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ISAAC HANEY-OWENS: Hello, this is Isaac Haney-Owens, and you’re listening to the Leaders for Inclusive Community Podcast, hosted by The Kelsey, covering topics related to housing and disability. Welcome. Thanks for listening. Each episode, I’ll meet with different community leaders to learn about what they do and ask them questions about how their work can make housing and communities more inclusive for people with disabilities.
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CHAN U LEE: You could say that it’s because we don’t have enough resources, but it’s also a real kind of conversation around prioritization and who and what communities and units and types that we are committing to and prioritizing and willing to pay for.
ISAAC: Tuesday, Thursday, September 24th, we’re interviewing Chan U Lee, the President of Devine & Gong, Inc. Many of the programs mentioned in this podcast episode are specific to California. The topic today is focused on housing is money. Let’s dive in.
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ISAAC: So, it’s nice to interview you today.
CHAN: Very nice to meet you, too, Isaac.
ISAAC: And I’m glad to be able to find out about the work that you do.
CHAN: I’m excited to tell you about a lot of the affordable housing that we do. Yeah, for sure.
ISAAC: Yeah. So, the first question is, tell me about the work you do.
CHAN: So, I run a small firm. It’s mainly a consulting firm, but we do some development. And it’s all in the field of preserving and producing affordable housing, predominantly in the Bay Area.
ISAAC: Great. There’s a big need for that in the Bay Area.
CHAN: Oh, yeah. [laughs]
ISAAC: And the state is not, unfortunately, reaching its goal every year on the amount of housing it wants to have every year.
CHAN: Yes! I agree with you. Yes.
ISAAC: Yeah. And then what led you to do this work? Why do you focus on affordable housing?
CHAN: Right. So, it started off with the work that I did in New York City. I’ve always been interested in sort of community development as a pathway to a more just society. And I feel like housing is something, in particular, affordable housing provides the stability for people to be able to pursue kind of a stable life. And it’s something that dovetails with my interest around a just society and also what I’d like to do, which is to work on financing and community development projects.
ISAAC: Nice. So, what is a housing developer?
CHAN: Interesting. Yeah. I think there are varying definitions, but a housing developer is somebody who builds housing, right? But not only do they build housing, they build housing that’s appropriate and needed for that particular area and that particular neighborhood, taking into account all the different needs and resources that are available to build the housing. So, there’s a lot of community work that goes into housing development.
ISAAC: So, where does the money for affordable housing come from?
CHAN: So, for affordable housing, I mean, the predominant sort of financing tool out there now is what’s called Low-Income Housing Tax Credits, and it’s a program that’s been around since 1986. And like in the title, Low-Income Housing Tax Credits, it’s a tax credit program where the federal government and the state allocate credits to developers who then can sell it to affordable housing tax credit buyers so that you can raise money to build affordable housing. And there’s two types of credits. The 9% credits, which is, you know, allows you to get a lot more sort of funding. And then there’s something called the 4% bonds where you use bond in conjunction with 4% credits to build housing. And then this all, though, dovetails with state, local, county funding that then provides some measure of gap financing. So, it’s a way for the private sector and the public sector to participate in the development of affordable housing.
ISAAC: How much rent does someone pay in an affordable housing complex?
CHAN: So, it’s really, first of all, affordable housing, on average, is capped at 60% of AMI, or Area Median Income, although there’s some variations on that. And what typically happens is a person pays 30% of their income towards their rent in an affordable housing project capped at the affordable level. So, you can’t go higher than what’s designated.
ISAAC: There are a lot of topics and terms that come up in housing development that not everyone knows what they mean, and I’d like to ask you about some of them. What is mixed income?
CHAN: So, mixed income is where you have both kind of affordable units, typically capped at 60% of AMI, and then you’ve got market-rate units also. And they all, the units, the market-rate units, which is sort of rents that you can get out on the market, and affordable units at 60 and below, right, are all integrated together in one project. And that’s called a mixed income, so that you have, you know, you probably have a range of unit types from like 20% of Area Median Income all the way up to market.
