task force principles · •cities, states compete to attract mobile jobs-creating entities – big...

Task Force Meeting #3

April 20, 2018

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Today’s Agenda

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9:00 a.m. Welcome and Introductions

9:15 a.m. Debrief on Community Solutions Event

9:35 a.m. Presentation by David Smith

10:55 a.m. Break

11:10 a.m. Work Group reports

12:00 p.m. Lunch Break

12:30 p.m. Overview of Task Force report structure and key Elements

12:40 p.m. Discuss recommendation ideas from the work groups

1:50 p.m. Next Steps and Wrap Up

2:00 p.m. Adjourn

“Future of Housing” Community Event

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• About 75 people attended • Small table conversations focused on shared housing stories,

identification of housing issues, and brainstorming ideas and solutions

Task Force Guest – David Smith

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David has 35 years of experience with complex affordable housing transactions, programs, and policies, and a global reputation for creativity, insight, adaptive innovation, passion and problem-solving.

Founder and CEO of Affordable Housing Institute Chairman of Recap Real Estate

, 4/20/2018 www.recapadvisors.com

David A. Smith [email protected] +1 (617) 502-5913

Inventing new housing paradigms Without ever leaving the state

Minnesota Governors Housing Task Force St. Paul, MN

9:30 am Friday, 20 April 2018

http://www.recapadvisors.com/

mailto:[email protected]


Structure of this session

• Part 1: Housing is the glue • Part 2: Resources in search of solutions

• Part 3: Solutions in search of resources

• Part 4: Housing paradigms housing value chains

• Part 5: How to design viable housing program solutions

• Discussion




Part 1: Housing is the glue

“No sustainable cities without urban affordable housing”

Minnesota Governors Housing Task Force St. Paul, MN 9:30 am Friday, 20 April 2018




The 4+1 engines of sustainable jobs

• Communities fail unless cities grow – Economically, demographically, socially – More jobs, more people, more connectedness – 21st century cities grow with ‘sustainable’ jobs

• ‘Sustainable job engines’ come in 4+1 types

– Usually in this order of development/ priority

1. Education

– Especially graduate students and foreigners

2. Health – Where the world’s elite come to get repaired

3. Technology innovation – Job creation via the internet

4. Government – Where the output is laws and money

5. Leisure/ tourism – Where the product is memories



Housing is where community meets household

Communities

Households

• Affordable housing anchors communities • ‘Green sustainable cities’ urban affordable

housing

• Housing touches everything • Jobs, transport, health, safety, community

• Scale of success is neighborhood-plus • Time test of success is capital reinvestment

• Affordability is end objective in itself • ‘Decent, safe, and sanitary’

• Scale of success is the property • Time test of success is property viability • Households start out independent

• Affordability is just start • “Housing plus services” • Housing is the platform for improvement • People are less than independent

• Scale of success is person or household • Time test of success is life improvement

Affordable housing



The housing policy inversion Politics, policy, and innovation

• Housing’s ‘magnetic field’ reversed – 1966 (HUD) 1986, top down – 1986 (LIHTC) 2008, side to side ↔ – 2009 (crash) Now, bottom up ↑

• Housing influenced by 3 levels of government

– National: Income tax, interest rates – State: State tax, LIHTC allocation – Local: Sales tax, zoning, development barriers

• Cities, states compete to attract mobile jobs-creating entities

– Big 4 of ‘clean cool jobs’ (education, tech, health, government) – Law of sustainable cities: 1=1+1

• Add +1 job Add +1 housing and +1 daily commute

• America does not have a national affordable housing crisis

– National epidemic of distinct state/ local affordable housing crises




Part 2: Resources in search of solutions Social savers, economic aspirants, community vitalizers





Urgent challenges in affordable housing/ 1 Unsolved problems in search of solutions

The ‘social savers’ group Helping taxpayers by helping those in need

1. Elderly retrofit to extend healthspan

– ‘Nursing home aversion’ by non-medical caring

2. Permanent supportive housing for chronically homeless

– Bringing help home

3. Veterans’ recovery campus

– “Emotional demobilization”

