earning up to 80% of the area median income and 115 units for veterans experiencing homelessness.
PROJECT DETAILS
DEVELOPER: Community Solutions
MAJOR FUNDERS: Morgan Stanley; National Equity Fund; Kaiser Permanente; UnitedHealth Group; Ford Foundation; Alliance Healthcare Foundation; BQuest
Acquiring the development has allowed the nonprofit to provide affordable homes more quickly and at a much lower cost than traditional affordable housing models. The first new residents moved in within 90 days of Community Solutions identifying and buying the building. The $89.2 million deal came to about $389,000 per unit, roughly half the costs of building a new unit in the market, say officials.
The deal also ensures that existing residents will not see their rents skyrocket and be at risk of displacement. Units will be converted when there’s natural turnover.
Courtesy Community Solutions
Community Solutions was able to compete with market-rate buyers for Market Street Village with the help of a property tax exemption. Bypassing the use of low-income housing tax credits, the deal is instead funded by Community Solutions’ Large Cities Housing Fund, a $150 million initiative supported by major social impact investors to help communities reduce veteran homelessness.
“We saw an opportunity to acquire a high-quality building with lower-cost capital, and, in exchange, we were able to lower rents and connect the building to the housing system, which allows us, primarily through Veterans Affairs and other organizations, to make units available to individuals exiting homelessness,” says Dave Foster, president of BDP Impact Real Estate, an arm of Community Solutions.
Market Street Village will provide homes for 36 veterans exiting homelessness within the project’s first year and a total of 114 in three years, according to the developers, who plan to use the Veterans Affairs Supportive Housing vouchers and other subsidies. Wakeland Housing and Development Corp. is providing on-site resident services.