ISAAC: So, what is public housing revitalization?
So there’s a different type of housing that’s not funded by tax credits. Public housing is funded by the federal government through HUD, and it’s the Housing Authority then got money to build public housing. And so, it houses people on the very low-income spectrum. And it is extremely low-income housing to the point where I think the minimum might be like $50 a month in terms of payments towards rent. And revitalization is when a lot of the public housing was built on land that could become more dense. And so, you bring in the kind of mixed resources like tax credits and bonds and other public subsidies, as well as the market to come back in to one, replace the public housing units that need replacement or rehab, one for one. And then you build more affordable housing and more, to a certain extent, mixed-income housing. And so, you then, you’re able to cross-subsidize the redevelopment of public housing and have more density, but at the same time, also be able to deliver more affordable units.
ISAAC: How does Section 8 pay for housing?
CHAN: So, Section 8, it’s a good tool from the federal government. It pays the difference between what a tenant can pay, right—30% of their income towards rent—and what is a market-rate rent. And the Section 8 payment, you can actually have it as a 20-year sort of housing assistance payment contract that allows you to take that difference between what it costs to operate the project and the market-rate rent and use that to go out and get more debt to be able to build more affordable housing.
ISAAC: And why is it so hard for people with Section 8 vouchers to find places where they can live?
CHAN: Yeah. So, the Section 8 voucher program is, you know, you’ve got to have willing landlords willing to rent out, right, to people with Section 8 vouchers. And then the landlord goes through a whole process to ensure that their unit or their project meets the sort of requirements, both the compliance and the physical requirements to participate in the Section 8. So, because it’s a, I don’t want to say it’s a, yeah, it’s a voluntary program, meaning landlords have to be willing to take the Section 8 vouchers and then work with HUD to ensure compliance. So, not everybody, you know, if you own a unit, it doesn’t mean that you’re going to then take a Section 8 voucher holder.
ISAAC: What are tax exempt bond and attacked credit regulations in housing finance?
CHAN: So, the bond program is another tool that we use to be able to get loan funds, and the Private-Activity Tax Exempt bond program is a program of the state that allocates these bonds, that allows you to get what’s called a tax-exempt rate on the financing, which saves you money, right, in terms of your interest rate. But the bigger thing is it allows you access to the 4% tax credit program, which gives you tax credits that you can sell to be able to raise investment dollars to build affordable housing.
ISAAC: What does Area Median Income mean? How does it affect rent in an affordable housing complex?
CHAN: So, the Area Median Income is it’s just that, you know. There’s statistics that are collected, and you look to see what people are making in terms of income levels, right? So, San Francisco or Oakland, you collect all the sort of income levels, and you create what’s like a 100% median income. So, right, what is typically somebody who is at 100% median? And then you take that, and it’s a mathematical calculation as to what 60% AMI and 30% AMI is. And it gives you an indication then of what the rent levels you can charge for certain affordable units designated at those AMI levels.
ISAAC: What role does the state play in affordable housing?
CHAN: Well, the state plays a lot of roles, a lot of roles. You have the state Housing and Community Development group that then provides gap financing around, you know, through their programs like the MHP program, the No Place Like Home program, the Affordable Housing and Sustainable Communities Program, TOD. And it’s all funding that was received through bond measures, right, and through regulations that the state pass. Because we collectively decided that it’s important to have money to build affordable housing. The state also allocates the bonds, and they also allocate tax credits. So, the state has a big influence on how and where affordable housing gets built in the state of California.
ISAAC: Why do you think we don’t have enough housing that is getting funded or developed for people with disabilities, the homeless and low-income people?
