Expanding Access to Early Care and Education in San Francisco

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Statewide in California, about four million children need child care, but less than one million slots are available. In San Francisco, about 20,000 kids do not have access to early care and education (ECE) programs. Quality, affordable child care is an investment that enables whole families to succeed by allowing parents to work and/or attend school while feeling confident about their children’s early education and well-being. This shortage of child care spots is most urgent in the city’s Mission, Excelsior, and Bayview-Hunters Point neighborhoods, and has only become more significant during the COVID-19 pandemic.

LIIF is helping to address the city’s child care shortage with an innovative model that provides flexible, low-cost financing through the use of New Markets Tax Credits (NMTC). This use of NMTCs is unique — it uses the power of a tax credit to deliver below-market interest rates. Most New Markets Tax Credit allocations are for large scale projects. LIIF has used this product to offer loans to nonprofit ECE providers who may not be able to get regular bank financing for projects that are smaller in scale but meet a great neighborhood need. NMTCs can be used for the purchase of a building or for improvements on leased spaces. This model has helped Mission Kids Co-op Preschool to purchase a permanent home in the city’s Mission District, and supported Mission Neighborhood Centers to build out a new space in the Mission. For centers like Mission Kids that purchase their property, at the end of the seven-year NMTC term, the equity will stay with the center, greatly enhancing their financial well-being.

Helping Mission Kids Co-op to buy their forever home prevents displacement of a neighborhood ECE center in a rapidly gentrifying community and creates stability for the center’s children and employees. Building a new facility in one of the nation’s least affordable cities would be impossible without this flexible, affordable debt.

For Mission Neighborhood Centers (MNC), the financing to build out a new rental facility in the Mission District will enable the center to build capacity for 22 infant and toddler spaces, while increasing their overall capacity from 34 to 42 children. This construction will more than double MNC’s programming space and add a 3,200 square-foot outdoor play area — unusual in this dense, urban neighborhood where many child care centers share public playground space with neighborhood residents.

This new building, on the same block as both bus and rapid transit lines, will be easily accessible to residents of the Mission and Excelsior who are most in need of quality, affordable child care.

LIIF Financing

  • $2.44 million NMTC allocation and $1.7 million leverage loan to Mission Neighborhood Centers
  • $7.56 million NMTC allocation and $5.14 million leverage loan to Mission Kids Co-op Preschool

Funding Partners

  • The San Francisco Office of Early Care and Education
  • U.S. Bank