Breaking Ground
Adhi Nagraj, Chief Development Officer, McCormack Baron Salazar, Inc.
By Darryl Hicks
13 min read
Since February 2022, Adhi Nagraj has served as the chief development officer at St. Louis-based McCormack Baron Salazar—one of the nation’s leading for-profit developers, property managers and asset managers—overseeing all project management activities nationwide.
He joined MBS in 2019 as senior vice president for development and built a pipeline of new projects totaling more than 1,400 units and $1 billion.
Before that, Nagraj was a director at the San Francisco Bay Area Planning and Urban Research Association (SPUR), a nonprofit that brings people together from across the political spectrum to develop solutions to the big problems cities face.
Nagraj lives in Oakland and was an Oakland Planning Commissioner for two terms, serving as chair of the commission for two years. He was also appointed by Governor Jerry Brown, and re-appointed by Governor Gavin Newsom, to the Board of the CA Housing Partnership Corporation.
Tax Credit Advisor sat down with Nagraj to learn more about MBS and project management best practices that he follows to help affordable housing projects succeed.
Tax Credit Advisor: As chief development officer are you mostly focused on ensuring that projects in your pipeline proceed as planned, or do you also assist with property management, asset management and other functions within MBS?
Adhi Nagraj: I support pre-development activities, construction and close-out of all of our projects around the country. We’re set up in multiple regions, including the West Coast, Midwest, Southern and Mid-Atlantic regions, and Puerto Rico/USVI. There are regional leads in these areas and a project manager to support them. My job is to support all of the regional leads on the projects that they’re working on. We don’t do this in a silo without constant input from other departments. It’s one thing to build something, close it out, and have it running on Day 1. We care about how a property looks in Years five, ten and 20. There are constant discussions with property management that provide real-time feedback on what they’re seeing in similar buildings in the same market and discussions around design ideas that we should incorporate into new projects, whether they have to do with the front lobby layout, bedrooms, security, community spaces and landscaping. On the asset management side, we have ongoing discussions with the folks who are tasked with ensuring that buildings are healthy for the long term and that underwriting standards are incorporated into projects to ensure success.
TCA: How often do you engage with your project managers?
AN: I just had my weekly meeting with Senior Vice President Pam Askew, the regional leader in the Mid-Atlantic. They’re all highly intelligent professionals and leaders in their regions. Pam is our representative for Baltimore, Washington, DC and New York. She supervises staff and can handle 90 percent of the issues by herself, which is true for all the regional leads. I do the weekly check-ins to ensure that I am supporting them and in part to offer advice that we’re seeing in other regions around the country. Being a national organization with people all over the country, I think it’s important from a culture and connectivity perspective to ensure that everyone, whether you are in the Mid-Atlantic or Texas, feels part of the McCormick Baron Salazar culture, history and ethos.
TCA: What project management best practices have you adopted over your career to ensure deals succeed?
AN: For me, it starts with basic schedule management and proformas. What is the critical path schedule? What needs to be done by what date and are we able to hit all those milestones? Who do we need to follow up with, whether it’s internal or external to the company, to meet those milestones? If we’ve got an end-of-the-year closing, there are steps we need to take right now on May 16 to ensure that we meet that December 31 deadline. Proformas help ensure that the numbers adequately reflect the upward pressures that we’re seeing. It’s basically a numbers game. As we chase money, it helps to know that we’re chasing the right amount we need in order to project for a future close and not underestimating in cases where the escalation is higher than we think it’s going to be. How we get to those numbers demands constant attention. We partner with a lot of general contractors during the early design phase, which allows them to get to know the project and advise on constructability and allows us to vet construction numbers to ensure that the subcontractors are giving us the best possible numbers. The general contractor often advises on escalation costs and what they’re seeing in the local markets because Bay Area construction is different from New Orleans or Miami.
TCA: What cost issues are you currently monitoring?
AN: Supply chains have been easing across the board. However, electrical work and electrical equipment is something that everywhere in the country requires a long lead item. Part of our project management best practices is ensuring that when we start construction, we don’t incur a piece of electrical equipment that’s going to take a year to come on-site. How do we problem-solve that? Do we accelerate the electrical clients to get our specs in order sufficiently enough before we start construction that we pre-order some equipment? All of this is kind of a give and take, and a back and forth with the general contractor in terms of what they’re seeing.
TCA: You’ve been in your current position since February 2022. Are there any new lessons that you’ve learned, especially during the COVID pandemic, that have been incorporated into your daily routine to improve the overall efficiency of your teams and the company as a whole?
AN: At a company level, we’ve readjusted by incorporating technology that reduces the need for site visits. We want to be efficient with people’s time, which then allows regional leads and their teams to remain in their communities and be where they’re most valuable, working on projects and developing relationships. Another small example is that the Department of Housing and Urban Development and other public agencies started doing virtual inspections during COVID as opposed to traveling to the sites. While some of that has flipped back and changed, we are incorporating some of those lessons of virtual inspections, and virtual plan checks on building plans as opposed to the old-school way of walking our plans and dropping them off at a city department or dropping off multiple plans to mark up. The other big piece of the COVID period was the racial reckoning that was brought to the fore of the country with the George Floyd killing and multiple protests around the country. There was a visual dichotomy of our streets going from being dead quiet to exploding with people in activity, passion and anger as these nationwide protests and the matter of race became prominent issues in our country. Some of our projects were affected. In Louisville, KY, we’re redeveloping public housing that was the site where Breonna Taylor was killed. In Minneapolis, our Heritage Park property is adjacent to where George Floyd was killed. Those buildings were impacted. What we did internally was to create a Diversity, Equity and Inclusion (DEI) training program that was mandatory for a few hours a week with our partner, a nonprofit called Urban Strategies, that facilitated mandatory discussions on race and gender identity. The meetings went on for a full year. I think it was a great moment that acknowledged where we were as a country, and that this was stuff that a lot of our staff and residents were going through.