CHAN: It’s a big, that is, yeah, that is the— It’s a combination of clearly, there’s a lot of demand, and we just don’t have enough supply. And I mean, there’s too, you could say that it’s because we don’t have enough resources. But it’s also a real kind of conversation around prioritization and who and what communities and units and types that we are committing to and prioritizing and willing to pay for. So, it’s got to be advocacy and a willingness for us as a community and as a state to be willing to pay to build more affordable housing, and in particular, housing that meets the needs of homeless, formerly homeless, disabled. And we’ve got to be able to sort of decide if it’s a priority. Then collectively, we’re going to work to make it easier to be able to develop this type of housing.
ISAAC: What advice would you give to someone who has little experience but wants to get involved in housing development? Where should they start?
CHAN: So, the NPH, Non-Profit Housing, in Northern California actually has a really good internship program where they place people into different non-profit housing development organizations. And that’s where I would start, is, one you could volunteer and get involved, right, on the local level. Two, if you want a job, I would start by actually seeing if there’s a way to work at a non-profit housing organization. And it doesn’t necessarily have to be starting at like the project management level. You could start in the services. You could start in asset management. But it really is tapping into this huge sort of infrastructure of non-profit organizations. And if you have a passion for it, I think, working at The Kelsey or tapping into any of these different places to be a developer is a good start. You could probably enter it through other types of justice work, right? Advocacy, legal aid. But if you want to get into the kind of the nitty gritty of housing development, I would suggest that people start working or looking into the non-profit housing sector.
ISAAC: Why are there people that have this idea that it is bad for their neighborhood to have affordable housing?
CHAN: I don’t know! [chuckles] It’s a—
ISAAC: Because there’s this saying that goes, “Not in my backyard.” And those are people that are fighting to try to get affordable housing not put in their neighborhood.
CHAN: I think that people, a couple of things. I mean, I always want to think the best of people. So, I always think that it’s because they actually don’t know, right? And they have these preconceived notions of what affordable housing is, right? I think that they think that it brings kind of a whole host of problems to the neighborhood and that it’s going to take resources from the community. I think that they think that it brings a certain kind of level of sort of crime or disruption. And I think people don’t like change. But in particular, I think that they think that affordable housing and people who live in affordable housing somehow are different than who they are. And they have these kind of negative connotations of what and who affordable housing is and who lives in affordable housing.
I’d like to think that with education and with sort of better sort of CEQA rules, people will begin to understand that affordable housing is just one piece of a vibrant community.
ISAAC: What does CEQA mean?
CHAN: Oh, it’s the environmental process that you have to go through to get the approval to be able to do any type of development. And it requires you to do an environmental study. It requires approval of the neighborhood. It requires the traffic studies. It basically is a process under which you take into account the impact the new development is going to have on that particular site and on that particular community.
ISAAC: And can you explain more about that term you used when talking about Section 8?
CHAN: So, the Section 8 HAP is something different than a voucher in that the HAP is a contract. It’s like a 20-year contract that you get from the federal government that allows you to take, that they basically are contracting to the project that they will provide a stream of funding for 20 years to make up the difference between what the tenant can pay and market rents. And then you can batch that stream to be able to go out and get a loan for the project.
ISAAC: What else would you like to say to somebody who wants to start advocating for affordable housing and who is new to this?
CHAN: That it’s a marathon, not a sprint, that you can never give up, and that there’s so many different ways to enter the affordable housing world. That it’s not set in stone, the rules under which affordable housing is built, and that we need everybody to get involved in figuring out how to build more affordable housing. [pop music fades very slowly back in and plays till the end] And that it should be the priority, because as long as we don’t make it a priority, we’re going to continue to have the inequities that we see in our communities.
ISAAC: This is a long fight that’s gonna take possibly many years before it’s really, before we start seeing a dent in this problem.
CHAN: Yeah, I agree. So, it’s great that you guys are involved. Fabulous.
ISAAC: Yeah.
Thanks for listening. For more information on The Kelsey or to check out more of my podcast episodes, visit TheKelsey.org. If you have a topic you’d like me to explore or a person to interview, email me at Isaac@TheKelsey.org. Goodbye.