California’s affordable housing projects are ready to move—on paper. But sponsors say the money to start construction is the missing piece, leaving thousands of units in financial delay even as regulators push localities to plan more homes.
The latest snapshot comes from a new report by Enterprise Community Partners, a national nonprofit that funds, consults and advocates for affordable housing. It estimates that 39,880 affordable housing developments across California are “shovel-ready” in the sense that they are designed, legally cleared and backed by a significant amount of funding, but still short of what they need to begin building. One example is Morris Village, an apartment project planned on East Morris Avenue in Modesto that promises 44 affordable homes, half reserved for people without homes and backed by features such as on-site mental health services, job training and Zumba classes.
Morris Village has drawn support from local elected officials and received zoning approval, but developers say it remains just shy of the total needed to break ground after assembling a financing patchwork of local government and corporate grants, private debt and a plot of land donated by a foundation. “Six years and 13 funding applications after it was first proposed,” the project sits ready but waiting, according to the reporting. Enterprise’s report places similar delays across the state, characterizing the problem as a bottleneck at the final stage of filling the remaining funding gaps.
Enterprise policy director Justine Marcus described the dynamic as one without an immediate way out. “There’s no exit route right now. It’s a bottleneck,” Marcus said in the report, adding that some projects have been waiting “for a year or two” for funding. For many developers and advocates, that bottleneck is frustrating because California’s policy goals call for rapid housing production, including additional units affordable to renters with the least ability to pay—goals that depend on turning pre-development approvals into construction starts.
Enterprise estimated that clearing the backlog would require an extra $4.1 billion, split among state-administered grants, low-cost loans and tax write-offs, after taking publicly available but difficult-to-parse applicant lists from seven subsidy programs managed by different wings of California’s state government over the past three years. Those projects, Marcus said, “kinda have to have their (stuff) together” to qualify for the final layer of state subsidy—suggesting the state is not starting from scratch, but trying to close gaps in already-assembled financing plans.
The report also points to the way projects become “stuck” after earning early support. Two-thirds of the projects on the list have already received help from at least one other state program, and developers say those dollars are tied to performance expectations—like proximity to amenities and delivery of resident services—so sponsors typically cannot simply swap in any funding stream. Betsy McGovern-Garcia, vice president of Self-Help Enterprises, said the projects are “close to amenities,” “providing resident services” and “financially feasible,” and that they are “meeting the bar for what we want to see as a state out of our affordable housing community.”
Morris Village’s backers applied in February for another round of state financial support, seeking to “close the gap” and begin construction. McGovern-Garcia said in an interview that the team remained “optimistic this might be our round.” She said the expectation is that sponsors are already prepared for the next step, so the remaining delay is largely about securing the last layer of financing rather than rebuilding approvals or redesigning projects.
Advocates say the bottleneck has shifted location over time as California changed local rules and federal incentives. Nevada Merriman, a policy advocate for MidPen Housing, described earlier years when the main hold-up was local approval and litigation risk for affordable sites in specific communities, with developers facing extensive planning and council processes as well as costly concessions. She said that changed as lawmakers passed laws overriding some local impediments, which moved competition forward to earlier state and federal subsidy stages such as Low-Income Housing Tax Credits—and then, late last year, to changes tied to President Donald Trump’s 2025 tax bill that boosted the overall supply of one type of tax credit while changing how another credit type could be spread across projects.
In Merriman’s account, the current problem is that projects can pass local approval and more easily line up federal financing, but sponsors often cannot apply for federal sources until other financial holes are filled. “We’re looking for state sources to fill that gap,” Merriman said, adding, “We want to make sure we don’t leave those federal sources on the table.” She described MidPen as having 1,198 units across seven developments waiting for that last bit of funding, with a “pipeline that is ready to go” if the state provides additional support.
California’s last major infusion of public affordable housing dollars came from a voter-approved bond in 2018, and after that, the remaining funding streams have continued in a more fragmented pattern. The California Department of Housing and Community Development said at least $1.8 billion should be available for affordable developer applicants this year, while Gov. Gavin Newsom’s budget proposal for the coming fiscal year would not include new discretionary spending beyond that amount—though advocates and supporters have pointed to past bargaining in which lawmakers added hundreds of millions of dollars back into the final budget.
Beyond adding more money, the article describes another route: cutting costs and speeding timelines so projects do not lose ground to construction-price increases while waiting. A UC Berkeley Terner Center for Housing Innovation analysis found that each additional funding source delays the start of construction on an affordable project by an average of four months, adding $20,460 per unit. The Newson administration has proposed changes aimed at reducing delays as well, including creating a cabinet-level housing agency to take over California’s housing and homelessness loan and grant programs and requiring that the new agency coordinate with the Treasurer’s Office so developers can apply in a more unified way.