The United States is in the middle of an affordable housing crisis.
The United States is in the middle of an affordable housing crisis, with working-class families increasingly struggling to pay rent — let alone purchase a home. In California, where the median income per household is approximately $75K, many residents end up spending more than they can afford on rent.
According to Eddie Lorin, CEO and co-founder of Alliant Strategic Development, a Southern California-based developer specializing in multifamily, this affordable housing shortage is particularly detrimental for people in search of “missing middle” housing — housing options that are sized between single-family homes and luxury apartments for residents making between 60% and 120% of the area median income.
Lorin said that this population, which includes teachers, firefighters and recent college graduates, are those whose incomes do not qualify them for restricted low-income affordable housing, but who nonetheless need something more economical than a single-family home or a high-end apartment.
“It’s all about supply and demand, and currently there’s not enough supply across the board,” Lorin said. “To build a product for the ‘missing middle’ is difficult because the price for both land and common construction materials are the same for luxury housing.”
Lorin said that ASD is working to provide a holistic solution for those who need “missing middle” housing. This involves creating high-quality housing at a more reasonable price point in transit-oriented communities.
ASD consists of a team of developers, contractors, architects and financial engineers, each with an estimated 30 years of experience, according to Lorin. Since 2020, the team has been collaborating with commercial real estate professionals and stakeholders to build apartment units that may be smaller in size and with less parking, but with comparable amenities to luxury housing currently on the market.
“We want to come up with innovative structures to subsidize the housing and deliver a product that’s cost-competitive, but of equal value by creating smaller, spacious-feeling units,” Lorin said.
Lorin said that to build these structures, ASD starts by paying attention to not only square footage but cubic footage to create a voluminous living environment with tall ceilings and smartly appointed unit interiors. Additionally, the building amenities provided in these units, such as common areas and rooftops, are similar to those found in a typical high-end unit.
He added that ASD’s process of creating and subsidizing these units involves using available land in areas that are accessible by public transportation, ride-share and bicycles, to bypass the need for excessive on-site parking. More recently, ASD’s new construction projects involve building on unused land within university campuses as well as excess land from former public school sites and older, abandoned commercial buildings on major boulevards.
“We took the original 10 story Security Pacific Bank HQ, which was built in the ’60s in downtown Santa Ana and has 14-foot clear ceilings, and created workforce housing that is unique to Orange County,” Lorin said. “The asset has incredible views at an affordable price to serve those residents making around 100% of AMI.”
Lorin said the target units to be rented are approximately $500 to $1K less than comparable luxury products on the market, which has been made possible through bond financing, below-market interest rates, soft money sources and a partial property tax abatement. By using this financial structure, ASD can help to decrease the capital stack and allocate the savings toward dropping the rent cost for tenants.
Lorin said that building energy-efficient LEED-Certified structures allows resident utility bills to be lower, which translates into further rental savings.
“Good deals are made, not found,” Lorin said. “Anyone can get into a bidding war and win a deal. At ASD, however, we collaborate as a team to come up with creative solutions to build, finance and deliver a quality, well-valued product as well as an incredible experience for residents. Our goal is to provide true impact in the form of a triple bottom line delivering financial, environmental and social returns to our investors, stakeholders and residents.”
Lorin said a key component for ASD to ensure that more housing is built is constant communication with government officials and everyone involved in the building process.
“It takes more than just tax credits to make affordable housing deals work today,” Lorin said. “We use our creativity to financially structure transactions by collaborating with local and state leaders to support innovation in housing.”
Because the government alone can’t solve the vast need for capital, Lorin said, ASD works together with philanthropies, corporations and private foundations to innovate financing solutions for its deals.
Lorin said that ASD is currently creating approximately 1,700 affordable and workforce housing units for people with various income statuses with the goal of exceeding 5,000 units within five years in California. In addition, using the Low Income Housing Tax Credit Program, ASD also builds units that are federally subsidized and carry a deed restriction to serve those making less than 60% of AMI.
“The old saying ‘it takes a village’ has never been truer today, as we continue to strive to one day get all stakeholders in the same room to come up with definitive financing solutions and provide everyone with the right to a safe, affordable place to live,” Lorin said. “It starts with building bridges rather than walls.”
This article was produced in collaboration between Alliant Strategic Development and Studio B. Bisnow news staff was not involved in the production of this content.
Read the article on Bisnow