HUD Event: How local governments are innovating to meet community housing needs Part 3
"Lean into the sense of urgency," said Rhode Island Secretary of Housing Pryor. "Draw energy from the urgency."
On Thursday, March 21, 2024, HUD’s Office of Policy Development & Research (PD&R) hosted a hybrid PD&R Quarterly Update on how local governments are innovating to meet community housing needs. As the crisis of affordable housing deepens in communities across the country, local leaders are taking innovative steps to increase the supply of affordable housing. From local housing production funds to the development of social housing agencies, these leaders are at the forefront of housing solutions. At this event, we hear from local leaders about the actions underway in their communities.
In Part 3 our panel looks at a range of innovative housing production models at both the city and state levels. Moderated by Brian McCabe, the Deputy Assistant Secretary for Policy Development here at the Department of Housing and Urban Development, the panel features:
Matt Bedsole, Director, Atlanta Housing Innovation Lab;
Alex Lee, Assemblymember for California’s 24th Assembly District; and,
Stefan Pryor, Secretary of Housing, State of Rhode Island.
I started with Part 3 because it features Rhode Island Housing Secretary Stefan Pryor. See Part 1 here and Part 2 here.
Brian McCabe: Matt, what's happening in Atlanta looks the most like what's happening in Montgomery County, although I think some key differences are worth highlighting here.
Matt Bedsole: We approached this problem from a holistic view of the city's problem with affordable housing. Our work on this started around two years ago, when Mayor Andre Dickens entered office and what we found was that we had a lot of big goals for affordable housing production, but we were not going to get there. So one of the first things that we decided was to think outside the box. The existing tools were not going to get us where we needed to be in affordable housing. The second piece was [determining] what tools we have locally. The big one was public land. We ran a portfolio analysis, and this is before we got into the social housing piece, we looked at the land and we asked, “What can we do to most effectively use the hundreds of acres that we have in the city of Atlanta today to help achieve our goals on affordable housing?” We looked at a lot of different models around the world, not just in the States, but in Europe and Asia. And what we came to is that we liked social housing in that it would allow us to not just get the most out of our land, but also to layer additional local sources of subsidy on top of the land to make that initial asset even more valuable. The missing piece though, was the execution.
We hadn't built out our public land asset for years. We didn't have an entity that could look at all the different public land - not just in our housing authority, not just in our city - but in our schools and our transit agencies. What we determined is that we like social housing for a lot of the reasons other people like it: it's locally sourced. There's a strong element of public-private partnerships. It allows us to lean into the mixed-income model of development where the mixed-income model drives the economics of the deal as opposed to something that you just kind of tack on to the deal. The most important piece in all of this is that it gets us into locations that we couldn't afford to get into previously - parts of Atlanta that we don't have access to - because in the state of Georgia, it's illegal to use inclusionary zoning.
There are ways around that, but for the most part, it's illegal. The Midtown neighborhood of Atlanta hasn’t had a new affordable housing project built in decades. We added over 15,000 housing units in the past decade and not a single one of those was an affordable housing unit. That's one of the first projects we looked at: How can we add affordable housing into Midtown? We own a piece of land, an old fire station built in 1986 and we asked, “What does it take to build on top of that?” We knew we needed a new entity that could wake up every morning to make this model work.
Brian McCabe: In Montgomery County, the entity is an HFA, a PHA, and a public developer, [but] you've chosen a different entity. Can you explain the rationale behind that decision?
Matt Bedsole: The entity is called the Atlanta Urban Development Corporation. It's a subsidiary of our housing authority and under state housing law, that entity is granted all of the rights associated with a housing authority. To compare and contrast with an HOC, it doesn't have an existing balance sheet. This is a startup, right? One of the things we're still working on right now is how to capitalize a new entity. This is a partnership not just between the city, and a housing authority, it also includes our economic development authority. It's a three-party arrangement that is led by our mayor and is a crucial aspect of getting this off the ground.
Brian McCabe: Stefan, lemme turn to you and the Rhode Island Housing Department. So the agency that you lead is newly formed in Rhode Island. As you give us an overview of what's going on in the state, can you share a little bit about the role of the new department and the conditions under which the department was created?
