One Talk Away | The Developers Story, gave us a delightful insight into the world real estate. As we dove deeper into the conversation with our guest panelist Brent Little and Flora Brewer. We concluded our journey exploring key project insights and ideas for the future.
Project Insights
In discussing a few recent projects from both Brent and Flora we reflect on a few insights. Firstly, a developer has to been able to sniff out opportunities, especially when building projects geared towards a social mission. In the event of Quail Trail, Paulos Properties was able to use a Reasonable Accommodation Ordinance to get a multifamily complex built on commercially zoned land. This project is the first to use the ordinance in this manner, which unfortunately has resulted in Fort Worth City Council requesting review on all future projects using this clause.
Funding sources can have a direct effect on the speed of developing a project. For Palm Tree apartments, Paulos Properties financed the project without using Federal support or debt service, allowing the team to purchase, rehab, and occupy the project in 10 months. The only government funding utilized was for the rent subsidies. With Quail Trail, the project utilized a mix of funding including government financing which ultimately delayed the project by 4 months.
For Brent, the journey to the 1 Percent Challenge started with a project with Kennesaw State University where he first learned about college homelessness. Realizing a latent vacancy on his projects, he donated 1 Percent of the total units at 848 Mitchell to be used by housing insecure students. The vacant units though do not necessarily need to be donated. A 50% reduction in rent is still very helpful and considering that occupancy rates are not recognized over 95% by Fannie Mae or Freddie Mac, this challenge can help developers achieve higher economic occupancy while serving a much-needed purpose.
When creating vetting measures, we must consider that students do not plan to homeless. It is important any support program be flexible and responsive. For Brent, this meant shifting from a competitive housing scholarship program to donating the units from 848 Mitchell directly to UTA. This let UTA coordinate with the students to assign each of the donated units. For the student, they would fill out a standard lease for $0 and agree to the normal terms and conditions for caring for the apartment. This allowed for a quick turnaround and a few success stories for the model. This was not the case for North 116 Flats. Utilizing Massachusetts’ 40B Housing Program, the project was able to convert the zoning so it can support affordable housing. Although an effective program, it was not designed for students, requiring the team to get creative in how they coordinated with Massachusetts Housing. Additionally, the process to lease a unit was equitable to purchasing a house. There was a large learning curve not just for the students, but also the team that managed the property. Once an effective process flow was established, the occupancy rates increased. Though a success for this project, there are over 266,000 units established under 40B, and this was the only project developed to support housing.
Ideas for the Future
As discussed in depth there are a multitude of challenges to face on any development project. Akin, to building a new business from scratch for every project, development has a multitude of hurdles to overcome. We entertain the idea of breaking a project into individual segments that represent a specific barrier. This would allow the team to focus on developing a solution for that specific barrier and then moving on to the next one. Through this approach the prototype could be a showcase for each of these solutions.
We could identify lenders that resonate with this challenge and are open to funding these types of projects. With the current interest percentages, a project could get a great debt rate. Given the social purpose of the project, we could partner with a few local organizations to relinquish the property marketing cost and have them assist in funneling clients to the project. This expense could be reutilized to invest in more in-depth research and strategies to help the challenge become more visible. Given, that this challenge is still not commonly known, there could be potential to develop viable knowledge outputs that could be shared to spread and engrain the narrative of the challenge. We could put together a powerful story to help recruit more supporters.
Policies to eliminate or restrict single family zoning is also another aspect worth exploring. In Oregon, the state eliminated single family zoning to spur more dense developments and counteract the racial and class segregations often perpetrated by suburbanization of the American neighborhood.
Any avenue we can take to create opportunities the more likely an individual will be able to succeed. Decent housing that is priced appropriately becomes part of this strategy. Seeing how landlords might be hesitant to lease to students, an organization could form two supporting entities. One would help align, market, and lease vacant apartments at a reduced rate to improve a projects economic occupancy. The second entity would provide a guarantee to pay for any damages that a referred tenant might cause.
There is hope in the air. As shared by Brent, organizations are very receptive to this. As community members we can each contribute by sharing the stories and helping. As we get success stories through pilot programs and prototypes, we can create an open source knowledge bank to share best practices and key insights. This would allow future problem solvers to build off each other success and replicate and surpass our desired outcomes.
Final Thoughts
This challenge is grand to say the least. There are so many contributing factors from the environmental challenges the students face to the regulatory hurdles that effect development. It all sums up to a very hostile environment for today’s college student. Without an adequate support system, each student is left to chance. However, we know this now, and know more than we did two weeks ago. We have the advantage of being able to ask new, more specific questions. Our journey is still far from over. Enlighten, we press forward with, eager to further explore this challenge as we move ever closer to being One Talk Away from ending college homelessness.
Comentários