LIIF Uniquely Positioned to Scale Its Affordable Housing Production and Preservation Strategies Across California

LIIF has a storied history around community development in California. Our goal is to devise and implement strategies that foster opportunity, equity and well-being. When it comes to quality, affordable housing via our production and preservation strategies, we center racial equity as we redefine our perception of risk and nimbly deploy capital in historically excluded communities.

The numbers tell our California story: Over LIIF’s decades in the state, we have invested $1.2 billion, with $5.7 billion of capital leveraged. To break this down further, there have been investments of $641 million in affordable housing, $492 million in community facilities and $65 million in early care and education, the latter a quickly scaling line of work for LIIF.

As "housers" from all over the state get ready to gather for the Housing California 2023 conference with the theme “Housing’s Next Chapter,” the work we do feels never ending as we continue to make small dents in the housing problem. I wonder how we collectively define that next chapter in a state with extreme challenges in this realm. To quote a colleague: “It’s only impossible until it gets done.” With that thought in mind, I look forward to “Housing’s Next Chapter,” especially for LIIF’s efforts in California.

LIIF’s next chapter

LIIF remains committed to deepening our impact to address the lack of access to housing that far too many communities still face. That’s why we are driving $5 billion in investments over the next decade to advance racial equity. LIIF centers racial equity when it comes to how our CDFI deploys capital. We seek an industry-wide redefining of perception of risk, knowing that the systemic barriers long in place must be broken down to build power and agency for the historically excluded Black, Latino, and other people and communities of color we serve.

We also know that we need equity-centered federal policies and directives to resolve these chronic issues. LIIF applauded the recent Executive Order (EO) which stated, “Despite the meaningful progress that the Biden-Harris Administration has made, the reality is that underserved communities — many of whom have endured generations of discrimination and disinvestment — still confront unacceptable barriers to equal opportunity and the American Dream.” Those words from President Biden’s EO say it all – and perfectly align with LIIF’s mission that “everyone in the United States should benefit from living in a community of opportunity, equity and well-being.”?These issues cross the boundaries of urban versus suburban versus rural. LIIF looks to be nimble as it deploys capital in any ZIP code underserved residents call home.

LIIF is halfway through following the roadmap laid out in its 2020-24 Strategic Plan, with one focus to “create a new framework for our lending that will more explicitly and intentionally incorporate impact and racially equitable strategies into how we evaluate opportunities and direct our capital.” To see true progress toward our ambitious goals, CDFIs needed to strip ourselves of a traditional mindset to produce an innovative framework that would shift our lending business. That is where the development of our new Impact-Risk-Profitability (IRP) framework comes into play. LIIF’s strategy centers on supporting business development goals that drive maximum impact and promote racial equity. Our methodology created a set of tools -- an Impact Scorecard, New Risk-Rating Model and a Profitability Model -- enabling more intentional and balanced decision-making around outcomes and financial sustainability of LIIF’s lending business.

Capital solutions in California

While there are myriad discussions daily about California’s housing crisis – from the halls of the capitol in Sacramento to dinners around kitchen tables – it is time for talk to turn into actionable solutions. With a racial equity lens in place, LIIF continues to leverage the strong partnerships we have forged over the years with lenders, funders, nonprofits, elected officials, decision-makers and the community itself to develop innovative capital solutions.

One example is LIIF’s leadership around the creation and successful of the Golden State?Acquisition Fund (GSAF), a cadre of eight CDFIs partnering with the California Department of Housing and Community Development (HCD) as funder. GSAF, now showcasing a decade of success, is a flexible, low-cost financing program aimed at optimizing affordable rental housing and homeownership opportunities across California. GSAF is a $292 million fund, seeded with an initial $23 million -- and an additional $50 million added to the funding pool in January 2023 -- from the State of California. The fund has revolved over four times, producing or preserving more than 10,000 units of affordable housing.