Stefan Pryor: We've created a new housing department. It's about nine months old in terms of its full and formal creation and I've been on the job for about a year. The establishment of the department was an initiative that was drawn from the challenges that we have in housing production and preservation in Rhode Island. Unfortunately, we've inherited a situation, under our current governor Daniel McKee, that over decades, really generations, has allowed the housing situation to erode. We have at this time the lowest housing production rate in America on a per capita basis. We produce 1.1 units per thousand. In Idaho, they exceed nine units per thousand at the top of that list. By the way, I took a look. Georgia is 13th at 5.7 units and California is 37th in the country at 2.9 units. You definitively have challenges, but we, honestly, have the worst set of challenges in the country at the moment.
We wanted to create a leadership structure that would enable us to mobilize resources and catalyze activity beyond government. I would say there are three things that we're undertaking.
One is around new administrative structures and leadership, the housing department itself. In addition, we look to our housing finance agency, Rhode Island Housing, which has a long track record in Rhode Island and has gotten a lot done. We want to make sure that we are not just financing projects but reaching into the market in a way that's nimble and helps to unleash activity - working with developers, nonprofits, for-profits, et cetera. We're creating a new subsidiary, working through regulatory hurdles at the local level, partnering with municipalities, making sure that their priorities are heard at the town level, making projects happen, helping to put the capital stack together, and helping to navigate in general.
We've also worked on finance as a second component of our work. We've established a new low-income housing tax credit companion to the federal Low-Income Housing Tax Credit (LIHTC). That's a state tax credit with a five-year authorization of $30 million a year in Rhode Island. That's a good start. We are also working on innovative ways to channel more financing into the system. One of those ways, under Governor McKee, is that we're creating our largest general obligation bond proposal. We'll see if it gets all the way through. We're optimistic. In the history of Rhode Island, the largest geo bond in history would be a hundred million dollar bond dedicated to housing to help inject resources into the system.
Third, I would point out we are undertaking regulatory reform and heavy-duty partnerships with municipalities. To touch upon that, our Speaker of the House, Joe Shekarchi in Rhode Island, has made this his signature issue. He's helped us eliminate an appeal layer for planning and zoning matters. He's helped to introduce bills that would, at the local level on a pilot basis on an optional basis, allow the merger of planning and zoning boards into a single unified process. He's also introduced an accessory dwelling unit bill that would authorize, with few restrictions, the establishment of ADUs. We're coming from behind on that front as well compared to some of our sister and brother states. In addition, we're looking to work closely with municipalities. We're taking a lot of steps along those lines and I imagine that in the course of this discussion, we can get into those things more.
Brian McCabe: Alex, let me turn to you for a broader overview. You chair the Select Committee on Social Housing in the California state legislature. You've introduced legislation around this. Can you share a little bit about what's in that legislation and how it will advance California?
Alex Lee: When I was elected in 2020 to represent my Bay Area district - about half a million people - which is one of the most expensive metro areas in the entire country, I realized that we were missing a crucial tool in addressing the housing crisis. And that was largely what we talked about in the past presentation. We do not have tools for public development. We do not embrace social housing like many of our European/Asian counterparts do, to combat and mitigate their housing crises. For the large part, we leave all of it up to the free market. And I have bad news to tell people. Especially in California, prices are climbing so high people are being forced to live on the streets or to double up or six up into one single-family residence.
Is the market working as intended? It is a profit-motivated system. Sure there are a lot of barriers that local governments and other governments put in place, but at its heart, it is a profit-driven system. In our counterpart nations they have put forward the funds and political will to provide housing to all their folks. I liken it to libraries. We, as local and state governments, put a lot of social value into providing libraries free of cost - not means tested so that anyone can use them. But when it comes to housing, we put barriers in place and it causes a lot of issues. We introduced the Social Housing Act in 2021 and we passed it - we got it out of the legislature with two-thirds majorities in both houses and sent it to the governor where, unfortunately, it was vetoed. But we are going to send it again.
The important thing is we're trying to create a statewide public developer, something that takes a lot of cues and inspirations from what Montgomery County is doing and HOC, but we're trying to do this at scale using our state resources of financing, state development expertise, but also the land aspect is important as Matt talked about. The State of California has already identified 90ish parcels of property that it owns. We have the sovereignty to make sure that we can build affordable housing on it - either ourselves directly or we could ground lease it to our partners, whether they be public or private entities. And that has a real edge in California. If you're able to ground lease some land for effectively $1 or $0 in a very, very costly land environment, that puts you ahead on your finances.
