The Affordable Housing Crisis: Meeting Today's Most Critical Housing Challenges

[00:00:01] Welcome to the MultifamilyBiz PowerHour Webcast Series where insight meets innovation in the

[00:00:10] ever-changing rental housing market. Please welcome your hosts and industry experts,

[00:00:17] Kerry Kirby and Ernest Oriente.

[00:00:51] For those of you who are vendors and suppliers, you're here because you want to what? Be your best and do your best with your products and services.

[00:00:58] And we love that as well. Please, as you're rolling along, if you have questions for us, please just hit reply to the confirmation that brought you here.

[00:01:07] We love that end. We always love you to challenge us for upcoming topics, news, challenges, and opportunities from that perspective.

[00:01:16] With me is Kerry Kirby. He is the legendary CEO of the award-winning 365 Connect and also what? The innovator, Kerry, behind MultifamilyBiz are what?

[00:01:28] Largest media platform in our industry. Kerry, how about some opening words? I'll say a few opening words and then we have a special guest introduced. Yes?

[00:01:38] Absolutely. So first off, I want to thank everyone for joining us today. My name is Kerry Kirby.

[00:01:43] I'm the CEO at 365 Connect where we deliver the world's most sophisticated automated marketing, leasing and resident service platforms of multifamily communities across the globe.

[00:01:56] Designed for renters, property management teams in today's changing world, our AI enabled platform is utilized to supplement staff, eliminate redundant task and reinvent operational performance.

[00:02:11] Our innovations also include MultifamilyBiz, the largest media resource in the multifamily housing industry.

[00:02:18] We provide news, resources and events to more than one million monthly friends, fans and followers.

[00:02:26] MultifamilyBiz is also the host of the longest running webcast series in the multifamily housing industry.

[00:02:34] The award-winning MultifamilyBiz Power Hour webcast series, which you can catch streaming everywhere including Spotify, iHeartRadio, Apple Podcasts just to name a few.

[00:02:48] And be sure to check us out at 365connect.com to learn how we are leveraging our 20 plus year legacy of continuous innovation.

[00:03:00] And Kerry, what a joy it has been.

[00:03:05] Going all the way back to 2007, 18 years ago we launched our very first one and here we are what? Number 171.

[00:03:13] It's such a delight and you and your team are ever so supportive of our sector, our industry and the topics that we bring.

[00:03:19] So thank you. Always a pleasure.

[00:03:22] And by way of brief introduction, my name is Ernest Oriente.

[00:03:26] My company is Power Hour. 29 years ago we launched our company.

[00:03:32] We work with teams and leaders in 15 time zones around the world.

[00:03:35] 35 years ago stepping into the property management space and what a joy and delight.

[00:03:41] And today working with leaders and teams, whether it's from a team perspective or recruiting perspective, the digital footprint or the M&A side.

[00:03:50] We love all of that.

[00:03:52] And then Kerry as you know we have 20 LinkedIn groups, more than 180,000 leaders.

[00:03:58] We were positively the OG at LinkedIn.

[00:04:02] One of the first 500 to get started and get rolling.

[00:04:06] And it's been a joy and delight.

[00:04:07] So many of you are here tied to that.

[00:04:11] Whenever we get settled in, Kerry and myself bring both the telescope and the microscope.

[00:04:19] And you're going to hear in just a moment about our guest who's going to bring her telescope and microscope.

[00:04:25] But that simply means that we want to play big.

[00:04:27] We want to look at the macro, the big picture of what is moving around in affordable housing, what we're going to cover today.

[00:04:33] And what is moving at a granular level.

[00:04:36] So sort of listen with both ears.

[00:04:39] What is the telescope and the big picture?

[00:04:41] What does that mean for me, my team, the future?

[00:04:44] And then what is the microscope?

[00:04:45] What am I going to do today with this?

[00:04:48] What are my action steps going to be?

[00:04:49] So we have three specific goals every time we come together.

[00:04:52] Number one, we want to share what?

[00:04:54] New ideas to stretch and spur and stir your thinking and have you play out beyond your comfort zone.

[00:05:00] Number two, if you hear something we're going to talk about today that matches and mirrors what you and your team already are doing or realize or recognizing,

[00:05:07] we literally send you a virtual high five.

[00:05:09] It means that you're mirroring the very best of best practices.

[00:05:12] And then lastly, the serendipitous.

[00:05:14] The serendipitous is the most fun.

[00:05:16] As you're listening to this, you're not working in your biz, you're working strategically on your biz.

[00:05:20] What does that mean?

[00:05:21] In the serendipitous component, if you hear us talking about blue frogs or purple turtles or red cantaloupe,

[00:05:26] and you imagine a maroon pine tree, we love that.

[00:05:31] The serendipitous.

[00:05:32] In other words, those ideas that spark and get spurred that might be either on topic or off topic.

[00:05:36] We love all of that.

[00:05:37] Okay?

[00:05:38] So, Kerry, as we pass the baton back to you, we have a marvelous guest and a fabulous topic.

[00:05:44] How about some opening words about Flannan, please?

[00:05:48] There it is. We do. So joining us today is Flannan Janisse.

[00:05:52] She's executive director of Rainbow Housing Assistant Corporation.

[00:05:58] They're a national nonprofit organization that provides service-enriched housing programs for residents of affordable rental housing communities.

[00:06:09] Rainbow currently serves over 32,000 units across 23 states.

[00:06:16] Rainbow is also an affordable housing preservation leader.

[00:06:21] They serve as general partner in over 12,000 units across the country.

[00:06:27] Ernest, I've known Flannan for quite a while.

[00:06:31] I proudly serve on the advisory board of Rainbow, which she has done an incredible job of operating over the last 18 years.

[00:06:41] She brings a wealth of knowledge to our conversation today, and I am extremely excited to have Flynn join us today.

[00:06:51] Thank you both very much. I'm honored to be here.

[00:06:55] We are elated. We apologize if we're ever so formal at all that we're going to cover.

[00:07:02] Not. But we know we've got a lot of ground to cover.

[00:07:07] So let's get rocking. Today's conversation, right, related to affordable housing and the critical issues and challenges is really the big picture we're going to talk about.

[00:07:16] So let's kick it off, Kerry. Let's go down this opening path and talk about the current status and sort of what is the need for affordable housing in the marketplace?

[00:07:25] What's happening? Big picture.

[00:07:27] Yeah. So, you know, Flynn, Ernest, affordable housing has always been a big topic across the country.

[00:07:35] Inside political circles and certainly in the communities that they are built in.

[00:07:40] But today, the word affordable has been replaced with a new term called critical housing.

[00:07:47] It's critical because not only do we have a shortage of 7.3 million rental units, which is growing daily.

[00:07:57] But that shortage is impacting not only individuals and families, but the broader economy as well.

[00:08:04] It displaces our workforce. It increases public spending.

[00:08:10] It creates financial instability and all that puts a strain on our wider economic system.

[00:08:20] Now, we've all witnessed housing costs have been steadily increasing across the country.

[00:08:27] You know, rising interest rates have kept people in rental housing for a longer period of times.

[00:08:33] This makes it challenging for low and moderate income individuals and families to be able to afford rent.

[00:08:41] I do want to point out the shortage of affordable housing units is also drawing attention to.

[00:08:48] The shortage of affordable housing units is also driven by a couple of other factors.

[00:08:54] Zoning regulations, limited land availability, the high cost of construction, and also the lack of available funding.

[00:09:05] But one of the biggest issues I continue to witness is what's called NIMBYism.

[00:09:11] And that stands for not in my backyard.

[00:09:15] What affordable housing really is kind of fuels the fires.

[00:09:20] If neighbors hear about it or hear the word affordable, they tend to rally against it.

[00:09:28] They put pressure on those elected officials to stop it.

