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Getting it through our thick heads – Building affordable homeownership is about scale!

CDC’s and CDFI’s have traditionally financed or developed predominantly multi-family, affordable housing. When development opportunities for homeownership arise, they are generally viewed through the lens of deeply subsidized development. Most local nonprofits are building 10-15 homes per year. The scale of our nation’s inventory crisis demands much more aggressive thinking about sustainable homeownership development. Presenters will discuss innovative partnerships and financing arrangements that are beginning to approach a scale commensurate with the problem but which remain a long way from real scale. Innovative regional and national initiatives will be highlighted.

Moderator:

Edward J. Gorman III, Chief Community Development Officer, Executive Director, Managing Director, NCRC, NCRC Development Corporation, NCRC Housing Rehab Fund, LLC

Speakers:

Randall Woodfin, Mayor, City of Birmingham, Alabama

Donna VanNess, President & CEO, Housing Channel

Courtney English, Senior Advisor to the Mayor, City of Atlanta

Transcript:

NCRC video transcripts are produced by a third-party transcription service and may contain errors. They are lightly edited for style and clarity.

Gorman 00:00

Good morning. Welcome to NCRC’s conference. We’re so glad to see you in person. I mean, it’s been too long. I used to be the Director of membership and organizing for NCRC. And I would start out my meetings by saying, My people really happy to see everybody. This is a special panel, graced by terrific speakers, whom you’re going to hear from, to talk about the topic that I think is near and certainly near and dear to everybody’s heart, or you wouldn’t be in the room. But the need in communities to get to scale on affordable homeownership is something we’re just beginning to understand and start to act on. The folks who are on this panel today are walking the walk, walking the talk, they’re doing it, and they’re getting really great stuff done. So you’re gonna hear a lot of great things about it. Before we get started. I want to ask folks to sort of identify themselves first of all, because we have so many folks here from some of the cities that are on the on the Dyess. I’m just curious to know how many folks here are from Birmingham? Yeah, feel free. All right. All right. I mean, this is this is what Birmingham does. Birmingham shows out. All right, now I got to ask about Atlanta. How many from Atlanta? All right. All right. All right. All right. You notice he’s speaking louder, so he can sound like these more people in the room? I gotcha, Jim. All right. How about DFW Dallas, Fort Worth? All right. All right. Hey, Matt, a board member from back there. Matt Hall.

Sorry. Well, so I’m just saying in terms of get out the vote.

This mayor knows how to get out the vote. So look, this is a topic that’s on a lot of our minds, I think. We’re gonna be discussing innovations about sort of building affordable homeownership owned homes, doing groundbreaking work, and in more ways than one. And, and so let me let me just talk a little bit about our organization first, because being the moderator, I get to say a few things about our stuff. So I don’t know if you know about GROWTH, but I’m going to just give you two minutes on that maybe three. So GROWTH is an affordable homeownership fund. It’s an impact investment fund formed by NCRC. And we could not have done this, this is something started seven years ago. And I’m going to name the banks who are investors and who’ve helped us grow. But I have to start with NCRC’s board, because NCRC’s board committed two and a half million dollars of first loss capital to this fund. And bankers immediately know that when somebody commits first loss capital, it’s pretty much akin to saying, Okay, it’s safe to go in the water. We were trying to do something that really hasn’t been done. And that is create a private equity fund, owned by a nonprofit. But that does affordable homeownership, and every banker in the room will tell you, they do lie tech and affordable rental deals all day long. But affordable homeownership has always been seen as a bridge too far. And we set out to prove that it’s not. And then in fact, we can do stuff and get to scale. Because in all honesty, what we’ve seen across the country, we have 700 member organizations around the country. And when you go from city to city, you hear yes, I do affordable homeownership, well, how many do you do a year 1015. And they honestly feel that that’s a good year. Because that’s in fact, what they’re used to doing. And they have to raise the money from so many sources to just do that many homes, that it’s impossible to get beyond that number. But we will never get to scale, obviously, with that number of homes being done by nonprofit organizations. So we set up to prove that we could do something bigger, and that so can you and that banks can understand that this is a viable asset allocation for CRA funds. So I think we’re getting there, but I’ll let you decide that as you hear more today. Yeah, I’ve already abandoned the PowerPoint. I tend to do that. So let me just talk about sort of the state of the market. Well, no, I need to do something first. First of all, let me thank with banks who have invested with GROWTH, we started out trying to raise 50 million and we ended up raising $100 million. So here are the banks synchrony. And if you’re here, raise your hand at Mars TV, raise your hand. Thank you TD Huntington personick Come on Huntington you should be here. I’m gonna go get him. PNC PNC Union Bank MUFG Union Bank. Okay, probably not your truest truest Bank of America, Wells Fargo Housing Foundation BBVA Compass they’ve been absorbed, sorry, cafe, citizens Eagle bank, Fifth Third, which bank this third First Financial first horizon Iberia. Love that day keeping oops, sorry, list. This is not hearing and regions, regions. Excellent. And then we have three other city, Goldman and home bank that have also provided funds. So talking about the state of the market. And other speakers have covered this a little bit. But I want to just sort of set to set the table. We are in trouble. I think everybody understands the housing inventory crisis. But the problem is that we didn’t build for at least a decade after the great recession. And in fact, in this country, we used to build in the 70s, 425,000 affordable homes a year. By 2016, that was down to 65,000 while the population grew. The Millennial Generation and beyond  particularly generous the biggest generation in history, and yet we’re building 65,000 affordable homes a year. My view of this is Millennials are becoming a generation of involuntary renters. More than twice as many young people live with their parents as as did in previous generations for one simple reason housing, can’t find it can’t get it. So you live with your parents. And you delay forming families and you delay adulthood in many ways. And then you actually become disenfranchised. And you sit behind your computer angry. And we see some of the results of that today. We have this gift. And I don’t mean to sound partisan here because because it’s this is a bipartisan issue of affordable homeownership. But this Administration is responsible for a once in a lifetime lifeline to cities. And the mayor, Dorothy and others will talk about the American rescue plan Act. In fact, another mayor is talking about it this afternoon as well during a plenary session. But that money has given us an opportunity that we cannot miss to build affordable homeownership at scale. Just as another little fact of what you need to know, in 2021 25% of the market was priced below $300,000. In 2022, that fell to 10%. Okay, we’re not building enough and what’s happening with existing inventory, by the way. And Courtney from Atlanta can can tell us because Atlanta has the highest percentage of this in the country, which is why what the mayor in Atlanta is doing is so laudable. 32% of all owned homes in Atlanta, are being bought by investors to rent 32% Roughly a third. So when you combine the loss of existing inventories, what used to be owned homes and you see the lack of building you get a generation of involuntary renters. In 2021 24% of newly built single family homes were under 1800 square feet in size. That sounds good except that in 1999 It was 37%. So we’re down over a third since 1999 At a time when more people are coming into the market or trying to alright so banks CRA capital can be a great help here ndt John Taylor, who’s the founder of NCRC is fond of saying, when they’re doing the right thing, banks are our community’s best friend. And in this project and what we’re getting trying to get done here, they clearly are. So when you can, and when it’s, I don’t know, medically feasible to do so hug a good banker.

So, let me let me move on and let’s get to our speakers because you heard enough for me already gave that. We’re gonna give that. So our next speaker, actually, our next two speakers share a common thread. They’re both Morehouse graduates. And I have learned really a lot about Morehouse. And I know, Daria cringes when I say this, Daria has been with me since the beginning. So Daria per day, raise your hand dairy. Daira is the glue to this thing. But Morehouse there’s a expression Morehouse mafia. It’s real, and it’s spectacular. Spectacular. I mean, the connections Morehouse folks make. Where’s the Jared? Jared logo. Works with Morehouse grad. These two gentlemen, Morehouse grads, Dennis Harold on my staff, Morehouse grad, Kelvin Walker in Dallas Citizens Council, Morehouse grad. Keep going the mayor of Cleveland.

