2023 Spring Issue - 31

Hill: What should a developer,
investor, or someone who's
even considering getting into
the space be aware of?
McElroy: Historically, where
Dominium is focused in the tax
credit space, there is a less than 1
percent loss or default rate. Investors
can come into this space on
the equity side and even lenders,
but on the equity side, investors
are achieving 7 percent, 8
percent-plus returns. When you
look at the risk-adjusted return in
affordable housing-through all the
market cycles, through the Great
Recession, through COVID, through
everything-this is an incredibly
resilient asset class, and they're
great returns, solid consistent
returns for investors with very little
downside. There is risk like with
any investment, but if you're working
with quality sponsors, and
you're picking good locations, I
think this is an asset class where
there should be more activity.
Buell: Absolutely. I would also
add that for corporations looking
at housing affordability challenges,
don't be afraid to start small. Start
looking around your community to
see what's going on in the housing
market. Amazon started small and
quietly. Most people don't realize
that because it's Amazon; it's a
big name. But we started with a
housing match of several million
dollars. The success of the match
showed that our employees were
really interested and excited about
housing. For employees, knowing
that their company is giving back
on issues that they care about is
really important to their confidence
in their employer, creating a dual
benefit for corporate investments in
affordable housing.
I would also encourage corporate
partners to think creatively
about the tools that they have at
their disposal. The Amazon Housing
Equity Fund was actually born
in part out of our treasury office.
Our treasurer understood that lowcost
capital would allow us to have
a positive impact on affordable
housing. And for that reason, we've
been able to leverage Amazon's
low-cost of capital to be able to
invest and create affordable housing
at scale.
Finally, for new partners, don't
be afraid to go bold. Prior to the
Amazon Housing Equity Fund,
one of our senior executives took
a stand and decided to give one
building on our main campus to a
homeless shelter. It's now called
Mary's Place and is a beautiful
200-bed family homeless shelter
that opened during the pandemic.
Mary's Place was Amazon's first
big, bold investment in the homeless
and housing space, and it
taught us that going big actually
has a meaningful impact. For nontraditional
players-whether you're
a corporation, whether you're a
nonhousing agency that has land-
leverage the resources you do have
(even if different), and don't shy
away from going big.
We saw significant impact early
on where we were able to increase
the dedicated stock of affordable
housing in Bellevue, Washington,
and in Arlington, Virginia, by over
20 percent in less than one year.
Lynch: All the individuals who are
here on this roundtable-through
our collective thought leadership,
as well as our own balance sheets
and our ability to bring in our
networks and partnerships-we
actually can make an incredibly
meaningful impact. There is absolutely
optimism.
The pessimism is if we keep
doing things the same way, then
there is no way that we'll be able
to address the challenge in any
meaningful scope or scale.
Zukerman: The message to
developers would be, during a
time that a lot of developments
are not penciling for the reasons
we discussed, mixed-income solutions
offer compelling financial
incentives that could make these
projects feasible. For example,
with Fannie Mae and Freddie Mac,
their very best terms are reserved
for mission-rich properties that
have meaningful affordability. And
the other area besides financial
incentives, of course, would be
municipal incentives, whether it
be a meaningful tax abatement, a
density bonus, and so on.
Kwatinetz: The emerging light
on the horizon is the increased
corporate involvement in housing
production. Having Amazon
in this conversation is a case in
point. Their interest has recently
seemed to evolve to a position of
understanding that solving housing
supply issues is not only a
necessity from their employees'
perspective, but that it also is a
persuasive investment case from
the corporate treasury standpoint.
For so long, tech companies have
not predominantly looked at real
estate as a smart investment in
which their demand can control
so much of the outcome. This can
be the moment of the emergence
of great master developers that
are tech companies. How can we
in the industry help leverage that,
support them, make partnerships
with them, and create an ecosystem
that encourages capital inflows
into affordable housing at a historic
scale? UL
FARON A. HILL is chair of the ULI
Foundation and president of Atlanta-based
Peregrine Oak. SIBLEY FLEMING is
editor in chief of Urban Land.
" The message to developers
would be, during a time that
a lot of developments are
not penciling for the reasons
we discussed, mixed-income
solutions offer compelling
financial incentives that could
make these projects feasible. "
-MICHAEL ZUKERMAN,
MANAGING DIRECTOR,
GREYSTONE
SPRING 2023
URBAN LAND
31

2023 Spring Issue

Table of Contents for the Digital Edition of 2023 Spring Issue

2023 Spring Issue - Cover1
2023 Spring Issue - Cover2
2023 Spring Issue - 1
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2023 Spring Issue - Cover3
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https://www.nxtbook.com/urbanlandinstitute/UrbanLand/ulm-winter-2022
https://www.nxtbook.com/urbanlandinstitute/UrbanLand/summer-issue-2021
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