[00:09:32] And, you know, our local government, they are the gatekeeper to zoning permits, utility access.

[00:09:40] And we have a lot of cities that do all they can to make affordable housing happen. They understand it.

[00:09:46] But there's also a large number that given to that voter base when they get that pressure put on them and try to block projects.

[00:09:58] Flynn and Ernest, I personally recently watched through the media a hundred unit affordable apartment property fully permitted, ready to go.

[00:10:10] Had tax credits in place to go affordable. Have a moratorium placed against it because the neighbors put pressure on those local politicians.

[00:10:22] They actually pulled their permits just to block it from happening.

[00:10:27] Flynn, of course, you live in this world. What are you seeing in the way of I guess two things? One, the need for more affordable housing.

[00:10:37] And, you know, are you seeing or you encountering any of these NIMBYism issues?

[00:10:45] Absolutely. I think the need for affordable housing for all is critical. It's critical across the country.

[00:10:51] We certainly see it in all 23 states that we represent ourselves as a general partner or for the provision of tenant based services.

[00:10:59] You know, there's the average age of those living in affordable housing, I think now is age 28 to 32 in Texas.

[00:11:06] There's 27,000 people on the waiting list to qualify and get into affordable housing.

[00:11:12] There's these younger populations that are coming out of college and they're joining the workforce really at a lower wage or less than livable wage.

[00:11:20] You certainly still have the middle income single parent households or younger partner relationships that are challenged.

[00:11:27] And as always, you have the seniors and the disabled with less than a livable wage and a declining financial benefit across the country that are really struggling to stay housed.

[00:11:39] NIMBYism is often, it's frequent. It's a lack of understanding really around housing that's affordable and for whom it's to be provided.

[00:11:49] There's certainly a misconception of who lives in housing that is affordable.

[00:11:54] I personally was involved in alongside the mayor of Youngtown, Arizona.

[00:12:00] And in some instances we have a fantastic political support, really bright spots, if you will.

[00:12:07] And as an example of that, Mayor stepped out to know and understand affordable housing better.

[00:12:12] He himself went out to communities and says what does affordable housing look like?

[00:12:17] Took his entire team and said let's really understand this because we're going to be part of the decision making as to whether this comes and is present in our backyard.

[00:12:26] And to be able to appropriately and adequately share that with his constituents so that they could see that there was a very favorable space to come at this from.

[00:12:35] Fully invested in having everyone come out and understand that better and really embodying the importance of the well-being of everyone that needs to come together and be contributors to revitalize neighborhoods.

[00:12:50] Those are great spaces.

[00:12:52] On the flip side of that, there is a lot of pushback as you described, Carrie.

[00:12:56] And it's something that we as advocates for housing that is affordable for all need to continue to put forward in every market that we have an opportunity to do so.

[00:13:05] Yeah.

[00:13:07] And you know, it's Ernest, it's almost like affordable housing, I call it needs a PR campaign.

[00:13:15] It's, you know, people have this notion in their head that oh wow, you know, it's going to bring all this mass destruction and crime and all these things into the, you know, into the area where we're really just talking about, you know, it's income restricted housing.

[00:13:35] It's just a different level of income.

[00:13:37] What's your take, Ernest? Should this be renamed?

[00:13:42] Yeah, you know, I was thinking about that.

[00:13:44] So, you know, Power Hour is based in Park City, Utah, right? 25, 30,000.

[00:13:51] It's really interesting to watch this because we see NIMBYism, affordable housing, multifamily development all over the world, right?

[00:13:59] Across the United States, Canada and globally.

[00:14:01] But to see it in a small pond, you know, you watch to see how the influence is being done or how it's being communicated to the city council.

[00:14:11] Then you've got city government.

[00:14:12] Then you've got your community.

[00:14:14] Then you have your social media.

[00:14:15] Then you have your influencers.

[00:14:17] I've literally seen four residents shut down development, shut down the UDOT, the transportation, shut down building structures.

[00:14:28] We literally had millions of dollars of ski lifts sitting in a parking lot and three neighbors shut that down.

[00:14:35] So I think in all of this we should just recognize that if you're coming in and looking at these kinds of projects, you've got to pull – here comes the telescope.

[00:14:43] Big picture.

[00:14:44] You've got to work on all the big picture.

[00:14:45] But you've got to bring it down to the microscope and really communicate all the way down to the grassroot level in order to get things done.

[00:14:54] Otherwise, you can anticipate what?

[00:14:56] Pushback.

[00:14:57] And I think we should agree that the pen today is mightier than the sword, right?

[00:15:02] And those that who write and engage and show up at meetings and lobby and petition and get signatures can push back on projects.

[00:15:08] And I think we should anticipate it from the affordable housing side.

[00:15:12] You know what I'm saying, Flynn Anne, your take on that?

[00:15:16] Yeah, absolutely.

[00:15:17] Absolutely.

[00:15:18] We see it happen again across the country where it's the neighbor next door that has a really strong voice and is incredibly passionate about pushing it out of that environment.

[00:15:28] And if we can wrap our arms around them and bring them to a space of understanding what that is, that these individuals that live in these communities are essential workers.

[00:15:39] You know, they're first responders and teachers.

[00:15:41] They're local businesses.

[00:15:43] These are the people at Walmart and grocery stores.

[00:15:45] You know, they're state workers.

[00:15:47] They truly are the labor force across the country.

[00:15:50] And we need to embody that and wrap our arms around it and share with those who are creating spaces of pushback.

[00:15:57] These are people that look like we do.

[00:16:00] These are people who are functioning in life like we are.

[00:16:03] And we need to be able to support that piece.

[00:16:06] If we don't, we almost become a silent supporter of homelessness.

[00:16:13] The other thing is I think there's a misconception of even what this stuff looks like because Flynn, Ernest and I have actually had an architect as a guest with us once.

[00:16:32] And he's pretty well known.

[00:16:34] Pretty well known. I think he's retired now out of Los Angeles, did a lot of affordable.

[00:16:39] And I mean, some of his affordable housing would rival Class A housing.

[00:16:46] I mean, incredible. Some of it in California, you know, powered by solar panels that were so tastefully done.

[00:16:55] You didn't even know they were there.

[00:16:57] I mean, just incredible. And it'd be like, wow, that's affordable housing.

[00:17:04] So I think that's some of the misconception is that what you think you're seeing in your community, Ernest, at times is total misconception of what this looks like.

[00:17:17] Yeah, no doubt. And it's really when you get back to this heartfelt, you know, teachers and police and nurses and those who work at grocery stores, really the fabric of the community.

[00:17:29] And when you work on the leadership side, again, talking about Park City compared to other ski resorts, for example, in Oregon, where they literally pushed all the affordable housing on the other side, not only figuratively, but literally across the other side of the tracks.

[00:17:45] All kinds of negative repercussions from teen pregnancy and drugs and gangs and all the things that you could expect.

[00:17:52] But when you really embedded affordable housing in a community, it's a totally different feel. Jackson Hole is another classic example where they ship all the workers hour and a half away and then they wonder why they can't get the workers.

[00:18:04] And then they're having to pay more. And there's just cycle that goes on and on and on. Come to Park City. They're right here in the community.

[00:18:11] We know where they live. They're part of our community. They're part of the fabric of the community. Little side note to that.

[00:18:17] When we see economic downturns, we've seen departures of those who are in market rent. Those who are in affordable don't and stay and they're part of the community and they keep it vibrant.

[00:18:27] So is there work to be done? Yes. Do we have to communicate it positively? Absolutely. And the word affordable in terms of housing and rental rates will continue to be with us given what?

[00:18:36] The rise of market rents on one side, the rise of real estate and purchasing on the other side and interest rates, which means what? There are those that don't even realize it.

[00:18:46] They will never be able to afford a home. Hence, Lenin, this conversation is ever so vital. It's going to be part of the fabric of ongoing housing for the next 20 or 30 plus years going forward.

