(Summer ’12) Dan Rinzler G
PSC Intern. This summer, Dan will work full time for ten weeks for the California Housing Partnership Corporation (CHPC) out of its Los Angeles Office. CHPC is a State-sponsored nonprofit housing policy and financial consulting organization whose mission is to help nonprofit and government agencies develop, preserve, and manage affordable housing for low-income households. His work will strengthen and refine CHPC’s programmatic efforts to preserve housing affordability, reduce utility costs, and improve housing quality for very low-income Los Angeles residents living in at-risk, nonprofit-owned affordable housing. He will also produce key deliverables as part of a larger, MacArthur Foundation-funded effort for CHPC to develop an affordable housing preservation policy and funding framework for the City of Los Angeles. Be sure to keep up with his updates!
Fourth Post (August 30, 2012) – Wrap-up and final thoughts
This is my final blog post for the summer. I’ll use it to recap my work at CHPC, and to offer a few concluding thoughts.
I spent the final working weeks in a sprint to finish a handful of projects – some of which I had been working on for the entire summer, and a couple others of which I collected along the way.
I also spent most of this time doing financial modeling, which was a change from the first handful of weeks when I spent many hours on a policy report for the City of LA Housing Department. A bit to my surprise, I enjoyed the modeling and was even able to get creative with it in the case of the renters’ tax credit (see below).
Here’s a run down of the projects I completed over my final two weeks at CHPC:
Abode portfolio recapitalization
I finalized “deal summary sheets” for four low-income housing tax credit-assisted (LIHTC) properties in Abode’s portfolio, and developed financial models to refinance and recapitalize all four.
After creating individual models for each property, I combined two of them into a single model – where the two properties could be refinanced in a single transaction – when my supervisor suggested that banks seeking CRA credits might not be attracted to such small equity investments. I suspect he’ll combine the other two as well, since all four are relatively small properties.
This modeling will help Abode understand the opportunities and hazards in refinancing its portfolio of tax credit properties – which, if done strategically, will allow it to further its mission as an affordable housing developer and property owner while improving long-term organizational health.
Renters’ Tax Credit modeling
This exercise turned out to be much more creative than I had anticipated. It turned out that the folks at the Center for Budget and Policy Priorities (CBPP) hadn’t yet determined how their proposed renters’ tax credit could be layered onto LIHTC properties to achieve deeper affordability. The answer to this problem was not straight forward.
CBPP had asked for CHPC’s help thinking through this problem in part because CHPC is a respected voice in housing policy and finance, but also because CBPP’s staff lacks development expertise and a deep familiarity with the LIHTC program. As a result, there was plenty of room for my colleagues and me to fill in how we thought the credit should work in the context of a LIHTC-assisted property.
After a lot of back-and-forth, my colleague Amy and I developed a financial model and set of procedures/regulations that we believed would make using the credit on LIHTC-assisted properties: 1) attractive to potential renters’ tax credit and LIHTC investors; 2) sufficiently sized and designed to avert operating shortfalls while maintaining affordable rents for extremely low-income tenants; and 3) protective enough of public resources from the perspective of the state agencies who would administer the credit.
This exercise was particularly fun because it helped me see how financial models are based on a huge number of assumptions – and in this case, we were the ones creating these new assumptions, and proposing rules for how they should be regulated in order to maximize public benefit while satisfying stakeholders.
My work on the renters’ tax credit also showed me how policy activists and policy makers often don’t have a strong sense of how policies actually play out on the ground. This isn’t necessarily a criticism, but housing is such a complicated field that even the most respected housing-oriented policy entrepreneurs in Washington D.C. often don’t have a strong grasp of the range of impacts of their (proposed) policies, or what might be required to make them work. Not many people have such broad-ranging expertise.
I’m still trying to decide where I best fit within the affordable housing world – whether it’s as a policy maker, program administrator, developer, consultant, or advocate. Working on the renters’ tax credit was valuable for me because it demonstrated the importance of understanding as many aspects of the multifaceted housing world as possible. I think this will make me more effective, no matter which role I ultimately decide to take.