4. Formerly incarcerated

– 2,250,000 in prison, 4,750,000 on probation/ parole

5. Aging out of foster care – Unready for economically independent adult life



Urgent challenges in affordable housing/ 2 Gaps in our resource/ subsidy/ delivery ecosystem

The ‘economic aspirations’ group Growing economy by growing affordable homes 6. Workforce housing

– Above LIHTC, below market-income

7. Employer-assisted housing

– People who can’t get to their job won’t take the job

8. ‘Off-campus’ dormitories: grow campus, not spillover

– Universities are ‘sustainable urban jobs’ engines

9. Entrepreneurial rooming houses – If ‘WeWork’ is a business incubator, why isn’t ‘WeLive’ an

entrepreneur’s incubator?

10.‘Refugee landing pads’

– Turn refugees into productive Americans – Their little place in the land of opportunity



Urgent challenges in affordable housing/ 3 Which of these are priorities in Minnesota?

The ‘community vitalizer’ group Housing stabilizes de-stabilizing communities 11.Orphan properties

– Aging, obsolescent, de-motivated … yet essential

12.Operator-owned mobile home parks

– The largest single form of affordable housing

13.Foreclosure homesteading – Curing the ‘urban chicken pox’ one home, one block at a time

14.‘Flats over shops’ (Living Main Street) – Storefronts vacant by day downtown dead at night

15.Accessory Dwelling Units (ADU’s) – The family member you want close … but not too close

16.Naturally Occurring Affordable Housing (NOAHI’s) – Vaccinating against ‘market eviction’




Part 3:

Solutions in search of resources “The solution is its salesware”





Veterans’ recovery campus Example: Soldier On, Pittsfield

• The big idea – A veterans’ only complex/ community for ‘post-

graduate’ education into independence

• How it works – Custom-design campus facility (‘safe inside’) – Housing plus services – Tap VASH – Reorient with job training, skills training

• Why is it better? – A safe space to learn how to be independent – Peers help peers reinforce independence-behaviors

• Graduates return to the campus as role models

– Once created, it attracts resources

• Adult-education and similar programs

• Goods, volunteers, advocates, contributors

• And it works! – http://www.wesoldieron.org/ – http://centuryvillages.org/


http://www.wesoldieron.org/



http://centuryvillages.org/

http://centuryvillages.org/


‘Living Main Street’ Flats over shops for newcomer family businesses

• The big idea – Revive ‘the old Main Street’ – Mixed-use, mixed-tenure, mixed-income

• How it works – Renovate older properties in smaller downtowns

• Retail/ commercial on the ground floor

• Flats above

– Underwrite three streams of income

• + Family-owner’s household income

• + Rental from tenants

• + Commercial rental from ground floor

• Why is it better? – Employs the whole family

• A class immigrant-entrepreneurial-assimilation path

– American aspirational model for 150 years – “Eyes on the street” 24/7

• Jane Jacobs, Oscar Newman, Defensible Space

• Concept note available – Email [email protected]




Homestead Scholarship Turn student debt into home mortgage debt

• The big idea – Swap student debt for mortgage debt

• How it works – Recent-grad borrower buys home in target

neighborhood

• HFA finances 90% of price + 75% of renovations

– Borrower commits to live there 5 years – Philanthropy/ agency funds a Homestead

Scholarship Payment

• 3 years’ worth of student debt over 5 years

– 100%, 80%, 60%, 40%, 20%

• Why is it better? – Student loan 5x Mortgage loan

• Same payments: 8% 4%, 10 years 30 years

– Stabilizes inner-urban neighborhoods – Gets young people into homeownership faster

• Creates new entrepreneurial landlords

• Concept note available – Email [email protected]





Part 4: Housing paradigms Housing value chains “The solution is its salesware”




© 2015 Affordable Housing Institute: all rights reserved

Housing markets work only when value chains work And when the value chains work, they’re invisible

20-Apr-18 20

• Households want quality housing

• May be “effective demand” • Need financing • Need down payments

• Homes are developed • Built, ready for move in • Designed to meet need • Priced to match market

• Household • Loan • Home • At same time


Two value chains must meet at a closing Called ‘offtake’ for the developer

20-Apr-18 21

• Household wants home • Can pay for home • Ready to move in

• Home can be moved into • Home can be sold • Price recoups capital • Developer cashes profit