[00:19:00] No shortcuts. Terry, back to you.

[00:19:05] Yeah, so, you know, Flynn mentioned some, I guess, age statistics that she's got. It's basically younger people coming into the workforce. They're just not at that level yet and need that, you know, with some of the inflation and all that we've encountered.

[00:19:26] Need that workforce housing, need that income restricted housing. Flynn, what is seeing in like age restricted affordable? It seems like that becomes a little more receptive.

[00:19:38] I mean, it's kind of tough to say, hey, you know, we don't want to house our seniors and they're living on Social Security. You know, I mean, are you seeing a better reception on age restricted?

[00:19:50] I do think that there's a better reception on age restriction. I think there's a sense of stability in the tenant population in those spaces. Of course, there are other dynamics that require a lot of attention to those populations, so they require more from us than bricks and mortar.

[00:20:07] You know, this is where a provision of tenant services and investment of human capital really needs to be made in these environments to allow for these individuals to be sustainable outside of just the financial component that needs to be paid to ensure that these programs continue to thrive.

[00:20:25] You know, one of the things Ernest, you had mentioned, you know, we talk about what these communities look like. I think it's also important to be reminded that developers are compliant to support the tenant populations and that's something that's misunderstood as well.

[00:20:39] That there's a commitment by those developers and preservationists to make sure that those people who are qualifying to live in these communities have sustainable support that surrounds them as well.

[00:20:51] Yeah, no doubt. And then we even see, for example, in Dublin, Ireland, where we have clients there because of so much inventory taken out tied to short term furnished rentals, all of Airbnb, right? What's happening there?

[00:21:05] Again, we're pulling pools of housing that will not be available as well. And it's creating again workforce shortages and housing and also age restricted carry back to your point.

[00:21:17] So there is so much happening. We're seeing it globally and all that matters truly is what's happening in your marketplace through whatever the filter is. If you're here from the property management side, that's one aspect for those of you that are here from the development side.

[00:21:30] Another strategic piece and so much to consider from that perspective. And then, of course, from the renter side. So, Kerry, back to you as you come around the bend here.

[00:21:39] Yeah, so so Ernest to kind of, you know, transition us over to the other one. You know, I love research and I found a couple of things. But one thing that really stuck out in this and it ties back to this age restricted affordable is there some stats out there that we have an aging population and actually an increasing single person household?

[00:21:55] And these are contributing factors also to the high demand for affordable housing because affordable works on how many people are in a household. So you have an aging population of more single person households.

[00:22:08] So, you know, to kind of round the bend on this one, I mean, to address this shortage is going to require joint efforts from policymakers, developers, the community, these community stakeholders that come out against it.

[00:22:22] To increase the supply of affordable housing and ensure that we have these equitable access to housing opportunities because without that, it really doesn't make sense.

[00:22:35] Yeah, no doubt from that perspective. And that's something we're going to have to what continue to track and continue to navigate the

[00:23:02] And really, there's also a component of what the finance vehicles, right? The financial side as well tied to some of the areas that we're covering also to consider. Right? Kerry?

[00:23:15] Yeah, so let's let's just look at that for a minute. Aren't a certain, you know, it's a number of programs out there to help developers build affordable housing.

[00:23:26] Talk to any developer, you know, that's in that space that's building affordable that's dealing with these programs. And I'll tell you, you know, it's the risk is high that that you're going to get into some of these things.

[00:23:40] Some of those programs like tax credits are competitive and in the red tapes overwhelming. There's just a lot of front end costs to do.

[00:23:50] And a lot of, you know, hoops to jump to this to see if you're you're going to be able to get your development funded. So obviously the primary source of financing for affordable housing.

[00:24:03] Is what's called the low income housing tax credit program? You know, no known in the circles is light tech.

[00:24:07] Uh, the program it provides tax credits which developers sell to investors to to raise equity and that helps offset the construction costs.

[00:24:19] And the trade off is to keep those rents affordable that program falls in a, in a, in a, in a way that we don't have to do that.

[00:24:30] And the trade-off is to keep those rents affordable.

[00:24:35] That program falls in a bucket.

[00:24:38] So what that means is it usually serves people

[00:24:41] between 30 to 60% of area medium income.

[00:24:46] And what you do is you set aside units

[00:24:49] and you'll say, well, I'm gonna do 30s,

[00:24:50] I'm gonna do 50s, I'm gonna do 60s,

[00:24:52] but it kind of taps out at 60%.

[00:24:57] There's also bond financing tax-exempt bonds,

[00:25:00] which are issued by states

[00:25:02] and even local government entities

[00:25:05] can do that for affordable housing.

[00:25:08] Those are kind of attractive because the interests

[00:25:11] on those bonds in the financial markets

[00:25:13] are exempt from federal income tax.

[00:25:16] And that makes that a very attractive option

[00:25:19] because you're able to, as a developer,

[00:25:21] you'll be able to secure lower rates on it.

[00:25:24] There's also some grants that I call it fly around now

[00:25:28] and then probably the most popular

[00:25:30] is the Community Development Block Grant Program

[00:25:33] that's administered by HUD.

[00:25:36] There's a federal home loan bank has some grants,

[00:25:39] there's a housing trust fund,

[00:25:41] and even the Department of Agriculture,

[00:25:43] which a lot of people don't think of,

[00:25:46] they'll provide grants and financing

[00:25:48] for rural housing development,

[00:25:50] maybe something a little ways out.

[00:25:52] Of course, they've got a map

[00:25:56] of what's considered rural housing.

[00:26:00] There's also a few state and local governments

[00:26:02] that have programs that are really into this

[00:26:04] and are striving to get some housing in there.

[00:26:08] So they'll have some subsidies

[00:26:10] and some set-aside programs that might help you along,

[00:26:13] maybe a few pieces on property tax.

[00:26:19] But whatever you do,

[00:26:20] you often have to piece these parts together

[00:26:25] because whatever you do, you always come up short

[00:26:28] when you're working with restricted rents.

[00:26:30] You can't say, well, let me put another 20 bucks a month

[00:26:32] on it and it'll pencil out.

[00:26:34] You can't do that.

[00:26:37] So after you find all the things you can,

[00:26:41] you gotta figure how can I cut costs?

[00:26:43] Can I find subsidies?

[00:26:45] Can I maybe abate or make some kind of deal

[00:26:48] on property taxes?

[00:26:50] So a lot of moving parts to get affordable housing built.

[00:26:55] And of course, Flynn lives in the nonprofit space.

[00:27:00] They're a national nonprofit.

[00:27:02] And as we said, they sit in that general partner seat

[00:27:05] on many of these housing tax credit and bond deals.

[00:27:12] Flynn, tell us, how can a nonprofit help get

[00:27:18] affordable housing on the ground?

[00:27:21] I think that if you're looking for creative people,

[00:27:25] go find them in affordable housing, right?

[00:27:27] Because these are individuals who are innovative

[00:27:33] and thought leaders.

[00:27:34] They're really coming together to layer financing

[00:27:37] and programs that capitalizing

[00:27:40] or that can capitalize on these opportunities.

[00:27:43] So just like you said, real estate tax abatement.

[00:27:46] In many states, if a not-for-profit is involved

[00:27:49] in the ownership structure, you can secure 100%

[00:27:53] or 50% real estate tax abatement.

[00:27:56] That goes a long way with penciling out a deal

[00:27:58] and taking it across the finish line

[00:28:00] from a financial perspective.

[00:28:02] Certainly there is kind of a new concept

[00:28:05] and maybe it's just more relevant,

[00:28:07] not necessarily as new, but sales tax savings

[00:28:10] on construction material.

[00:28:12] Everybody could use a little benefit there.