Another focus of LIIF’s lending is the Black Developer Capital Initiative (BDCI), which has shown solid results, with a primary focus in the eastern U.S. The program’s success has compelled us to move forward?, which will now include affordable housing developers in California . This flexible lending program emphasizes the specific experience of the people rather than the balance sheet. BDCI comprises two products: the Line of Credit offered through LIIF, which provides early-stage project financing at a favorable interest rate. The second product emerged via a three-way partnership created to resolve the housing issue, with LIIF, Stewards of Affordable Housing for the Future (SAHF) and National Affordable Housing Trust (NAHT) joining forces. NAHT's Low Income Housing Tax Credit (LIHTC) Equity Fund addresses variability in pricing and terms for LIHTC deals due to perceived risks of smaller or less-resourced developers.

Following are other highlights of LIIF’s affordable housing impact in California:

Keeping Homes Affordable

The fund offers flexible lending terms to help developers compete with private market-rate buyers, offering developers five-year, below-market interest rates, and up to 100% Loan-to-Value. LIIF has committed $15 million in capital for the program, with Calvert Impact Partners providing $35 million and Arnold Ventures $5 million in top loss capital. As the originating lender, servicer and asset manager for the fund, LIIF will originate all loans within the program.

Metro Affordable Transit Connected Housing Program (MATCH)

MATCH is a $75 million fund, in partnership with?Metro and philanthropic partners, to preserve, stabilize and expand affordable housing stock near?existing and future transit nodes in Los Angeles County. Over 1,300 units have been supported to date.

Bay Area Preservation Pilot (BAPP)

BAPP is a $49 million fund, in partnership with the Metropolitan Transportation Commission, to support the?preservation of occupied affordable housing near public transit in the nine-county San Francisco?Bay Area.

Bay Area Transit-Oriented Affordable Housing (TOAH)

TOAH is a $40 million fund, in partnership with the Metropolitan Transportation Commission, that has supported?1,614 units of housing and mixed-use facilities near public transit in the nine-county San Francisco Bay Area.

Lift to Rise (LTR)

LTR is powered by Collaborative Action Networks (CANs) that engage residents and community leaders in both the public and private sector who share a vision for a Coachella Valley where all families are healthy, stable and thriving. With LTR and LIIF, the Coachella Valley’s Housing Catalyst Fund was created.

Expertise

To continue increasing production and preservation of affordable housing, LIIF has several main areas of focus tailored to meet the unique needs of this market. LIIF seeks to offer coverage across California, no easy task in a state comprising 156,000 square miles as the third largest in area in the nation. According to the 2020 census, the “Golden State” is home to over 39 million residents – approximately 12% of the population of the U.S. With so much territory to cover and a diverse population to serve, LIIF customizes its lending and operational strategies to meet the housing needs of community members from the Oregon border down to San Diego, the Pacific coast to the Sierra.

LIIF has a strong presence in California, with its longtime headquarters in San Francisco and a growing presence in Southern California. To have folks on the ground, we hire local experts in their fields

As a 39-year-old, best-in-class CDFI, LIIF offers expertise around best practices in the affordable housing industry. Our staff of 130 strong features a wealth of subject-matter experts (SMEs), often invited on conference panels or being interviewed by press around lending solutions centered on racial equity and the latest innovations in the sector.

Our organization also offers a unique understanding of sub-economies. It is imperative that the workers who are the backbone of the economy be able to live near the schools, restaurants and the like where they toil. Being compelled to find an affordable rental or homeownership opportunity an hour or two from your job means less time with your family, increased transportation costs, and augmented stress that can negatively impact one’s physical and mental well-being. One of LIIF’s strategies to ameliorate such challenges is our co-location of family child care homes into affordable housing developments.

Moving forward

With a legacy of success to leverage, LIIF is ready to implement tried-and-true solutions, while also devising tailored strategies to meet the unique needs of California’s housing market. LIIF is all about impact. Measurable impact. Offering fair access to capital and strengthening historically excluded communities is what truly matters. LIIF is scaling our commitment to preservation because the country's affordable housing stock is increasingly at risk. That is why we are augmenting access to funding for BIPOC developers, plus fostering community ownership and early care and education (ECE) co-location in affordable housing. We are cognizant that it’s not only about buildings – it’s about the people in the buildings.

The affordable housing crisis is a solvable problem. LIIF is committed to attracting new sources of capital, providing innovative programs that unlock capital quicker and easier. To again quote my colleague: “It’s only impossible until it gets done.”