That’s the legislation we're working on when it comes to social housing. But I can tell you it's been a rough time because, as my colleagues will probably talk about, social housing is not the most known or wildly embraced issue, but it is very well-known and embraced across international communities. It's something that, while we can draw a lot of inspiration from places like Vienna or Singapore, [opponents] will retort that they're not responsible for housing because we do not build housing. Cities do not build housing and that is true. So what we need to have is public development tools to fill in that gap because what cities are doing is they're coloring parts of the map and hoping something will be there, but without the financing development expertise to do it, the cities are on the hook. Our constituents are blaming us for not putting the housing there. So we should have all the tools possible to fulfill those goals.
Brian McCabe: Let me ask each of you about the relationship between the state and the city or the city and the state, depending on which seat you sit in. Stefan, maybe you can start, how is the state agency working with cities? Alex, how is this state bill impacting cities? Then Matt, turning that around, what does it mean to be a blue city in a purple state?
Stefan Pryor: We are blessed in Rhode Island in that we are a smaller state. Little Rhodie. We have 39 cities and towns so we can call the mayors and town managers and town administrators into a big room and have a conversation about what's going on and what they would favor. We've done that. We've invited the chief elected officials and appointments officials in the towns and we've gone around the room and asked, “What kind of housing are you aiming to produce? What are you aspiring to?” And almost universally there is a vision, a project, and an initiative they're trying to undertake. One of the things that we want to start with is that kind of positive spirit - What can we do together? - and that is happening. We've gotten project submissions, recommendations, or moves that towns are trying to make and we're partnering with them.
Can we do it more systematically? What we're trying to think about is whether we can profile each of our 39 municipalities by letting the leadership of the towns speak to their assets and their aspirations as well as the barriers that they're facing to undertake housing. I'm sure all of us have experienced this, but towns will legitimately express that there's infrastructure they're missing on certain tracks of land, whether it's water and sewer extensions or a roadway extension. Side note: in Rhode Island, we've established an infrastructure fund just for that last-mile infrastructure for housing purposes. So we can have a beneficial conversation because we can say, “Why don't you apply for that program?”
We can do that, but also we want to truly cultivate, from municipal voices and plans, what goals they are setting for themselves to grow as a community. Once we hear those voices talk about what we can aspire to as a state, we let that build into a planning process for the whole state. That's something that we are working on over time. It would be fantastic to continue to craft, as we did with the infrastructure fund, new financial tools and funding programs around what the towns tell us.
Brian McCabe: I think that's music to the years of many of my HUD colleagues who are also very much interested in understanding local infrastructure needs and housing needs and constructing local plans to address that.
Alex Lee: The state and city dynamic in California varies between cities. Some cities are embracing housing to grow their communities inclusively. Some enclaves resist and do not want to grow. That is the political dilemma we have. That's why we're passing more legislation to allow the attorney general to enforce our housing laws to make sure that our housing department can enforce compliant housing plans. This is a recent trend. This is a decades-in-the-making problem for California. [Some municipalities] have chosen to artificially keep their supply low for a lot of different reasons. Whether it's the desirability of having a lower population or to keep certain people away, that is a real tension that exists in California and with our social housing legislation, you see that dynamic play out.
Some cities say, “Yes please” to a statewide social housing developer so we can have more options to take this transit or school property, and we can, instead of begging for a private developer to build it the way we would like it to be built, we can rely on a public partner to come in and build it with the specifics and the demographics that we would like to see. That's a real challenge, right? Because if you are in the shoes of a city council in California or many other places and you want to be pro-housing, you have to take the best deal on the table, even if it's the one you don't want and your constituents don't want, even if they want to be pro-housing. That can be a very frustrating situation to be in. As we've done this legislation, we've had a lot of cities in support and a lot of cities opposed for different reasons.
Even in blue California, we have red cities and city councils, that have different takes when it comes to the role of government or housing. It varies very much, but I think in the end, an at-scale statewide public developer or an at-scale housing department is a big asset to cities because doing it on your own in a smaller context, you have fewer resources to leverage. Doing it at the statewide level, you have more resources across the state, and, especially for places that are more rural and underserved, they have more opportunity for us to cross upsize. As was talked about in the last panel, where you have higher income earners helping cross upsize lower income earners in a specific building, you can have that statewide where the Bay Area or the Southern California - Los Angeles metro area - helps subsidize our central valley or central coast areas.