[00:28:14] So where you have a not-for-profit

[00:28:16] involved in the ownership structure,

[00:28:18] you may be able to capitalize on sales tax savings

[00:28:21] from construction material,

[00:28:23] especially if you're doing a material rehab or a new build.

[00:28:27] Now a lot of local city and state programs

[00:28:30] where housing that is affordable is prioritized

[00:28:33] based on the need can tap different funds

[00:28:36] and resources from their budgets

[00:28:38] to be able to support those gaps really

[00:28:40] in getting something across the line of closing.

[00:28:43] And then seizing the financial incentives

[00:28:46] that are coming out of Freddie Mac and Fannie Mae

[00:28:49] and where those particular pieces

[00:28:51] can leverage financial objectives

[00:28:53] to reduce interest rates across the term of the loan.

[00:28:57] And that's incredibly impactful for years and years

[00:29:00] to come.

[00:29:01] Historical preservations are a great space.

[00:29:04] We've seen a lot of that over the course

[00:29:06] of the last five to seven years,

[00:29:08] repurposing medical buildings and schools and hotels

[00:29:12] that will find an interest from the political environment

[00:29:16] in those cities and states.

[00:29:18] And Novigradic does an awards piece

[00:29:20] where you can present various different projects

[00:29:23] that have been completed throughout the year.

[00:29:26] And many of the points for scoring a project

[00:29:29] are around creative financing, who came together?

[00:29:32] What city and state organizations came together

[00:29:35] to put some skin in the game

[00:29:37] to ensure that the type of housing that was created

[00:29:40] served the populations with the most significant need.

[00:29:45] Yeah, and Ernest, I think, you know,

[00:29:48] Flynn just hit the nail on the head.

[00:29:50] If you wanna find creative people,

[00:29:52] go in this business because the layers

[00:29:56] of getting something done,

[00:29:57] and again, back to what I started with

[00:29:59] when you have restricted rents,

[00:30:01] is it's really a commitment.

[00:30:04] It's almost beyond somebody that says,

[00:30:09] I wanna go in real estate development,

[00:30:11] and I wanna build cities and get rich doing this.

[00:30:18] Not that there's not some money to be made,

[00:30:21] but the commitment here is pretty much

[00:30:25] a social commitment to be a developer in this space.

[00:30:31] Yeah, Flynn, when you said

[00:30:34] if you wanna find creative people,

[00:30:37] look to those in this space,

[00:30:39] that is one of those areas we truly believe

[00:30:42] don't go it alone in any professional path.

[00:30:46] But this particular one has got a lot of zigs

[00:30:49] to the zags, you're hearing it today,

[00:30:51] and the deeper you go and the more you sort of

[00:30:54] peel the layers back, Kerry and Flynn Ann,

[00:30:56] I mean, look, if your team has the expertise,

[00:30:59] be honest about that, right?

[00:31:01] No ego.

[00:31:03] Does your team have the expertise?

[00:31:04] If not, bring in the needed resources

[00:31:08] or make certain that your path is charted up front.

[00:31:11] We call this gap analysis.

[00:31:13] Kerry, we've covered this in other educational webcasts,

[00:31:16] but a gap analysis really take an honest look.

[00:31:18] Be honest.

[00:31:18] We've also done it in SWOTs, strengths,

[00:31:21] weaknesses, opportunities, threats,

[00:31:22] when we look at this strategically,

[00:31:24] but there is no easy path,

[00:31:26] so make certain that you have a path and a plan,

[00:31:29] and then Flynn Ann, to your point,

[00:31:31] and then the thought leader and leadership

[00:31:34] that lines up with that.

[00:31:35] Does that make sense, Flynn Ann?

[00:31:37] Absolutely.

[00:31:39] Yeah.

[00:31:40] Incredibly important to bring all the players together

[00:31:43] and ensure that as you move forward within a development,

[00:31:46] you really have the voice of everyone

[00:31:47] who's gonna live and thrive in those communities

[00:31:49] and those developments,

[00:31:51] as well as those who are financially backing them.

[00:31:56] Gotcha.

[00:31:57] Kerry's closing comments on this point

[00:31:59] or additional comment to add before we transition here?

[00:32:02] Yeah, one thing I wanna throw back at Flynn,

[00:32:06] and we were talking about all these programs,

[00:32:08] and a nonprofit, another thing a nonprofit can bring

[00:32:12] to the table is there are set asides

[00:32:16] in some of these programs.

[00:32:18] If you're going after the tax credit program,

[00:32:23] LIHTC, there's set asides

[00:32:26] because there's buckets of it.

[00:32:29] It's like if you talk to somebody in affordable housing,

[00:32:32] you'd swear they're speaking another language, right?

[00:32:35] So there's what's called 9% credits which are competitive

[00:32:40] and then there's 4% credits

[00:32:42] which you usually wrap with a bond.

[00:32:44] So if you can get what's called bond allocation,

[00:32:48] those 4% credits come with it

[00:32:50] and the credits then are not competitive,

[00:32:54] but they have to make sure they have allocation.

[00:32:56] They have enough bond capacity to finance your project

[00:33:01] and others they might be looking at.

[00:33:04] And Flynn, correct me if I'm wrong,

[00:33:06] but there are some set asides

[00:33:09] if you come in as a nonprofit

[00:33:11] that they have to take a percentage of those programs

[00:33:14] and set them aside only for nonprofits.

[00:33:17] Am I correct in my thinking?

[00:33:22] Yes, yeah, that's absolutely correct.

[00:33:24] So in a city or state or a locale,

[00:33:27] there may have a specific need.

[00:33:29] Maybe it's for a high chronically homeless population,

[00:33:32] seriously mentally ill or physically disabled population

[00:33:35] and they'll set aside or request that

[00:33:38] the communities that are being developed or preserved

[00:33:41] set aside a certain number of units

[00:33:42] or percentage at an income level

[00:33:44] to house those that are most vulnerable.

[00:33:47] And in those spaces,

[00:33:48] you wanna have a wraparound service provision

[00:33:51] that supports those populations well

[00:33:54] so that they are housed

[00:33:55] and they are sustainably housed for a long period of time.

[00:33:59] So there are definitely benefits

[00:34:01] to working alongside a not-for-profit

[00:34:03] or a general partner

[00:34:04] to capitalize on those particular pools of funding

[00:34:08] to support the locale's need for housing.

[00:34:12] Yeah, and Ernest just kind of

[00:34:15] rounding the bin on this one.

[00:34:18] Nonprofits in affordable housing

[00:34:20] are always misunderstood what their role is.

[00:34:23] That kind of almost adds to the Nimbianism

[00:34:26] when you say, well, I'm gonna bring in a nonprofit

[00:34:30] and there's some big highly notable nonprofits

[00:34:35] like Rainbow.

[00:34:36] Rainbow has been around forever

[00:34:38] and the highly esteemed board of directors,

[00:34:42] I call it the who's who of affordable housing

[00:34:45] sits on that board.

[00:34:48] So nonprofits, they bring a value

[00:34:53] not just to access to things

[00:34:56] but also the quality of housing

[00:35:00] because they typically, as Rainbow does,

[00:35:03] bring that service component to the table

[00:35:07] and that helps build that bond of community

[00:35:10] because nothing makes a community better than

[00:35:14] when all the neighbors are kind of pulling

[00:35:16] in the same direction.

[00:35:18] We see it in the neighborhoods we all live in.

[00:35:21] Everybody's moving in the same direction

[00:35:24] and we want our neighborhoods to be great and nice.

[00:35:30] Apartment community stands no different than that.

[00:35:34] So they bring a lot to the table.

[00:35:37] Yeah, and earlier, Kerry, when you mentioned about

[00:35:40] do we need a PR campaign to remove some of the bias

[00:35:43] tied to Nimbianism and tied to affordable housing,

[00:35:47] air quotes, actually the positioning of a nonprofit

[00:35:52] and doing it under that umbrella

[00:35:54] actually helps to soften it.