In any case, I’m sure Amy and my other colleagues at CHPC continued to develop our model after my position ended, but I think our initial effort was strong. I’ll be curious to hear what CBPP does with CHPC’s findings and recommendations.
Case study write-up for CHPC preservation newsletter
In its monthly preservation newsletter, CHPC often includes profiles of affordable housing preservation efforts that were in some way remarkable. I wrote a case study for an upcoming issue on Juniper Gardens, a 40-unit property in San Diego that was at risk of 1) converting to market rate, due to uncertain estate planning on the part of the original owner and the impending maturity date of its CalHFA mortgage; and/or 2) falling into physical obsolescence due to a substantial capital needs backlog.
A nonprofit developer was able to purchase, refinance, and rehabilitate the property thanks in large part to a pilot program that allowed prepayment of CalHFA mortgages, as well as a sizable investment from the San Diego Housing Commission. My CHPC colleagues in the LA office were also instrumental in helping the developer buy the property, obtain HUD approvals to extend the property’s Project-Based Section 8 (unit-based rental assistance) term by 20 years, and secure competitive 9% LIHTCs on the first try.
This preservation effort meant that: 1) existing residents will be able to remain in their apartments at their current rents; 2) the entire property will be rehabilitated, with the help of many sustainable design features; 3) there will be a new community center and children’s playground; 4) the property will remain affordable to low-income families in perpetuity.
Policy report for the City of Los Angeles Housing Department
As I noted in previous blog posts, we finished our report for LAHD in late July. The last step was to present our findings and recommendations in-person to senior LAHD staff.
In a meeting at City offices, we (well, my supervisor Paul; I was there for moral support) presented our report and findings and endured a rather intense 2-hour Q & A. Overall, LAHD staff seemed pleased with our work. Hopefully the report will help the City better align its resources and processes around affordable housing preservation.
Please see my previous blog posts for a longer discussion about the contents of this report, which was part of a larger MacArthur Foundation-assisted effort to help the City improve its preservation efforts.
Working at CHPC this summer was a great experience on multiple levels.
First, I got a chance to work on a nice array of affordable housing policy, finance, and administrative/organizational projects. I had targeted CHPC specifically because they are a multifaceted organization involved in a range of housing activities, and for their landscape view on the affordable housing scene. It was helpful for me to get a taste of different aspects of the field; my experience this summer will help me decide which positions to target when I graduate from MIT.
I also worked with really great people. Paul’s mentorship blew me away, and reminded me what a difference an extremely smart, dedicated, experienced, and conscientious boss can make to an up-and-comer like me. He and the other LA staff were welcoming to me – their first intern ever – and I enjoyed working with and learning from them.
Most importantly, I think I was able to really help CHPC this summer (or so they told me). CHPC is a very important organization that helps create and preserve a lot of affordable housing that provides stable and affordable homes for some of California’s most vulnerable residents. So I feel good about the work I did.
Thanks for reading!
Third Post (August 29, 2012) – A simple question: are we doing a good job?
My summer position at CHPC ended a couple weeks ago and this entry will be the first of two final reflections on my work there this summer. The second will come in another week or so.
One of the most interesting experiences I had this summer didn’t happen at the CHPC office, but it was related to my work there because it had to do with how – and how effectively – affordable housing programs and policies that use public resources help low-income families and individuals. So I think it’s worth sharing.
Over the past year I’ve grown increasingly curious about the Section 8/Housing Choice Voucher (HCV) program – our federal government’s largest housing expenditure for low-income people – so I decided to pay a visit to the Housing Authority of the City of Los Angeles (HACLA), which administers the program in LA. I had heard the program director is a smart and decent guy, so I scheduled a time to talk with him and also to sit in on a voucher briefing/information session for families about to receive a voucher. This blog post is mostly a reflection on my experience spending a morning there.
Some background on the Section 8/HCV program
The HCV program is a demand-side subsidy for very low-income households that helps them afford housing in the private rental market – as opposed to in physical housing units with restricted rents, such as public housing or privately owned affordable housing (the latter of which was the focus of my work at CHPC).
