Pictured (L-R), Jonathan F.P. Rose and Scott J. Alter
Housing and affordability remain hot topics. As such, it was fitting that the Dec. 3 Walker Webcast featured a sit-down with affordable housing experts ahead of the recent AHF Live Summit in Chicago.
During the hour-long webcast, Walker & Dunlop Chairman and CEO Willy Walker hosted Jonathan F.P. Rose (Founder and President of Jonathan Rose Companies) and Scott J. Alter (Principal & Co-Founder of Standard Communities).
The trio touched on multiple topics, including the inaugural Nathan D. Taft Award for Leadership & Character in Affordable Housing (which Rose and Alter helped create), whether NYC Mayor Zohran Mandani understood the fundamentals of affordable housing (the consensus was not really) and the necessity for more compassion, spirituality and purpose in doing business.
Then, the host and guests delved into specific issues related to affordable housing.
Location, Location, Location
Where do the Jonathan Rose Companies and Standard Communities invest? Interestingly, neither Rose nor Alter is investing in Texas, despite the state’s ongoing population growth. “We were quite active for a while in Santa Fe and Albuquerque, but we’re getting out of those markets,” Rose added.
Rose explained that his company evaluates multiple criteria when selecting locations, including climate risk, insurance availability and state and local tax assistance.
Alter said that opportunities exist to purchase affordable housing portfolios in Florida, California and gateway cities like Boston, MA and Philadelphia, PA.
“We don’t typically operate in major cities, but around them,” he said. “There are certain markets we think are poised for growth, and their (affordable housing) programs are set in such a way that we can work with them.”
The Political Factor
Alter and Rose said that at the federal level, there is a high level of bipartisan support for affordable housing. However, “what we’re lacking now is innovative vision,” Rose added. Zoning and density remain ongoing issues, particularly at the local level.
Rose also felt that taking the long-term view might not be a bad idea. “Trump got a lot of pushback for his 50-year loan comments,” he said. “But in Denmark, one way they fund is by providing 2%, 50-75-year mortgages to nonprofits to build affordable housing.”
Walker, Alter and Rose also agreed that rent control isn’t the answer for affordable housing. Walker pointed out that affordable housing is a supply issue, and supply requires more capital. Alter pointed out that housing finance starts at the federal level. “But states and local jurisdictions provide a level playing field for affordable housing. With that, we can help bring in the federal dollars and leverage them.”
Furthermore, Rose commented that the new mayors in Denver, San Francisco and Seattle “need to understand the fundamental issues in play to make a better world.”
Capital and Efficiency
On the subject of obtaining capital, Alter said that Standard Companies constantly accesses finance structures that have nothing to do with HUD, Fannie Mae or Freddie Mac. “We find that insurance capital measures up well with affordable housing,” he explained. “We’ve used public finance markets over the years to create 3,000 middle-income housing units in California.”
Rose chimed in, pointing out that the HUD 221(d)(4) construction and rehab loans are a boon as non-recourse financing. “But it takes forever to process,” he said. “If everyone else can figure out how to close loans in 30-60 days, HUD can.”
Does Size Matter?
In the era of large, multifamily complexes, Walker asked whether large affordable housing builds or rehabs might make sense. Rose and Alter said no, with projects at 150-200 units the easiest to manage.
Part of the reason is that an effective, affordable housing project provides more than units. The guests emphasized the importance of community organization partnerships in helping residents improve their social well-being.
“We want residents to feel like they’re living in a community, and the social component is so important,” Alter explained. “When you get too large, you can’t create that sense of community.”
Rose agreed, noting that promoting economic and social benefits becomes more difficult with larger projects. “We’ve focused on bringing social health to our residents. In some cases, this has made remarkable transformations in the culture of the community,” he added. “The result has been economic and social benefits. It’s been transformational for families to live there.”
On-demand replays of the December 3 Walker Webcast are available through the Walker Webcast channels on YouTube, Spotify and Apple. Subscribe to get invites, replays and articles for new Walker Webcast episodes every week.
The post Walker Webcast: An Affordable Housing Discussion with Jonathan F.P. Rose and Scott J. Alter appeared first on Connect CRE.