Housing Accelerator Fund
In 2014, San Francisco Mayor Ed Lee convened a Housing Working Group highlighting the urgent need for innovative solutions in housing finance. Building on NYC’s Acquisition Fund, the City created the Housing Accelerator Fund (HAF), with greater flexibility and expanded capability.
Organizational Structure, Staffing, and Governance: Whereas the NYC Acquisition Fund delegates loan origination to six existing CDFIs, the San Francisco Housing Accelerator Fund would make loans directly to borrowers. Moreover, the new loan fund would be an independent nonprofit, with the flexibility to provide financing not only for acquisition and predevelopment, but for needs across all project phases. Structuring HAF this way expanded its flexibility beyond what would be possible if it were to be owned by and originating loans through existing CDFIs. This approach also positioned the HAF for future scalability and versatility, conferring independent control that allows HAF to combine financing sources to increase efficiency, move quickly and nimbly, and think innovatively.
HAF’s governance and capital stack are structured to secure partner confidence while allowing this independence. HAF is governed by an independent board of directors comprised of individuals with expertise in housing, finance, philanthropy, and community development, with the City holding ex officio seats.
Capitalization: HAF sought to design a capital structure that balanced the flexibility and scale offered by philanthropic and private capital with the security and risk protections those investors would require. Supporting this structure, an intercreditor agreement lays out the “loss waterfall”, establishing the order in which different lenders or classes of debt are repaid—or bear losses—in the event of default or liquidation. Moreover, it provides a mechanism for new investors to join the fund while preserving the rights, priorities, and risk positions of existing investors.
To launch the HAF, the City approved a $10 million 20-year 0% subordinate investment. The loan administered by the Mayor’s Office of Housing and Community Development, which maintains a close working relationship with the HAF for collaborative affordable housing pipeline management. As a subordinate investment, it serves as a backstop for the rest of the capital stack. This structure allowed HAF to utilize the City of San Francisco’s initial investment into HAF to serve as “top loss” capital before HAF had any equity on its balance sheet. (Since launch, HAF has grown equity through retained earnings and grants to the loan fund, which provide even more security to other investors).
Alongside the City, HAF’s earliest investors included the San Francisco Foundation, Dignity Health, the Hewlett Foundation, and Citibank, on both the Community Capital and Community Development side (press coverage here and here).
Scaling the HAF
HAF has grown remarkably from its $37 million initial capitalization to over $300 million today (averaging ~70% committed). It has expanded geographically beyond San Francisco throughout the Greater Bay Area. Further, HAF has successfully scaled its portfolio of financial products and now offers loans across all phases of affordable housing development. This includes innovative tools focused on specific gaps in affordable housing delivery, such as the Bay Area Housing Innovation Fund and Industrialized Construction Catalyst Fund.
As an independent public-private entity that built its own balance sheet, HAF blends public, private, and philanthropic capital into a mission-aligned platform for housing preservation and production.
This structure allows HAF to move quickly and tailor financing products to evolving affordable housing gaps. By strategically layering capital, HAF reduces risk for private investors while preserving affordability outcomes. Its unique governance and capital model de-risks transactions, accelerates execution, and enables a broader range of stakeholders to participate confidently in affordable housing solutions.
HAF offers private investors a range of positions on its capital stack, tailored to different risk-return profiles, including:
- Project-Level recourse / Off-Balance Sheet Facilities:
- Federal Home Loan Bank (FHLB) access: HAF became a member of the San Francisco FHLB two years ago, gaining the ability to pledge assets (stabilized project loans or securities) and borrow competitively priced advances up to a percentage of the asset valuation. Each FHLB has its own terms and rules for CDFI borrowing, and until recently the max borrowing term for CDFIs in the San Francisco region was up to five years. However, the San Francisco FHLB recently extended eligible borrowing terms in specific instances for CDFIs up to a maximum term of 20 years, which should meaningfully impact HAF’s ability to provide permanent loans to the affordable housing market in its region.
- Bank revolving lending facility (“Senior Secured”): This facility provides 60–80% of financing for eligible projects. This senior debt is secured by a first-position deed of trust on the underlying property, and all draws do not have recourse to HAF’s balance sheet, meaning they do not have rights to claim the assets off the balance sheet. This facility is priced at a spread to the Secured Overnight Financing Rate (between 1.5% to 2.5% spread) depending on the bank partner. Pricing is fixed at draw from the facility.
- On-Balance Sheet / Recourse to HAF Investments: Investment categories include:
- Senior Investments: Predominantly banks and institutional investors, with typical interest rates ranging from 2.5% to 5%.
- Mezzanine Investments: Structured for mission-aligned investors such as foundations and health systems, also including some banks. Typical interest rates are below 3%.
These investments are anchored by over $20 million in subordinate loan capital, including the previously mentioned 0% interest, 20-year first loss loan from the City of San Francisco, $60 million in philanthropic grants, and retained earnings. This deep subordination enhances the likelihood of repayment for private and institutional investors. Largely due to underwriting to the public sector takeout, these loans have seen zero losses to date.
Crucially, HAF underwrites many of its loans to a committed future public financing source that will repay HAF loans. Nearly all projects financed by HAF include a future commitment from the City of San Francisco or another public agency to provide permanent financing once affordability restrictions are in place. The City has never failed to complete its financing and HAF loan payback on a deed-restricted affordable housing project, and every HAF loan includes a permanent affordability deed restriction at closing, significantly reducing long-term repayment risk and enhancing investor confidence. HAF takes on the time-sensitive, hands-on phase of the deal and bridges to the timeline in which public financing can participate. Real estate risk and public finance risk are distinct risks which are often blended in complex projects; HAF disaggregates these risks to reduce complexity.
This structure enables HAF to tap into capital sources underutilized in affordable housing. For example, a partnership between HAF and the San Francisco Foundation channels donor-advised funds into an ultra-low-cost loan to the HAF (with an interest rate below 1.0%), which the HAF then leverages alongside its other balance sheet capital. The Home for Good Fund is a revolving DAF facility with a 5- or 10- year repayment date to donors, designed to accelerate housing solutions in donors’ “backyard” while maintaining their future giving optionality. Over $30 million has been raised through this structure to date.