Public Housing Authorities that administer the voucher program pay landlords the difference between 30 percent of household income and the market rent for the apartment that the voucher-holding family chooses themselves, up to a limit (somewhere around 40 percent of the county-wide market), in accordance with standards for unit quality, limits on the time from voucher issuance until lease-up, and other program limitations and requirements.
At its core, the HCV program embraces the American preoccupation with choice and hope in its ability to produce better outcomes than supply-side programs – some of which have faced scrutiny (and civil rights lawsuits) for concentrating minorities in poor ghettos – that lock low-income people into subsidized properties. In theory, families will make the best decision for themselves about where to rent a unit, and will use the voucher to do so. Vouchers are also usually cheaper on a per-family-served basis than building low-income housing.
This combination of free market orthodoxy and efficient use of public resources make the program somewhat palatable to fiscal conservatives when compared to some supply-side programs aimed to help production of affordable housing (with the Low-Income Housing Tax Credit program being the notable exception, since it has a strong “free market discipline” component and private investors take on risk as opposed to taxpayers).
Does greater “choice” work better for low-income families?
This promise of choice leading to better outcomes is one reason I’m so interested in the HCV program. Studies have shown that although there is some improvement in locational outcomes among voucher-holding families when compared to those who live in unit-based affordable housing, they largely end up in high-poverty, high-crime neighborhoods despite the freedom the voucher supposedly provides to rent anywhere they want.
Most people working in affordable housing (and in the public at large, for that matter) assume that voucher holders, who at least in major urban areas are mostly people of color, mostly live in sub-markets with concentrations of poor minorities – and with higher crime, poorer schools, fewer job opportunities, and less healthy environments – because it is their preference to do so.
But research and program evaluations contradicting this theory have mounted in recent years, suggesting that few people, including seasoned affordable housing professionals, actually have a solid grasp on how low-income people search for and make decisions about housing their families, let alone which new supports within the HCV program (such as housing search assistance and longer allowed search periods) might be the most cost-effective ways to help interested families move to and stay in better neighborhoods.
Toward a better understanding of how low-income families choose housing
Most new research on the housing search process among voucher-holding families has come out of evaluations of HUD’s Moving to Opportunity experiment, but other recent studies such as those by Stefanie DeLuca, Associate Professor at Johns Hopkins University, have demonstrated just how poorly the voucher program is aligned with the experience of being an extremely low-income renter – that is, if the policy goal is to do anything more than help these families afford a unit of some minimum quality, in a rough-and-tumble neighborhood, likely for a short period before something uproots them and forces them on another housing search likely to yield a similar outcome.
Notably, MTO evaluations demonstrated that many low-income families want to move to better neighborhoods, and will fight hard to stay in them if given a chance. This is an important point to make, considering the common perception that vacuum-sealed sets of preferences determine locational outcomes for these families – and not any failing on the part of the HCV program.
Further, research showed that voucher-holding families face a litany of barriers to leasing up in lower-risk/higher opportunity areas, all of which are accentuated in tight rental markets such as Los Angeles – not to mention that fewer eligible families in these markets actually receive housing assistance via the voucher program when compared to looser markets.
These barriers include demand-side barriers (e.g., mental and physical health problems; limited time, money, information, transportation, and help from counselors/program operators; burdensome family and social obligations) and supply-side barriers (e.g., discrimination; landlord participation; administrative barriers; availability of voucher-appropriate units in opportunity neighborhoods).
Finally, new research has demonstrated that voucher-holding families often make difficult, conscious tradeoffs when choosing a unit – such as sacrificing neighborhood quality/safety for unit quality and availability – and often “take what they can get” and otherwise do their best to manage neighborhood risks. This model for housing search contradicts the idea that voucher holders end up living in very poor neighborhoods because it is their preference to do so.
The HCV program in Los Angeles
The preamble above is background for what I experienced when visiting the Section 8/HCV program at HACLA, which is basically a well-run program that – considering that it is the second largest voucher program in the country – does well in achieving the program’s primary goal of increasing rental affordability for extremely low-income Angelinos who are lucky enough to receive vouchers. The Section 8 program also has a variety of “set-asides” for special policy priorities such as supportive housing for the homeless.
