Explore our research and presentations examining impact investing with a Bay Area focus.

Catalytic Affordable Housing Finance for Place-Based Impact Investors (2019)


When too many members of a community cannot get or afford adequate and safe housing, the community suffers. Tackling the problems associated with inadequate housing, from shelters for the homeless, supportive housing for seniors and disabled, to affordability for low-income families is a complex task. Solutions will require broad and inclusive partnerships that include public, private and philanthropic members.  Regional policies for inclusion, equity, resilience, transportation, housing and sustainability must be developed together with community input and engagement. These solutions will also require investment funds that are partnered with public and philanthropic grants, across the risk and return continuum, and channeled to regional plans for redevelopment and environmental risk mitigation.


Urban affordable housing is one of the solutions to the housing crisis.  For decades we recognize that subsidized housing is an effective way to reduce homelessness and address the affordability issue for many families.  Developing and redeveloping urban landscapes to include more affordable housing is complex.  The process begins with a network of public and private contacts in the affordable housing regional marketplace. Proven teams can manage the entire project to add affordable housing units to an urban redevelopment strategy, engaging the community, and working with public officials, investors and lenders, non-profits, and builders.


These public private partnerships can control the entire development process, referred to as the DBFOM model:  Develop, build, finance, operate and maintain.  It is a more efficient way to manage the whole pipeline over the entire life cycle of the project:


  • Develop: acquire the place, plan the design, get the permits
  • Build: construction of buildings, green space, infrastructure
  • Finance: the complex capital stack: grants, tax credits, loans, equity
  • Operate: sustainably, inclusively, generating community benefits
  • Maintain: for community, preserving affordable housing capacity


The complexity of financing an urban affordable housing redevelopment project requires different kinds of monies, provided at different stages of development.  The hardest money for a developer to find is the early funds – those needed to secure the property, obtain designs and permits, and engage the community to develop an inclusive and sustainable long-term strategy.  Once these efforts are complete, the team can arrange long term financing, supportive loan guarantees (HUD, FHA), tax credits and other grants.  This early stage funding is the Equity Gap.  It needs risk capital up front, filling in the gap in financing until the revenue sources can be completed.


Financing the Equity Gap is catalytic.  Without these early investors, urban impact opportunities cannot be realized.  Only a small portion of the overall financial package is needed in the earliest stages but it will be the critical portion, for without it, a project may ever get off the ground.  Some Qualified Opportunity Zone funds are being developed for investors with capital gains to participate in the funding of the Equity Gap for an urban project, but only for some locations.  An Urban Impact Opportunity Fund (U I O Fund), described in this paper, could provide the monies for the early financial needs of an affordable housing project to get it off the ground.


Calculating the Equity Gap in the complex financial structure of an urban redevelopment affordable housing project requires a thorough due diligence and financial analysis of the potential outcomes.  A development budget estimates the property acquisition costs, permits, fees, and construction costs.  An operating budget is developed based on many other factors: the number and type of units, what rent levels can be achieved while remaining affordable to the target markets, what long term loans can be supported by that rental income stream, what tax credits may or may not be available, and what other supportive funds are expected from public agencies or non-profit organizations.  The financing package arranges the early, short-term, and long term funding sources, and the Equity Gap is the amount still needed, if necessary, to start to project, often as a down payment on the property acquisition.  Having the funds available (some immediately, the rest in 10 days) can make a project viable and operational.


An Urban Impact Opportunity Fund can be part of the solution set that heals a community.  Sound community engagement can address other issues in the community of the affordable housing project, like child care and senior centers, open and green space, community meeting places, retail and service opportunities and job creation.  Safe and adequate housing brings many positive impacts to the community, including safer streets, better education outcomes for children and adults, more stable employment, and healthy members. In managing the projects and the funds for the projects, we can also measure the positive impacts that result from the redevelopment and engagement.  An impact report alongside a financial report ties investors to their values and reinforces the belief that we can track and intentionally invest for positive impacts within our community, while earning an attractive, risk adjusted, high impact rate of return.


An Urban Impact Opportunity would invest in the early stages of urban redevelopment affordable housing projects.  Once developed, a well-managed, federally and locally supported housing project can be self-sustaining and an important part of the community, while throwing off adequate cash flow to support not only repayment of the long term loans but also financial returns to the equity investors.  Long term patient capital like that from place-based impact investors can provide decades of positive impacts while the project continues to preserve affordable housing units in our urban core.  Steady returns based on cash flows (estimated around 6%) would provide an open-ended return on capital. Preserving affordable housing suggests that well-managed properties stay in the portfolio and continue to provide their financial contributions and impact.  Liquidating or exiting properties that are performing to plan is not our objective.


This paper describes how the financial aspects of urban redevelopment and affordable housing projects are tied to the timing, duration, and risk factors involved and require multi-party collaboration for long term successful impact.  Each investor and participant to the solutions that will rebuild our most vulnerable communities is necessary to make these complex projects and their complex capital needs connect.



September 24, 2019


Lauryn Agnew, President, BAIII.org

Jatin Chadha, Research Intern, BAIII.org


View the full paper: PBII Catalytic Affordable Housing Finance

Financing Sustainable Cities (2016)

Financing Sustainable Cities Scan and Toolkit: An action-oriented “how-to toolkit” for Chief Sustainability Officers and Chief Financial Officers to catalog implementable and emerging funding mechanisms that can support cities striving towards bold climate action and sustainability goals, including a scan report, infographic of finance options, and conference agenda. (USDN Innovation Fund, 2016).
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Guest Lecture for the Multisector Strategic Partnerships & Financial Solutions course at Presidio Graduate School (2019)

Watch the lecture recording here

View and download the PowerPoint presentation here

BAIII 5 Year Update: 2013-2018 (read more>)

BAIII Custom Equity Strategy Update Q1 2018

BAIII Fixed Income Strategy Update Q1 2018

BAIII Real Estate Strategy Update Q1 2018

BAIII Infrastructure Strategy Update Q1 2018

BAIII Private Equity Strategy Update Q1 2018

BAIII Super CD Strategy Update Q1 2018

Other BAIII News Update Q1 2018

Download Full BAIII 5-year Summary

The BAIII 5 Year Summary Presentation (April 2018)

Download the PowerPoint presentation here.

The Research behind the Bay Area Impact Investing Initiative (September 2013)

Download the PowerPoint presentation here.

Impact Investing in the Bay Area Conference (May 2013)

On May 7, 2013, the Federal Reserve Bank of San Francisco hosted the Bay Area Impact Investing Conference to discuss how and why institutional investment pools can participate in Impact Investing activities in the Bay Area.

At this conference, these impact investing strategies focused on regional investments that first and foremost, meet our fiduciary requirements for risk and return expectations, but also include particular environmental, social and governance factors, socially responsible investing criteria and align at least part if not all of the portfolio, even across all asset classes, with some degree of intentional impact on the mission to keep the Bay Area economy strong, diverse and innovative.

You can view the conference brochure here or listen to the presentations online.

Impact Investing for Small, Place Based Fiduciaries (December 2012)

In December 2012, Lauryn Agnew published the research study “Impact Investing for Small, Place-Based Fiduciaries” for the United Way of the Bay Area.

The paper provides an analysis of impact investing, an understanding of fiduciary duty and a step-by-step handbook on how to build a stock and bond fund that is aligned with the mission to reduce poverty in the Bay Area, while meeting fiduciary standards of due diligence and performance expectations.

You can download the paper here or view it on the Federal Reserve’s website.