San Diego is blessed to have many, many generous charitable donors. Extrapolating from national statistics, San Diegans likely donated over $4 billion to charity in 2018 alone.
That’s a lot of money, yet San Diego, like most American cities, still faces enormous challenges—homelessness, affordable housing, food insecurity, and good jobs with livable wages for all, to name just a few.
Philanthropy is essential, but alone it is not enough to address these big, thorny issues. Nor is government. This year’s California budget includes nearly $2 billion to address homelessness in the state, yet that has not been enough. Private corporations have started to devote funds to affordable housing, but that is just getting started, and on its own won’t do the trick.
Solving society’s biggest issues requires more than what one sector can provide. It requires that the private sector—businesses and private investment—join with government and philanthropy, each doing their part.
San Diego is one of two cities recently named an “Innovation Lab” as part of a federal initiative called ImPower, which is designed to facilitate partnerships between philanthropy, government and the private sector. Locally, ImPower is being facilitated by San Diego Grantmakers. One of the first projects is YIGBY, which stands for “Yes in God’s Backyard,” a pilot project to rapidly build affordable housing in San Diego.
There are over 1,000 vacant parcels of land in the county that are owned by faith-based institutions—churches, mosques, synagogues and the like. YIGBY aims to harness philanthropy, government funds and private investment to build affordable housing on these parcels—in God’s backyard. The initiative’s board is peopled with experts in housing development, architecture, construction, legal compliance, and affordable housing management.
The first project is anticipated to be built on a parcel owned by a church in southeast San Diego and will likely total 16 units. This is a tiny number given the current lack of affordable housing. But if this first project works, the concept is scalable and could make a real dent in San Diego’s housing crisis.
YIGBY’s innovative model is to use prefabricated housing that is already pre-approved by the state. This lowers the cost of building the units and saves months of processing time with municipalities.
Manufactured units and modified shipping containers are an emerging low-cost solution that are beautiful and livable and available from several plants in Orange and Los Angeles counties. The cost will be approximately $240,000 per unit, a far cry from the current approximately $500,000 for a traditional affordable housing unit that uses federal low-income tax credits. Although tax credits can be very effective for some projects, they add an expensive, cumbersome administrative burden.
Now here’s how philanthropy, private capital and government funds can work together. For this first project, YIGBY is raising $1 million in philanthropic capital in order to establish proof of concept. With these funds, YIGBY will be able to raise debt from private sources such as local banks, community development financial institutions, corporations and individuals. The budget is being developed so that the church can service the debt and maintain the property with rents from Section 8 or veterans housing vouchers.
The church is also planning to use any surplus, which will grow as debt is decreased, to fund special projects and endowments. This is a long-term investment for the church in which their assets are leveraged to do good for their community and congregation.
Both the city of San Diego and San Diego County are supportive of YIGBY innovations. Last year, San Diego changed its policy on the required parking ratio at places of worship, which frees up land to use for housing.
From the philanthropist’s perspective, the $1 million of charitable funding is being leveraged effectively. From the lender’s standpoint, the debt is reasonably secure as government-subsidized rents are enough to pay back the debt. As for government, currently, there are thousands of people in San Diego who have housing vouchers but no place to use them and the costs of managing the growing homelessness problem are unsustainable.
Donors need to step up and provide the $1 million of philanthropy. A bank or other lender must agree to provide the loan. Once these pieces are in place, and the pilot is completed, additional sites can be built in relatively rapid succession.
Similar arrangements can be used to address other challenges facing San Diego and cities across the country. At a time of unprecedented division in our society, bringing government, nonprofits and businesses together to solve pressing community issues ought to be something we can all agree on.