My 90-minute conversation with the Section 8/HCV program director was heartening because it proved to me that there are extremely smart, creative, and capable people working in public service. But it was also a discouraging reminder that housing programs are tightly regulated and do not offer much leeway to administering agencies that want experiment with new ways to serve low-income families – not to mention that these programs are woefully underfunded, and are subject to annual cuts from Congress.
The highlight for me was the voucher briefing session, where HACLA staff informed new voucher holders of their obligations under the program (e.g., limits on search time to lease-up, how to schedule a unit inspection, payment standard limits, others).
Other than providing a few off-the-record tips (“take the first unit you can get” and “visit the neighborhood at night before you decide to rent a unit”) and pamphlet at the briefing session, HACLA provides basically no housing search assistance to voucher-holding families. This 2-hour info exchange is it.
I can’t be sure how the new voucher-holders in the room actually felt at the time, but I sensed a mix of excitement (understandable, since many waited more than 10 years to receive a voucher) and also confusion and apprehension about program requirements. Many in the room only spoke Spanish or Armenian, and struggled to understand exactly how the program worked. Even the English speakers had many questions for HACLA staff.
Given the barriers that very low-income people face in leasing up in the private rental market, it is no wonder voucher holders mostly end up in poorer areas with fewer resources. The truth is that most of these families – especially the ones interested in making the kind of “opportunity moves” to better neighborhoods that research has shown to have dramatic positive health impacts, particularly for women – need a lot of help finding a place to live that suits them, or that at least reduces the severity of some of the tougher tradeoffs they typically make when choosing a unit. With the way the HCV program works right now, they aren’t getting it.
Given limited resources, do government housing programs provide the best housing assistance possible to low-income families?
I decided to write about the Section 8/HCV program and my visit to HACLA for this blog post to demonstrate the continual challenge that all affordable housing programs face related to effectiveness – both in achieving targeted policy objectives (i.e., serving clients well) and in terms of cost.
This challenge certainly applies to the affordable housing preservation work that I did at CHPC this summer. When compared to demand-side programs such as HCV, the level of complexity and the number of stakeholders and investors involved in supply-side financial transactions even further pits financial feasibility against achieving desired outcomes beyond affordability, such as expanding opportunities for low-income people to live in higher-opportunity areas.
The truth is that policy priorities are something of a moving target in affordable housing programs, for reasons both political (e.g., vouchers are perceived to be cheaper than production subsidies) and well meaning (e.g., a program adjusts to new research demonstrating the importance of living near transit). Policy priorities within housing programs have included poverty reduction, improving educational outcomes among children, improving health, neighborhood revitalization, and creating construction jobs, among others. And target outcomes change over time, even within the same program.
Ultimately, I hope that housing programs can adapt over time in order to better serve families, while still preserving/expanding basic assistance for low-income families and individuals in need – a kind of housing safety net to avoid the most crushing cost burdens. Achieving this kind of balance depends heavily on availability of funding, but also on ingenuity among program operators.
Second Post (July 23, 2012) – CHPC — Industry Facilitator
Three weeks since my last post and three weeks left on the job, I’m still discovering how my apparently disparate projects at CHPC are thematically connected.
First, I am beginning to understand CHPC’s value to its clients – and to the affordable housing industry as a whole – in clearer terms. Rather than merely being a “financial modeling expert” or “policy advocate,” CHPC is a facilitator of affordable housing transactions, policy initiatives, and administrative processes.
For example, although I have performed a number of discrete tasks this summer (policy analysis, report writing, financial modeling), all of my work has had the goal of improving the “ease of use” and overall trajectory of affordable housing production, policies, and programs.
Broader objectives have included better aligning multiple housing program administrative processes and policies; helping nonprofit housing developers and owners achieve sustainable organizational practices; satisfying – to differing degrees – a range of stakeholders party to transactional and policy outcomes (e.g., tax credit investors, low-income residents, developers, local governments, elected officials, FHA-approved lenders, state and federal agencies, etc); and reaching out into an unknown future in search of policy solutions that could improve target outputs such as increasing assistance for large, extremely low-income families.