• Household walks away with keys, obligations


In functioning markets, all 16 links connect together Demand side, supply side, for each household type

20-Apr-18 22

• Many actors along the way

• Many handoffs

• Each relies on the next

• Developers always looking for opportunity

• Find a new customer-price niche

• Government enables or disables

• Regulates • Incentivizes


If any link doesn’t work, the value chain is ‘broken’ And in many (most?) markets, one or more links doesn’t work

20-Apr-18 23

• If even one supply-side link is broken

• Homes aren’t created

• If even one demand-side link is broken

• People can’t borrow to buy

• If several links are broken at the same time …

• Problem may seem insoluble

• Solution: Analyze each value chain by observation • Identify missing links, weak links, uneconomic handoffs • Make ‘maxi-min’ changes at the weak links only

Affordable Housing Institute www.affordablehousinginstitute.org 20-Apr-18 // Slide 24


Part 5: How to design

housing program solutions Map the value chains

Find the hidden treasure


http://www.affordablehousinginstitute.org/


Affordable Housing Institute www.affordablehousinginstitute.org 20-Apr-18 // Slide 25

Affordable housing resources come in many forms

Cash

1. Grants

2. Hard debt, high leverage

3. Hard debt, interest subsidy

4. Soft debt

5. Hard equity

6. Soft equity

7. Operating subsidy

8. Redirective subsidy

Non-cash

1. Land (cheap or free)

2. Zoning and density

3. Trunk infrastructure

4. Site infrastructure

5. Cheap utility rates

6. Credit enhancement

7. Sales tax relief on building materials

8. Ongoing real estate tax relief

Every political jurisdiction has a distinctive mix – what is yours? Always design programs and business models around your unique mix

http://www.affordablehousinginstitute.org/


Inventory state and local resources (non-cash)

Supply side

• Land: state owned, city owned – Path of TOD, brownfield remediation

• Land value capture

• Vacant buildings, under-occupied buildings – Relocate municipal tenants, reposition for higher/ better use

• Upzoning/ inclusionary zoning – Density bonus for affordable housing

• Transferable Development Rights

• Configurations (more than just microunits) – Reinvent room-bath-kitchen (RBK) – Reinvent boarding house/ entrepreneurial dormitory/ WeLive

• Risk assumption/ mitigation – Co-develop, land lease, bulk offtake commitment

• Construction – Modular/ prefab – Green tax credits, state tax credits (don’t parrot LIHTC) – Davis-Bacon exemptions (above percentage affordable)



Inventory state and local resources (non-cash)

Demand side

• Eligibility: Which populations to target? – What is their specialized ‘housing-plus’ need?

• Aggregation of demand – Employer-assisted housing: long history

• Subsidy – Who are their benefactors/ external funders (e.g. Medicaid, VA)? – HCV’s,§1115 waivers, VASH, down payment assistance – Employer match/ forgivable loan

• Credit underwriting – Mitigating risk of non-payment – ‘Secure tenure with the potential for homeownership’

• Rent-to-own? Shared appreciation?

• Funding: Lower cost of capital Lower cost to consumer – Liquidity via bonds, MHFA, Opportunity Zone funds

• Contributed assets? Concessionary loans?

• Servicing – Payroll deduction at source

• Enforcement – Adjustable payments/ flexible loan tenor



Summarizing … “The best way to predict the future is to invent it”

1. Housing is the glue a. Urban affordable housing Growing sustainable urban economies

2. Housing matters for what it does

a. Strengthens diverse communities b. Revitalizes job-losing downtowns c. Turns sheepskin serfs into urban homesteaders

3. Pick a solution worth solving … and solve it

a. Laws & money & solution idea = Impact b. Risk-takers’ innovation = New solutions

4. Map your value chains by desired solution typology

a. Weak links, broken links b. Where are the hidden costs? The non-cash resources?

5. Build a prototype Create political demand



Subscribe to State of the Market Email [email protected]

Discussion





Inventing new housing paradigms Without ever leaving the state

Minnesota Governors Housing Task Force St. Paul, MN

9:30 am Friday, 20 April 2018



Work Group reports to Task Force

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The three work groups will provide an overview of: • Topics covered and remaining for their work group • Recommendation ideas* that have emerged so far • Innovation or “stretch” ideas they’ve identified * The recommendation ideas are a starting point for conversation by the Task Force and do not represent formally proposed language.