11:34

Go ahead, we’re going to start raising money in a minute.

Gorman 11:41

I mentioned I want an honorary doctorate. Anyway, I’m a big fan. So Mayor Woodfin. Now, we had the pleasure of getting to know Mayor Woodfin over the last 16 months. And I can say unequivocally that his leadership in Birmingham has, I think may change Birmingham 180. And what he talks about gets done. He’s got a great staff. I’m going to ask the folks from Birmingham who worked for the mayor to raise your hands, please. Thank you. Thank you. Thank you. Where’s Kelvin? Somewhere in here? There yes, there’s. And so what he says they do, what they do is work with us. 16 months ago, 17 months ago, we started working with the city of Birmingham. And they said we want to do this, we said but we need to meet regularly. And so every Monday at 2pm. Eastern, we have a call with the city of Birmingham. And that’s what the leadership of Birmingham has done is create this moment and this volume of homes that we had no right to believe or expected happen. And that’s thanks to Mayor Woodfin. And I’m proud to say that the mayor ran for re election last year and swept into office in huge numbers, and deservedly so. So without further ado, Mayor Woodfin.

Woodfin 13:27

Thank you for that introduction. And good morning to everybody. I apologize for the some of the folks on this front row because I thank you all the only people I cannot see from the position of seated and right now. I want to say good morning to my panelists as well. I do know, Courtney, we’ve went to school together Ashley is a good man. And Don is great to meet you. I gotta get to Fort Worth at some point. But I am glad that the Just Economy Conference not only exists but in person, right that we haven’t been able to do this in a while. So I’m going to back up for a minute, because I want to speak to the why, why this is important. You stripped down any job of any mayor in any American city in this entire country. And it boils down to two things, public safety and public infrastructure. And for my first term that was a significant investment. And those two things that I will go deeper into in a minute. But what I realized in the second term, six months into this second term and and especially over these past few months, working with Edie and GROWTH and his entire team is that the linchpin, right the bridge between public safety and public infrastructure is housing and particularly homeownership and if I can go deeper, affordable homeownership. And so, any merit that comes before any You all during this conference until you that there the reason any of this exists, they will be lying. Mayor is only as strong as the team and the people that they have in place to execute on that vision. And equally important, is genuine public private partnerships. So this large contingency you see here in Birmingham, part of the reason here is not only to display and show showcase what we’ve done, but equally is to benchmark and learn from everybody else what you’re doing to take back home, because we’ve made housing and affordable homeownership a priority in the city of Birmingham. So I want to acknowledge my team that’s present, led by Megan Venable Thomas, but I want to acknowledge all the local Birmingham partners as well, that are present, whether it’s our local housing authority, some of our local banks, which includes reason, Bob Dickerson, I’ll see you here, everybody knows, Bob, if you don’t know, Bob, you’ve done yourself a disservice. And so, right there being quiet, and so many other local organizations, but truthfully, for any city, and I’ve benchmark cities on purpose. I’ve declared myself a nerd. And I like to learn. And part of that learning is benchmarking other cities, and when you find about other cities, is the consistency of any cities. consistent GROWTH is genuine public private partnerships. So none of this success we’ve been able to do. It hasn’t been an isolation, Justice city. And so our relationship is really important to me. Now, with all of that said, back in 2017, I became the mayor of the city of Birmingham. What happened 14 months prior to that for an entire year and a few months is that I knocked on over 50,000 doors, actually, the citizens of Birmingham to vote for me, elect me. And if I became their mayor, these are the things I wanted to do on their behalf. Well, I want and there was a lot of work to do. But part of what I saw over those months knocking on doors, I want you all to imagine a mother or grandmother who lives in a single family home. And she walks out to her front porch, and she looks to her right. There is an abandoned home or burnt out structure that has been existed for years. She looks to her left there is a overgrown empty lot. In front of her is a buckling sidewalk, so it’s hard for her child or grandchild to ride their bicycle safely on that sidewalk. And when she pulls out of her driveway, wherever she’s going from point A to B. She’s dodging potholes. And I’m gonna guess she wants to walk her that same child or her grandchild down to the neighborhood park. But when they get there doesn’t have adequate playground equipment.

And because it’s getting dark, she wants to hurry and get home because the streetlight doesn’t work. And when she gets home, it’s time to feed her child or her grandchild, she realizes that she doesn’t stay in proximity of healthy food. And from time to time at night, they have to drop to the ground because they hear gunshots. That’s what I saw in very close proximity from those months. So when I was elected, those are the things that I made a priority. I summed it up in two words: neighborhood revitalization. And everywhere I went. I talked about neighborhood revitalization. The city of Birmingham is made up of 23 communities 99 neighborhoods. So I had this notion that we have to invest in all 99 neighborhoods and the city of Birmingham is only as strong as its lowest quality of life neighborhood. So what do we do? Well, the whole idea was that when that mother walked back, mother or grandmother, walked back out onto their front porch, and she looked to her right, that we removed that blighted structure next to her that had been been sitting there for years. But it wasn’t just that one structure next to her over the course of the last four and a half years. We remove one a day in business days, so close to 2,000 dilapidated structures we have removed (applause). 