This blend of work requires a distinct skill set, institutional perspective, and organizational history that I believe are unique to CHPC in California. On a given day, my coworkers will move from strategizing with policy advocates in Washington D.C. to advising single-asset property owners in South Los Angeles. But at its core, CHPC’s facilitative role and organizational objective has to do with its provenance; the State of California sent it into the world to solve problems where the public interest is at stake.
Here is a summary of the actual work that I’ve been doing:
Two weeks ago, we worked late into the night on multiple nights to complete a draft report for the City of Los Angeles Housing Department on how to better align its resources and administrative authority for affordable housing preservation with other resources and programs, particularly FHA financing (this is part of the MacArthur Foundation-supported initiative I mentioned in my last post). I found this work interesting and enjoyable because it combined policy analysis, organizational strategy, and financial modeling in a single work product. Last week LAHD provided feedback on the report, and we’re currently revising it and will present it to the City on July 30.
I’m also moving forward with the portfolio recapitalization work for Abode Communities, a nonprofit affordable housing developer and property owner with a strong track record in Los Angeles. Part of this work involves presenting a concise picture to Abode of the aging Low-Income Housing Tax Credit-assisted properties in its portfolio (e.g., outstanding loans, affordability restrictions, reserve balances, operating budgets, etc); I’ve almost completed this task. The more difficult portion of the work will be to model how each property might be refinanced and recapitalized using new LIHTCs and other financing sources. Note: affordable housing preservation has typically focused on older HUD-assisted properties, but LIHTC properties reaching their end of their 15-year terms present additional challenges and opportunities for owners, such as the chance to earn a substantial developer fee through refinancing and recapitalizing using non-competitive 4% tax credits and tax-exempt bonds.
Finally, I’ve picked up the interesting assignment of developing a sample financial model/pro forma for how the Center for Budget and Policy Priorities’ proposed “renter’s tax credit” might work in conjunction with LIHTCs to target deeper affordability in assisted properties, as well as model how owners might package and sell the credits to investors in a similar way as syndicating LIHTCs. It’s exciting to contribute even in a small way to a national-level policy discussion, so this is a nice opportunity for me. In addition, CHPC’s work with CBPP in this instance is just one example of the policy work it does in Washington.
Like many others working in affordable housing development and policy, this summer I have often thought to myself: why does this have to be so complicated? This question merits its own blog post (or multi-volume treatise), but it is relevant to what I consider to be CHPC’s core function as a curator and facilitator. Part of the reason CHPC and other similar actors are so valuable is that very few people and organizations have as complete a landscape view of the field, and are simultaneously involved in so many different aspects of development, program implementation, and policy design.
The sad truth is that the US doesn’t really have a low-income housing policy – merely a handful of programs that often don’t fit well together, and many of which are block grants and are thus subject to annual Congressional cuts (as was the case last year, when the HOME program was cut by more than 40 percent). Federal, state, and local programs were born at different times under different political and administrative regimes, and have different policy objectives and stakeholders; for example, the LIHTC program was the first to make private investors – not taxpayers – assume the risk involved in developing and operating federally assisted low-income housing.
Given the field’s history, it is no wonder that organizations involved in low-income housing need assistance navigating practice and policy arenas, as well as the uncertain space in between. I only hope that CHPC and others can, over time, help the field become more cohesive in process as well as in purpose.
First Post (June 29, 2012) – Affordable Housing Deluge
I’m four weeks into a ten week internship at the California Housing Partnership Corporation (CHPC), and despite this being my first blog post I feel that I’m both just getting started and running out of time. I’ve learned a lot in a short period at CHPC’s Los Angeles office, and I aim to use this entry mainly to introduce readers to CHPC and to my work here, but also to reflect on the affordable housing field and my own career development.
First, the basics: CHPC is a unique organization in that it is the only State-sponsored 501(c)(3) nonprofit in California. The legislature created it in 1988 specifically to help address the growing number of “at-risk” affordable housing developments throughout the state – that is to say that its focus is on preserving affordable housing as opposed to facilitating new construction. Over the course of its 25 years of existence, CHPC’s focus has remained on preservation, though over time it has expanded its toolbox and the roles that it plays in the broader affordable housing policy and development field. Beyond its core financial consulting work to nonprofits and government agencies (which I describe in more detail below), it provides training to housing professionals, advocates for better policies at the state and federal levels, and spearheads various initiatives such as a recent statewide weatherization effort for multifamily housing. Considering its breadth of activities and statewide influence, I am continually surprised that CHPC only has 15 full-time staff members.
