NH&RA 2009 Affordable Housing Vision Award Recipients
By Caitlin Jones
5 min read
Tax Credit Advisor, November 2009:
David A. Smith:
Running on All Cylinders
By Marty Bell
David A. Smith is an energy machine. Standing before a room full of Washington housing professionals to present his newest innovative idea, Mission Entrepreneurial Entities (MEEs), he is the peripatetic college professor you always wanted to have, the orchestra conductor, the ringmaster. Tall and lanky, his hands fly through the air as he speaks accompanying the waterfall of words gushing from him, words filled with urgency and passion. The bit of gray that has snuck into his blond hair and neatly trimmed beard belie his forever youthful enthusiasm.
His field is affordable housing finance and it is not a job to him but a cause. He’s devoted 30 years to it now, consulting for housing entities all over the world, most recently in India and Ireland; running CAS Financial Advisory Services in Boston, which has over $5 billion in assets under management; founding the Affordable Housing Institute, a nonprofit international housing consultancy; lecturing, writing over 2,100 articles and now perpetually blogging. Check out one of his blogs at AHI.org or dasblog.org. They are not just written but constructed – provocative thoughts, quotes from both classics and pop culture, photos and illustrations – all architecturally arranged to leave a lasting impression. He’s written 109 blogs on capital markets, 81 on policy, 58 on cities, 71 on innovation, and 14 humor pieces. You just have to read one and you’ll be hooked. He’s one of those folks that make you wonder how he has time to squeeze it all in.
Smith is, above all else, a man with a comprehensive world view and it is fitting that he has been honored by the National Housing & Rehabilitation Association with a 2009 Affordable Housing Vision Award.
He grew up in Marblehead, Mass., went to Harvard, and hoped to become a sportswriter. But he calculated it would take him 15 years just to get hired by a major daily. No patience for that. So he took a desk job at Boston Capital and 15 years later was the CEO.
His passion for housing hit him by accident in 1978 on a day trip to Dayton, Ohio with his then boss, Harry Howell. They were there to visit a project called King Arthur Apartments. “After we walked around, Harry asked me what I thought,” Smith says. “I kept my mouth shut. But what I was thinking was, “˜How could anyone have taken money from the government and built such a crappy project?’ I realized right then that it was our duty to build something both the people who lived there and the people who funded it could be proud of.”
Now, after 30 years at it, Smith tells the gathering in D.C., “My head is pointy because I’ve been banging it against long-term viable affordable housing.” His message this day is that the U.S. affordable housing market is going through a structural change. Over the past 40 years, there has been an evolution from a public system to what is now a public/private system. The future is not just housing production, but building communities. And this is going to require leadership that has both a business vision and a social vision. Thus, the Mission Entrepreneurial Entities:
- Mission, because the developers got into the field to make positive change;
- Entrepreneurial, because they achieve their results via entrepreneurship, taking risks, persuading established institutions, including government, to do things;
- Entity, because they must be concerned with their own viability – cover expenses, pay staff, make profits, so they can continue pursuing their mission outcomes.
These are businesses that may operate on a nonprofit structure, but have the savvy to make profits and sustain themselves over time. “You need scale to be a strong management company,” he says.
His concern is with the functioning of the housing ecosystem – the combination of all the forces that combine to provide financing. With the current capital crunch and a housing-driven recession, he wonders if a system built around the low-income housing tax credit (LIHTC) is in jeopardy, which shows the inherent weakness of relying on one primary funding mechanism. And yet he believes a healthy LIHTC approach is more favorable than any alternative. “If you want to deliver long-term affordable housing,” he says, “the government has to close the gap between the capital cost and what renters can afford to pay.”
Smith feels the LIHTC program drove into a cul-de-sac and crashed in 2007. Financing entities that once needed the tax credits made less money and no longer needed them. It became the domain of CRA-driven, best price buyers and drove everyone else out. The path to getting the market active again is tied to a change in thinking by both allocators and investors – both of whom routinely hold off to committing until too late in the process to encourage a robust market for developers.
As the MEE report concludes, “At the very moment when MEE capacity is needed to cope with inventories in turmoil, their own health and viability is itself being disrupted. If we can reorient the delivery systems to match new resources to housing problems via established MEEs, we can turn the double turmoil into opportunity not just to save the inventory but also to reinvent the system.”
Smith feels now is the time. “We have the most capable HUD staff in 25 years,” he says. “Meeting with them is like starting at Chapter 4 instead of Chapter 1.” And America is urbanizing. The vehicular city created after World War II has now become the information city. People want to use their auto less, to commute faster. “The move is coastal and temperate, to both coasts and to the south.” The future is the cities and the cities will benefit and flourish if first responders – the day-to-day service providers – not just work there but also live there. And so there’s no time to waste in fixing the ecosystem and providing affordable housing.
