San Diego’s housing crisis has reached a point where proven, unconventional solutions are no longer optional — they are necessary to make immediate, real headway at scale.
Over the past five years alone, rents in San Diego have surged by more than 40%. Nearly half of San Diego households are now considered “rent-burdened,” spending more than 30% of their income just to keep a roof over their heads. Low- and middle-income families — the people who power our economy and anchor our neighborhoods — are increasingly being pushed out of the region altogether.
Nonprofits have long engaged with housing to provide social services and limited interventions, but the scale of today’s crisis demands a larger role. When traditional systems leave a gap this large, those of us with the tools and resources to do so have a responsibility to act. That’s why we’ve chosen to step beyond grants and services alone and use our mission-aligned capital to address one of the biggest barriers to housing: the cost and risk of development.
As leaders of nonprofits whose core missions center on health and human services and community well-being — not real estate development — our involvement in housing may seem unusual. But housing instability has become such a pervasive, systemic challenge that it now touches every aspect of our work. We experience its consequences every day as a shared reality affecting the communities we serve and systems we rely on.
When housing is unstable, health outcomes deteriorate: stress rises, medical conditions worsen and preventable medical costs increase. The lack of affordable homes, low through moderate-income, also deepens already existing equity gaps, making opportunity harder to reach and social services harder to access or sustain. Nonprofits like ours work to help families build stability, but the ground beneath keeps shifting. Philanthropic dollars are stretched thin as families cycle through assistance without ever solving the underlying housing problem.
Research by Harvard Economist Raj Chetty reinforces what we’ve seen on the ground: stable, affordable housing fosters cross-class interaction and is crucial for improving social mobility. When children grow up alongside peers from different socioeconomic backgrounds, it shapes their career aspirations, educational decisions and future opportunities — helping to break cycles of intergenerational poverty.
While many incentives focus on first-time homebuyers or deeply subsidized units, the reality is that nearly everyone needs an affordable home, but this extends from low-income through moderate-income workforce housing. Essential workers — teachers, healthcare staff, childcare providers, city employees, hospitality workers, first responders, early- to mid-career professionals and even some of our own nonprofit employees — often earn too much to qualify for subsidies but far too little to compete in today’s market. This “missing middle” is critical to our region’s future, and it is precisely who is being squeezed out.
Time and again, the conclusion is the same: neighborhoods matter. Without stable, affordable housing, even the strongest services cannot produce lasting success. Housing is not a “nice-to-have” add-on. It is the platform on which all other progress depends. Housing stability will reduce long-term strain on public systems and nonprofits like us.
We see where the system is breaking — and are willing to step into unfamiliar territory to help repair it. But we are not housing developers, and we do not pretend to be. That is why we partnered with Monarch Group and Klein Financial Corporation — trusted housing innovators with deep local roots and a combined track record spanning decades. This work happens alongside our trusted partners, not in place of them, so we can ultimately provide high-quality investments in the types of homes that neighborhoods need most.
Traditional affordable housing models are essential, but their heavy reliance on scarce public subsidies and highly competitive 9% tax credits — exclusively for very-low income — often extends timelines and causes projects to stall or never break ground. And when housing supply falls short because of this, demand for nonprofit services spikes. So rather than react only after the damage is done, we are activating our resources to address a key barrier upfront by closing a key part of the funding gap.
Our current collaborative was brought to life with the Hillside Apartments project, a 249-unit, mixed-income community under construction in Southeastern San Diego, where over 40% of units will be affordable, from very-low to workforce income levels — quadruple what is typically provided by traditional market-rate projects — and wraparound resident services will be integrated to directly address community needs and reinforce stability.
More than 100 homes will be reserved for households earning 30% to 80% of the Area Median Income (AMI) — roughly $49,620 to $132,320 for a family of four, which includes many of the essential workers who keep San Diego running every day. Affordable rents will average approximately $2,173, with some as low as $930, while market rents will average just over $3,400.
To make this possible, our organizations are collectively investing $12.0 million — including $5 million each from Prebys Foundation and Jewish Family Service of San Diego — to secure the land. This single step removes one of the largest financial barriers to development, enabling a remarkably cost-effective investment of $113,200 per unit and deeper affordability across the project.
Our partnership also unlocks additional innovative financing, including tax-exempt bonds and non-competitive 4% tax credits, making the project viable and shovel-ready. In a market where the cost of building affordable housing in San Diego often exceeds $700,000 per unit, Hillside will come in at an estimated “all-in” cost of approximately 30% less per unit and delivery of higher quality, family homes up to three bedrooms.
By combining the deep expertise and proven track record of reputable housing developers with the success of mission-driven nonprofits, this partnership offers a bold, practical path forward with real community benefit and financial efficiency — and establishing a replicable model for the region. Over the next five years, we hope to scale this approach, potentially bringing upwards of 2,000 low- and moderate-income, high-quality affordable homes to the San Diego region.
We invite developers, nonprofits, investors, advocates and San Diegans to come together and help us bring this bold vision to life. Together, we can transform housing in San Diego and create a ripple effect that impacts lives and communities for generations.
Sarah Lyman is executive director of Alliance Healthcare Foundation. Andy Ballester is co-founder of BQuest Foundation. Dana Toppel is chief executive officer of Jewish Family Service of San Diego. Gil Alvarado is ehief financial and investment officer for Prebys Foundation.
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