When you become mayor, you don’t think that hey, we got to put your local tax dollars into removing private property. But that’s what we had to do to improve quality of life. That overgrown lot to the left of her we not only cut that lot, but we have attempted to go vertical with more single family homes by investing in our land bank, and I’ll get to GROWTH in a minute. But no city can be in the grass cutting business forever. Okay, that is literally just not sustainable. Or city like city of Birmingham were at the height of our population we had 360, or 340 to 360,000 people live in our city in the late, late 60s, early 70s. Over the last five years, we’ve hovered around 200,000. So you can imagine our inventory and empty lots. You can’t cut over 20,000 empty lots a year, it’s just not sustainable. So then we started making those same investments in that sidewalk to make sure that child or grandchild could ride their bicycle safely, we started making more investments in paving our streets so people can stop dodging potholes, and we made more investments in our neighborhood parks so children can play safely in those parks. And we partnered with Alabama Power so we can get more LED lights in our neighborhoods. And we created a, a food food security fund. So we can go after more healthy food options, and invest in more local urban farms for our local citizens. And we’ve taken over 2000 guns off the streets each year since I’ve been mayor, but it’s still hard to stop gun violence. All of that to say, it goes back to what the mother a grandmother originally saw, to her left and to her right. The abandoned structure here, the empty lot here. So what do you do? You find ways to make affordable housing actually work in the city like Birmingham had mentioned it, but I don’t know if you call it. Post the Great Recession in 2008, there hasn’t really been new housing going on affordable housing going on across many cities across the nation. Particularly in Birmingham, I know well, over a decade, no new of homes being built in our actual inner city where you have historic neighborhoods where majority of the citizens are black. If you didn’t know Birmingham is the fourth blackest city in America with a median income of 40,000. And unfortunately, too much poverty, but not just poverty, concentrated poverty. So we have a lot of work to do in this space. And so I want to speak to some of that. This whole relationship with NCRC. And GROWTH is the whole notion of we have to go vertical, with more affordable homes, in our neighborhoods. You know, when you tear this dilapidated structure down right here, and you still have this lot here, what I tell people is, neighborhoods aren’t meant to be snaggletooth. And if you know, right, you all get that visual neighborhoods are not meant to be Snagger. To you, you address one problem over here, by removing that blighted structure, you created another problem, now you have additional empty lots in your city. So between our city’s land bank, and city owned properties, I think it was important for us to partner with an organization like NCRC and GROWTH, to find ways to expedite getting much of these empty lots to an organization that can in return, make significant investments around his conversation of affordable home ownership. So unpacking that a little more. City of Birmingham, we don’t. I told you earlier, we benchmark and study other cities, but we’re not trying to be like another city, we want to be the best version of ourselves. We are a midsize city, which allows two things, it allows us to a try something to see if it can work, based on our size, but we’re also large enough where it’s scalable if it works, and you can apply it to other cities across the nation. And we believe this partnership and relationship with NCRC and GROWTH around what we’re doing around affordable home ownership is the model for anyone in the nation that’s looking to how do you make affordable homeownership work. So again, going deeper before I pass the mic to my two colleagues. We have an aggressive, ambitious approach to do over around the 450 affordable homes over the next few years. We just broke we not broke ground, but we actually gave the keys to some homeowners a few months back. We started with a 27 home development in a historic neighborhood called Bellevue heights on the west side of Birmingham. The next phase is we’re going to do 20 in a neighborhood called Woodlawn. And then we have some other areas were called Smithville and pride city where we want to continue building affordable homeownership in some of these areas across the city. I think it’s important to note because I have my notes here so I don’t want miss anything. Partnerships like NCRC. And GROWTH in the city of Birmingham only happen when you have a mayor that actually prioritizes, affordable homeownership. What we find in any cities that any of y’all are from, unfortunately, in City Hall, there’s too much red tape. Some of you all may call it BS, there’s a whole lot of synonym for what you got to push through. And so this, again, sad, but it’s worth repeating this whole notion of sitting down with them meeting on not your own, not on a monthly basis, not on a quarterly basis, or every six months to check in to see where’s progress, but weekly, right weekly with them. And I wasn’t even on most I wasn’t even on majority of the calls, community development lead. But in our internal teams, and the legal department and the planning, permitting department and everybody being on the same page to cut through all the red tape, all the inefficiencies, to get to the point where we can actually produce affordable homes on scale. It takes a serious commitment from any administration in any city in America. So 1718 months ago, this conversation started and we picked up a cadence. But NCRC had been around for quite some time. And I think for us, the conversation started and stopped and 18. And then we found found ways to restart those conversations. So to sit on this stage, and be in a position to share with you why this is important. I think this is the note I want to end on. Scale is hard. Alright, I want to say that out loud to each of you see in this room. Scale is hard. But when you want to improve people’s quality of life, and when you accept and embrace the linchpin between what was it I used earlier, public safety and public public infrastructure, that linchpin, and that bridge is home ownership. Then for any and everything, you say it as a priority, whether it’s education, or your city’s infrastructure, or gun violence, or property value, or decrease in crime or cleanliness, or any of these things, investments, genuine investments in affordable home ownerships, gets you there faster than anything else you can do in your local community. So this is a conversation we’ll continue to have. I told it to keep raising the money. The city of Birmingham will continue to do its part and pushing this conversation. I do want to acknowledge, I mentioned Meghan earlier who leads to Community Development for the City of Birmingham. But I want to acknowledge Kelvin Datura, who used to be in the mayor’s office, that’s now part of community development. Who lead who led this prior to Miss Thomas leading our team, as well as my good friend, Jared Lowe, who’s an adviser to the city of Birmingham, who’s been very intentional about holding us accountable to make sure we do what we say we want to do, right? A lot of people say they want to do affordable homeownership, but it’s very different than doing it. One last note, money because you can’t talk about this conversation without money, right?

It takes money. Ed mentioned two things. He mentioned a partnership from the banks in this room, and I had a genuine question to him. I said, Hey, I might as well just tell him out loud, right? We got no secrets, no secrets. Why do you think banks are investing in NCRC and GROWTH? Do you think it’s because it’s a genuine interest in this conversation around affordable homeownership, or do you believe it’s because of CRA? Which by definition is forced. Or is it a combination of both? We both got around to our theories and our thoughts and our opinions. But it came down to a mix of both. I think this conversation first started, CRA dollars needed to be invested in something that they can track scale etcetera. But I think over time, as he called up all those banks, which I imagined all these banks were not at the table originally. I think banks are starting to see the importance of this conversation and how this how NCRC is pushing in a tangible way what the American dream really is all about. Doesn’t work without affordable home. ownership. Which brings me to the last note and also mentioned this, the president, President Biden push all these resources towards our local economies in the form of ARPA dollars, city of Birmingham got his first tranche last night. And with that first tranche, we set aside an initial million dollars to support those first 27 homes that I mentioned. While we’re the second tranche and with some of our other local monies and in partnership with hood and a whole lot of other folks, y’all y’all see all the southern talk them to give me y’all y’all and, Bo. We are getting ready to dump a considerable amount of more money into this because that’s the only way it’s going to work. That’s why I implore you. Engage your local administrations hold them accountable. But tell them to put their money where their mouths are, and invest in affordable homeownership. Thank you.

Gorman 31:08

Okay, good. Well, now you can see why we love working with Birmingham. Seriously, we could, you could trade places with me. I couldn’t trade places with you. But you could do much. Because what you just said, I hope every banker heard that. Because the banks who aren’t invested, we’re coming for you. So we’ve also begun to work at a amazing scale with the city of Atlanta, partnering with another Morehouse man, Jeff Riddle, who’s our joint venture partner in in Atlanta, and working with Mayor Dickens and Councilwoman Overstreet. Party in the USA. And we have had the pleasure of getting to know Courtney English as part of the effort with the mayor of Atlanta. And I can tell you that we’re going to be issuing a press release today on this once we get a quote from the mayor we got it good. So we proportionately these cities are sort of neck and neck. In terms of population. I think Birmingham may be batting above its weight here. But see if Atlanta, we’re going to build 1,000 homes in Atlanta over the next four years. 

And that’s not conjecture. That’s actual dirt that we have secured through our partnership. But we couldn’t do this without the mayor of Atlanta invest Atlanta. And the mayor had a good sense of Is he out of the country? Is that what I heard? But, but but Courtney is the senior adviser to Mayor Dickens. And he’s relatively newly elected. I mean, just since November, as I believe he took office in January today, January 3. Well, this is a mayor who’s hit the ground running. I think he’s taken a page out of your book, Mayor Woodfin. Courtney himself is quite accomplished. I didn’t know this about you coordinate, youngest person to hold city wide office and Atlanta’s history. First elected to the Atlanta Board of Education at age 24. Man I was I was still learning to tie my shoes. And 2014 at age 28. He was elected unanimously by his colleagues to serve as the board’s Chairman, the youngest in the history of the school system. He does did phenomenal things on the education side. And now He is the senior adviser to Mayor Andre Dickens who’s with with a portfolio that includes affordable housing, economic development, youth engagement, and closing Atlanta’s long standing equity gaps. I’ve already mentioned his Morehouse connection. Without further ado, Courtney English. Nice to have you.

