Salinas to see new brand of affordable
SALINAS >> An affordable home builder has launched a project in Salinas that combines private investment with the abilities of nonprofit organizations to produce low-income housing that for many reasons has been out of reach for many communities.
New Way Homes is a Santa Cruz-based nonprofit affordable housing builder launched in 2015 by serial entrepreneur Sibley Simon. His approach to helping solve the housing crisis in California is a hybrid model that marries private investment with nonprofit organizations.
The east Salinas project is in its infancy with New Way working through the permitting process. It sits on over two acres of land off East Market Street near commercial properties. The exact number of units won’t be decided until the permitting process is completed, but Simon estimates it will be around 80 apartments.
New Way spent two years getting environmental approvals for the site. At least 15% of the units will be very low-income housing, and others will be for low-income families.
Faced with an unprecedented level of housing shortages in Monterey County and around the state, Simon said New Way is creating privately-financed affordable, supportive and belowmarket-rate housing.
Supportive housing is permanent, affordable housing that’s paired with on-site services, like mental health care, job training or addiction treatment. It’s for especially vulnerable people, like those with disabilities or survivors of trauma, who otherwise have difficulty staying in stable housing.
The nonprofit is just completing seven units of permanent supportive housing on River Street in Santa Cruz that will be owned by another nonprofit, Housing Matters. The two nonprofits are collaborating on an additional 120 units of supportive housing in Santa Cruz.
Simon said there are 350 units in the pipeline in the San Francisco and Monterey bay areas.
The financing is novel. Part of it comes from private Investors who can purchase notes that return 4% interest, not bad considering today’s low interest-rate climate. The capital is raised through WeFunder, a crowdfunding website https://wefunder.com/new.way.homes. As of Wednesday, New Way has raised $400,000 from 135 investors.
Simon said many investors like the low-risk, fixed-yield from the notes compared to the highly volatile securities market. More importantly to him, the investors are individuals who believe in social capital and who care about helping communities out of the housing crisis.
The work is also supported by nonprofits such as the Silicon Valley Community Foundation and Community Foundation Santa Cruz County.
As a rule, Simon said, the traditional model of public funding for affordable housing creates good housing in the region but doesn’t come close to meeting the demand. Without some kind of subsidies, most developers have proven they aren’t interested in affordable housing because the return is far less than building bigger homes for higher-income homebuyers. Unless developers can get exceptions from city government zoning laws so they can build higher density projects, it just doesn’t pencil out.
The vast majority of zoning for housing in cities is singlefamily residential or R-1. That kind of zoning excludes apartment buildings. People who live in these single-family residences often fight against any attempt to amend zoning laws that would allow apartments. They are vocal and they vote.
It’s a problem the state of California is painfully aware of and is taking harder stands against cities that don’t provide zoning for apartments.
Other cities, like Berkeley and Sacramento, are taking the lead by tossing out old zoning laws in favor of more multifamily residential zoning.
What helps New Way Homes succeed are the partnerships with nonprofits that own land — from social-service nonprofits like Housing Matters to Black churches in Oakland.
“We aim to build thousands of units in our region this decade and more importantly, help seed a new part of the housing industry,” Simon said.