Brian McCabe: Alex, in addition to a statewide developer, are there incentives built into the legislation for city- or county-level public developers? In other words, something like what's going on in Atlanta or Montgomery County, but to do that at the city or county level?
Alex Lee: The bill I have been working on for the last couple of years is solely focused on a state developer. Though I have been personally trying to get my counties and my cities and even some school boards to engage in public development, there are other bills related to trying to create technical expertise in the state to help, say, school districts create teacher housing on their land. But we don't have any of those quite yet.
Brian McCabe: And not in Atlanta.
Matt Bedsole: I don't want to come out soft here. We are a purple state. Although the state government has been conservative for a long time, we have a lot of state support. We have a state tax credit system. Our Department of Community Affairs prioritizes a tremendous number of 4% projects for the city of Atlanta. We have a state both red and blue that recognizes that housing is a problem whether you're in a big city, a small city, or in rural parts of the state. I think there is bipartisan agreement on that.
We wanted a system that recognized that we can only depend on ourselves to a certain degree, but we want to be able to prove a model that can gain support at the state level that can usher in more federal support.
But we also wanted to have something that would allow us to move forward in our chosen direction - where we didn't have to worry about state bills like the one that just got introduced in the House in Georgia and got voted down that would severely undermine state tax credit court. For us, it's gaining independence and moving in a direction. I'm also creating a sustainable model where this is a legacy for the city and this administration where we are going to capitalize a new entity that we think in 5, 10, or 20 years can continue to snowball into where Montgomery County is today. That's more or less what we want to get to. Also, if we can prove what we think is ultimately a non-ideological model in the City of Atlanta, maybe this can spread to other parts of the state. Maybe it can spread to the Augustas, Athens, the Macons, and Columbus - maybe it can spread down to Blackshear, Georgia. I think we need new affordable housing, not just in our state but throughout the country. We just got tired of waiting on other people, so we did it ourselves.
Brian McCabe: I do want to come back to the politics of this - thinking about this as a non-ideological issue and learning more about the politics in each of your states in part because I think this is increasingly a bipartisan issue at the federal level. Folks coming to understand the depth of the crisis, the importance of supply, and the mechanisms we have to change this. But before I move on to that, Matt, I know you are in an early stage in Atlanta of thinking about public land. Are there any projects or initial wins that came out of this that you can point to as evidence of the importance of this independence at the city level?
Matt Bedsole: Yeah. The Atlanta Army Development Corporation is only eight months old. Last year we were just starting conversations internally and building the support base. As these things go, we are moving very fast, but I can point to at least two projects that we don't think would've happened outside of establishing a new entity dedicated to social housing. The first is one I mentioned before. We call it Midtown Fire Station in Midtown Atlanta. It's the fire station built in 1986. We released a procurement for that earlier this year and are in the process of evaluating responses. That project is exciting because not only are we going to build housing on top of a new fire station on public land that's near the preeminent park in Atlanta, near transit, and a location, as I mentioned before, that hasn't dedicated affordable housing stock in a very long time.
It also allows us to do something that we don't think any other entity would be able to do. And it's a sexy project. We can bring in mixed-income units 20% at 50% AMI, deeply affordable without a single LIHTC dollar being spent, and also get a great new fire station for our firefighters. The second project, which we just released a procurement on last week, is Thomasville Heights, which again is with a Midtown fire station. There's three-quarters of an acre. The Thomasville Heights site is in partnership with our Atlanta Housing Authority, a former public housing site. It's a 36-acre property that's been vacant since 2008 and is located across from a property known as Forest Cove. Forest Cove in Atlanta is very notorious. It's 400 units. It's a section eight property that as of yesterday or two days ago, the demolition process has begun.
That was a property that we've been working on with HUD for the past year to relocate the residents because of the abhorrent conditions of that property. When Mayor Dickens entered office, one of the first things he keyed in on was the humanitarian crisis that was happening at Forest Cove and the lack of responsibility that public leaders had that could be blamed for those conditions. We're able to issue procurement. The first phase is introducing about a hundred units for rent and sale - three- and four-story townhomes to be built for the former Forest Cove residents. And we can operate on our timeline. We don't have to wait for the next funding cycle for 4% projects to come on. We can just move ahead. And at the same time, we're also creating desperately needed economic development because the project's going to be mixed-income. It allows us to move quickly. It allows us to move with independence. The end of this is going to be an 80- to 100-acre redevelopment project across multiple sites and we wouldn't be able to do it without the Atlanta Urban Development Corporation.