English 34:27

Great to be here. Great to be with you, Ed. Course. Mayor Woodfin, Dallas, nice to meet you as well. What an incredible, timely, necessary conversation. The last bit of that work, that ED talked about closing Atlanta’s long standing equity gaps is actually where I want to start. It’s also I gotta give a word to shout out to you my mayor Mayor Andre Dickens in absentia he didn’t go to Morehouse. But that’s okay. He went to Georgia Tech. So we let him slide. That That being said, Our mayor entered office dead set on closing those equity gaps. That number I want you to remember is 4%. A kid born into poverty, underserved community in the city of Atlanta, like I was, has a 4% chance of escaping poverty for that. Wow. 4%. Right. And so if you look across the city of Atlanta, what you will find is, candidly, A Tale of Two Cities. On the north side of our city, we have predominantly white, predominantly affluent neighborhoods that are incredible. They’re they’re vibrant, they’re booming places for development, they are absolutely wonderful places to live. And on the south side of the city, you have some incredible neighborhoods with incredible people that have suffered for one reason or another, from long standing discriminatory policies. And that’s just what it is. So when the mayor takes office, knowing that, you know, if you walked into the mayor’s office today, that 4% Number is literally plastered on his wall. And we’ve got one goal. And that’s to change that number, for the better as fast as humanly possible. It talked about I was got elected a long time ago to the school board at 24. It just means I’m impatient. And I’m Mayor shares that level of impatience. And so when this mayor took office in January 3, he said, an ambitious goal of creating or preserving 20,000 units of affordable housing in eight years, that’s incredibly ambitious, hard number, particularly when you have systems in place that need to be deconstructed and reconstructed to get housing up out of the ground and to the market. And so we’ve done a few things. And as far as budget as mayor has allocated $65 million towards affordable housing alone, that $65 million is backed by $100 million affordable housing. But that $100 million housing bond is backed by incredible partnerships, public private partnerships, with folks like NCRC and GROWTH, which is going to help us get 1000 affordable housing units off the ground. The key to closing those equity gaps really, at its core, it’s a housing issue, right? The pathway to wealth is particularly in black and brown communities is and has always been homeownership. And so we’re having a serious conversation about how to move people up the economic ladder, we have to have a serious conversation about how we allow people to own homes, and do that as fast as humanly possible. So whether you are coming at it from an education standpoint, affordable housing matters to you, our public school system has about a 30% mobility, right meaning 30% of the kids are gonna be different at the end of the year than they were at the start of the year. And the lowest performing school and APS. That number is 60%. So think about that for a second 60% of the kids are going to be different, right? There’s no teaching strategy for that. It didn’t matter how great of a teacher and I’m a former teacher, and I thought I was amazing.

But if your kids are going to be different at the end of the year, you can’t teach through absence, right. And so if we’re going to have a serious conversation about education, we got to have a serious conversation about affordable housing, because what you find is that our parents are chasing affordability, right? If you’re gonna have a serious conversation about economic development, you got to have a congress serious conversation about affordable housing, and homeownership. If you can have a serious conversation about reducing crime, you’ve got to have a serious conversation about affordable housing and getting homes in neighborhoods that haven’t had them for a long time. Because what you also find in the city is that in neighborhoods that it almost doesn’t matter. If you close your eyes and look at the underserved neighborhoods throughout the city of Atlanta, you’re gonna see, you know, low literacy rates, you’re gonna see incarceration rates that you don’t like gonna see incidents of violent crime that you don’t like you’re gonna see average low credit scores that you don’t like. And at the core of that, in almost every one of those neighborhoods, you’re gonna see a rental rate that’s right at 80 to 85%. Right across the board, you can it doesn’t matter where you go, what you can close your eyes, throwing a dart at a map, and if you hit one of those underserved neighborhoods, I guarantee that stat is gonna be right there. So let’s say I like to say we’ve got a lot cooking in the city of Atlanta. That’s the that’s the that’s the dark side, right. But we’re really excited about the $65 million we’re about to put into the market. We’re really excited about our 100 million dollar housing bond. We’re really excited about partnerships with GROWTH the mayor’s created affordable housing, StrikeForce, which is designed to cut through a lot of that red state. So what you have at one table is our housing authority, our transit authority, you have our development authority, you have our school system, you have our land bank, you have our Land Trust, the city’s at the table, and everybody in between who touches housing is all sitting in one room with one simple goal. How do we get housing up out of the ground? And how do we do it fast. And so the city of Atlanta is open for business. As you all think about who you want to partner with the South definitely has something to say, as you can see. So we want to work with you. The one thing I will say this, and then how close is scale is, in fact hard. So you know, you all are financiers, and bankers, so on and so forth. So when you come to the table, I want to give you a sense of the size and scope of the problem. So 20,000 units over eight years, it’s about a $6 billion problem. Right? So great, I will take you know, your one to two $2.53 million $10 million grants. Right. We’re excited about that. But I really want you to be thinking about how do we how do we get to 1000 units at once? How do we think about home ownership the same way that we think about multifamily development, right? And so we’ve got, you can do, almost you can finance the deal the exact same way if you do 250 homes at once, right. And so we’ve got to get out of the mindset of of the five units or the 10 units or 17. House deals. And let’s start talking about 50 and 100 and 500. And I think you’ll find a willing partner in the city of Atlanta, so excited about the conversation. Thank you.

Gorman 41:45

Alright, so now you see why both cities are exciting for us. Let me just say I’m going to introduce Donna VanNess in just a moment. In both Atlanta, the cases of Atlanta and Birmingham. You’re seeing commitments that I have not seen anywhere in the country, for affordable homeownership. Let this be the start of a trend. And banks. Please hear what Courtney English has said. It’s not enough to think you’re doing community investment and answering community needs. If you’re just doing like tech, lie tech doesn’t build real community investment. People buy a home, they live in a community they invest in that community, every part of that community is there’s a feeling of ownership about you just don’t get that feeling. If you’re a person who’s a renter, particularly if you’re one who wants to be a homeowner, and can’t be so thank you very much, Mr. English. So, Donna VanNess, I met Donna about six, seven months ago, I think it was October of last year. And let me just say I immediately thought, here’s a kindred spirit. Donna’s been doing this work and laboring in this vineyard. That and belying her age, she must have started in her teen years. For a long time, I’m not going to say the number of years I let her say that. But But I will say Donna gets it. And she’s been trying to educate folks in the Dallas Fort Worth area for some time. And Donna help is on the way. We’re coming to Dallas Fort Worth, we’re going to work with you. So I’m looking forward to this but, please I you know, Donna oversees a portfolio of about $40 million of investment. That’s pretty significant. For nonprofit organization. I’m going to let her tell her story. But this is what persistence can get. And a lot of you out there are trying to do community development and know that you can’t make it happen. With a year or two years or even five years worth of effort. You know, we got to see things in decades, a decade long commitments. And that’s true of a fund that you create. And it’s true of the way you invest the money. We’re in this for the long haul. And we got to get investments really geared towards revolving capital that can be invested and reinvested in these communities so we can begin to produce scale. So Donna, pardon me for the editorializing. But let me ask Donna VanNess. Thank you, please you’re up.  

VanNess 44:48

Thank you. I’m not at the clicker. Okay. Good. Yeah. As my esteemed colleagues still have visual aids to help communicate my speech today

Gorman 44:57

Can Donna be heard?  Oh, why don’t you take one of ours?

