A supportive housing project is rising in South Los Angeles that’s unlike most, if not all other affordable housing developments in the city.
A partnership including private equity fund SDS Capital Group is backing the 20-unit development, which is being built without government financial assistance, according to the Los Angeles Times.
The team wants the project to serve as a model, to show that the private sector can deliver housing quicker and cheaper than developers who receive tax credits, bond funding or other public financial aid.
Developer RMG Housing is also on the project, as are Homeless Health Care Los Angeles, along with local church organizations.
SDS Capital launched what it calls a social impact fund that has around $100 million it will use for similar investments. Kaiser Permanente steered $50 million into the fund as part of a mission to promote health, according to the report. SDS Capital said it hopes to add another $50 million to the fund.
The group wants to eventually build more than 1,800 units of housing.
The partnership team claims the South L.A. development — and similar 20-units projects — will cost around $200,000 each. That would be less than half the cost of a single unit of housing that received Proposition HHH bond funding from L.A. The lower construction costs will help make it financially viable for the developers.
Affordable and supportive housing is typically funded from a number of sources, including government funds and tax credits. It can take years to put that funding together. The SDS Capital team claims each project can be built two years after the property is acquired.
Housing experts also attribute the high cost to build subsidized affordable or supportive housing to lengthy approval processes, fees paid to government bodies and the falling value of tax credits.
The SDS Capital development partnership says it has all its funding in place, and can quickly move on the projects.
[LAT] — Dennis Lynch