NAHMA Leaders Talk Trends
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Our members were asked to provide their insight and expertise on emerging trends in the affordable housing industry for the upcoming new year. They shared their knowledge of what they see as the most significant trends for the upcoming year.
NAHMA executive members were asked: Look into your crystal ball, what will be the biggest trend(s) in the affordable housing industry for 2022?
C D F N P S
Community Housing Services Inc.
Phil Carroll, SHCM, NAHP-e, president
The biggest trends in 2022 in the affordable housing industry will likely be how we cope with the changed environment that COVID-19 has created. Last year we hoped that the introduction of vaccines and a favorable trajectory of infections would let us all mostly return to life as usual. We all knew but failed to appreciate that we live in a very polarized country. With 30% of Americans opting out of getting the vaccine, we will not reach “herd immunity,” and we can only hope that COVID will run its course.
So here we are in a very changed world that, without some very lucky intervention, we now are dealing with a “new normal.” How do we create a “safe” environment for our residents and those who work for us, even those who refuse to protect themselves?
I think we will need to rethink how we conduct our daily business and interact and provide service to our residents. In an effort to keep safe, some have simply isolated themselves and only interacted with our residents as absolutely necessary. Others just have moved on as if nothing is amiss. But to be successful, we will need to rethink how we do business. This needs to be a thoughtful process involving staff and residents with the objective of creating a safe and comfortable living environment. Remembering that our communities are homes and need to be both safe and livable.
I think this is very challenging, but it is an opportunity. The challenge may seem to be creating both safe and livable communities, but in reality, it is finding common ground in our polarized world. This is more than agreeing to disagree. Everyone needs to feel they are being listened to and respected. To get to safe and livable communities, we need to take the time to listen and process all these divergent views and concerns.
2022 could be a very good year if we can get our staff and then our residents to communicate, talk and listen, and to make the changes needed to create the safe and livable communities we all want.
It means we need to step back and rethink much of how we do things, remember there are no easy answers. This is hard work, this is a new world environment, but it will be worth it in the end.
CSI Support & Development
Diane Smith, SHCM, national finance & development manager
There has been a significant amount of support for the Low-Income Housing Tax Credit (LIHTC) program recently, with the supply of credits increasing and the 9% and 4% fixed rates. While this has helped more deals to get funded, the effect of the increased supply of credits has been a reduction in equity pricing. There is proposed funding available in the Build Back Better (BBB) legislation which would help reduce funding gaps caused by lower equity pricing. Additionally, supply chain issues and employment challenges have caused significant construction budget increases. Proposed BBB funding is critical to meet the funding needs caused by both lower equity pricing and increasing construction costs.
Two other issues that need to be addressed are protecting the rights of nonprofit owners of LIHTC funded properties as they approach year 15 and clarifying IRS regulations related to income averaging. First, in recent years, private firms have been systematically challenging nonprofits’ project transfer rights (Right of First Refusal or ROFR) and disrupting the normal exit process in hopes of capitalizing on a property’s current market value. Many LIHTC housing units are at risk of losing their affordability. The ROFR language in the IRS code should be amended to ensure nonprofit purchase rights are preserved.
Second, a few years ago, the IRS allowed for income averaging at LIHTC properties, which has been critical in acquisition/rehab deals to ensure that residents above 60% area median income are not displaced when their apartment home is renovated using LIHTC. The IRS has yet to clarify key regulatory issues related to a project’s compliance with income averaging, which has caused equity investors to prohibit the use of income averaging on deals. Effectively, the tool is available but cannot be used.
Dominium Inc.
Jack Sipes, partner & senior vice president
- Demand for affordable housing will continue to outstrip supply.
- Investment in U.S. apartments will continue at a steady rate because of the relative safety of those investments. However, we will see the entrance of more institutional investors into the affordable housing development space, which is new and may challenge the norms of the industry.
- There will be increased recognition of the need for affordable housing. Public interest will remain high and, politically, there will be more support for increasing affordable housing development. The need for affordable housing is an issue found in both urban and rural areas; it bridges the urban-rural political divide. Whether that translates into a decline in NIMBYism is yet to be seen.
Fairstead
Shah Alam, managing partner, property management
In 2022, governments, developers and communities will need to effectively collaborate to ensure that everyone has access to a comfortable, safe, and stable place to live regardless of income. Innovative and impactful ideas to creatively solve our country’s affordable housing crisis have emerged during the pandemic, including converting distressed hotels and vacant office buildings into residential spaces. This moment is a golden opportunity to provide affordable housing where land is scarce. These conversions and other solutions will require key stakeholders to change local zoning ordinances and offer financial incentives to be successful. From New York’s Mayor-elect Eric Adams citing hotel to housing conversions as a priority for his administration to California’s plan to spend more than $800 million on this effort, we welcome the coast-to-coast support we are seeing for this movement. Owners and managers should also prioritize creating outdoor spaces for residents to enjoy. This became especially valuable during the pandemic and will remain an amenity that residents look for.
