Serving the Underserved: An Affordable Housing Provider’s Take
Housing on Merit’s Jaymie Beckett talks about challenges and opportunities in adding much-needed supply to the California market.
Despite being one of the most supply-constrained markets in the country, California presents significant opportunities to both build and preserve affordable housing. And provider Housing on Merit is leveraging all the resources available to step up to the task.
With a national portfolio totaling 51 properties and 10,349 units across six states, including California, the Carolinas, the District of Columbia, Maryland and Ohio, HOM has been a co-developer in numerous bond-financed and government-supported multifamily housing projects. Today, the nonprofit is involved in several developments across Los Angeles County.
In an exclusive conversation with Multi-Housing News, Jaymie Beckett—who joined the company as CEO in February—talks about challenges and investment opportunities in California, policies and advocacy efforts, and HOM’s approaches to easing the notorious affordable housing crisis in the state.
In today’s economic environment, how difficult is it to stay active as an affordable housing developer in California?
Beckett: While California can be a challenging affordable housing market due to the state’s particular regulatory burdens and high costs, it remains one of the largest areas of growth for the company…
We have been a partner on many pioneering projects in the state over the past few years, including several motel conversions funded by the state’s Homekey grant program, to innovative ground lease structures on government disposition request for proposals, to master-leased permanent supportive housing developments in Los Angeles.
Most recently, we have seen an influx of new and experienced developers navigating the affordable housing development process for the first time, incentivized by new state density bonuses and approval streamlining measures at the state and local level, such as Executive Directive 1 in the city of Los Angeles. We are excited to be part of that journey and welcome more developers to join the movement of building quality affordable housing in the communities that need it the most.
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How do projects get off the ground today? What specific policies or advocacy efforts are the most beneficial to you?
Beckett: We’re on a mission to confront the housing affordability crisis head-on in California and in the rest of the nation. Our approach centers on advocating for and facilitating the development and preservation of affordable housing through strategic utilization of federal, state and county incentives…
Federal incentives, particularly the LIHTC program, serve as the cornerstone of our efforts. LIHTC not only supports the construction and revitalization of affordable rental housing but also attracts substantial private investment. We play an active role in guiding developers through the intricacies of applying for these credits and maximizing their impact. Additionally, we tap into HUD programs such as the HOME Investment Partnerships Program and the Community Development Block Grant to further bolster affordable housing projects and community development endeavors.
State incentives play an equally crucial role in our strategy. California’s specific tax credits and housing trust funds, sourced from real estate transaction fees, offer additional financial support. We tirelessly advocate for the expansion and accessibility of these resources to ensure they cater to the diverse needs of California’s communities. Moreover, we champion density bonuses, whether offered by the state or local governments, as they incentivize developers to integrate affordable housing units by permitting more extensive development than zoning laws typically allow.
One of the best incentive tools that we have available to us is the Welfare Tax Exemption, a critical tool we advocate for in affordable housing development. This exemption eases financial burdens for developers and owners by exempting eligible properties from certain property taxes. Our efforts focus on promoting its adoption, ensuring its ease of use and expanding its accessibility to more developers and owners.
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Is it challenging to navigate the LIHTC allocation process? Some developers find it daunting.
Beckett: … Navigating the allocation process for LIHTC requires a strategic approach and a deep understanding of the complex regulatory framework surrounding affordable housing development. HOM employs a multifaceted strategy that involves close collaboration with government agencies, investors and community stakeholders.
This includes actively engaging in the competitive application process for tax credit allocations, demonstrating the viability and social impact of proposed projects and ensuring compliance with all applicable regulations and requirements…
Tell us more about the imperative need to collaborate with local communities and government agencies to develop projects.
Beckett: Every project requires diligent and creative collaboration with local communities and government agencies … Getting a project built or preserved for long-term affordability requires assembling a team of capital providers, government partners and local community representation … HOM leverages both government funding and private investments to maximize the impact of its affordable housing initiatives.
Aspen Wood in San Ramon, Calif., is a good example of the power of partnerships and what we can accomplish when we work together on a shared goal. HOM worked closely with national affordable housing developer and investor Standard Communities and the City of San Ramon to bring 123 units of affordable housing for seniors with incomes between 30 and 60 percent of the area median income.
The site where Aspen Wood was built was originally intended for a luxury development, but we collaborated with the city to turn the site into affordable housing for seniors. Aspen Wood is the first affordable development in San Ramon in more than 20 years.
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Considering your broad experience, what would work best in alleviating California’s notorious affordable housing crisis, besides simply building more?
Beckett: The scale of building and preservation of affordable housing needed requires us to not only scale our efforts with our current development partners, but also to continue thinking outside the box on welcoming more development partners into the affordable housing space.
As we have seen most recently in Los Angeles … policy can have a big and immediate impact on the development pipeline. While other cities in California are following Los Angeles’ lead—or coming up with their own incentives such as in San Diego under the Complete Communities’ program—there are many more cities that can act with the same urgency in helping clear regulatory hurdles in the development process.
How do you expect this housing crisis to evolve? Are there any signs of improvement in the immediate future?
Beckett: The affordable housing crisis in California and nationwide is a significant challenge, but there’s reason for optimism … We’re seeing more recognition of the problem and a real push from policymakers to address it.
We see California adding innovative programs to help alleviate the affordable housing crisis. Homekey is a state program that represents a proactive approach to tackling the need for more housing by repurposing existing properties to provide stable housing and support services for those in need. Improvements to the state density bonus also help, allowing developers to obtain more favorable local development requirements in exchange for building more affordable housing.
However, obstacles such as high land and construction costs remain, underscoring the ongoing need for collective action. While progress is being made, it’s clear that sustained collaboration and innovative approaches are essential …
