Monthly Columns Archives

If you attended NH&RA’s Spring Forum in Los Angeles in May or just took a glance at the event’s agenda, you will recognize many of the topics covered in this month’s issue. A paramount objective of both a trade association and a trade magazine is to capture the current mindset of an industry, address the issues of greatest concern and facilitate the sharing of experience and innovative thinking across company lines. I view the association and the magazine as partners in comprehensive communication.

In thermodynamics, entropy is, among other things, a measure of a system’s granular complexity – and in thermodynamics it is a fundamental law that entropy and complexity always increase.

Acertain $10-billion-a-year industry faces systemic catastrophic risk, for which we are entirely uninsured.
Today’s tax credit properties would not exist without insurance. Today, a LIHTC property without insurance is unfinanceable and un-ownable. It must have title insurance, fire insurance, casualty and personal injury insurance, and flood insurance if relevant. Many properties expect the tenants to buy renter’s insurance, many loans have mortgage insurance.

Along with a little luck, choice is probably the primary determinant of success. It’s also the basis of endless debate. Did our child pick the right spouse? Did our team pick the right draft choice? Why’d you order that dish? You’re voting for who? Yellow? You’re painting this room yellow? You know you look great in that dress.
Just think how much of our daily discussion is triggered by the choices we (or others) make.

In an anecdote that has become urban folklore, the famous Roaring 20s pilferer Willie Sutton was asked, “Why do you rob banks?” And he responded, “It’s where the money is.”

Early in the 1980s, when I was earning my keep as a freelance journalist, my brother Peter asked if I would write a newsletter for a fairly new organization he was managing called the National Housing & Rehabilitation Association. The assignment came with a great perk—attending the organization’s conference on Martha’s Vineyard. It was there that I first had the privilege of observing the creativity in strategic financial thinking that (IMHO) has characterized NH&RA throughout its history.

What then is the business model of 21st century rural America? Though you may not realize it, finding the answer is absolutely critical for the affordable housing industry. It stumped me for years, but now I think I’ve figured it out.

We take energy for granted. We know it’s there, someplace. Water is running, lights are on, food is cooking, and something somewhere is making it happen. But we can’t see it, like a new couch or a new car, we can’t flop onto it, jump into it, speed it up. It’s one thing to try to sell people something tactile and visible, it’s another to sell them an idea for something that is invisible and seems intangible.

Ask Americans what they envision by green building and the property they describe will likely be a ground-hugging campus, newly built, festooned with cutting-edge technology. Then show them a 12-story central-city high-rise built in the mid-1960s and they may instinctively recoil at its plain exterior, small footprint (often paved), and visible age. Yet, when properly compared, that refurbished 202 is much greener than the new campus, because “green isn’t what you think it is.” Instead it’s three things.

Call it an exodus, call it a coincidence or call it a meme, but Americans are heading to the cities in the largest numbers since the Industrial Revolution changed a rural society into an urban society at the end of the 19th century. This latest great migration is from the center of the country towards all the edges. And it’s not surprising since the cities are beautiful. A month ago, I traveled from my home in beautiful Washington to Boston, Pittsburgh, Charleston and Atlanta and each of them was beautiful in its own quirky way.

Even as tax reform looms on the horizon, the LIHTC is under a different mortal threat, one from an unlikely source – the Obama Administration and its judicially questionable but so-far politically effective blunderbuss known as disparate impact. If not struck down in a case just argued in the Supreme Court, then we might as well kiss goodbye states’ autonomy to set their own QAPs and to make binding awards, and say sayanora to the LIHTC production pipeline as we know it.

Young singles have plenty of personal, economic, and social mobility; they have minimal cash assets (and possibly maximal student-loan liabilities); they want to live somewhere close to work and pay as little cash for it as they can. Their needs beautifully complement what the elderly homeowners have, and what they have is what the elderly need.