[00:35:55] And maybe we need another educational webcast

[00:35:57] just on the why and a deeper understanding

[00:36:00] just on the nonprofit component

[00:36:02] and how all that fits in.

[00:36:03] I know we're just touching on it here

[00:36:04] but I actually think that it helps.

[00:36:07] I've noted where Habitat for Humanity comes in

[00:36:10] on the housing side and they get more grace.

[00:36:13] Again, here in small park city, mountain town,

[00:36:16] homes get more access and everything seems to flow better

[00:36:20] and a little better understanding.

[00:36:22] So I love that we're touching on this actually

[00:36:25] and maybe this will be something we'll do

[00:36:27] in a part two educational webcast,

[00:36:30] circling back around.

[00:36:32] We need about three or four of these Ernest

[00:36:33] to get the word out.

[00:36:36] We're coming back.

[00:36:37] I believe we will be back.

[00:36:41] So let's make it again another pivot here

[00:36:45] and let's talk a little bit about.

[00:36:47] So how does providing serviced in rich housing

[00:36:51] make a difference to the residents?

[00:36:55] And that's just what we were touching on.

[00:36:57] So let's talk about service in rich housing.

[00:37:01] What is it?

[00:37:02] Service in rich housing,

[00:37:04] it makes a huge difference

[00:37:07] in the entire affordable housing program and mission.

[00:37:12] So its purpose is to improve the quality of life

[00:37:16] for residents through elevating a person's personal skills,

[00:37:22] their access to things like healthcare,

[00:37:24] education advancement, the list goes on and on.

[00:37:28] So it's more almost think of housing

[00:37:32] with some personal services and programs wrapped into it.

[00:37:37] So let's take a deeper dive

[00:37:40] into exactly what is service in rich housing.

[00:37:43] So service in rich housing,

[00:37:46] typically it integrates support services

[00:37:49] as I touched on like healthcare, counseling,

[00:37:51] vocational training, social activities

[00:37:55] and it brings it into the community itself.

[00:37:59] The core of that program

[00:38:00] is to survey the needs of the residents

[00:38:03] and create programs based on their needs.

[00:38:06] So it's not like one size fits all.

[00:38:10] So you kind of take a look at that

[00:38:12] and let me just give you an example.

[00:38:13] Let's say we are operating a senior housing community

[00:38:17] like we talked about earlier.

[00:38:19] So based on the average age of our residents

[00:38:22] and coupled with some of that survey information,

[00:38:26] we might implement a program through a partnership

[00:38:31] with a local healthcare provider to come by

[00:38:34] and do anything from, hey, we're gonna do

[00:38:38] these little quick checkups, blood pressure checks

[00:38:42] and it's kind of some indicators

[00:38:45] to see if anyone living in a community

[00:38:47] might need some deeper form of medical treatment

[00:38:53] or something just so the standard checks

[00:38:57] when we all go to the doctor, right?

[00:38:59] Let me listen to your heart.

[00:39:00] Let me take your blood pressure.

[00:39:02] But looking at it as a senior community

[00:39:05] and you kind of look at the age of everyone,

[00:39:07] you might incorporate some exercise classes,

[00:39:10] yoga, even community garden.

[00:39:14] But Ernest Flynn is certainly an expert in this arena

[00:39:18] because this is the core of what Rainbow does.

[00:39:23] But again, the idea behind living in a service

[00:39:28] and rich housing community,

[00:39:30] it gives residents more than just a roof over their head.

[00:39:33] It becomes their support network

[00:39:35] so that community has a lot to offer.

[00:39:38] And Flynn, I know I'm just scratching the surface here

[00:39:42] and Rainbow does this at scale across over 30,000 units.

[00:39:46] So enlighten us, tell us what is happening

[00:39:50] in the service of rich housing space.

[00:39:53] Like you've done an incredible job.

[00:39:55] You've learned well, Kerry,

[00:39:56] with your kind of advisory members.

[00:39:58] Yeah, you know, I hang out with some people

[00:40:02] that know what they're doing and now, you know,

[00:40:05] I do keep my ear to the ground.

[00:40:08] I'm feeling very fulfilled at this moment

[00:40:10] that I've transferred that experience to you.

[00:40:14] I would say that, you know, it's kind of twofold.

[00:40:16] A lot of times when I'm called

[00:40:17] to speak at industry conferences,

[00:40:19] I kind of get on my soap box and say,

[00:40:21] you know, let's find the greatest space of wisdom

[00:40:24] in the room who's been doing this a long time.

[00:40:26] And let's really remember why affordable housing

[00:40:29] and housing that's affordable came into play.

[00:40:32] And it is to serve the populations

[00:40:34] who need supportive services

[00:40:36] and to wrap our arms around them

[00:40:38] and provide the service enriched housing model

[00:40:40] that a number of organizations demonstrate

[00:40:43] really incredibly well across the country.

[00:40:46] But one of our board members once said,

[00:40:48] and sometimes it's those profound moments

[00:40:50] where you said tenant services

[00:40:52] is really about stabilizing the population.

[00:40:55] So it's not about the property management piece necessarily.

[00:40:57] It's not about the development of the preservation.

[00:41:00] It's about stabilizing the tenant population,

[00:41:03] and that's kind of the role and responsibility

[00:41:05] when called to do so.

[00:41:06] So it's removing barriers to self-sufficiency.

[00:41:09] So where possible, creating spaces

[00:41:12] where you can have youth enrichment programs

[00:41:15] that are free of charge to the communities

[00:41:17] and the residents that live there.

[00:41:19] So it eliminates a financial barrier for them,

[00:41:22] certainly creating spaces of financial resilience.

[00:41:25] So the new and not even new,

[00:41:28] but certainly advancing space of credit enhancement.

[00:41:32] The Jesuses of the world who are going out in communities

[00:41:35] and moving forward with having renters

[00:41:37] be able to have their on-time payments

[00:41:40] be reported for credit enhancement.

[00:41:42] That's a significant play in the affordable housing space

[00:41:46] so that people can become credit and financial resilient.

[00:41:50] Upward mobility is a really key word,

[00:41:53] right, or phrase right now,

[00:41:54] and that's all about education, employment skills,

[00:41:59] really creating career pathways

[00:42:01] and people's ability to manage money,

[00:42:04] whatever level of financial or economic space they're in

[00:42:09] for them to create a space to be

[00:42:12] or have sustainable funding

[00:42:14] so that it limits their exposure to becoming homeless.

[00:42:18] And that, again, falls into this financial resilience

[00:42:21] across the board, creating space of livable wage,

[00:42:24] not a space of wage that is minimal but livable

[00:42:29] so that you can handle all of your financial expenses

[00:42:33] from rent and utilities to medical needs.

[00:42:35] And as you had mentioned, there's so many dynamics

[00:42:38] that social service providers can bring to housing

[00:42:43] that is affordable that eliminates and removes barriers

[00:42:46] to people's economic and social success

[00:42:49] and their ability to move forward

[00:42:51] and become stabilized in those spaces

[00:42:54] and potentially move them away from the housing

[00:42:57] that is affordable and more into a market rate space.

[00:43:01] One of the things I often say

[00:43:02] is throughout the course of my career

[00:43:05] and certainly the career of many others

[00:43:07] where you see market rate housing

[00:43:09] and the residents that live in those communities,

[00:43:12] they may have historically lived in class A

[00:43:15] and there's an economic downturn

[00:43:16] and those residents moved to class B

[00:43:19] and those residents living in class B housing

[00:43:22] moved to class C

[00:43:23] and those living in class C housing become homeless.

[00:43:27] And that's the reality of an economic turn.

[00:43:29] And when you can provide a provision

[00:43:31] of stabilizing supportive services,

[00:43:34] you have an incredible impact

[00:43:36] in the residents being the catalyst

[00:43:39] of moving to financial resilience and stability.