VanNess 45:04

Hello? All right. So seeing the registrations for this session, I was a little panicked, I have to confess, I thought, Oh, my God, you know, they they have the illusion that, that we have the answers to sort of housing. So to tell you the truth, there’s not one answer. And all the answers that we have our heart, we’ve mentioned that several times now. Our agency is a choto, Community Housing Development Organization in the Dallas Fort Worth area, and my board of directors, many of them bankers, still have trouble with the fact that we generally sell houses below cost of what it costs to build them doesn’t register financially. We also start homeownership projects with big gaps, you have to get the momentum going to raise the money, there’s you’ve just got to put yourself out there and you’ve got to risk that potential project. And sometimes it’s a million dollars or more. And we also buy land that zone for lucrative multifamily. And we down zone it, I know that’s your exploding brains, but we do we do medium density, we do single family. And at the end of the day, if we haven’t lost a lot of money, that’s a huge win for us. So to get my board and my bankers, you know an analogy of how our finances work, that tell them that we’re there like the Bailey brothers Building and Loan from the movie. It’s a Wonderful Life. We’re finding the greedy Potter’s of the world and to generate prosperity for all in our bed for falls, and just barely making ends meet. How many of you seen that movie? It’s a great movie. So how interesting. Is it that a movie made in 1946 can draw some parallels to the economy that we’re facing today? 75 years later? We’re all feeling these large institutional investors gobbling up our inventory even coming into low income neighborhoods. They never on the radar before. Yep. I’m sure many of you saw the 60 Minutes interview. tricon residential CEO, people want to rent the American dream. What what a jackass I’m just gonna say Sorry, sorry, Mayor. They have no other options. You have 80,000 single family homes in your portfolio. And you’re from Canada. Also read a statistics in Jacksonville, Florida. 28% of the properties recently purchased by an investment group are just sitting vacant, waiting for the value to increase. Unbelievable. They’re sitting on these homes like commodities, while people are struggling for housing. And based on the hands raised, we all know what happens in the end. If hardworking people, immigrants, minorities are denied the opportunity to participate in the economic mobility of life and build Well, it’s Pottersville. Based on the scenes from the movie, that’s not a nice place. People are miserable, saddest part of the movie, when you see the police man, the cab driver, the bar owner, they’re, they’re miserable. They didn’t get to participate in building their well, and they lash out. And I feel like that’s a parallel to what’s going on racism, violence, all of those things. And this is why the discussion is so important. We have to scale our developments to combat this shrinking inventory, high prices and decreasing opportunities for people to build wealth through homeownership. So I want to show you some images of these are how we used to do our projects. Big swaths, you know, subdivisions, great, big homes, big yards. That was the good old days. The far the bottom one there was on the left or the ride that was one of our first communities. We sold those houses for $77,000 in 2003. The top left, that was our most recent one, and that was in 2016. I think we were at 165 sales price. And they we offered $15,000 in downpayment assistance for low income buyers. So it’s a great opportunity. But we were you know, we were building five houses to an acre you know, we were it’s Texas, we got land. We’re not really worried about it.

We are using programs like CDBG home and Neighborhood Empowerment zones? As a choto in the city of Fort Worth, we get first right of refusal of all the city’s foreclosed inventory. I don’t know Have other cities do that. But we also get to buy them at 20% Market value, which back then, you know, where’s that? Oh, yay. But now we’re like, Oh, yay, you know, because the value has gone up so high. But I’m gonna show you these statistics of what happened in the last five years. Well, this actually is from the Texas a&m Research Center, they do a great publication called Texas affordability Outlook. So what What this demonstrates here is that in 2011, over 70% of people earning the median income could afford the median priced home. Today, only 33% of the homes sold in Texas were affordable to those earning the median income. And that’s just the median. I’m not talking about 80% buyers, and Dallas, Fort Worth is dropped to 11.5%. Wow. So I’m not going to spend too much time on the statistics, because I know many of you on the east and west coast. You’re thinking of median sales price of 375. You crazy I’ll buy for right now. I know. I know. But we’re on the fast track to catch up, believe me, it’ll be part of the problem as institutional investors. And the other problem is the big migration from California to Texas. I’d like to take a quick poll, how many of you are from the California area? Okay, can you just stay where you are? Stop, stop moving to Texas. One out of every…

Gorman 51:39

It’s a new Trump wall going up.

VanNess 51:47

So one out of every more than one out of every 10 New Texas camps for California. And that’s been the case for over 20 years. But what’s happening now is with COVID remote working, where you can sell your big California price house, come to Texas buy three or four of them. And work still like your high paying job in California. So now it’s on our news. People are paying over $100,000 over list price. Because they can. So stay where you are. So we thought it was hard before and now building affordable is really impossible. So my board and I had a strategic planning, how are we going to continue our mission in this market? James, do you understand what I’m talking about? So prices aren’t going to go down land still high construction tie, that’s not going to change we have to change. So what we’re doing is changing our model we pivoted. We’re doing scale developments, as we’ve talked about here. We switched from 5000 square foot lots 212 and 15 units per acre. So we’re trying to create new products attached single family homes, duplexes, triplexes, and we’re also getting into small cottage communities and pocket communities. This this project here was our first one. It’s Bellaire on Abram. It’s named after the first car of the GM assembly plant, which is a block from this project here. And it beautiful, I have to say, we went in the community, we said what did you want to see. And these are all you know, the color from the color of the brick to the type of landscaping the community had an input in, in this development. And how we got this done was a program with new markets tax credits. And I know a lot of people use new markets for community facilities, education centers. But there’s a group out of St. Louis Smith in MTC and Associates, you’ll hear more about them, there’s going to be a story coming out in the Washington Post. They did a pilot program where it was for sale housing. And so far, they’ve done 500 500 million in new markets funding for sale products, totaling 4500 units across 30 states. So how this works is and this is the other cool thing we did, because you know fly tech and new markets, you got to get big pots of money like $20 million. Well, Chodos can’t do that $20 million, because you have to put 20 million in and then you get more back out once the tax credits are sold. So what they did is they cobbled together four or five nonprofits each getting four and $5 million apiece and we created this entity. And so we put $4 million in and we got $5 million back out. So we create a million dollar steps you right off the bat with this project. So that’s how we got it done. The city didn’t neighborhood empower. Aren’t zone so waived all our development fees? It was it’s just a really a really great project. And it’s 47 townhomes. And this was zone, this is one of the projects that was zoned multifamily. So we did a PD and down zoned it. It was that without surrendering there, so it actually kind of looks like the rendering. It’s a mixed use mixed income project, we reserved a minimum of 30% for 80% buyers, and then the rest up to 120. So it’s great to also not only building wealth for our 80% buyers, but it also creates that product for missing middle those people who are caught in between the 80% and the upper income, there’s just no inventory for them. So and what that missing middle does is it helps us offset the gap for the 80 percenters because we’re selling these at market right, the higher price. So it’s a win win. And plus, it incentivized people to come to this area, which is the highest crime, crime and poverty in the city of Arlington. Banks participated, helping us out with low interest financing because it’s a qualified census tract. They also offer downpayment assistance for any buyer, not just low income buyers, which is great because it’s qualified census tract. So that also incentivized market rate and middle income buyers to come in to a city they wouldn’t never look at before or two part of the neighborhood. So it’s it’s awesome project. The next one we’re doing this sort of with the success of this project helped us sort of open our eyes to possibilities. There’s so many infill lots you mentioned earlier, that we really didn’t look at before.

