Talking Heads: John Peck, Partner, Jones Walker
By Darryl Hicks
9 min read
NH&RA’s New Chairman Shares His Priorities and Views
John Weld Peck has been at the forefront of affordable housing finance in the United States for over 40 years. He participated in the legislative hearings that gave birth to the Section 8 program in the 1970s and helped write the original Section 8 financing regulations.
He has also developed, or participated in the evolution of, numerous innovative tax-exempt multifamily housing finance vehicles while serving as bond counsel, underwriter counsel, disclosure counsel, borrower counsel, housing authority counsel and issuer counsel on thousands of multifamily housing transactions. The National Housing & Rehabilitation Association elected Peck as its new chairman at its annual meeting this past February.
Tax Credit Advisor sat down with Peck to find out what his priorities will be as chairman and where he sees the affordable housing business headed in the Trump Administration.
Tax Credit Advisor: Congratulations on being appointed Chairman of NH&RA. What do want to achieve during your tenure?
Peck: NH&RA has reached a point where we need to ask ourselves, ‘who are we? where are we going? and what important contributions can we make for the benefit of our members and for affordable housing?’ I look forward to participating in this discussion and determining how we most effectively and efficiently can manage our resources for the continued growth of the organization and making sure that we serve members as best as possible. A smaller organization, such as NH&RA, cannot dilute its efforts too much without losing something. Focus is critical.
TCA: How do see the debates over tax reform and the administration’s proposed budget cuts playing out?
Peck: Secretary Carson needs to play a key role during these discussions. We have never had such a well-known and generally popular national figure running HUD. If he is given a competent senior staff to assist with his education and the legislative work to be done, this could be an interesting year for us. Without question, we have budget cuts coming and some of that is justifiable given the large bureaucracy at HUD, both at headquarters and around the country. That leaves us with a focus of getting the Secretary on board with these programs and insulating and growing the Low Income Housing Tax Credit, both the nine percent and four percent credits, which are fundamental to housing programs. We have congressional support for the tax credit. Senators Maria Cantwell (D-WA), Jack Reed (D-RI) and Susan Collins (R-ME), and Congressman Pat Tiberi (R-OH) in the House, are just a few of our staunchest supporters. The industry has shown that we can successfully debate the critical importance of retaining and growing the housing tax credit. On the HUD side, the focus has to be on retaining the RAD (Rental Assistance Demonstration) program, which is proving to be so successful. I am looking forward to that challenge.
TCA: Are your clients, the state housing finance agencies, concerned? How would you sum up their reactions thus far?
Peck: The leadership of the NCSHA (National Council of State Housing Agencies) has immersed itself in these debates and made its opinions known to allies in both parties. Single family mortgage programs are the bread and butter revenue producers for state housing agencies, so they care about the mortgage interest tax deduction. They are also very supportive of the multifamily programs. We find that multifamily, and especially single family, provide financial operating support for the state agencies, so they have a foot in each camp. HFA board members and executive directors have been helpful nationwide with lobbying efforts. State agencies have also been really good at figuring out ways to protect projects that have already been allocated nine percent credits, or will be, by setting aside funds or reassuring developers that if there is a reduction in pricing their projects will still go into production. I’m satisfied with the different ways that state allocating agencies are handling the situation. I’ve not seen any changes, accept for the adjusters, and the need to fill in holes on the sources side. Overall, I am pleased with the way the year is going.
TCA: I’m curious whether you have met with your elected representatives to discuss these proposals given their importance to the future of the business? Do you see a role for NH&RA members in this debate?
Peck: Individual members have definitely been playing roles on a local level and through other organizations. I don’t think we ever thought that NH&RA could take a leading role in lobbying efforts. We do our share as individuals. I am from Ohio, so I have met with Pat Tiberi, who represents a district north of where I live but more importantly sits on the tax-writing Ways and Means Committee. I’ve met with both Ohio Senators, Rob Portman and Sherrod Brown. In this regard, I am like many of the other members, but the major lobbying efforts are through other organizations, like the Tax Credit Coalition and NCSHA. I see NH&RA’s role as more educational, that is keeping everyone up to speed on current market conditions and providing a forum for practitioners to discuss successful business strategies. But you raised an interesting point. We’ll see how the membership feels over time and assess their views on whether NH&RA should play a bigger role in these policy debates.
