SVB Collapse Disrupting Bay Area Affordable Housing Projects

The collapse of Silicon Valley Bank (SVB) is disrupting affordable housing projects across the Bay Area—where the shuttered bank was the primary lender to non-profits.

The uncertainty over construction loans that are midstream on projects backed by SVB is impacting federal housing subsidies that have compliance deadlines backed on financing.

California developers who were planning to apply for credits in April may be scrambling to find a different financial partner as a result of the closure of SVB by federal regulators, according to a report in Bloomberg.

SVB announced an investment of $17.5M in four community-based organizations in December 2022, including Housing Trust Silicon Valley, which is itself a lender to affordable housing developers in the region, the report said.

Construction on The Kelsey Civic Center, an affordable housing project in San Francisco spearheaded by civic group The Kelsey, was supposed to start on March 11. Unfortunately, the lender for the $52M construction loan for the project was SVB.

On the same day the loan was scheduled to close, federal regulators shut SVB down, halting the project, which planned to build 112 affordable housing units across the street from San Francisco City Hall. The Kelsey and its co-developers are now talking to other potential lenders.

Kelsey had already tweeted out a congratulatory message on the closing to partners including the city government, California’s state housing agency HCD, HUD—and SVB Financial.

Micaela Connery, a co-founder of the civic organization, later retweeted the message with a new introduction:

“A week ago, we were signing paperwork to close on a 112-home affordable housing community in San Francisco. After 3 years, preparing to start construction next week on homes for ppl with & without disabilities. Friday, on our actual close date, SVB, our $52M lender, was no more,” Connery tweeted.

According to the Mayor’s Office of Housing and Community Development in San Francisco, five affordable housing projects in the city that have exposure to SVB. In addition to The Kelsey Civic Center, three projects are under construction with funding coming from loans financed by SVB.

The Mayor’s Office said in a statement that the closure of SVB could impact the fulfillment of some construction loans, potentially causing work and payroll stoppages.

MidPen Housing,  a Bay Area nonprofit developer with more than 9,000 affordable units and 1,500 under construction, currently has two construction loans with SVB for Shirley Chisholm Village, San Francisco’s first educator workforce housing project.

In San Jose, MidPen is developing a 108-unit project targeted entirely to homeless people. In Livermore, in the East Bay, the nonprofit is building a 44-unit complex for developmentally disabled adults.

The Livermore project is due to receive about $14.5 million in funds through housing tax credits on April 1, and for the San Jose project, there is a $2.3 million construction draw on the loan pending at any moment, Bloomberg reported