And this here, particular one is from the city of Irving. And it’s not particularly attractive, but it was a owned by the city. So we didn’t have to compete with anybody to buy it. And it originally had for single family homes, it’s about 35,000 square feet. But it’s on a major thoroughfare on Second Street in Irving. And so what we’re doing is we took down the four homes, we’re building 12 townhome units, and they’re really pretty, it’s really going to be a catalyst for that area. And we’re excited to see this happen. And we’re doing a mixed income and mixed use. The mixed use, we’re going to try something new live working. It’s where there’s retail space on the bottom and living on the top. So excited to find, you know, entrepreneurs and small businesses to participate in this catalyst project for us. I think we’re doing five units reserved for 80% and the rest up to 120. This is another lot just two blocks down. Same thing I have for single family homes and we’re turning in into 18 Single Family townhomes. And all of these are being projects, the city offers 50,000 and downpayment assistance, closing costs for 80% buyers. So that’s always very helpful. So this last one here is something new, we’re going to try a church owns this little sliver with that blue boxes, and they said, Hey, we see all the stuff that you’re doing. Could you do something with this? Well, heck yeah, I can give it to me. So we’re gonna build it so multifamily for some strange reason, we’re gonna build eight duplexes, eight units, and all them when we reserve for sale to 80% buyers that get to participate in the downpayment assistance program. So of the three projects combined will create 38 units of for sale housing, where there’s originally just eight. So that’s the scale that we’re talking about. It’s not a 1000s that 450. But, you know, we’re a little choto, we’re trying, and we’re making a dent. So we’re really excited. that’s those are pictures of the duplexes, we wanted to look like homes and not square boxes. So we’re really working hard to create designs and offer alternatives. You know, for smaller lots, we’re looking at stacked units. And for larger ones, we’ll do this side by side garages, lists last projects really cool. I don’t know if many of you do this, but the universities are great partners in affordable housing. So UTA has a College of Architecture, and public planning administrations called kappa. So their students, it’s actual class. It’s a design build class in the spring, I’m sorry, in the fall, they design it and then in the spring, they work with our builder side by side to build the project. It’s so cool. Not only does it offset our design and labor costs, but we’re informing them and educating them about affordable housing. So they’re not going to be NIMBY problems on the way down you know when they get older. So there’s and they come up with really cool ideas. This is a small cottage community we’re doing in the houses are actually under 600 square feet. And they’re not Yeah, then there’s tiny homes are Tiny, they’re like one and 200 square feet. So these we’re calling cottage homes. And the idea behind it is to give everyone their individual unit and their patio, but also integrate with, you know, gardens and green space to create that sense of community. So, I know we’re in DC. So I’d be remiss if I didn’t mention the incredible Biden Harris administration’s action plans, I won’t go into great detail. But if you had to had a time to read that, I mean, you really need to look over at some amazing action plans. But you know, plans are just plans until we have support and advocacy for us to get going. So I really need you to look at that and talk to your congressman, your representatives and really get behind this, these proposals. And lastly, I just have some some tools that we work with to do affordable housing developments. You know, mentioned some of them, any Z’s are todo status allows us to do things, cities need to really think about their resources, and help land bank and keep those resources for community development. And then, this is not my quote, but the most affordable house is the house already built. So we really need to work on incentivizing creating financing tools for rehab. I see a lot of heads nodding. So, this, this next slide really scares the hell out of me. It’s a fictitious community called the stacks in a movie called Ready Player One. Okay, so I have no life, I just watched movies and work, that’s all I do.

In this movie, people spend all their time in a virtual world because the reality is so bleak. Except for the rich, except for the rich working class families live on top of each other in these stacked mobile homes. Now, this isn’t gonna happen in my lifetime, and probably not likely our children’s lifetime. But I want to think about is this dystopian future a possibility. Knowing that Wall Street is backing institutional investors with $40 billion companies like trikon, whose goal is to buy 800 single family homes a month? What is the future look like? So this time is now we need to think about this and commit and we can’t kick the ball down the field. It’s not someone else’s problem to fix. We’re all in this room together. Because we know it’s a problem now. And it’s up to us the George Bailey’s of the world to do the hard things, the things that don’t always make financial sense, but are necessary for creating a just economy for all. Thank you.

Gorman 1:02:53

Well, thank you, Donna. So much to unpack here. I know we need to have I’d like to get questions from a lot of folks. I’m going to ask one myself, and then ask others to please raise your hands. And let’s get to your questions. Donna, you mentioned and and I think I may have mentioned a little bit about the missing middle. I hear this conversation with mayors across the country. The point you were making about the lack of affordable homeownership, even for the missing middle, you know, obviously CRA if you’re not in a qualified census tract, generally requires you to work with people who are less than 80% of area median income. But if the median income earner can only afford Did I understand right 33% of the homes in your area. That’s a person making 100% then the teachers, the firefighters, the nurses, the EMTs police officers have nowhere to live. They’re the missing middle. And if you’re a mayor, trying to secure public safety, and you’re not figuring out how to house folks who will be that public safety for you. What are you doing? Now these mayors clearly understand that, but I just want each panelist if you would if you know how big an issue is missing middle in your communities, and I’m mentioning this in the context of a CRA reform that’s underway right now. Right, everybody aware that? It’s out for comment. We need comments into the Federal Reserve, the FDIC the OCC. I liked that party. We need comments. And I think we really need them on this topic in particular because if CRA can help the missing middle in non qualified census tracts And then we’re missing. What is the crisis that’s currently underway for our communities? That’s my thought on it. What do you all think about that?

Woodfin 1:05:15

I think we all agree.

English 1:05:18

Yeah, I’ll just say this quickly. concentrated poverty doesn’t work in anything. Right, right. And work in healthcare don’t work in house and work in education, it just doesn’t work, right. And so when you think about the need to invest, and then missing middle across all of those different sectors, which you when you don’t do it, when you fail to do it, what you create is pockets of wealth and pockets of poverty, right. And in those pockets of wealth, right, those folks are living relatively well, in those pockets of poverty, you’ve got crime, you’ve got up stuff that you don’t want to see. And if you look across the country, I’m not gonna shout out any cities, because I know folks are from everywhere in the room, but there are cities that you can point at. And I believe we’re seeing trends, really in three big buckets, right? There’s a bucket where, when you don’t invest in the middle, you those pockets, ultimately mean you’re shrinking the middle class. The problem with that is from an economics perspective, is that’s the bulk of your buyers, right? It’s the over America built the world’s largest, strongest economy, because of the middle class. And so when you do that, sooner or later, like one model, your economy collapses, literally, right? And there’s a city in America, you can, y’all can figure out who I’m not gonna shout out, shout out, shout it out where that literally happened. Right. There’s another example where in those concentrated pockets of poverty and pockets of wealth where I was pockets of poverty, you got folks killing each other, at an alarming alarming rate. Layered on top of healthcare disparities layered on top of educational disparities, just layers and layers of lack. Right. So that’s another option, right? And then you’ve got cities in the country where you just price all the poor people out of your city. Right, and then the affordable housing community in your city becomes lawyers and doctors, right? Like think about that for a second. So that’s a real, those are three very real examples that are happening across the city. And so again, if you’re thinking about it from a municipal perspective, right, or even from a private perspective, right, the more you invest in the middle, the more folks you have to open bank accounts, the more folks you have to lend money to the more businesses you have to lend money to, the more opportunity you create for yourself, from a municipal perspective, you want to solve crime education, or any of that other stuff, you’ve got to strengthen your middle class.

Woodfin 1:07:41

And so I’ll just add to his point. And forgive me if I spend more time on the problem than the solution. But I think it’s important that you realize the impact of what he’s saying. The great resignation has several snowball effects that are negative one is that for city, and for anybody who does provide frontline services, the last two years you have been able to hire at the rate that people are retiring. So it’s not just the airline industry that may have the pilots but don’t have the flight attendants or they have a flight attendants but know how to ground crew. When you you step in to get your your baggage. It’s the hospital that short nurses is the school system that are short teachers is the city that short drivers to actually CDL to pick up your trash and your bulk trash, or short officer to respond to your calls, or any form of emergency management. These are your folks that are middle class. And if we don’t find more creative ways, and supportive, affordable home ownership, to also invest in nice folk, then you we can’t hire because these folks saying that at this rate of whatever you’re paying. I can’t I can’t afford it. It’s not enough for me to take care of my family. So it’s all correlated and what we do around affordable homeownership.

Gorman 1:09:13

Donna, you said some already if you don’t want to, we’ll move on. But but if you have a comment on this,

VanNess 1:09:18

Just want to make one point back in 2010, when we had the foreclosure crisis, HUD sort of relaxed, you know, the rules and because it was always 80% 80% and allowed up to 120 Yes. And so it because we needed that to pull us out really fast. So yeah, I mean, hello, it worked. 

Gorman 1:09:39

Yeah, it did. It did. Although it also spawned the buy to rent industry, unfortunately, I think too. All right. Questions, folks. Yes. And identify yourself and where you’re from please.

Audience Question 1:09:50

Ashley, I’m from Texas where the Permian Basin.

Gorman 1:09:57

Can everybody hear? I’m gonna ask you to Speak up as loud as you can. Oh, thank you. Yes, please. In fact, that’s a great idea. I didn’t see them there.

