Communities across the country face significant obstacles to delivering affordable housing, due to sluggish bureaucratic funding processes that lack the agility to adapt to changing market dynamics or meet the scale of the problem. Addressing these challenges requires innovative, flexible financing solutions capable of rapid response and scalability.

Public-private collaboration can effectively deploy public, private, and philanthropic capital to accelerate affordable housing production and preservation, in close partnership with local governments, to help achieve ambitious and crucial affordable housing development goals. Communities interested in the benefits of public-private partnership have several models and approaches to choose from. This includes structuring the partnership via a memorandum of understanding between existing organizations, hosting the partnership within an existing organization, or setting up a standalone entity with its own balance sheet and governance structure. Standalone public-private collaborations often require more time, effort, and resources to set up compared to other approaches. Once launched, however, they offer communities a durable, flexible, scalable tool for achieving a range of affordable housing outcomes.

The San Francisco Housing Accelerator Fund (HAF) exemplifies the public-private collaboration. Initially incubated within the San Francisco’s Mayor’s Office, HAF began making loans in 2017 and has since evolved into an independent nonprofit and Community Development Financial Institution (CDFI). The organization was originally capitalized through a $10 million, 20-year, firstloss subordinate loan from the City of San Francisco, which was later increased to $20 million in 2019. Now in its ninth year of operations, HAF has raised over $450 million in capital, including $430 million from non-City sources. San Francisco’s public investment has been leveraged at a ratio exceeding 20:1, demonstrating the catalytic power of public-private partnerships.

HAF now offers a diverse range of financial products including acquisition and pre-development, construction and rehabilitation, and permanent financing for the development and preservation of affordable housing. To date, HAF has committed over $600 million in project investments in its hometown of San Francisco and surrounding communities, funding more than 3,000 affordable homes. HAF is a compelling example of how a standalone public-private partnership can be successfully launched, scaled, and adapted over time to meet evolving priorities in affordable housing production and preservation.

The Challenge This Tool Solves

Well-structured, standalone, affordable housing-focused public-private partnerships create shared platforms where public agencies, philanthropic funders, and private and nonprofit partners align goals, pool resources, and move capital nimbly. These entities can take on the work of designing and deploying customized financing solutions that are responsive to local needs and enable more equitable development. They can absorb risk, reduce transaction timelines, and tailor underwriting standards to mission-driven outcomes — unlocking projects that would otherwise stall or fail. In doing so, they provide a vehicle for policy innovation, regional coordination, and scaled preservation and production of affordable housing.

The key benefits of this structure include:

• Leverage: Pooling diverse capital sources into coordinated, flexible investment strategies;
• Speed: Providing swift, market-responsive financing for property acquisition and preservation; and
• Innovation: Encouraging innovative and proactive solutions to affordable housing finance challenges.

Types of Communities That Could Use This Tool

Most communities facing affordable housing shortages encounter a common problem: public financing for affordable housing is often bureaucratic, siloed, and slow to deploy. This prevents developers from accessing capital quickly enough to compete in real estate markets, causing missed opportunities and increased costs as they assemble complex capital stacks. While public-private approaches can aggregate and distribute capital more effectively, they require both dedicated public-sector partners (even if they are often slow to get out into projects and encumbered by a lot of regulatory burden), and interested private and philanthropic capital sources (even if they lack a clear one-stop-place to invest).

Public-private partnerships, structured as independent nonprofits with their own capital stack, may prove particularly valuable when a community faces additional challenges, including:

• Complex, Evolving Local Markets: Requires an on-the-ground partner with the capacity to understand nuanced conditions and agility to address them;
• Need for New Financial Products: Especially if the need is ambiguous and the product terms require refinement;
• Gaps in Existing Lending: Established lenders may lack motivation to take on product innovation, increased volume, and/or new risks the community needs; and
• Developers with Inadequate Financial Capacity: There are partners motivated to serve as developers, owners, and operators, but they do not have the financial capacity and complexity to move on opportunities independently.

Expected Impacts of This Tool

Communities facing the challenges and conditions described above, and that invest in creating an independent public-private partnership (such as the Housing Accelerator Fund, profiled below), can expect to see:

• Rapid Increase in Affordable Housing Stock: Accelerated development and preservation timelines;
• Enhanced Capital Attraction: New inflows from a diverse range of investors, including private banks, foundations, and individual philanthropists;
• Cost Efficiency: Significant savings achieved by reducing regulatory burdens, increasing access to advantageous capital, and accelerating the speed of delivery. Additionally, innovative construction techniques are often easier to finance through a public-private collaboration like the HAF, generating further savings alongside sustainability enhancement;
• Increased Community Stability: Reduced homelessness and displacement through preservation of naturally occurring affordable housing and proactive development strategies; and
• Long-Term Adaptability: Flexible, durable tool can evolve with changing market conditions and community needs.