{"id":140027,"date":"2026-01-19T12:34:11","date_gmt":"2026-01-19T12:34:11","guid":{"rendered":"https:\/\/www.newsbeep.com\/us-ca\/140027\/"},"modified":"2026-01-19T12:34:11","modified_gmt":"2026-01-19T12:34:11","slug":"real-estate-quarterly-funding-solutions","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us-ca\/140027\/","title":{"rendered":"Real Estate Quarterly: Funding Solutions"},"content":{"rendered":"

As the need for affordable housing continues to define L.A.\u2019s housing landscape, developers must navigate the complexities of building these communities.<\/p>\n

The execution of these projects is currently being shaped by creative financing packages as well as growing private-sector interest. <\/p>\n

Between 2018 and 2024, just 10% of new rental housing units built and certified for occupancy in Los Angeles County were affordable to low-income households, according to August data from USC\u2019s Neighborhood Data for Social Change. Even so, the number of affordable units being delivered per year is increasing, with 4,397 units completed in 2024, compared to 1,597 in 2021 and 491 in 2018.<\/p>\n

Despite this uptick, the need is still tremendous. Based on the Regional Housing Needs Assessment, NDSC estimates a shortfall of more than 578,000 rental units in Los Angeles County for households making less than 50% of the county\u2019s area median income.<\/p>\n

While nonprofit developers and public sector funding have long dominated the affordable housing creation space \u2013 and make no mistake, they still do \u2013 for-profit firms and private capital are increasingly shaking up the market. And despite shared goals, developers\u2019 financing strategies significantly affect projects\u2019 costs and timelines.\u00a0<\/p>\n

In interviews with nonprofit and for-profit developers alike, there seems to be a consensus that Los Angeles projects built using low-income housing tax credits (LIHTC) typically range from around $700,000 to $900,000 per unit. This is the result of many factors, including lengthier timelines for securing this funding, the need for additional funding sources, prevailing wage requirements and much more.<\/p>\n

Additionally, with LIHTC, the lower the income level a development seeks to serve \u2013 like residents earning less than 50% AMI versus up to 80% AMI \u2013 the more complicated the project can become, said Lisa Gutierrez, director of affordable housing at U.S. Bank.<\/p>\n

\"\"\"\"Lisa Gutierrez<\/p>\n

\u201cDeeply affordable developments \u2026 will have multiple layers of financing sources that are coming from state, local and regional levels,\u201d Gutierrez said. \u201cThose capital stacks look much different than a workforce housing development.\u201d<\/p>\n

With every additional financing source comes specific requirements and conditions that developers must incorporate into their project, she added. \u00a0<\/p>\n

In the L.A. market alone, U.S. Bank has done about $4.3 billion in affordable housing finance \u2013 $1.7 billion through LIHTC and $2.6 billion through affordable housing debt. This translates to about 270 deals and more than 22,000 units financed, working with both nonprofit and for-profit builders.<\/p>\n

Within the last decade, Gutierrez said the need for private capital to get involved in affordable housing finance has become \u201cmuch more crucial.\u201d<\/p>\n

\u201cPublic sources are finite,\u201d she said. \u201cWe can\u2019t solely rely on that (if we want) to be able to produce as many units as possible.\u201d<\/p>\n

Westwood-based SDS Capital is one prominent firm supplying private capital to affordable developments. Founded by Deborah La Franchi in 2001, SDS has a $1.6 billion portfolio across various funds and has financed more than 3,600 affordable, workforce and permanent supportive housing units in its tenure.<\/p>\n

Key to SDS\u2019s strategy is maintaining a low number of financing sources for a project.<\/p>\n

SDS is currently focused on financing permanent supportive housing projects in California, all of which are dedicated to the homeless population. For these projects, the firm uses two main funding sources: the SDS Supportive Housing Fund, which provides 97% of the capital, and the project\u2019s developer, which provides the rest.\u00a0<\/p>\n

\u201cIt\u2019s very streamlined and we do not have any third-party debt (which keeps) our legal costs to close a transaction at less than $10,000,\u201d La Franchi said.<\/p>\n

In today\u2019s interest rate and inflation environment, SDS is funding projects at between $325,000 and $375,000 per unit. Prior to the Covid-19 pandemic, this number was around $225,000 per unit, La Franchi said. Typically, the firm\u2019s supportive housing projects consist of 500-square-foot, one-bedroom apartments. La Franchi acknowledged that affordable housing projects may come with more square footage, which affects price. Still, SDS\u2019s cost-per-unit ratio is impressive.<\/p>\n

Aside from limiting the number of funding sources for a project, she said developers can keep costs down by replicating previous projects.\u00a0<\/p>\n

This means using the same vendors across projects to secure better rates and working with the same architect, who will tweak existing plans to fit various projects, rather than coming up with a new design every time.\u00a0<\/p>\n