Whether it is hotel to affordable housing conversions or new developments, a sustainable-first strategy when implementing these ideas is critical for residents, developers, and cities in the effort to combat climate change. Fairstead has implemented solar strategies in communities across the country and is looking to expand this effort to create green energy solutions and offset utility costs for residents.
Northwest Real Estate Capital Corp.
Noel Gill, NAHP-e, SHCM, CPO, executive vice president
Technology will play an important role in creating lean and efficient processes that allow us to expand our interaction and communication electronically. It will create workflows and processes that help us overcome deficits in the workforce due to availability or cost. Many companies will/or are beginning to evaluate staffing vacancies as potential changes in workflow and assessing whether electronic automation can fill vacant roles.
Accessing technology has become seamless with internet and cloud-based services that allow organizations to attract remote talent previously unavailable with structured work locations. Linking property management software, document management systems, websites, social media, and G-Suite or Office365 can create amazing virtual work environments and allow teams to work collaboratively and efficiently. Application programming interface (API) connections allow the software to data share, and we can mix and match a broad range of technology to customize our business automation.
Using technology from the time of application through the term of the tenancy has been migrating from the conventional market to affordable housing. It is estimated that more than 80% of affordable housing residents have a smartphone. Leveraging technology to interact with residents through electronic processes creates efficiency and could help cover vacant or burdened site teams. Accessing information, services, submitting requests and paying rent, allow for a better resident experience. State agencies are adopting electronic file reviews; using document management systems allow for access or efficient transfer of documents. Our vendor relations are also moving to electronic interaction that provide opportunities for streamlined processes or automation.
Some benefits of adopting technology to streamline/automate processes may include lower operating costs, efficiency in workflows, removing staffing shortages and allowing for increased capacity for organizational growth to remain competitive in the employment market.
Our next generation of our workforce grew up using technology, and they adapt to changes quickly. They want and expect organizations to keep up with new technology. Leaders are embracing technology as we envisage the next phase of our work environment, culture, communication, workflows, workforce demands and work/life balance. Technology is the future of an efficient, collaborative, and paperless work environment.
PRD Management Inc.
Skandar Zaouali, chief financial officer
A year ago, the average inflation rate was 1.2%. As of October 2021, it was at 6.2%―a drastic increase! Unless we see some thoughtful fiscal policy from the government and the Federal Reserve, we could have great difficulty curbing inflation and effectively managing property finances. HUD programs that rely on the yearly OCAF (Operating Cost Adjustment Factors) or budget-based rent increases (to cover the increases in operating costs) will be facing a serious cash-flow problem unless rent increases are brought up to match the actual cost of living. While HUD is currently giving owners the option of borrowing from our reserves to cover these shortfalls, this is not a sustainable long-term solution for many properties. Coupled with the rising pay rates to retain key employees, eviction moratorium, difficulties in managing turnovers given supply chain issues, 2022 is sure to be another challenging year for property managers and owners who are trying to keep costs in line.
Seldin Company
Alicia Stoermer Clark, SHCM, president & chief executive officer
The closing of 2021 brings reflection on how essential and valuable the affordable housing industry is to all. The term “affordable housing” has been a staple of all industry dialogue for the last two to three years, but as access to and availability of “affordable housing” continues to go unanswered, it is beginning to reach a crisis level. The term “affordable” means something unique and different to each person using the phrase. To truly begin to address our issue, we first need to gather and define “affordable.” There are interchangeable phrases, as well as definitions representing vastly different applications. Terms commonly thrown around when discussing “affordable housing” include workforce housing, assisted housing, low-income housing, mixed-income housing, among others.
The need for more housing is broad and far-reaching. We know throughout the country we need a significant number of housing units. I would further state, we need more housing options of all types in the single-family and multifamily space. There is a need at all income and rent levels, both rental and homeownership. We are facing a shortage in supply and a continuous increase in demand.
What does this mean? We need to organize, advocate, define, collaborate, and act together across the industry to make development, construction, delivery, and management feasible, economical, and attractive. We need to bring ideas and suggestions to our federal, state, and local officials; we need representation from business partners (builders, transportation, material/suppliers) at the table, and we need to work through the mechanisms to expand the supply and delivery, to serve the demand.
In conjunction with limited housing supply and increasing need, our industry faces a tremendous personnel shortage. There are continually double or triple the average number of available jobs open week over week. How do we locate and attract a new wave of individuals into our industry and simultaneously retain all those currently working? A primary focus for 2022; attract, onboard, train, and retain a workforce who shares the dedication, commitment, and drive for serving our industry. To do so, we must build the connection between the business, the mission, and the purpose of housing.