[00:43:42] And secondary to that, on the flip side

[00:43:45] from a developer and a preservationist

[00:43:47] when you can stabilize the tenant population

[00:43:50] and create an environment that's front porch living

[00:43:53] and has all of the elements of being home.

[00:43:57] You had mentioned early on Ernest

[00:43:59] the importance of someone's name

[00:44:01] and I think there's five characteristics

[00:44:03] taught by Dale Carnegie

[00:44:05] of which I proudly am a graduate that says,

[00:44:08] one of the five most important things

[00:44:09] in an individual's life is their home.

[00:44:12] And where there are some of us,

[00:44:15] I love apartment living,

[00:44:16] I no longer live in apartment living

[00:44:18] but I thrive on it.

[00:44:19] I'd love to, I hope to one day be back to it

[00:44:21] but there's a lot of life that happens in that space.

[00:44:25] People get married, they get divorced,

[00:44:26] they create life, they lose life.

[00:44:29] You know, these are homes

[00:44:30] where people are truly living life

[00:44:32] and there's incredible value

[00:44:34] in investing in the human capital

[00:44:37] that sustains these affordable housing programs

[00:44:40] and sustains the people who maybe

[00:44:43] based on economic structures are required to choose it

[00:44:48] as their space to call home.

[00:44:52] Flammey, when you went down the path

[00:44:54] of A to B, B to C class, C class to homeless

[00:44:57] it made me gulp.

[00:44:58] I had never heard those words

[00:45:00] and thought about how a person waterfalls

[00:45:04] through that in cycles through

[00:45:06] in a very negative downward spiral.

[00:45:09] Your insight again is amazing

[00:45:12] and thank you for sharing that.

[00:45:15] And the carriers you were talking about

[00:45:19] even program partnerships

[00:45:22] and the local healthcare providers,

[00:45:23] my oldest son works for private equity group.

[00:45:27] They literally are doing that.

[00:45:29] They're literally working with healthcare providers

[00:45:32] that provide services for lower income

[00:45:35] and their proposition is we can do this

[00:45:37] and do this well and still do well as a PE firm

[00:45:40] and they are.

[00:45:40] So I really again spoke to my heart of what's out there.

[00:45:44] We think about PE firms about Flash and Burn

[00:45:46] and Change Saw, Al Dunlop

[00:45:49] and you know, we know the name stories, right?

[00:45:52] But there's other that are doing good, right?

[00:45:54] Revenue coming in saying, oh my gosh

[00:45:56] I fell out of the bathtub and broke my arm.

[00:45:59] Now we have a major medical moment.

[00:46:00] Instead it's these providers come in

[00:46:02] and say, let's put that rack right in here.

[00:46:05] So it's here already for you, right?

[00:46:07] Proactive from that perspective

[00:46:08] and you went down the path of blood pressure

[00:46:10] and other paths from that perspective

[00:46:13] but a lot of heart, right?

[00:46:14] You know, it's like Flynn said

[00:46:18] and I haven't taken Del Carnegie

[00:46:22] but now you got me wanting to do so

[00:46:24] because I love some of the things

[00:46:29] but I always have a saying

[00:46:31] that nothing's more personal than your home

[00:46:34] wherever it is, right?

[00:46:36] And I think that some of the things happening

[00:46:40] in affordable housing again,

[00:46:42] it's something we got to get out and educate people on

[00:46:45] especially in the service and rich housing programs

[00:46:49] is sometimes people just not aware

[00:46:53] of some of the things available to them

[00:46:54] and Flynn mentioned like building credit

[00:46:58] and actually I think it's Fannie Mae Flynn has a program

[00:47:04] where you bring credit services in

[00:47:07] for people to have their on-time rent payments reported.

[00:47:10] They're paying for whatever cost that is

[00:47:15] for I think two years through some of their programs.

[00:47:19] So there's an army out there to try to make things work

[00:47:25] including call it boots on the ground

[00:47:28] which is something Rainbow does

[00:47:31] but the other side of what Rainbow does

[00:47:34] and does as a leader in it

[00:47:37] is and I want Flynn to talk on this

[00:47:39] is some of the digital services also

[00:47:44] that's being provided

[00:47:45] and just to kind of set the table here

[00:47:48] and I said at Rainbow,

[00:47:50] there are on staff people that are what's certified

[00:47:56] it's certified I can keep wanting to use the word job

[00:47:59] trainer but like career people that'll help you get

[00:48:04] find work or career paths.

[00:48:10] There's also educational people on staff

[00:48:14] that are degree that run educational programs.

[00:48:18] So Flynn and them are doing this at scale

[00:48:22] in a whole different way

[00:48:25] and Flynn please speak to some of the digital services

[00:48:30] you guys are doing before I abominate all this.

[00:48:35] As you know it better than I do.

[00:48:38] It's an incredibly exciting space

[00:48:40] probably about eight years ago now.

[00:48:43] I did the day in the life

[00:48:45] of resident service coordination kind of on the ground

[00:48:49] and this was boots on the ground

[00:48:50] going community to community and door knocking

[00:48:52] and in that period of time on my walk

[00:48:55] as I refer to it,

[00:48:57] I encountered so many residents who were not engaging

[00:49:00] in onsite provisions of tenant services.

[00:49:03] So unless there was food in a bounce house

[00:49:05] people really weren't coming out

[00:49:06] for the full benefit of programs

[00:49:08] and services that could be provided to them

[00:49:10] and I was asking why?

[00:49:12] Why when we put this basket of opportunity

[00:49:15] on your front doorstep are you unresponsive to it?

[00:49:18] And there were some real answers that came out of that.

[00:49:21] I don't wanna go to a common space

[00:49:23] and talk about domestic violence in my home.

[00:49:26] I don't wanna talk to other residents

[00:49:28] and neighbors that I can't feed my children.

[00:49:30] I don't wanna speak to what people may perceive

[00:49:34] as an inadequate level of education

[00:49:36] or my lack of skill set to garner different employment

[00:49:40] and we really thought about that and said,

[00:49:42] okay, we're missing a gap of people

[00:49:44] that isn't comfortable coming to an onsite space.

[00:49:48] We're gonna try to run this digitally.

[00:49:49] We're gonna create a platform

[00:49:51] where we can still provide one-on-one direct services

[00:49:54] and communicate with those individuals

[00:49:56] who don't wanna go to a group or public setting.

[00:49:59] So we first initially developed a national call center

[00:50:03] and that particular division now referred

[00:50:05] to as our outreach division calls every resident

[00:50:08] that we have contact information for

[00:50:10] and says what do you need, what do you want,

[00:50:12] what are your goals, what are your aspirations?

[00:50:14] And in that particular space, we then navigate

[00:50:17] how to connect them and create access points

[00:50:20] to opportunity and that's a one-on-one direct service

[00:50:23] that has a platform of delivery that's technology based.

[00:50:26] So everything we were doing onsite,

[00:50:29] we transitioned to accessibility through a digital space.

[00:50:33] So if you are looking to advance your GED,

[00:50:36] English as a Second Language,

[00:50:37] we're now in 27 different languages,

[00:50:40] you can come to Rainbow and participate

[00:50:42] in that digital space live every day

[00:50:46] on central standard time, Monday through Friday

[00:50:49] or access our recorded learning library

[00:50:51] which is those same training components

[00:50:53] that are available 365.

[00:50:56] So available any day, any time, 2 a.m.

[00:50:59] with live supportive chat that's available to you.

[00:51:03] I'm very proud to say that I still field the live chat.

[00:51:06] It's something that keeps me close

[00:51:08] to the mission centered work of Rainbow.