Audience Question 1:10:08

So we mainly face not only affordable housing, but the working middle class. We’re short over 400 teachers, 65 Sheriff’s Department officers, and well over 100 police officers in our town, and we have everyone moving and working in. So when the oil is booming, yes, people are making our median income in Odessa is 96,300 – 15 miles from us and Medellin, it’s 129,900, right. So one of the ways that we’ve kind of gapped this is we’re building 288 unit multifamily in Odessa city limits, but in the county of Midland. So by doing that, we’re able to house some of those middle class teachers, first responders, firefighters, but we’re also building the first 45 of 100 single family homes, where we’re able to give $20,000 in down payment closing cost. And we’re able to go up to the 120% of the median income as well. So of our first 12, we already have 12, pre sold, and we’re building 12, 11, 11, and 11. And we’ve partnered with some of the bit local banks, we have four banks that have come together to gap the funding for us. So we’ve, up into this point, we haven’t lended, any money to build, we’ve done it out of our own nonprofit. But now we are needing to build faster. So we are doing lines of credit for the first time to gap this. My question is, is yes, there is a huge need for affordable houses. But I feel like in our area, we have a bigger need for the working class. Because if we don’t have that working middle class, then our cities are going to just shut down. I mean, we don’t have enough people to run our schools. My kids alone are in a class of 45. So that is huge education wise, I have a master’s in education. And that’s where we’re suffering over 400 teachers. In a town of Odessa, we have two high schools with over 4000 students in each high school. So yes, we need help and trying to figure out that middle class area how to bring teachers to our area. 

Gorman 1:12:24

Great, great comment. Anybody want to comment on that? I mean, I think it speaks for itself. But if anybody has a comment.

Woodfin 1:12:33

Actually, could you? You don’t mind going back to the mic or speaking louder? Louder where you are. I want to know how the $20,000 is incentive enough to is it attracting?

Audience 1:12:42

It is attracting, so we have great response to that. Our only requirement is that they live in the home for five years of portions are given every year after five years. 100% is forgetfulness. So our local TGD does not have enough they partnered with us, but they’re only able to do two of the home. So because we partnered with the economic development grow Odessa, our local city government, we were able to cover all the infrastructure cost. We’re also building out a coal form steel, which is cheaper than wood right now. Not anymore. Not anymore, but they’re more efficient. Even the homes that we’re offering granite countertops, stainless steel appliances, bottle paint flooring. So people are seeing that. Yes, it’s affordable, but it doesn’t look affordable.

Gorman 1:13:34

Yeah, we believe in the same thing you do on that.

VanNess 1:13:43

Well, it sounds like you’re on the right track. So I mean, the thing that we talked about here is scale, meaning you can build faster with attached products and maybe easier for you to get more going than, you know, the traditional. Smaller, let’s do it. Yeah.

English 1:14:04

Have you done an assessment of all your public land?

Audience 1:14:08

So much of ours is lost because of drilling.

Gorman 1:14:18

I love the murmur that went through the crowd. Oh. Yes, ma’am. Step up, please. And tell us who you are and where you’re from.

Audience Question 1:14:30

Thank you. Well, I am patients malaba. I am from Seattle, Washington. With the Housing Development Consortium. I am the executive director there. I do have a question about the missing middle housing piece that you talked about. In the Pacific Northwest. We’re working hard to expand areas where we can get more missing middle housing. It was good to hear that for some of your areas you actually I think of down zoning, because we’re working harder to even rezone in the first place. My question is, what are some strategies that you are thinking of in expanding beyond just feeding? Once we get the missing middle opportunity, feeding more closer to single family homes, because in many cases, duplexes were really trying to conform right to really be part of the neighborhood character. But can we expand the opportunities beyond duplexes and triplexes and begin to scale home ownership to larger options beyond what looks closer to a single family home? Just curious to get some of your thoughts and what you’re doing on that front?

VanNess 1:15:47

That’s a That’s a really tough question. You know, expanding single family is really going to take our cities to look at rezoning their land uses all those policies that prohibit or limit the opportunities for smaller skilled housing to exist. City of Arlington, when we work in their minimum square foot lot, or square foot house is 1500 square feet. That’s ridiculous. And I know that we all know the purpose of that. So, you know, if we had leaders like this, which I think they’re starting to come around, we definitely can try to do more and expand more. One of the things we’re also looking at is for cities to allow 80 us accessory dwelling units. Because like I said, you know, the most affordable housing is the one that’s already built. So if you can add on to that, and create other units for families to create their own wealth and then provide housing at the same time, that that’s an ideal situation as well.

Gorman 1:16:54

I just got a stat on ad use from Robert Dietz, who’s the Research Director for the National Association of Homebuilders this morning, because I was I’ve been in conversation with I had no idea 1.5 million adu units are under construction currently. That’s a pretty significant number. I didn’t realize it kind of gotten to that. That point, I guess. But the question, of course, is what’s the use of those at use? Because ultimately, they can be a mother in law suite. They can be a rental that will help with income. I’m not sure it’s producing more homeownership. That’s the thing I wonder about not that, you know, that we any building is good building. But best building is affordable homeownership. So that’s my view anyway. Yes, sir. Yes. Please go to Mike, tell us who you are and where you’re from.

Audience 1:17:48

Hi, my name is Glen Burley. I’m from St. Louis. I’m work for equal housing Opportunity Council. Sure. I was just wondering if being the panelists have ideas, like we’re moving into a different rate environment, right, like we’ve been at this low rate environment for so long. And you know, rates are going up and values don’t nobody’s really talking about large drops, right. So the monthly cost is going to be going up. But do folks have strategies that you’re working with to try and offset some of this increase in financing costs?

English 1:18:21

So I spoke earlier about why I asked the question, actually a question about doing an assessment of your publicly owned land. And so I think cities generally have to start looking at land as the biggest, best, strongest resource they have. Period. Right. And so, in Atlanta, we’ve done that assessment across all of our public agencies. There’s roughly 2500 acres of developable, undeveloped public land, right. And so when we, when we think about opportunities there, what does it look like to do ground leases, whether it be for single single family homes, multifamily deals, single family attached on so on, and so forth? Like when you put that mechanism into the deal? It pencils out in a different way? Right, it pencils out in a completely different way? Additionally, you know, we’re going to start we’re actually changing the way in which our development authority issues tax abatement is right. And so if you’re a single family, if you are an affordable housing developer period, right, you can come talk to us, like we still want to attract the big businesses, so on and so forth, and want to help those folks stay here. But we also want to help you get stuff out of the ground, right? And so we’re gonna give you a tax abatement over a 10 year period, that also helps your cash flow which helps your deal penciled out even more, right. And then there’s we’re actually going to put debt and equity into the deal ourselves. And so you when it comes to this particular issue, I believe I think City’s got to throw everything we legally can against the wall, right? It’s a smorgasbord of stuff that we can do. ground leases, housing vouchers, you know, every we’ve got first right of refusal off of foreclosures as well. And so we’re looking at all of those stuff, all of those things to be able to put opportunity into into those deals.