TCA: Where do you see the affordable housing business 12 months from now? Five years?
Peck: We have a critical need for decent housing. That has been recognized on a much broader scale than I would have thought. Given the conservative majorities in Congress, we need to be creative and we need to focus on the efficiencies of the use of the tax credit, and how RAD programs fit into this whole scheme. Support for public housing is much weaker than support for the tax credit. But the housing provided by public housing agencies is fundamental. So conversion of those units through the RAD program has to be a real priority. The defense of Section 8 has generally been challenging, but with a focus on RAD, I think we can bolster our case with thought leaders and with Congress. The tax credit program is way more popular than the housing authorities. The need has been recognized but there isn’t a lot of confidence in the capabilities of the housing authorities to efficiently manage properties. But they need to play a continuing role. Increasing the value of the Low Income Housing Tax Credit, and lifting the cap on the number of units that can be converted under the RAD program, is critical. As I said, the HUD budget could be hit hard, but I think these other changes to LIHTC and RAD can happen. Secretary Carson needs to play a critical role, but that’s a big question mark now because he lacks senior staff.
TCA: Have these political discussions started impacting the way that affordable housing deals are being structured today? What additional changes could we see?
Peck: I don’t think so. Syndicators have adjusted tax credit pricing and the state agencies are supporting projects that have been allocated credits. The one negative that I see in the short run is that construction prices have started moving upward. That concerns me just as much as the problems in Washington. I am hopeful on the Washington side, but not as much on the costs of producing our units. We need to tighten our belts and figure out a solution.
TCA: Do you see tax-exempt bonds playing a bigger role in financing affordable housing?
Peck: They have to. So many projects compete unsuccessfully for a finite amount of nine percent housing tax credits that there are no options to using bonds for many affordable projects, and larger projects have no access to the nine percent credit at all. The four percent credit with tax-exempt debt is a natural fit in these situations. Furthermore, the RAD program uses tax-exempt debt vehicles extensively and so assuming that program continues, we will need bonds to generate enough units to keep up with the demand for decent housing.
TCA: What other noteworthy trends are you seeing in the business?
Peck: Generally, the greater availability of different types of credit facilities is a positive development. The resurrection of Fannie and Freddie, and the competitiveness that exists between them, has created tremendous opportunities. The programs that they have created, especially on the tax-exempt bond side, are significant arrows in our quiver to get projects financed. Both agencies have brought in-house some real professionals from the business both on the operating and legal side to help develop new and innovative programs, some of which are still in process. This bodes well for us. In addition, the 221(d)4 pilot program that HUD is talking about, if put into effect, could really be helpful. We could reduce the time it takes to get an FHA project in the ground from 11 months to four months. And there would be less resistance from the developer community to using the FHA (d)4 program for rehab and construction, which I see as a real positive.
TCA: You’ve been a member of NH&RA for several decades. Where do you see the value of NH&RA compared to other affordable housing organizations?
Peck: I joined NH&RA in 1986 and have served on the Board of Directors since 1993. We are, and always have been, a small boutique organization of the really professional affordable housing community. The beauty of this organization is that we as competitors consistently work together to find better ways to do what we do, and to find better mouse traps to advance the cause of decent housing. One additional factor that I think is really important is that this organization has done a great job of promoting networking. That has been one of (NH&RA President and CEO) Peter Bell’s significant contributions. We are small, so we get to know everybody. And I can’t tell you the number of times I’ve picked up the phone and called somebody, either because of a geography that I needed to know better, or to ask a technical question, or a ‘who do you know’ question, and I always get the answers because of the availability of NH&RA members to assist one another. We are competitors, but when we meet as NH&RA members, we are kindred spirits.