Brian McCabe: I'm turning back to politics starting with Rhode Island. There’s quite a bit of legislation happening in the state. What are the politics of this?
Stefan Pryor: I would say that there is a great interest in and momentum behind doing more for housing because up and down the income ladder. Folks are searching for housing stock, and they might've been accustomed to buying or leasing at a given price point, but they can't find it through the market. There is a consensus that we've got to do more. There's a call for supply, supply, supply and there's interest in action. Of course, there is some reluctance, even resistance at the local level. I'm sure everyone here is shocked when a development is proposed, especially on the affordable housing front, and some communities [reject it]. There are issues that we need to grapple with as a society that undergirds that and poisons the conversation. I think there are also some straightforward parts of the conversation that we can grapple with in the near term and make real progress.
What am I thinking about? Sometimes when the opposition to housing occurs, it's because of concerns for burdens on the school system. “What are we going to do? We're already tax burdened. Our schools are aiming to do better and do more for our youngsters. What are we going to do when there's new housing stock?” Well, part of the state agency's job, as we perceive it, is to come into that conversation if we're invited and do the math on whether the new property taxes generated by that new tract of land being activated for housing might eclipse the new expenses in the school system. We certainly have these where there's declining enrollment and the incremental pupil in a system is not that expensive in the context of the overall budget. If we can do the math, we can prove that some of these fears are unfounded - some of the perceived reality is mythology.
Brian McCabe: And a great way to bring the resources of the state right into local municipal government to be sure. Alx, in California, what are the politics in a largely blue state?
Alex Lee: I would reiterate that we have cities that are pro-housing and cities that are not pro-housing. However, housing is largely acknowledged to be a problem across both parties. Although our Republican colleagues do not seem to embrace solutions - they like to talk about a lot of things and then they vote against all our bills - I can say that because I’m a legislator. I think it is an acknowledged problem although we diagnose very different causes and issues. There is a lot of buy-in across the spectrum.
Brian McCabe: I have a question about the terminology of social housing. It's been used and it hasn't been used by various folks. This is maybe the first time that it's been widely used on the HUD stage - to say social housing over and over again. I think it’s imperative, as somebody coming from the research and policy development office - to think about and define our terms. When you talk about social housing, what's the thing that you're talking about and what sort of reaction or response do you get?
Alex Lee: I know other practitioners don't use it for different reasons, but I deliberately use the term social housing because I want us to be related to the international movement. When I say social housing in the American context, it should be publicly led housing development that is meant for everyone. It is that simple. There are flavors: Do you have home ownership or rental? Do you have public-private partnerships? How do you finance these things? Those are all flavors on top of it. The world consensus on social housing is that you have a very lefty government tradition, for a hundred years in Vienna, embracing social housing and you have a right-wing government history in Singapore embracing social housing. This is a world-proven solution just as much as public schools and public roads are.
When it comes to housing done socially, that is how we embrace it. When you start talking about the definition of social housing to people on the street and you say “public housing 2.0” or something like that, people rightfully or wrongfully have the history in their mind of the projects in their minds. But when I talk about social housing I say, “Hey, look at this thing in Vienna. Look at this thing they do in Singapore.” It's an interesting psychological experiment. Through my propagandizing, in my district, I converted school board members and city council members to be on board for social housing to the point where I want one day for our work and public development to be reduced to those two words so that when we say social housing on national stage one day, hopefully, that everyone understands what that is and gets it right away.
That's why it's important that even though some people may recoil at the term social housing, most people don't know what that means or second say, “That sounds cool, that sounds different.” But when we say public housing, a lot of Americans have an innate stigma against it.
Stefan Pryor: I have no problem with the term social housing and I use it. The Montgomery County team is doing a fantastic job of explaining and promoting the term and explaining the notion of a public developer. It is important to go beyond those headlines and those labels, which are good ones, and get beneath it and ask, “What do we mean and is it working?” In Rhode Island, we're aiming to do that. We've contracted with the Furman Center at NYU and they're studying some of these models and their applicability to Rhode Island. We're intrigued by them. As I've described, we've already gotten down the road of establishing a proactive development agency that will get into the market as a partner.
