Good Neighbors


March 14, 2003


Community-based affordable housing

Community-based organizations are changing the face of affordable housing delivery in San Diego. And none too soon.

San Diego, as most folks know by now, has the distinction of being one of the least affordable housing markets in the nation. Recent statistics show that a family must earn over $21 an hour to afford a typical two-bedroom apartment. Housing purchase prices jumped by 25 percent over the last 12 months. Clearly, every available action needs to be taken to create more housing.

In 1990, there were just a couple of nonprofit housing development organizations in town, and they only produced a project (usually for seniors) every couple of years. Today, San Diego has 2,100 apartments under construction for low-income seniors, people with disabilities and families; and more than half are being built by nonprofits. What changed?

In the early 1900s a program was created intending to expand the capacity of nonprofit community-based groups to develop housing. The San Diego Housing Commission, together with the San Diego Foundation and LISC (Local Initiatives Support Corp.) funded competent, locally based social services and community development corporations to hire and train housing development staff. The initial operating support grants evolved into a system of project-specific funding -- predevelopment loans and grants -- to cover staff time, appraisals, preliminary design documents, and other studies preparatory to project financing. The result was a dozen burgeoning housing developers. Naturally, some were more successful than others, emerging as highly productive developers of many projects. They used developers fees earned for previous deals to fuel their capacity to do the next deal.

What makes these organizations well-suited as housing developers? First, they reflect the values of communities, using their local knowledge and rapport to work with, not against, neighborhood interests. This is particularly important because future development will increasingly be infill in existing communities. Successful infill development requires sensitivity to the character of individual communities and trusting relationships to achieve discretionary project approvals.

Second, they have access to unique funding sources and patience to stitch together the multiple resources necessary to create below-market rental and for-sale homes. In addition, many programs are only accessible by nonprofit corporations or favor them in competitive funding decisions. In our overheated market, many other developers seek to get in and out as quickly as possible, selling their housing before the price wave crests. These market-driven developers cannot wait for state-funding allocation committees to decide to finance their sites.

Nonprofit is not synonymous with un-businesslike. Successful nonprofits have strong business strategies to guide their growth and strong internal controls to manage well. Their mission diverges from that of a for-profit entity, managing toward a longer horizon and adding value with their social services. Effective nonprofits contribute to the range of solutions we need to develop as much housing as possible.

The experience of two local organizations is illustrative. Community Housing Works is an organization begun in Escondido in North County. It soon merged with another North County development group of similar focus and used its new scale to develop numerous award-winning rental projects.

Seeking to diversify, the nonprofit recently merged with another group known for homebuyer and rehabilitation programs in central San Diego to become yet a new Community Housing Works. Through this series of carefully structured mergers, the organization grew in skills and financial capacity. Today, it is recognized as one of the most capable developers serving our region, sought by local governments to partner in their localities.

Another success story is the City Heights Community Development Corp. Unlike Community Housing Works, this CDC emerged from the leadership of a particular geographic community. City Heights is one of the more diverse and challenged areas in San Diego, yet conveniently located to jobs and retail centers.

The City Heights CDC began as a community service group offering job training and neighborhood cleanup activities in its sphere of influence. Seeing the housing needs of its clients, it began to acquire and rehabilitate abandoned apartment complexes. After rehabbing half a dozen smaller projects, they began to partner with other developers to create larger developments for residents of City Heights. This approach marries the experience and financial strength of a larger company with the community sensitivity of indigenous, public-spirited nonprofits. Integrating holistic management practices with community development objectives, like hiring local residents, has made them a good neighbor. Today, developers know that if they want to work in this community, their chances for success are better if they work with the CDC.

Let's be clear. Most housing in San Diego has been and will continue to be built by able companies organized with a bottom-line profitability focus. But, because we foresee no change in our local housing market, the presence of community-based housing developers offers unique opportunities to create housing for San Diego's workforce. And we need all the housing we can get.

Elizabeth Morris is CEO of the San Diego Housing Commission.


March 14, 2003