[00:51:10] So if at 2 a.m., I have a single parent

[00:51:12] who's reaching out and they're challenged

[00:51:13] with mathematics studies in their GED program,

[00:51:16] then I'm sitting up and moving

[00:51:18] to the appropriate space to support them

[00:51:20] so that we're available for that time period.

[00:51:22] It could be a parent whose kid's on the soccer field

[00:51:25] and they want to engage in one of the gardening

[00:51:27] programs and they want to learn more

[00:51:29] or experience more in those particular pieces

[00:51:31] and we're available to them 24 seven.

[00:51:33] But each and every component of what we do

[00:51:37] around social and economic advancement

[00:51:39] is available in this particular platform

[00:51:42] and leveraged digitally so that we are casting

[00:51:46] a wide net to serve everyone

[00:51:49] in a space that they're most comfortable in.

[00:51:52] So we reach the masses in that space

[00:51:55] and it's relative to the average age

[00:51:58] in the communities I think I'd mentioned earlier

[00:52:00] that's age 28 to 32.

[00:52:02] These are really savvy people in the digital space

[00:52:04] and they want to connect digitally.

[00:52:06] So it allowed us to eliminate a gap of service

[00:52:09] that we had historically seen

[00:52:11] and allow us to provide more access

[00:52:14] to program availability and training components to them.

[00:52:18] And this ranges from career advancement,

[00:52:21] whether that be in the space of health and wellness,

[00:52:24] so nursing, it can be in agriculture,

[00:52:28] it certainly can be in teaching,

[00:52:29] this is entrepreneurship.

[00:52:31] So wherever they express to us

[00:52:34] that they desire to move forward,

[00:52:36] we create a space of support and solution for them.

[00:52:43] Incredible, huh, Ernest?

[00:52:44] I mean, you're talking about taking something

[00:52:47] and they've made it a 24 seven operation.

[00:52:50] I mean, it's access is everything

[00:52:53] and amazing things going on.

[00:52:59] And I'm also thinking about it

[00:53:02] from the human perspective,

[00:53:03] the heartfelt perspective, right?

[00:53:06] And the impact it's making on those who need the support,

[00:53:10] can't afford the support,

[00:53:11] don't want the stress or strain,

[00:53:13] commute, whatever that might be.

[00:53:14] I mean, there's so many beautiful options,

[00:53:17] Flynn and that you and your team are providing,

[00:53:21] but that are under the same umbrella.

[00:53:23] For those of you that are listening to our webcast

[00:53:26] thinking about how affordable housing is being served

[00:53:30] in services or imagining what affordable housing could do

[00:53:34] and realizing that each of you that are here

[00:53:37] listening to our educational webcast

[00:53:39] and we'll be back to listen to it

[00:53:41] long after we finish up the live version here today,

[00:53:44] where are you in those various stages

[00:53:46] and how are you providing this level of support?

[00:53:49] So Flynn and thank you so much.

[00:53:52] And Terry, where to next

[00:53:54] as we're sort of working our way through this webcast?

[00:53:59] Yeah, so let's just bring this thing full circle

[00:54:04] and let's talk about,

[00:54:07] what does the future of affordable housing look like

[00:54:09] across our country?

[00:54:12] Look, it's a big question

[00:54:15] and we have so many factors that come into play.

[00:54:19] What did we talk about today?

[00:54:20] We know that we can't get enough

[00:54:24] affordable units on the ground.

[00:54:25] We have a need that we can't completely fill.

[00:54:30] Some of the biggest issues we have are cost of building.

[00:54:35] And even operating these properties, right?

[00:54:38] Cause we have restricted rents

[00:54:40] and operating costs are currently unpredictable.

[00:54:42] I mean, Ernest just look at insurance rates

[00:54:45] especially in the coastal markets.

[00:54:46] I mean go Florida, the hometown for you.

[00:54:49] I mean, look at the insurance rates.

[00:54:52] I hear some people are 50%.

[00:54:55] I've heard people say they've doubled.

[00:54:58] We have limited land availability.

[00:55:02] I think we talked before we went live

[00:55:05] and we were talking about Miami has a shortage

[00:55:08] of over 90,000 units.

[00:55:11] I mean, we know there's limited land availability

[00:55:15] in Miami.

[00:55:16] There's not like a lot of great options.

[00:55:18] We're bound by an ocean on one side

[00:55:21] and the Gulf of Mexico on the other

[00:55:23] when we get down into South Florida.

[00:55:27] And again, we can look at urban markets

[00:55:30] but some of those numbers just skyrocket.

[00:55:32] We talk about converting office buildings in the housing

[00:55:35] and some of the numbers just don't pencil out.

[00:55:40] A couple of things and then let's just open this up.

[00:55:42] I'm a researcher.

[00:55:45] I've been keeping an eye on Graystar,

[00:55:48] massive now global company.

[00:55:52] So they purchase a prefab housing factory

[00:55:57] in Pennsylvania and they're doing modular construction.

[00:56:02] I don't know the exact number.

[00:56:03] I know a couple of people there.

[00:56:05] I'm trying to get that number

[00:56:06] but the cost savings I hear are massive.

[00:56:09] They're substantial and they're building

[00:56:11] in what's called the middle market gap

[00:56:14] and it's a gap between affordable and market rate.

[00:56:20] And that middle market is something

[00:56:22] that's somewhat been ignored

[00:56:25] and some of the lenders such as Freddie Mac

[00:56:28] and Fannie Mae have stepped up to it.

[00:56:30] Those lenders by the way are called GSEs,

[00:56:33] it's government sponsored enterprises

[00:56:37] but they've brought some programs in

[00:56:39] and the 80 to 120% of area medium income.

[00:56:42] Remember, LIHTC, our low income housing tax credit

[00:56:46] caps out at about 60% of area medium income.

[00:56:49] So after 60 we're in market rate.

[00:56:52] So they're looking to cover that gap.

[00:56:55] So some interesting things happening there.

[00:57:00] Flynn, you guys of course are in that GP seat

[00:57:04] and quite a few deals.

[00:57:07] What are you seeing in building and operating costs?

[00:57:11] Where's this going that we're able

[00:57:13] to get some more product on the ground

[00:57:16] as we go forward into the future?

[00:57:20] I think that most all would say

[00:57:22] there's been a significant increase in construction costs

[00:57:26] certainly over the course of the last three years

[00:57:29] due to financial setbacks,

[00:57:31] slowed construction due to financial setbacks.

[00:57:33] And we certainly have seen that.

[00:57:35] So it delayed in the launch of new developments

[00:57:38] or preservations but also delay

[00:57:40] in finishing up those projects

[00:57:42] due to those particular circumstances.

[00:57:45] Operationally you see a lot of

[00:57:47] robbing from one area of operations

[00:57:49] to solve for another.

[00:57:50] I think that's always been something in the industry

[00:57:52] that sometimes happens when there are cashflow challenges

[00:57:55] across a portfolio or an asset,

[00:57:58] one specific asset could bring the rest down.

[00:58:01] But certainly that's a space that we've seen an uptick.

[00:58:03] We only have so much cashflow,

[00:58:06] where are we gonna invest that cashflow in operations

[00:58:09] whether it's new development or just standard operations

[00:58:12] and daily operations

[00:58:13] in a property management perspective.

[00:58:15] Vendor shortages, when they're without timely payments

[00:58:19] we're seeing vendors drop off,

[00:58:20] maybe even longterm vendors that we've seen

[00:58:23] in the industry without the financial security

[00:58:26] of them knowing that they can be paid

[00:58:28] and paid timely for the work that's being done.

[00:58:30] So it's really compromising operations.

[00:58:33] I don't believe that it is going to inhibit

[00:58:36] the development or the preservation.

[00:58:38] I think that it's something that the very smart

[00:58:41] and creative people in the industry are doing

[00:58:43] is thinking through that and planning appropriately

[00:58:46] for the timing and setbacks of those particular pieces.