But what more do we mean by social housing or a public developer? There are several elements and if we can separately analyze them, it might help. For example, Montgomery County and Atlanta to their credit, are working on a revolving fund. One of the things that we want to do in Rhode Island is, if we were to capitalize a revolving fund, would it, under market conditions with our price points and with our cost structure, would it revolve? Is that the most valuable piece? There's the notion of governance, the ownership of the project, and the development being government. What advantage does that have in terms of catalyzing it, but also in terms of fees and returns and being able to find new value that can be brought to the development itself or auxiliary housing activities? What does that mean? Will that do? We're looking at our study of Montgomery County and Atlanta. We're looking at Dakota County, Minnesota. By the way, our new deputy secretary, Deb Flannery, who happens to be here in the audience, is from that jurisdiction, among others. And we're looking at what they've done in Vienna, Helsinki, and for that matter, Montreal, Canada, and looking at what they've done to create renditions of this and determine its applicability to Rhode Island. Getting that specific [means finding] which elements fit in which places, matters.
Brian McCabe: I appreciate the international recognition. As I mentioned at the top, the Deputy Secretary at HUD was at the social housing festival in Barcelona, learning about different models. One of the offices in PDNR is the International Philanthropic Division, which does all of our liaison work with international partners. There's work and interest on the international frontier learning not only from our closest neighbors but from folks across the ocean as well.
Matt Bedsole: It's a great question and one that we've struggled with over time. My definition is similar to Alex's. I think it's publicly funded, publicly owned, mixed-income housing. I want to emphasize mixed income. We say this is a true mixed-income model, where the economics of the deal is driven by the mixed-income nature of the product. That is a fundamental shift in how we have traditionally thought about affordable housing in the city of Atlanta and maybe some other jurisdictions as well. When you make that switch, it becomes a long-term view of asset investment and ownership.
That seems the responsible thing to do. In a lot of ways I reckon that financially, for me, it's a much better deal for me to own my home than to rent a home right now. What we've done, to a certain degree, is we've asked a lot of our public agencies to take a short-term as opposed to a long-term view. When we designed the Atlanta Urban Development Corporation, we built it from the ground up to operate on that mixed-income model, which means you can innovate in a lot of different ways where, and I'm going to say this pejoratively, you think like a private developer and an investor because you are trying to maximize the return for your tenants.
The tenants are the audience of that investment. Instead of saying affordable rents, what we think about internally is the discount you have from the market rate rent that your tenants would have to pay if those units weren't affordable. That is money in their pockets. That is the return that you are netting from the public investment for the folks living in that building. For us, that was a big shift and a lot of things came from that view, at least organizationally.
Brian McCabe: I hope that this is a conversation that continues. Putting social housing out as a typology is important. Some folks are scared off by it, but we're talking about ownership structures and mixed-income developments. There are a lot of pieces of this that we're quite familiar with and putting them together in a new way.
I want to wrap up with two final questions. The first is about federal funds. Are there ways that your teams are leveraging federal funds in this work or could be leveraging federal funds or are you sort of doing this despite us?
Stefan Pryor: Not despite. We've seen increased interest in the Biden Administration around housing and we're very grateful for the President's focus and Secretary Fudge’s focus. Congratulations and thanks to her on her final day. It's marvelous to see new agencies get in on the act. And I want to note something: Under President Biden, US DOT has, through some of its transportation programs, offered financing for a variety of residential development, including but not limited to commercial office to residential conversions, which in many of our center cities we need to do. We have several projects in Rhode Island that we would like to happen. We know that there's been a special emphasis on adapting these infrastructure financing mechanisms to the housing market and the expectations of the market in terms of timing and nimbleness.
Even greater emphasis needs to be placed, but it's being placed. We're incredibly grateful, but there's $35 billion for these purposes and others could be offered just through those USDOT programs. We're eager to see that get even more enhanced and to tap those.
We're grateful for the continuing focus on the low-income housing tax credit. It would be great to see bills pass Congress that both strengthen and expand LIHTC so that Rhode Island, where we've instituted a state LIHTC companion, can draw down even more resources. We're very grateful for that.
