The Answer to the Bay Area’s Affordable Housing Crisis

Enterprise Community Partners’ Rich Gross and Kaiser Permanente’s Bechara Choucair talk about their joint projects. The two companies launched a $100 million loan fund to create and preserve multifamily rentals.

Fueled primarily by technology and health care, the Bay Area’s economy continues to expand, boosting rental demand along the way. According to the latest Yardi Matrix report, average rents in metro San Francisco increased by 3.9 percent year-over-year through October to $2,662, nearly double the national figure, putting more and more pressure on low- and middle-income residents.

Several initiatives, like the Multifamily Mixed-Income Program—the state’s first to incentivize affordable housing developers to serve those in the “missing middle”—were created to encourage the construction of more affordable housing. But very low-income and homeless residents have even fewer chances to find a home they can afford. And with housing insecurity comes the lack of basic health-care needs. According to the National Center for Health Statistics, almost a quarter of the people living in poverty don’t have health insurance coverage.

Bechara Choucair, Rich Gross (Images courtesy of Kaiser Permanente and Enterprise Community Partners)
Bechara Choucair, Rich Gross (Images courtesy of Kaiser Permanente and Enterprise Community Partners)

Created last year, Kaiser Permanente’s $200 million Thriving Communities Fund is meant to improve community health by addressing housing stability and homelessness. In a new joint equity fund with Enterprise Community, the company set aside $5.2 million to acquire a 41-unit community in East Oakland, near Kaiser Permanente’s headquarters. Moreover, Kaiser announced a plan to end homelessness for more than 500 Oakland-area residents who are over the age of 50 and have at least one chronic condition. Between 2015 and 2017, homelessness in Oakland increased by 25 percent.

Kaiser and Enterprise also launched a $100 million national loan fund to create and preserve multifamily rental homes for low-income residents throughout Kaiser Permanente’s service areas. Rich Gross, vice president & Northern California market leader for Enterprise Community Partners, and Bechara Choucair, senior vice president & chief community health officer for Kaiser Foundation Health Plan Inc. and Hospitals shared their thoughts on the challenges the Bay Area faces today, suggested solutions to alleviate the affordability crunch and talked about their involvement in the creation of more affordable housing options.

How serious is the affordable housing crisis in the Bay Area today?

Gross: Today, the Bay Area is home to the most expensive housing market in the country. In dollars and cents, San Francisco provides a perfect example. An individual would need to earn $58 per hour, or $120,000 per year, to afford a typical two-bedroom apartment. To find affordability, people are moving farther and farther away from their jobs, sacrificing the time they spend connected to family and community for long commutes. These affordable housing challenges facing the Bay Area create serious gentrification and displacement pressures and deny hundreds of thousands of families, seniors, veterans and people with special needs a fair opportunity to thrive, threatening the health, education and economies of our communities.

What can be done to improve affordable housing development and preservation in the Bay Area?

Gross: We know from our 35 years of experience working in the housing sector that the best approach can be described in three Ps—protection, preservation and production. Protection means we work to keep residents in their homes through policy and zoning regulations like rent control to ensure that long-standing communities in the Bay Area keep their roots in place and stay affordable for all who call these neighborhoods home.

Preservation focuses on ensuring that the open market of affordable rental housing under threat to become market-rate housing remains affordable. It is critically important to provide funding to affordable housing developers to get these properties off the speculative market. Production is a very straightforward approach to the issue—build more affordable housing. This means utilizing all tools available like the low-income housing tax credit and forging cross-sector partnerships to build new affordable housing developments.

These are strategies at the core of Enterprise’s work for affordable housing, but no locality on its own can solve the region’s housing crisis. Housing markets are regional in nature and require coordination across policies and funding tools, across jurisdictions and scales of government. Above all, integrating health into affordable housing preservation and development will improve lives, communities and public health across the Bay Area and the country.

How difficult is it for you to obtain the necessary funds for affordable housing projects in the Bay Area?

Gross: It’s getting easier. Public recognition and private sector engagement around affordable housing has created positive change and impact. In the last three years, Alameda, Santa Clara County, San Mateo County, the City of San Francisco and the City of Oakland have passed a total of $2 billion in bonds for affordable housing. Last November, California voters approved Proposition 1 and Proposition 2, a record-breaking $6 billion statewide (initiative) to (provide) housing for low-income families, veterans and homeless people with severe mental illness. 

Our work with Kaiser Permanente on the Housing for Health Fund represents a step into new and significant funding arenas—it is the first time that a health-care organization has put equity at this scale into a fund for affordable housing and hopefully private sector businesses will follow. The fact that we’re working with a below-market return on an equity investment creates a valuable resource for affordable housing developers.

What projects do you have in mind for the $100 million loan fund?

Gross: We project financing the preservation or new construction of 3,250 affordable homes that will increase access to stable, quality housing for low- and moderate-income individuals, families and people who are either homeless or at risk of homelessness across Kaiser Permanente’s served communities in California, Colorado, Georgia, Hawaii, Mid-Atlantic—Maryland, Virginia and District of Columbia—Oregon and Washington.

What needs to be done in order to encourage affordable housing development in the Bay Area?

Gross: Protecting residents where they live with measures like rent control, legal assistance for those facing eviction and increased density zoning around transit hubs is key to the future of affordable housing in the region. Our most expensive communities are usually the least diverse. In order to encourage more affordable housing across the Bay Area and the country, our communities must be open to it. Our goal is for more organizations like Enterprise and Kaiser Permanente to take action together to create a stable foundation for regional housing solutions like the Housing for Health Fund and for communities and legislatures to require affordable housing where there is none.

Do you expect your example to engage other entities in your fight against homelessness in the area? 

Choucair: We know that public officials and organizations from several industries are using their expertise and resources to address the housing crisis and encourage others to continue to join the effort to increase affordable housing and decrease homelessness.

Our hope is that solving (the issue) for this specific population—more than 500 individuals in Oakland who are over the age of 50 and have at least one chronic condition—will give us a tangible foothold on a previously intractable problem, and that future work will expand to more locations and populations.

Ending homelessness for more than 500 individuals is a significant effort. How exactly do you plan to do that?

Choucair: Kaiser Permanente, working with community partners, identified these 500 individuals and we are now working with the City, Alameda County and other community partners to secure housing and other vital services for the individuals on this list.

We know we cannot accomplish our goals alone. To address the complicated issues associated with homelessness, we are working with the experts who can offer a comprehensive approach to getting these individuals the housing and unique services they need.