TCA: How do you or MBS corporate help leadership teams think holistically about their business (project management, development, etc.)? How do you approach the interconnectivity of differing perspectives and functions from a project management standpoint?
AN: It’s very important, as your question suggests, that the project management group is not working in a silo, and that there are frequent presentations where they get early input from McCormack Baron Management on what’s working, and what’s not. We need MBM’s input on security, landscaping and community rooms. We need McCormack Baron Asset Management’s input on operating budgets and services budgets to ensure the long-term sustainability of our properties. There’s constant discussion between the various groups, so that the project manager is getting all the lessons learned, and all the real-time information from different departments as we design and underwrite a building. That way when we do the handoffs to property and to asset management, that asset is in a place that can be built to succeed long term. We also think that the aspect of holistic development has a lot to do with the importance of local relationships. We’re developing a project in Oakland, CA and our partner is a woman who is the former national leader of the Black Panther Party. It’s a building for the formerly homeless, which is going to have ground-floor businesses run by the formerly incarcerated. That was the vision of our development partner. When I think of holistic development, it involves working within MBS and outside of MBS to create a product that responds to the residents and to the stakeholders and is going to be an asset that’s going to perform long-term.
TCA: I’d like to talk about MBS now. What regions of the country are you most active in? How many affordable housing units do you manage? What types of deals do you find most appealing?
AN: Broadly speaking, we want to shore up and go deeper into our existing markets and look for new markets. At the end of this month (May), we have a ribbon cutting in Sacramento where we redeveloped public housing into a beautiful, new mixed-income community leveraging HUD Choice Neighborhood Implementation (CNI) dollars. We are looking to do more work in Sacramento, Baltimore and Pittsburgh. As migration into Texas has increased, so have rents, so we think there’s a great opportunity to be more active there. We were invited to Las Vegas to help develop a 1,000-unit community, which will be our first development in that city. Syracuse, NY is another area where we don’t have an active pipeline, but the community invited us to redevelop public housing into a mixed-income community. It’s going to be adjacent to an elevated highway that will be demolished using federal dollars. The elevated highway had a reputation for breaking up a public housing community and exacerbating segregation and creating challenges with intergenerational poverty. We’re going to work with local stakeholders to redevelop that housing and bring back existing residents and add new residents to create a vibrant community. An alignment of vision with local partners and access to resources is what we look for as we approach new projects.
TCA: MBS has historically done a lot of HUD work, but I understand that you’re expanding into other areas. What can you share about that?
AN: Right now, we’re working in partnership with HUD on CNI projects in Memphis; Baltimore; Fort Myers, FL; New Orleans; Sacramento; and Fort Worth. We have secured, I believe, 15 CNI projects, which is the most for any developer. Under that program, we take disenfranchised public housing communities, rehouse the residents and build thriving mixed-income communities to help lift families and young folks out of poverty. That will always be the core of what we do. However, we want to augment that work and expand into workforce housing and non-HUD mixed-income housing. We have seen a migration of people to the Southwest that has created new affordable housing pressures in places like Phoenix and Houston. We are working in partnership with those cities and housing authorities to develop new communities or redevelop existing ones. We’re also looking at middle-income housing. Because we’re unable to house our teachers and first responders in the communities in which they serve, we are working on new financing products that may or may not incorporate tax credits, so that we have greater flexibility to go up to higher area median incomes (AMIs).
TCA: You touched briefly on holistic development and the importance of creating holistic communities. Can you provide more detail on what that means? Do you have a unique approach to resident services, special needs services and socially-oriented services?
AN: We are passionate about early and often meeting with residents, nonprofits, churches and other stakeholders. Much of what we do is focused on rebuilding urban America. We are desegregating our housing stock. We bring unrestricted mark-rate units into low-income communities and build 100 percent affordable housing in wealthy communities. We’re bringing in grocery stores and childcare centers through our in-house New Markets Tax Credit program. We want to make sure that what we’re building is responsive to community needs. We partner a lot with Urban Strategies, an independent nonprofit started by our co-founder Richard Baron, that helps mobilize residents and stakeholders to be a part of these meetings so that folks feel heard. Their creativity helps spur new ways of thinking about vacant parcels, and how real estate can help solve social issues. When we go into new communities, we’re thinking about holistic development. It’s not just building affordable housing, which is important everywhere, but for whom? At what AMI levels? What bedroom types? What populations? Those are questions that we need help from the community.
TCA: This is MBS’ 50th year in business. How will the company celebrate this milestone?
AN: There’s a book being produced that commemorates the last 50 years that will be coming out shortly. It covers MBS’ development work, the policy initiatives that helped launch HUD’s HOPE 6 and CNI programs, the communities that we’ve developed around the country, and the resident work we’ve done. It’s a nice culmination of the impact that MBS has had in our communities. We’re certainly appreciative of the fact that the forces that were at play 50 years ago, when Richard and Terry McCormack started the company, have not gone away, and in some cases, are stronger now, such as the need to invest in our cities, affordability, and having access to healthcare, education and social services. What was true back then is still true now and we are committed to this mission of rebuilding communities, reintegrating our housing stock and replenishing our urban communities.