Alex Lee: I would with Matt saying how mixed income is crucial to the socializing aspect. It's crucial to the legislation. I propose it is crucial to the whole economics portfolio and critical to relate to people who live in social housing that they're not just paying for their rent, they are paying to allow more people to live in social housing rather than paying a Wall Street landlord or something like that. That's a crucial difference. Yes, the government is acting like a private sector developer, but all the return and all the profit goes back to the community, which is a real bonus. In that vein, our legislation stressed long-term fiscal solvency, but we are also hoping to do the bonding of our own, without any federal money. As California has proven, we do a lot with the federal money.
Matt Bedsole: We don't have any federal money.
Brian McCabe: That was the easy answer.
Matt Bedsole: We want more though.
Alex Lee: We always want more.
Brian McCabe: Are there lessons to learn for folks in the audience? This is the largest audience that's tuned into PD&R's quarterly update - I'm thrilled about that. But for folks out there who might be working in a purple-to-red city or state, who might be on a state legislature somewhere trying to figure out what else to do, who might be starting up a state housing agency, is there a quick lesson you might give to them from the work that you've done?
Matt Bedsole: I've got four quick ones. One of the things that allows us to innovate on the procurement side is to focus more on qualifications, joint deals, and joint proposal building. Focus on that if you're trying to create a new entity or focus on social housing. Figure out how to build capacity where you can hire the best talent possible. That should be the number one goal, which means that you are poaching folks from the private development world to work in your social housing entity. Create specialized boards and investment committees, boards that are composed of people with housing experience with development capacity. The next one is aligning incentives. To thrive, make sure that the organization has to build so that the funding and the salaries for staff are dependent on what they can deliver so that you're driving growth. And the last one is to continue to build out your balance book and capacity for long-term sustainability. The goal is to keep growing your assets because the more that you grow, the more that you can build.
Alex Lee: I would say that social housing is one of the critical tools we need in this country to address our housing crisis, but it is unfortunately not the panacea. I often tell people who have a left-wing scare of social housing that even in left-wing Vienna, they have private real estate agents and private real estate sales even though 60% of people live in social housing. In contrast in Singapore, a right-wing government, over 80% of the population lives in social housing, but they also have tons of millionaires and maybe billionaires that live there. The sky will not fall if we have a successful social housing program in the United States. And to the four things that Matt talked about: If you want to create a public developer in your policy, whether you're at the county level, city level, or even state level, there are only four main ingredients I would say that you need.
If you want to get more information on how to make that happen, you should talk to Montgomery County and figure out the nuts and bolts. But at a very high level, there are four ingredients you need:
One, you need to have public developer expertise.
Two, you need land. Unfortunately, can't build housing in the sky, so you need to have some sort of land banking authority or ability to have an inventory of land.
Three, you need financing. It's bonds or all the instruments that you have, all the loan funds out there.
Fourth, the most critical one is the philosophy that your government has a role in providing housing to your population, whatever your city or county, whatever it is. Those are the four ingredients I would leave you with and it can be done at any level. City, county, or state.
Stefan Pryor: I would add: Lean into the sense of urgency. Draw energy from the urgency. Those of us in government want to make sure we project optimism. I think these two things are not contradictory. We have a major housing problem in the United States and in places like Rhode Island where we have the lowest housing production rate, where median home values have gone up 42% since 2017, and where 43% of our renters are cost-burdened. We have a real problem. Did I mention we have the lowest housing production rate? We have a real problem, but that produces a mandate and we can use it. It brings unlikely allies together and unlikely players onto the field. In Rhode Island, we have longstanding, outstanding advocacy organizations and practitioners like the Housing Network of Rhode Island and Housing Works that organize nonprofit developers and compile the data.
We also have organizations that are tenant advocacy groups like Reclaim Rhode Island, that are coming to the fore with ideas like the public developer, drawing on Montgomery County's momentum. We also have brokers, developers, and home builders who are occupying the field and saying, “We must do more.”
We need to capitalize on that and choose the streams of activity that we think fit our place. “What will contribute more?” They're not mutually exclusive. We can develop a proactive development agency. We can investigate the notion of a public developer. We can unleash more LIHTC activity. We can empower our developers in the market. We can do all these things and attend to the notion of tenant's rights and legal representation when they're facing eviction and things of this nature. We can do all these things when we have a mandate and this is the moment where we can get the most done. So let's try for this variety of things.
Brian McCabe: On that optimistic note, I'm going to wrap up our panel.