The affordable housing field’s origins and purpose aren’t well known among the general public, and it is a world clouded with jargon and creatively titled program names such as 221(d)(3) and 223(f). So before I go any further, I feel I should make a reasonable effort to explain at least some key terminology in the affordable housing preservation field. In particular, it is important to understand what is an “at-risk” property in need of preservation – that is, refinancing (dealing with existing/expiring mortgages and subsidies and bringing in both new government subsidies and commercial financing) and/or recapitalization (completing physical repairs on the property). In industry shorthand, that’s “refi” and “recap” – got it?
“At-risk” is a broad term that, according to CHPC staff, captures at least a few different categories of aging rental housing properties: 1) properties whose rental subsidies and affordability restrictions are within a few years of their expiration date, risking that the property might be converted to market rate and become unaffordable to low-income residents, particularly in a tight market like Los Angeles; 2) properties that are physically deteriorating, and are at risk of being permanently lost in the housing stock as well as jeopardizing residents’ health and safety; and 3) properties that face both of the previous challenges, to differing degrees; even older developments that have been well-managed and maintained over their operating lives usually have substantial backlogs of needed repairs.
Additional variables include but are not limited to the property owner’s intentions and know-how (e.g., whether it is aware of its full range of options for what it can do with the property, and how), and pressure from aggressive and often less mission-oriented for-profit developers eager to purchase and turn a profit on at-risk properties – this is to say that operating older affordable housing, particularly if the owner secures federal rental assistance for the property, can be a solid investment.
Today, most of CHPC’s work is in providing financial services and strategic advising to nonprofits and government agencies on how to preserve existing affordable housing (whether it is “at-risk” according to any commonly accepted definition or simply aging and has a growing capital needs backlog). CHPC staff call this “transactional” work, since it involves modeling and navigating through complicated real estate “deals” that incorporate multiple layers of financing and restrictions from different government and commercial funding sources, and endeavor in the complicated task of replacing older sources of government assistance with new ones.
Doing this work requires a high level of technical knowledge and experience with government programs, not to mention attention to detail and creativity. As a result, CHPC staff who provide transactional consulting services are some of the most respected and sought after in the state, and in most cases have at least a decade or two of experience assembling affordable housing financial packages as consultants, developers, lenders, and government officials. The three-person staff in CHPC’s Los Angeles office is almost exclusively focused on transactional work.
To the untrained ear, my colleagues can sound as though they’re speaking another language. Although I consider my own ears partially trained, I still find myself writing down unfamiliar financial jargon during every meeting and conference call. Even the playful slang can take some getting used to; in a staff meeting two days ago, my colleagues began referring to the amount of “hair” on different older properties (i.e., quirks and back-stories that might make refinancing and recapitalization challenging, or that could make a tax credit investor think twice about a property), and at one point my supervisor even declared a particularly troublesome development a “yeti.”
Considering the high barrier to entry for financial consulting on affordable housing preservation deals, my supervisor and I structured my work plan so that I can add value to CHPC’s efforts in targeted areas, while leaving space for me to build my skill base and learn the field by attending trainings, interacting with clients, or chatting about the ins and outs of California’s low-income housing tax credit allocation process for 45 minutes (as we did yesterday).
My work so far has been divided into a two major projects:
- The first is a MacArthur Foundation-funded effort to develop an affordable housing preservation policy and financing framework for the City of Los Angeles. CHPC has been working with the City’s housing department for a few years already, and our next report in the current phase of our contract is due to them in the beginning of July. So far I’ve spent time writing sections of the report, interviewing City staff and other financial experts in order to better understand challenges the City currently faces, analyzing and comparing preservation policies and programs, and collaborating with my colleagues on the product we ultimately provide to the City. It will be a real push to finish the report over the next two weeks. Our proposed strategies will involve parsing out exactly how the City could better align and combine its own resources (federally allocated grants and issuing tax-exempt bonds) with other financing options such as FHA mortgage insurance and low-income housing tax credits, as well as how it could improve its Housing Department’s organizational processes to achieve better and more efficient outcomes for preservation deals in particular.
