Developer launches fund to assist Bay Area homebuyers

Bay City News Service

Oakland-based real estate developer AF Evans Company Wednesday announced a new housing fund designed to make buying a home more affordable for Bay Area individuals and families.

Housing financed by the $75 million fund, which is called the Bay Area Workforce Housing Equity Fund, will be sold at approximately 15 percent below market rates.

The approach taken by the fund is a `breakthrough'' because it seeks to reduce financing costs rather than just reducing the cost of land or construction, according to the president of AF Evans Company, Alan Greenwald.

When banks and financial institutions invest in the fund, the fund then invests in development projects run by AF Evans, which lowers the equity cost of the overall financing of the project, according to the development company. These lower equity costs combined with the quick pace of selling units in a strong housing market like that of the Bay Area should reduce costs related to construction financing and marketing. AF Evans and the fund take reduced profits from the transaction and pass the savings along to consumers, lowering the price to buyers.

Investors in the fund accept reduced profits because the return on their investment happens more quickly than in traditional real estate deals, according to AF Evans.

`In strong economic regions like the Bay Area, we believe that the affordability gap can be best addressed through innovative financing strategies,'' Greenwald said. `By being partners in the community, we have created a scenario where investors and buyers benefit. Our goal is to create quality housing for all income levels.''

 

AF Evans Development partnered with The Development Fund, a San Francisco-based non-profit organization, to structure the fund.

Initially, money from the fund will be invested in two developments under construction in Oakland and San Francisco.

The building at 888 Seventh St. in San Francisco will be financed with
$1.2 million from the fund.

The 224 residential units under construction at 888 Seventh St. will include 170 below market rate units and 54 workforce units, which will make the building the largest below market rate and workforce housing development in San Francisco when it opens in 2007, according to AF Evans officials.

San Francisco Mayor Gavin Newsom called the fund `a major step by business to help families and individuals buy a home in San Francisco.''

The building at 901 Jefferson St. in Oakland will utilize $6.5 million from the fund. That building is expected to open in 2008.

One must earn below 100 percent of the average median income to qualify for below market housing. To qualify for workforce housing, one must earn below 150 percent of the average median income.

A groundbreaking ceremony was held Wednesday for the building at 901 Jefferson St. Construction on the development at 888 Seventh St. has been underway for approximately five months.

AF Evans has 13 projects planned or underway around the Bay Area.

Copyright © 2006 by Bay City News, Inc.