MTC Pledges $10 Million for New Affordable Housing Fund
OAKLAND, CA — It makes good sense to place compact, affordable housing at transit hubs, and now the Metropolitan Transportation Commission (MTC) is giving a substantial financial boost to the cause. MTC today approved a commitment of up to $10 million through its Transportation for Livable Communities program to help establish a new revolving loan fund to finance land acquisition for affordable housing development in select locations near rail and bus lines throughout the Bay Area.
Over the next several years, MTC hopes to parlay its $10 million pledge into a loan fund totaling $40 million or more by attracting matching commitments from private foundations and other investors. The new Bay Area Affordable Transit-Oriented Development Fund (TOD Fund) is to be modeled on similar funds established in recent years in Denver, Los Angeles, Minneapolis, New Orleans and New York, which in aggregate total more than $350 million and have been used to leverage hundreds of millions of additional dollars from commercial lenders, investment funds, foundations and public agencies to support affordable housing development. The Bay Area initiative, which is expected to begin making its first investments in 2011, is spearheaded by the Great Communities Collaborative, a coalition of nonprofits and community foundations whose 24 member organizations include the San Francisco Foundation, the Silicon Valley Community Foundation and the East Bay Community Foundation.
“In order to meet urgent and strict state goals for greenhouse gas emission reductions and sustainability, Bay Area regional planning agencies for land use, air quality and transportation face an imperative to reduce the number of cars on the road and miles driven. Building affordable, compact housing near transit stations is a key tool in meeting those goals,” said MTC Chair and Alameda County Supervisor Scott Haggerty.
MTC’s support for the Bay Area Affordable TOD Fund is subject to several conditions. Because the TOD Fund is not an eligible use of the federal money used to finance other Transportation for Livable Communities projects, the Commission must identify another source of funds and eligible projects for which it can exchange the federal dollars. MTC also requires that:
- foundations and other TOD Fund participants match MTC’s commitment on a minimum 3-to-1 basis by August 31, 2011 to reach a total of at least $40 million;
- funds be spent only in areas already designated by the Commission as either a planned or potential Priority Development Area;
- Commission staff report to MTC’s Planning Committee in September 2011 on fundraising and satisfaction of the other conditions before seeking the Commission’s approval to release the exchanged dollars to the TOD Fund.
“We think the slow housing market makes this an excellent time to make this investment,” commented MTC Executive Director Steve Heminger. “At a time when lending, especially for affordable housing, is almost nonexistent, this fund can not only triple the impact of each TLC dollar but also play a critical role in preserving sites for affordable transit-oriented development while the credit markets and bond institutions recover to support affordable housing construction again.”
Based on information provided by Bay Area cities and developers, MTC staff estimates a $40 million TOD Fund could be used to help finance the acquisition of at least 20 to 30 acres around the region, which, depending on the density of build-out, would support development of anywhere from 1,100 to 3,800 units of affordable housing.
It may take a couple years before the land banking assistance results in new housing projects coming on line. “Once developers start tapping the TOD Fund to secure sites, they will still need to go through local agency approval processes and line up construction financing,” Heminger cautioned.
MTC is the transportation planning, funding and coordinating agency for the nine-county San Francisco Bay Area. MTC created the Transportation for Livable Communities program in 1998 to fund small-scale, community and transit-oriented projects that improve neighborhood vitality.
Contact:
Randy Rentschler: (415) 778-6780
John Goodwin: (415) 778-5262 jgoodwin@bayareametro.gov