Gorman 1:20:14

I’m going to carry a little further with this, too. You know, there’s, I think folks are talking about 40 year amortization, amortization now, instead of 30. That’s about a 10%. Benefit. It’s not hugely significant. I mean, I think the the gentleman who raised this question, where are you? Thank you from St. Louis. I think the problem we have as this happened really quickly, and so folks are still scrambling a bit to try to figure this out. Land Trust and ground lease stuff of the Concord he talked about, we did a project and Columbus built 20 homes infill flanking a hospital in Columbus, Ohio. And we were able to deliver those actually 20,000 bucks and under budget five weeks early in the middle of pandemic, pretty proud of that. But it’s a Shared Equity arrangement. And that’s controversial. So you have to really figure out, alright, what’s fair here, on a ground lease, generally, you’re looking at 75% of the appreciation staying with in order to keep it affordable for the future, staying with the municipality or the land trust, and only 25% goes to the to the owner. So if you’re trying to build wealth, it’s there’s a tension there between. But if for folks who wouldn’t otherwise be homeowners a great first step, they probably shouldn’t stay more than seven years. Once you’ve done that, the other thing that’s nice about the land trust deals, you get all your principal back, and any capital improvement that went into the property, you get that money back as well. So there’s some balancing there. But Columbus had to put in 100,000 bucks a house to make that work. Some of it went to the builder, we were the builder. Some of it went to the you know, the owner, they were able to buy down what was essentially a $240,000 house, pegged it to 195, and then sold it as cheaply as 165. If you were at, you know, a certain percentage of AMI, right around 60%. Those are things you can do. But I think we have to figure out much more scalable stuff than land trust. I love Land Trust, but you’re not going to get as much done as you hope. Because 100,000 bucks a house of subsidy is not is not sustainable over the long haul. My view. Yes, ma’am. Oh, no, I’m sorry. There’s a line. Pardon me, if you don’t mind. Yeah.

Audience 1:22:28

Hi, Ben Horowitz with the Federal Reserve Bank of Minneapolis. On a similar note, and maybe related to the smorgasbord comment as well. We’ve been hearing a lot about the systemic racism that gets baked into the appraisal and assessment gaps in homeownership and the way that can maybe claw back some of the equity gains that you hope to see in homeownership programs. So I’m wondering if that’s something that any of you have come across or been able to tackle in your jurisdiction?

Gorman 1:22:55

Ben, one more time on that? I’m sorry, what is it that you’re you’re specifically asking?

Audience 1:23:00

So there’s some research now showing that appraisers and assessors value homes and communities of color? Re appraisal bias. So it’s something we’ve been hearing about not as like a push back per se on investments in homeownership. But just curious if anybody’s seen any success in addressing those issues at a at a local level there.

Gorman 1:23:21

I can speak anecdotally about it. Because we’ve experienced it. In the first project the mayor mentioned, in Bellevue heights. We had houses next door to each other. There hadn’t been new construction in the community for decades. And so the first houses they were having trouble doing comps, we did get two good appraisals with one bank that pegged them at about 195, which is where we want it we’re on be at 189. So that was good. And then next door, we got an appraisal at 148. And we’re like, how do we get this? And so we asked for the appraisal, we looked at it. And it was they didn’t find good comparables. So they did a cost of construction approach. But then they paid the cost of construction 97 bucks a square foot when actual cost of construction was 127. So you know that lots of mistakes are getting made. But I’m not it’s not even mistakes. The underlying problem, of course, is that in communities, particularly communities of color, where there hasn’t been significant building, they don’t have a way to really truly value what it’s worth and to overcome the long term racial redlining and racism essentially, in these neighborhoods. We’ve got to get folks to start understanding. Look, a comparable house in a comparable neighborhood would sell for a great deal more. If you’re penalizing a community for being majority minority. You got to stop that we got to make something happen that will stop that for the long haul. So the Federal Reserve thank you for doing this work. Stay at it. If You’re doing it. Ben, are you with the Federal Reserve? Is that right heard? Yeah. All right. Keep pushing on that. That’s a really critical issue. Yes, ma’am. We’re getting close to the conclusion here.

Audience 1:25:11

Yes. Just to follow up on what you said about redlining. And in terms of concentration of poverty, what do we do in terms of trying to build outside of these minority neighborhoods? What do we do about nimbyism? And the zoning where people don’t want renters in their in their neighborhood?

Gorman 1:25:33

Well, and this is not a rental market coverage. No, I’m kidding.

English 1:25:41

So, so I’m no longer elected. He is. So I’m gonna say something that maybe he can’t,

Gorman 1:25:48

oh, the freedom.

English 1:25:51

I look, I believe in political courage. And I think it’s just 1,000% necessary to do anything of worth. And in some cases, I think you, you know, I made a promise to my constituents, when I was elected, let me sit this way, it’s, it’s a look, there will come a time when we disagree. And when we disagree, I’ll give you all the time in the world to sit me straight. And at the end of it, I’ll do what I believe. And if you disagree with that, you can have your day to ballot box, right. And so when it comes to zoning, when it comes to a lot of the issues that we’re talking about up here, when it comes out, just affordable housing is, is an imperative. It’s a human imperative, right. And so some of this stuff, is just, it just has to happen. And so I’m gonna come talk to you, I’m gonna do all engagement in the world. And the end of it, I think we got to do what we believe. Right? And so and so when it comes to the kinds of changes that have to be made to undo, you know, a century of of redlining, a century of discriminatory policies, policies, you just got to do what you believe, right, and let the chips fall where they made the ballot box. And I think we’ve got when you knock on 50,000 doors, you know, and you’ve got a ton of opponents but you win with 60% of the vote. I think ultimately, this guy right here is living proof that the people are gonna be with you when you do what you believe.

Gorman 1:27:15

Right on. So, I know we have a lot more questions, please come up afterwards and talk we have a few minutes between sessions not too much. But I just want to thank this panel for a wonderful set of presentations.

Gorman 1:27:40

Are you okay with her expressing it because you guys were in line ahead of her? All right, ma’am. This is we really are out of time.

Audience 1:27:51

But we’re gonna get through this go. Let’s do it. Okay. My name is Lisa. We have a tremendous amount of property. We have a tremendous amount of homelessness.

Gorman 1:28:08

What city ma’am? where are you from, though?

Audience 1:28:09

I’ll say to you, I’m from New Jersey, but I’m working with someone from South Carolina. Okay. Now, my question is, when we’re talking about affordable homes, we’re talking about rentals, new rentals. Okay. We have the property around us that that doesn’t even qualify for these these things. Okay. How are you going to find a insensitive for the homeless that are that are middle class, the homeless to rent a property or get into affordable housing? That’s my question.

Gorman 1:29:03

We’ll let the mayor take this.

Audience 1:29:07

There’s a lot of training, hang on, and all kinds of other stuff. But go ahead.

Woodfin 1:29:13

Thank you, Lisa. I appreciate the passion and commitment on on the topic. And truthfully, it is a very hard topic as well, because in addressing homelessness, that there’s a toolbox. There, there are multiple tools you have to have within this toolbox to address homelessness. But housing is the number one too. There are a few mayor’s that have figured this out. To be truthful with you. Birmingham does not have the answer to your question. What we are attempting to do is partner with our local organizations and hood around how do we address homelessness with our second tranche of money. We will be setting aside some matching dollars in support of what HUD has provided us with the five million dollar grant to address homelessness around just the single issue of housing.

Gorman 1:30:05

All right, so thank you everybody. Those of you who are leaving please do not forget to complete the survey. We need you to complete the survey on this particular session. And thank you all for your attendance.

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Redlining and Neighborhood Health

Before the pandemic devastated minority communities, banks and government officials starved them of capital.

Lower-income and minority neighborhoods that were intentionally cut off from lending and investment decades ago today suffer not only from reduced wealth and greater poverty, but from lower life expectancy and higher prevalence of chronic diseases that are risk factors for poor outcomes from COVID-19, a new study shows.

The new study, from the National Community Reinvestment Coalition (NCRC) with researchers from the University of Wisconsin–Milwaukee Joseph J. Zilber School of Public Health and the University of Richmond’s Digital Scholarship Lab, compared 1930’s maps of government-sanctioned lending discrimination zones with current census and public health data.

Table of Content

  • Executive Summary
  • Introduction
  • Redlining, the HOLC Maps and Segregation
  • Segregation, Public Health and COVID-19
  • Methods
  • Results
  • Discussion
  • Conclusion and Policy Recommendations
  • Citations
  • Appendix

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