By Adriana Pop, Associate Editor
NeighborWorks America, a Washington, D.C.-based nonprofit with affiliates around the United States, announced that its partners invested nearly $2 billion in new construction and rehabilitation of affordable rental housing. As the supply of middle- and lower-income apartments is shrinking, NeighborWorks members are committed to constructing more, and to purchasing properties that go on sale in order to try and stop them from going up-market when it comes to rents.
MHN spoke with Thomas Deyo, vice president of Real Estate programs at NeighborWorks, who shared the organization’s results and strategies to maintain and construct affordable rentals across the United States.
MHN: How does NeighborWorks actually work?
Deyo: NeighborWorks supports its member affiliates that produce affordable rental housing with $20 million a year in organizational investment through: capital grants in their business lines; professional development through training, tools and resources; and consulting services and specialized leadership clinics to improve asset management functions of the organizations as owner/operators. NeighborWorks has placed a specific focus on advancing asset management functions to position the organizations to sustain and grow their portfolios, thus providing more low- and moderate-income families with high-quality affordable homes. NeighborWorks further advances access to growth capital through both two NeighborWorks Network-focused Community Development Financial Institutions and through promoting financial management standards, disciplines and practices to improve organizational strength and position the organizations for investment in the continued production of affordable rental homes.
MHN: What are NeighborWorks’ results so far?
Deyo: NeighborWorks’ member affiliates own or manage a portfolio of more than 140,000 affordable rental homes by as of the end of 2015. In the last three years, the network has added more than 18,000 affordable homes through new construction or acquisition. It has also preserved 15,000 homes with substantial rehabilitation, and completed more than 150,000 repairs to maintain the quality of the homes. NeighborWorks also provided instruction to more than 1,700 professionals in nonprofit affordable housing real estate development and asset management. And, NeighborWorks conducted eight specialized clinics for its members to improve best practices, address portfolio improvement and increase financial management practices.
MHN: What is the organization’s strategy in 2016?
Deyo: In 2016, NeighborWorks is focused in three areas. First, on attracting more capital to support the development of affordable rental housing. We support with equity investment two related capital corporations—NeighborWorks Capital and Community Housing Capital—that secure third-party investments to fund development of affordable rental homes of the network. Last year, these corporations combined for over $100 million in financing of network organizations. Beyond these capital corporations, NeighborWorks seeks to support our network members in connecting with flexible organizational and project investment that will allow them to compete in the marketplace and secure currently affordable homes and preserve for long-term affordability before they are lost as affordable homes.
Second, NeighborWorks is focused on continuing to build sound organizations with attention to strong governance, to diligent oversight of the sustainability of their properties, and to financial discipline at the organization and portfolio levels. We will do this through specialized professional capability training around best practices and standards of asset and financial management, provision of grant funds into portfolios and oversight of performance of portfolios to define technical assistance responses that address deficiencies in the portfolios.
Lastly, NeighborWorks is focused on furthering partnerships across non-housing sectors of education, health, sustainability and workforce development to improve the quality of life for residents in its properties. Pursuing these partnerships is intended to enhance the services many owners provide to their residents in pre-school education, health and wellness, and personal financial management, and thereby support family growth and success.
MHN: What type of challenges do you foresee?
Deyo: The challenges fall into a couple areas. First, the need for affordable housing continues to grow. Rents are increasing, incomes are stagnant and so the burden on low- and moderate-income families increases. Thus the efforts of our groups to continue to add to the inventory of affordable rental homes is ever more essential. This challenge comes at a time when resources for housing are less-than-needed, leaving millions of Americans homeless or spending far too much on their housing.
Second, the families in these homes achieve stability because affordability is improved through the long-term ownership by nonprofits. This stability offers a chance for families to focus on other areas of their lives. The ability to support, inform and encourage families is an important facet to the housing and should be an intentional focus of support across sectors—education, health, workforce—as each of these sectors can benefit from working with these populations in their stable home environments.