Rental Work Group - Topics

4/20/2018 32

Covered Topics

Cost drivers in NOAH (Naturally Occurring Affordable Housing)

Tenant advocacy perspective and owner & voucher administrator perspective (Joint meeting with Housing Stability & Opportunity Work Group)

Roundtable discussion with nine housing experts on visionary ideas that could positively impact affordable rental housing

Cost Containment strategies for both operating costs and development costs

Regulatory changes that could make affordable housing development or preservation more efficient

Remaining Topics

o Tenant impact issues such as rent control, tenant notifications in case of sale, consistent housing quality in NOAH units and expanding rent subsidy resources (project and tenant based.)

Recommendation Ideas – Rental

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Provide a Range of Housing Options

• The State of Minnesota should set, promote publicly, allocate resources to address and monitor annual statewide goals that correspond to need for rental housing preservation and production in three major categories: federally subsidized preservation, new production to meet back log of housing and new production to meet economic growth.


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Provide Access to Housing and Remove Barriers

• Create designated and permanent affordable housing capital, rental and

operating funding sources that can leverage other public and private

investment at local level and state level.

• The State and local units of government should ensure that all rental

capital resources and rental assistance programs are aligned and

focused on those households with the highest need. (Finance)

• Modify and expand existing rental rehab programs throughout the state

to simply and efficiently address the conditions of existing rental

properties (Finance)


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• Consider changes to the property tax regime that cap property taxes for owners who rent to low income tenants (may include ramped up 4d or new taxation scheme) (Operating Cost Containment)

• Shield properties that deliver affordability from growing utility costs (Operating Cost Containment)

• Ensure a scalable risk mitigation program to reduce operating costs and increase affordability and access (such as expansion of existing program or system wide utilization of existing private market insurance products) to mitigate owner risk to accepting tenants with multiple barriers to housing. (Operating Cost Containment)

Innovative / “Stretch” Ideas – Rental

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• Promising industry ideas to speed up development process including wide scale implement of modular housing and prototype designs.

• Review boards or arbitration boards that align significant need for housing with reasonable development process (review panel to evaluate proposed new regulations to understand cost implications; process to appeal local zoning / entitlement actions that add costs, delay, or exclude affordable housing development)

Innovative / “Stretch” Ideas – Rental

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• Explore the intersection of housing and other needs/flows of funds like health and education and criminal justice systems.

• Public information campaign on housing

• Opportunity zones, how to direct private investment for community development outcomes

• Services funding in property budgets or through capital funding sources

• Public lands inventory and commitment to affordable housing

Homeownership Work Group - Topics

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Covered Topics

Expand pathways and access to homeownership

Address the homeownership disparity

Address state and local government policies and regulations

Increase access to capital and address development costs

Remaining Topics

o Increase availability of alternative forms of ownership housing and

expand housing options

o Maintain existing housing

Recommendation Ideas – Homeownership

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Provide Pathways to Homeownership

• Encourage broad participation in homeownership housing opportunities by engaging a cross-sector of stakeholders in education, economic development, jobs, and housing.


• Encourage local governments to change local regulations to reduce costs for housing development and provide best practices for local governments.


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• Support and expand the reach of existing homebuyer and financial education and counseling programs.

• Increase access to capital for homebuyers through expanding mortgage products, encouraging innovative methods for savings, and growing downpayment assistance.

• Expand and simplify construction financing products and underwriting for homeownership housing developers.


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• Provide technical assistance and capacity building for smaller and newer developers to enable them to create more affordable homeownership units.

• Identify and encourage ways in which to reduce construction costs.

• Expand the housing inventory by developing more single family homes and encouraging alternative forms of homeownership housing options.

• Engage local community members to support new housing opportunities.

Innovative / “Stretch” Ideas – Homeownership

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• Pool downpayment assistance sources so that buyers will not have to apply to multiple programs.

