Housing Has Become Increasingly Unaffordable

The last 25 years has put increasing pressure on housing supply. From the Savings & Loan Crisis, to the Global Financial Crisis, to more recently the Covid-19 Pandemic, housing has been continuously impacted by exogenous events that have halted supply creation. Today, we find ourselves with millions of units short of what people need, millions of Americans rent cost burdened, and LIHTC, our only tool to create affordable housing at scale, is struggling to keep up.

What Prevents Us From Building More Affordable Housing? Development Costs Have Skyrocketed

Despite great efforts across both the private and public sector, we simply cannot keep up with increasing cost of development. In part this has been due to a decline in productivity, in part its the cost of inputs which have remained high after the pandemic halt. In larger part however, the cost of capital has outpaced the other inputs, making it disproportionately expensive to finance the development of projects.

Together these conditions have made tax credit equity stretch less per project, forcing developers to be increasingly creative with how they source funds for affordable housing. The increasing “gap”, as it is known, drags housing supply for months, meaning that people are going without quality affordable housing.

A second problem that emerges in our market is that when affordable units are placed into service, they are not necessarily in places that people want to live. For many middle and low income households, finding housing close to their work place is a challenge, and tax-credit funded housing is also struggling to meet that demand. What is needed is workforce housing in places where people want to live, as well as affordable housing to help those who are most in need!

It Is Clear! We Need New Affordable Housing Funds Designated for…

The Solution?

Santo Affordable Housing Investment Coops

Santo is a nonprofit investment coop starter. Our mission is to embolden communities to invest in the supply of affordable housing by creating investment coops, a model we call “investing in our neighbors.”

By pooling resources of many investors, and creating an equitable governance structure, investment coops can direct capital toward two housing needs: gap financing available to Section 42 LIHTC (low income housing tax credits) funded affordable housing, and to market rate workforce housing.

Each investment coop would have these two instruments with which to invest in their housing supply.

The first instrument, LIHTC Gap Financing Notes, would help affordable housing developers complete their capital raise faster by providing that last portion of funding they need. Affordable housing developments are currently being slowed down by the increasingly difficult gap financing puzzle. By lending toward this need, Santo Coops would help affordable units come to market months faster!

The second instrument Santo Coops would use are Workforce Housing Financing Notes. These notes would be made available to market rate developers working on workforce housing rental units, or to market rate developers who want to add workforce units to their project, but are struggling to do so financially. By securing affordability with a LURA (Land Use Restriction Agreement) Santo Coops can assure that units will remain affordable for years to come. Developers commit to maintain a proportion of the unit mix at affordable levels, and benefit from a lower cost of capital spread across market rate units.

How Do Santo Coops Work?

What Impact Can We Have Together?

Santo operates a non-extractive impact investing model, which organizes investors, pools them into coops, and assures that the capital invested remains deployed into the community. As developers service the notes lent to their projects, the returned capital would be reinvested into new projects, making the investments available in perpetuity.

By aligning capital with the mission of maintaining affordability, Santo Coops will build prevailing systems of justice, funding housing supply for those who need it most, multiplying the funds available overtime to exponentially grow its’ impact for good.

Tangibly, Santo will impact the velocity with which affordable units enter the market, it will increase the supply of workforce housing, and create a financial recycling process which continues to fund the common good.

Are You Ready To Invest In Your Neighbors?

We Are Looking for Partners to Help Make Santo A Reality!

Santo is a non-profit organization seeking 501(c)3 designation. We are looking for mission aligned lawyers, academics, real estate practitioners, and public servants who want to help grow our reach and begin connecting with investment opportunities.

We are also looking for investors who want to support our mission. We welcome conversations with both impact investors looking to help us fund the early stages of our organization, and investors who would want to participate in investing coops.

Together we can create a more just housing market by making funds work for the common good instead of against it. Let’s invest in our neighbors!

Download our introduction pitch deck and share it with your neighbors!

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