Housing Financing - California Climate and Energy Collaborative

Barrier 4: Housing Financing

Barrier Statement

Affordable housing developments require complex financing involving multiple funding sources, many of which are highly competitive and include excessive and inconsistent requirements, and extend development timelines.

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How communities are experiencing this barrier

View the details on what communities have shared with SLECC from across the state.

Key challenge discussed in - San Francisco Bay Area, Central Coast, Los Angeles, Inland Deserts

Stacking multiple funding sources burdens affordable housing developers with complex compliance and delays. Affordable housing projects typically require stacking tax credits, subsidies, and grants — each with its own timelines and compliance requirements. This patchwork approach creates administrative burdens that slow project delivery and make funding difficult to access efficiently.

Key challenge discussed in - San Francisco Bay Area, Inland Deserts

Establish local and regional pooled housing trust funds and collaborative financing vehicles—leveraging public, private, and CDFI capital—to provide flexible, low-cost, patient loan products that allow affordable housing projects to move forward despite state and federal funding delays.

Key challenge discussed in - San Francisco Bay Area, Los Angeles

State housing and climate funding programs remain both overly complex and highly competitive. Difficult, time-intensive applications—paired with limited funding pools—discourage participation from smaller jurisdictions and mission-driven developers. Even strong, shovel-ready projects often fail simply because programs are oversubscribed, creating significant barriers to accessing resources.

Key challenge discussed in - Central Coast

Missing middle housing (between deeply affordable and luxury market rate) is not financially viable to build under current incentive structures, leaving a critical segment of the housing market unserved.

Key challenge discussed in - Los Angeles

Market infeasibility: In some sub-regions, multifamily housing is financially infeasible, making it difficult to deliver affordability at scale. By contrast, townhomes or condos (“missing middle” housing) often “pencil out” and align better with consumer demand

Local Solution Opportunities

SLECC stakeholders have brainstormed the following solution opportunities that can be taken by local leaders. Existing examples of progress or pathways to make further progress are highlighted if known.

Local Solution

Establish regional coordination mechanisms to collaboratively build pipelines of investable housing projects. By pre-identifying priority developments, pooling resources, and aligning multi-jurisdiction applications before approaching state and federal funders, regional entities can reduce duplicated effort, avoid competing against one another, and strengthen competitiveness for scarce dollars.

Existing Examples of Progress:

Further Progress Pathways

Region(s): San Francisco Bay Area, Los Angeles, Inland Deserts

Local Solution

Standardize and pre-approve housing components by creating pre-qualified designs, turnkey/pipeline-ready housing packages, and pre-packaged compliance checklists. These measures reduce design review, procurement delays, and funder-by-funder ‘box-checking,’ allowing affordable housing developers to deploy projects faster and at lower cost.

Existing Examples of Progress:

Further Progress Pathways

Region(s): San Francisco Bay Area, Los Angeles

Local Solution

Streamline local grant and incentive programs for housing development.

Existing Examples of Progress:

Further Progress Pathways

Region(s): San Francisco Bay Area

State Solution Opportunities

SLECC stakeholders have brainstormed the following solution opportunities that can be taken by state leaders. Existing examples of progress or pathways to make further progress are highlighted if known.

State Solution

State should offer low-interest financing tools (similar to those already used in affordable housing programs) to make middle-income and workforce housing financially viable where current market conditions do not support it.

Existing Examples of Progress:

Further Progress Pathways

A dedicated public housing finance fund or green housing loan program offering accessible, low-interest capital to developers building for underserved market segments would provide a replicable model for how this could be structured at the state level.

Region(s): San Francisco Bay Area, Central Coast

State Solution

Establish a Regional Pre-Application / Project Prioritization Process: State authorizes or funds regional pre-application boards that evaluate projects before applications to state programs.Reduces competition among jurisdictions, aligns funding with regional priorities, and creates predictable pipelines.

Existing Examples of Progress:

Further Progress Pathways

Region(s): San Francisco Bay Area

State Solution

Trust and flexibility in funding design. There is a need need for “more trust of local communities to administer the funds in the way that they know will actually benefit their communities,” particularly when grants are meant to foster innovation or experimentation in affordable housing finance.

Existing Examples of Progress:

Further Progress Pathways

Region(s): Inland Deserts

Solution Spotlight

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