[00:58:49] The need is high, certainly development and preservation

[00:58:52] has a financial benefit to it.

[00:58:55] We just need to think harder about the longterm projects

[00:58:59] and when they'll come to fruition.

[00:59:01] Insurance has been the most significant piece

[00:59:04] I think we saw across our portfolio two years ago,

[00:59:07] 100% increase from where we were at

[00:59:09] in insurance costs at a property level.

[00:59:12] We were really thankful in 2024

[00:59:14] to see that just be a 50% increase.

[00:59:16] So our happy space has certainly shifted and changed

[00:59:20] but those are increases that will definitely

[00:59:24] inhibit progress and timeliness of projects

[00:59:27] and the sustainability of projects

[00:59:29] in hitting those timelines of construction.

[00:59:33] Yes, in earnest that's just such a hard thing

[00:59:37] when your operation costs go up.

[00:59:39] It affects the maintenance on your building

[00:59:42] and everything else and it's just a tough road.

[00:59:48] No doubt and if we were to also look at,

[00:59:52] you mentioned Florida, you were talking about Miami.

[00:59:56] We also look at the impact of tornadoes, hurricanes,

[01:00:00] acts of God and natural disasters

[01:00:03] or the step up of those, the magnitude of those

[01:00:06] tied to the warmer Gulf that's ripping across

[01:00:08] as you know, Kerry, based on where you're,

[01:00:11] you and your team are based,

[01:00:13] there are some really serious issues

[01:00:15] and then that's water falling into the rest

[01:00:18] of the insurance company's portfolios.

[01:00:21] They're getting hit hard here.

[01:00:23] Yeah, but I'm in Seattle, why is it impacting me?

[01:00:26] Because the insurance companies are having to balance out

[01:00:29] where they're gonna get their returns

[01:00:31] because they're getting hit so hard

[01:00:32] in other parts of the nation

[01:00:34] and that's one of those continuing emerging trends

[01:00:37] that are really not going away

[01:00:38] and Flynn and you touched on that 100%.

[01:00:41] I gulped as you said those words and yet we know it

[01:00:43] because we're seeing it with our property management clients

[01:00:46] and the developers.

[01:00:47] Kerry, I love your piece about Grey Star

[01:00:50] and the prefab factory.

[01:00:51] I was thinking that needs to be an educational webcast.

[01:00:55] Stay tuned.

[01:00:58] And for those of you who are joining us from Grey Star,

[01:01:02] we'd love your access to whoever would like to talk to us.

[01:01:06] What's going on in Pennsylvania?

[01:01:08] You know, they're pretty open to this thing

[01:01:12] they're doing, Ernest, and it's not just

[01:01:14] that they're bringing the cost of construction down

[01:01:17] but they're also operating the properties heavily

[01:01:20] with technology to bring a lot of the costs down.

[01:01:24] So I know some people at Grey Star,

[01:01:29] I know they listen to our webcasts

[01:01:32] so definitely would love to dive into what's going on

[01:01:37] there and how can that be leveraged

[01:01:39] in the world of affordable housing.

[01:01:42] Yep, I put a little asterisk next to that.

[01:01:45] We'll circle back to that.

[01:01:48] Goodness gracious.

[01:01:49] So all right, so we've come a long way.

[01:01:52] We've covered what?

[01:01:54] A lot of ground here.

[01:01:57] Kerry, where to as we sort of come

[01:02:01] to the top of the arrow?

[01:02:02] What are our insights, observations, next steps?

[01:02:06] And of course, I would love to come around to Ben

[01:02:09] as well from Flynnian, okay?

[01:02:12] Yeah, you know, Ernest, there's so many parts here.

[01:02:15] It's almost like, I know we tried to pack this all

[01:02:19] all in here but I would certainly love

[01:02:22] to get Flynn back and possibly some other people.

[01:02:29] We have some people on our board

[01:02:32] that would love to join us.

[01:02:34] And take some of the pieces of this.

[01:02:38] I think there's a whole topic just

[01:02:41] on service and rich housing.

[01:02:42] I think there's a whole topic on financing.

[01:02:48] So I think there's a lot of parts here.

[01:02:49] So I'd certainly like to keep this conversation going.

[01:02:54] We have a pretty good reach.

[01:02:55] We have a great distribution on this webcast that lives on.

[01:02:59] And I feel like Ernest, it's kind of our duty

[01:03:04] to stay on the front line and keep this conversation moving.

[01:03:07] Mm-hmm, yep, totally spot on and so much here.

[01:03:12] And Flynnian, from your perspective

[01:03:13] as we've kind of rolled along

[01:03:15] with our educational webcast,

[01:03:17] what you shared with us,

[01:03:19] what is your take as we're summarizing here?

[01:03:24] Yeah, just incredibly thankful

[01:03:25] to be having the conversation.

[01:03:27] There's so much industry insight and wisdom

[01:03:30] and so much talent.

[01:03:31] Keeping the awareness of these challenges

[01:03:33] in front of everyone and the conversation going

[01:03:36] is what will continue to sustain housing

[01:03:39] that is affordable for all.

[01:03:40] And the momentum of making progress

[01:03:43] and solving for some of these challenges

[01:03:44] will be at the forefront of everyone's mind.

[01:03:47] Mm-hmm, gotcha.

[01:03:48] Well we are ever so appreciative of you joining us.

[01:03:52] Your insight, your expertise.

[01:03:54] I feel, Carrie, like she just shared just like a thimble

[01:03:58] but I'm looking out over the ocean going

[01:04:00] and there's more water, isn't there?

[01:04:02] There's an ocean full and we just drank a thimble today.

[01:04:07] So we definitely need to come back

[01:04:11] and at least get a glass, Ernest.

[01:04:13] At least a glass.

[01:04:15] Flynnian, promise us a glass, okay?

[01:04:17] Because a thimble today, we eat a glass.

[01:04:19] Absolutely.

[01:04:20] Absolutely.

[01:04:21] Good, let's just pause right here.

[01:04:24] Thank you to each of you and all of you

[01:04:26] who have joined us both live

[01:04:28] and who will listen to our educational webcast

[01:04:31] on the other side.

[01:04:31] It will be teed up for you ever so shortly

[01:04:33] at Multifamily Biz.

[01:04:35] As you know, the most significant media platform

[01:04:40] and the largest in our space,

[01:04:41] in our sector and our industry.

[01:04:43] So Carrie, thank you so much to you and your team

[01:04:45] as always at Multifamily Biz

[01:04:47] and the award-winning 365 Connect.

[01:04:49] Stay tuned.

[01:04:50] We will continue our dialogue

[01:04:52] related to educational opportunities.

[01:04:54] Tell us what has you awake at night.

[01:04:58] Tell us where the struggles are.

[01:05:00] Tell us where the opportunities are.

[01:05:01] You literally inspire us

[01:05:03] and Carrie and myself and our teams

[01:05:04] literally stay on the pulse of all of that.

[01:05:06] So to each of you and all of you,

[01:05:08] thank you so much for being here live with us.

[01:05:10] To those of you that are enjoying

[01:05:12] long after this educational program wraps up,

[01:05:15] please ping us and let us know your thoughts,

[01:05:17] your observations.

[01:05:19] We love that you inspire us.

[01:05:20] So Carrie, Flynnian, an absolute delight

[01:05:23] as we wrap up today's educational webcast

[01:05:25] and we'll see all of you next month.

[01:05:27] Make it a great day.

[01:05:32] Thank you for listening to the Multifamily Biz

[01:05:35] Power Hour webcast series

[01:05:37] with your hosts, industry experts,

[01:05:40] Carrie Kirby and Ernest Oriente.

[01:05:43] Be sure to visit multifamilybiz.com,

[01:05:46] the largest media platform

[01:05:48] for the multifamily housing industry,

[01:05:50] delivering news, events, resources and more.