Stability & Opportunity Work Group - Topics

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Covered Topics – Barriers to accessing housing

Housing access for people in transition from systems

Impacts of housing discrimination, tenant screening, and other

legal or landlord issues impacting access to housing

Access to affordable housing through tenant based vouchers and

subsidies that support affordability

Remaining Topics – Barriers to maintaining housing stability

o Access to services connected to housing

o Evictions and other displacement impacts

Recommendation Ideas – Stability & Opportunity

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• Increase investment in rental subsidies

• Support efforts for inclusionary zoning

• Develop additional incentives for landlords to rent to

tenants with barriers to housing access

• Develop best practices for tenant screening procedures

• Address fair housing concerns


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• Encourage creative solutions to increase access to housing

for people with various housing needs and preferences

(seniors, etc.)

• Ensure Implementation of Olmstead Act

• Increase deeply affordable housing stock


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Enable and Support Housing Stability

• Increase housing education efforts and materials as well as ensure proper notification processes to tenants of any changes to their tenancy

• Increase housing-related navigation services to access housing

• Increase transparency and communication between tenants and landlords


• Incentivize private sector participation

Innovative / “Stretch” Ideas – Stability & Opportunity

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• Coordinate services funding into a single RFP

• Recommend the Department of Revenue create a housing tax credit program for employers who create affordable housing options for employees.

Framing for Task Force Report (overview)

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DRAFT -- Structure Concept for Final Report -- DRAFT

VISION Overarching statement of asipiration and need that sets the frame for the report

PRINCIPLES

ELEMENTS of a secure

housing system

RECOMMENDATIONS for each Element

Strategy and Action Ideas for each Recommendation

RECOMMENDATION Strategy or Action Idea Strategy or Action Idea Strategy or Action Idea





“Elements” to set stage for recommendations

Element 1: Provide Access to Housing and Remove Barriers - All

Minnesotans must be able to access housing they can afford.

Element 2: Enable and Support Housing Stability - Strategies must

be in place to ensure that Minnesotans can maintain stable

housing connected to transportation, jobs, healthcare, education

and other services.

Element 3: Provide Pathways to Homeownership - Paths to

homeownership must be clear and available to all who seek it

and have the resources to support it.

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“Elements” to set stage for recommendations

Element 4: Address the Need for Housing Preservation -

Preservation of existing ownership and rental affordable housing

is essential, whether it’s naturally occurring and subsidized.

Element 5: Provide a Range of Housing Options - Expand the range

of available housing options by product type and financing, to

better match the growing and evolving needs and interests.

Element 6: Ensure Safe and Decent Quality Housing Standards -

Ensure that Minnesota’s housing stock is decent quality and safe

/ Basic standards for quality and safety are essential for all

housing.

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Discuss Report Outline and Recommendation Ideas

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Work Group and Task Force Schedule

2/21/2018 Minnesota Housing | mnhousing.gov 52

Discuss Scope and potential topics for work group

January 11 June 25 April 20 May 29 February 21

TF Mtg.

2

TF Mtg.

1

TF Mtg.

3

TF Mtg.

4

TF Mtg.

5

Discuss Round 1 topics

Topic presentations


Topic presentations

Consider potential recommend-ations

Discuss report and Identify Round 1 and 2 Recommend-ations for Task Force


Topic presentations



Topic presentations


Work Groups Jan 23, 25

Work Groups Feb 12, 14, 20

Work Groups Week of Mar 12

Work Group Week of Apr 9

Work Groups Week of May 7

Work Groups Week of Jun 4

Upcoming events - Forums

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Watch the website for updates and details on the Forums. https://www.mnhousingtaskforce.com/regional-forums

Duluth

April 24

5:30-8:30 pm

Golden Valley

April 26

6-9 pm

Crookston

May 3

2-5 pm

Saint Paul

May 10

6-9 pm

Sleepy Eye

May 15

evening

https://www.mnhousingtaskforce.com/regional-forums




4/20/2018 54

Thank you for participating

Visit www.mnhousingtaskforce.com for:

• Meeting agendas and background materials

• Past meeting presentations and videos

• Regional Forums

• Call for Ideas

• Other opportunities for input and comment

4/20/2018 55

http://www.mnhousingtaskforce.com/

task force principles · •cities, states compete to attract mobile jobs-creating entities – big...

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