- My second project is assisting CHPC’s broader efforts to help their clients with portfolio recapitalization. In somewhat more understandable terms, this is to say that we’re using financial modeling and some creative thinking to help our nonprofit housing developer/owner clients develop preservation and recapitalization strategies across multiple properties in their portfolios. So far, I’ve been intaking loads of information (operating statements, loan documents, title reports, budget projections, capital needs assessments, etc) on five properties from Abode Communities, one of the largest and most established nonprofit affordable housing developers in southern California, and organizing this information into an understandable format that will form the basis for our financial modeling, which is shortly upcoming. One of the most interesting aspects to this work is that it is capacity-building for our clients, and it has as much to do with investing in properties and the low-income who live in them as it does to do with organizational sustainability (i.e., earning developer fees and pulling out equity from transactions, to invest in other properties) for our clients. Long-term organizational maintenance and growth is at a premium during these leans times in the affordable housing world; just in the last year, two crucial funding streams for developing and preserving low-income housing were either slashed (in the case of the federal HOME program, by over 40 percent) or eliminated entirely (the state Redevelopment program), which is unprecedented.
- My other activities so far have included: 1) analyzing the newest round of low-income housing tax credit awards, so that we can help our clients understand how to better align their projects for the next application round; 2) attending a HUD training on preservation; 3) meeting with clients and other stakeholders such as Bill Pavão, who runs California’s low-income housing tax credit allocation program in Sacramento; and 4) updating financial projections for one of our clients’ properties in Ventura county.
So far, I’ve enjoyed the balance of financial analysis and modeling with policy analysis and writing at CHPC. The financial work is most challenging for me because I haven’t had much coursework or work experience in this area. However, I appreciate the opportunity to try my hand at working with CHPC’s model, since it is so sophisticated and is one of the major tools that it uses in its transactional work. Even if I end up working more in the realm of policy and programs, and not as a developer or financial consultant, I will still need to have a deep understanding of how financial models and transactions work if I want to be effective and have any kind of legitimacy in the low-income housing world. In addition, CHPC is a good place for me to see a lot of different kinds of transactions, and to get a sense of the landscape for the kinds of challenges that nonprofits and government agencies face in this uncertain time and diminished funding environment for developing and preserving low-income housing.
Another notable aspect to my experience thus far has been the incredible generosity that my coworkers have shown towards me. I tend to ask them a lot of questions, and they always take the time to answer them in more depth than I had even hoped. My three colleagues have something like 45 years of affordable housing experience combined, and they are an incredible resource for me. And despite being overburdened by their work and constant client requests, they haven’t once made me feel out of place when asking for clarification about something they just said, or even about a housing issue not entirely related to CHPC’s work. I consider myself very lucky in this regard.
My final thought for this blog is that despite how impressed I’ve been with my coworkers and with the overall level of sophistication in project-specific transactions and even physical design and programming for low-income housing, I fear the effect of silos – that there isn’t enough communication between the transactional folks and a range of other housing stakeholders such as policy advocates, researchers and experts from other fields related to housing (such as public health and civil rights law), not to mention Public Housing Authorities, on what policy goals affordable housing should aim to accomplish, and how to move the field forward. Developers are certainly crucial to making this happen, but many others could provide worthwhile input. Just today, I attended a session where City of LA staff solicited feedback from a room full of developers and other transactional experts on how it should craft new scoring criteria for awarding funding to projects, and came away with the impression that most developers in the room were less concerned with certain policy priorities than they were with ensuring that the new process improved financial certainty and predictability for developers. This is understandable to an extent, but I hope the City will take this opportunity to open up its process to new ideas from non-traditional sources. For example, I believe that some of the most compelling arguments for changing the way we leverage public funds to help house low-income people – and where, and for whom, and at what cost – are coming from public health researchers and advocates. I’ll keep my eye out for this kind of cross-sector collaboration during the rest of my time at CHPC.