LOS ANGELES-A recent report from the National Low Income Housing Coalition revealed a shortage of approximately 4.6-million affordable units throughout the country, based on the 10.1 million extremely low-income individuals in need of housing. Without affordable housing options, low-income families throughout the nation struggle to secure basic necessities such as food and transportation. While the need for affordable housing is greater than ever, a growing turbulence has emerged in the industry.
Today's policy environment is being shaped by a widespread shortfall in the availability of funding for all public services. As communities are forced to choose between financing for a host of invaluable programs, there exists a general weakening of capacity for affordable housing development by the public sector and corresponding declines in the availability of public capital. While the industry is reeling from significant cuts to funding programs at the local, state, and federal levels, municipalities are turning more and more to affordable housing as a vehicle to deliver other social services and public policies such as environmental sustainability.
The challenge is in finding new ways to finance and structure projects. The diminished resources and broadened demands on affordable housing have pushed developers into increasingly complex transactions, which require a balance of multiple layers of subsidy as well as multiple policy-based development models.
There is no longer a straightforward formula for affordable housing production. In the past, it was not uncommon for projects to be completed using a simple combination of local redevelopment funds and tax credits. The landscape is much different today. Meta Housing Corp.'s most recent transaction, an affordable senior housing community in San Clemente, CA, was financed through a complex series of partnerships and programs, including ten distinct sources of financing and multiple tenant populations.
As resources for housing shift, it is essential that affordable developers remain attuned to evolving social and political priorities. Meta Housing works hard to actively participate in the formation of housing policy through roles on industry advisory boards, committees, panels, and workshops. Via active participation and a sincere interest in the broader formation of policy, developers can stay ahead of shifts in the industry and adjust business models accordingly.
Current hot topics include transit-oriented development, intergenerational housing, and affordable housing for persons with mental illnesses.
The new complexity of today's deals requires creativity and innovation. Municipalities are looking for development partners that have the ability to quickly understand disparate populations and programs and use this understanding to assemble affordable projects that are not only financially viable, but also succeed as valuable community assets.
Finally, during these difficult times, efficiency is key. It is crucial to leverage experience, resources, and knowledge to achieve more with less. Industry leaders are searching for newer, faster, and cheaper methods of product delivery, ranging from improved building designs and technologies to better leveraging of private investment. Lenders and investors will pay for quality and reliability. Only credible developers with proven track records of success will be able to fully capitalize on the private debt and equity available, which in turn diminishes the financial burden on public agencies.
As policy shifts continue to take place, the industry will continue to work through the uncertainty that has been present over recent years. Lawmakers who understand the need for more affordable housing and the job creation the industry fuels will likely move toward new legislation to help fund affordable housing. Until then, mastering complexity through continual innovation and adaptation remains the name of the game.
Chris Maffris is VP of Meta Housing Corp. He can be contacted at cmaffris@metahousing.com. The views expressed in this column are the author's own.
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