\u201cIt\u2019s more about manufacturing something that\u2019s the same versus creating a whole new concept for each project,\u201d La Franchi said. \u201cThat\u2019s been our model, and that is how we\u2019ve been able to keep the cost low.\u201d<\/p>\n

\"\"\"\"Thrive Living is combining housing with an anchor Costco store. (Rendering c\/o Thrive Living)<\/p>\n

Another proponent of private financing for affordable projects is Thrive Living, a real estate development and investment firm based in Brentwood. Thrive develops both mixed-income and fully affordable housing. The firm is making a splash in the Los Angeles market with its mixed-income, mixed-use 800-unit apartment building in Baldwin Hills, which will be anchored by a Costco once completed.<\/p>\n

By not using public subsidies, Ben Shaoul, founder of Thrive Living, said he\u2019s saving time and money.<\/p>\n

\u201cThe only way to solve the affordable housing crisis is to build a lot more housing,\u201d Shaoul said. \u201cOur company is focused on innovatively changing the way things are done to build as fast as possible and at scale.\u201d<\/p>\n

\"\"\"\"Ben Shaoul<\/p>\n

The cost-per-unit for Thrive\u2019s affordable projects in L.A. ranges from $300,000 to $500,000, including parking structures. As a for-profit, Thrive uses recycled bond volume caps from LIHTC developments for its non-LIHTC projects and also transfers profits from completed projects to new ventures.<\/p>\n

\u201cThrive has developed a different way to build affordable housing, an efficient model that excites investors because it delivers tangible social and community impact, while also generating profits \u2013 capital that can be used to fund the next project,\u201d Shaoul said. \u201cWe\u2019re demonstrating to investors that it\u2019s possible to build affordable and workforce housing using privately financed market-driven strategies.\u201d<\/p>\n

While we\u2019re seeing significant innovation from for-profit firms, that doesn\u2019t mean there isn\u2019t any from the nonprofit space. For Bridge Housing \u2013 a nonprofit developer based in San Francisco but quite active in the L.A. market \u2013 the ability to pull off projects requires creative thinking, said Ken Lombard, president and chief executive of Bridge. <\/p>\n

\u201cTo really make progress towards solving the affordable housing crisis\u2026 you have to be unwilling to accept the status quo,\u201d he said.<\/p>\n

Lombard noted that LIHTC has been and will likely continue to be the predominant finance source for affordable projects. Yet given the costs and timelines associated with LIHTC and its availability, many in the space \u2013 including Bridge \u2013 are exploring alternatives.<\/p>\n

\"\"\"\"Ken Lombard<\/p>\n

This included launching the firm\u2019s first private equity fund in September. Backed by KeyBank and BMO, the fund aims to raise $350 million in equity and is expected to close this quarter, Lombard said. Scouting other investment opportunities and using general obligation bonds are additional strategies.\u00a0<\/p>\n

Among Bridge\u2019s local projects are several housing components of the $1 billion redevelopment of Jordan Downs in Watts.<\/p>\n

When evaluating opportunities, Lombard closely considers the time required to assemble a project\u2019s financing package. \u201cIf we can\u2019t get it done within 24 months, then that\u2019s either a project we walk away from, or we look for different alternatives,\u201d he said.<\/p>\n

In the city of L.A., it typically takes nearly three years from the time permits are approved to project completion for an affordable multifamily building with five or more units, according to NDSC. This does not include the time it takes to go through the permitting process, apply for LIHTC, wait for the results and get the remainder of a project\u2019s financing package in order which can take several years.<\/p>\n

\"\"\"\"The Kalmia Rose development at Jordan Downs. (Photo c\/o Bridge Housing)<\/p>\n

\u201cTime is critical for us especially in an environment where it\u2019s not just nonprofit companies competing for the opportunities, but there are also for-profit firms that have alternative means to finance projects,\u201d Lombard said.<\/p>\n

Bridge is also strict about cost-per-unit. Projects must come out to around $500,000 to $600,000 per unit; otherwise, Bridge will not do the project, Lombard said. This is generally lower than most nonprofits can achieve when developing in Los Angeles.<\/p>\n

One reason nonprofits may be more comfortable with pricier projects than for-profits is the structure of their revenue production. Nonprofits get paid by charging developers a fee based on a percentage of the project\u2019s total cost, whereas for-profits don\u2019t see any returns until they\u2019ve paid back their lenders.<\/p>\n

\u201cThe traditional way (nonprofits operate) is no matter how high the per-door cost is, if there is available money, whether it be through agencies, tax credits \u2013 no matter how it underwrites \u2013 they\u2019re going to do the deal because as a company, they are dependent on generating developers\u2019 fees as their revenue stream,\u201d Lombard said.\u00a0<\/p>\n

Instead of this model, he said nonprofits need to underwrite affordable projects the way a developer would for any other project, ensuring the deal pencils out in a way that generates \u201ca reasonable return which in today\u2019s market should be between 7% and 12%,\u201d he said. This not only makes projects more competitive but also more sustainable, given the rent caps on affordable housing.<\/p>\n

Even with these strategies to lower the cost of building affordable housing in L.A., the market is much slower and more costly than in other geographies.\u00a0<\/p>\n

With increased regulation, high land costs and extended permitting timelines, investment interest in L.A. can be spotty, said Patrick Chopson, co-founder and chief product officer at Cove Architecture, an AI architecture firm based in Atlanta that analyzes building activity nationwide.<\/p>\n

\"\"\"\"Patrick Chopson<\/p>\n

\u201cIt\u2019s kind of like if you went to a restaurant and you ordered food, but there was a less than 80% chance that you would get your meal,\u201d he said. \u201cYou might consider going to another restaurant, and that\u2019s kind of how capital thinks about the L.A. market.\u201d\u00a0<\/p>\n

Part of the problem with L.A.\u2019s lengthy approval timelines is that \u201ceach part of the process is linked instead of parallel,\u201d Chopson said.<\/p>\n

In comparing 10 major metro areas\u2019 timelines for approving large-scale multifamily developments, Cove found that L.A., New York City and Philadelphia had the longest processing times, at 16 to 25 months, 12 to 36 months and 12 to 24 months, respectively. On the other hand, Houston had an approval timeline of one to two months; Miami was three to six months; and Dallas was six months.<\/p>\n

One action the city of L.A. took to mitigate this, specifically for affordable housing projects, is Executive Directive-1, which provides expedited review. Even still, La Franchi said in the discourse she\u2019s had with developers using ED-1, most say the program\u2019s 90-day timeline isn\u2019t quite accurate. Instead, approvals seem to take nine to 10 months.<\/p>\n

Additionally, projects using ED-1 must be 100% affordable, meaning mixed-income developments cannot secure the expedited timeline.\u00a0<\/p>\n

Overseeing U.S. Bank\u2019s affordable housing finance on a national scale, Gutierrez has noticed that other metros tend to favor mixed-income projects while L.A. focuses on deeply affordable developments.<\/p>\n

\u201cSpreading that affordability out drives the cost-per-unit down because you don\u2019t need to layer as many sources of funding to fill the capital stack,\u201d Gutierrez said.\u00a0<\/p>\n

Still, she thinks, given the state of homelessness in California and Los Angeles, \u201cthe state and the city are meeting the need of the moment in the market right now,\u201d by focusing on 100% affordable housing. However, projects could be less costly through mixed-income structures.<\/p>\n

In addition to SDS Capital\u2019s work in California, the firm also operates on a national scale and currently manages a 10-state fund in the South, which includes Texas, Florida and North Carolina. In comparing how these states and their local municipalities run their entitlement and permitting processes versus Los Angeles, La Franchi said, \u201cit\u2019s night and day.\u201d She also pointed to \u201cgreat\u201d incentive programs from these states, such as a variety of property tax abatements for affordable housing.<\/p>\n

\"\"\"\"Asset: An SDS Capital Group project, known as Dolores Huerta in Vermont Square. (Photo by Thomas Wasper)<\/p>\n

\u201cThese incentives are metastasizing because the different cities and states are looking over their shoulder and seeing what\u2019s working in one market and adopting it,\u201d La Franchi said, adding that she\u2019d love for L.A. to adopt more incentive policies.<\/p>\n

On the developer side, Gutierrez thinks looking for ways to streamline the construction process would help speed up the completion of affordable projects. This could mean looking at modular or panelized building techniques, she said.\u00a0<\/p>\n

Embracing technology is another strategy, such as using AI to analyze a project site\u2019s zoning code, dig into prior approvals, public hearings and comments surrounding a development.<\/p>\n

\u201cMany firms are starting to wake up to the fact that they can use AI to help them be more responsible,\u201d Chopson said. \u201cYou can deploy technology to help lower the cost of the project, because the real cost in L.A. is regulation, so (developers and architects) need to think about optimizing against that.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"As the need for affordable housing continues to define L.A.\u2019s housing landscape, developers must navigate the complexities of…\n","protected":false},"author":2,"featured_media":140028,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[27],"tags":[48,52,51,47,50,49,70814],"class_list":["post-140027","post","type-post","status-publish","format-standard","has-post-thumbnail","category-los-angeles","tag-la","tag-la-headlines","tag-la-news","tag-los-angeles","tag-los-angeles-headlines","tag-los-angeles-news","tag-sds-capital-group"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/posts\/140027","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/comments?post=140027"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/posts\/140027\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/media\/140028"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/media?parent=140027"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/categories?post=140027"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/tags?post=140027"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}