 Okay, good afternoon everyone. I think we'll get started. I know there was another housing Panel before this so maybe they're gonna filter in at some point when they realize they this is the better panel So my name is Oscar Abello, and I'm monitoring the panel today on Home matters the impact of an affordable place to live and And just by way of introducing myself. I'm a contributing writer for next city Which is an urban policy planning and design publication? We've been around since 2003 and I've been on the community development beat for next city since to 20 since 2015 writing about some of the organizations up here on stage and some of the organizations represented in the audience from what I can tell and and our panelists I'm gonna ask them to kind of quickly introduce themselves and then Introducing who you are and where you and where you work. Could you just say a little bit about the the kind of The volume of affordable housing whether you want to say your annual volume or your current before portfolio size Just a little bit of a taste of how deeply you are into this space So I'll start over here with omit south sure I'm omit Satya, and I'm with Prudential Financial and I run our impact investing program It's about a billion dollar commitment from the company that's invested both in real estate as well as in operating businesses So it's kind of fun for us as being at SoCAP as we straddle. I think two worlds that don't always talk to each other Which is sort of the real assets world and the kind of business venture worlds and for us on the affordable housing side I'd say we've made it about 15 to 20 percent of the portfolio so about 150 to 200 million dollars invested At any given time so that's sort of outstanding and that cycles through every five years or so So that over its lifetime So it's a fairly substantial portion of the portfolio and for us. I think what's interesting It's thinking about sort of how some of the the tools techniques the logic that's used around affordable housing has Relevance both to that sector but also to the broader community of people who want to be impact investors Because for us one of the things that's been nice about the sector is that it has some of the data richness some of the deal size the geographic ability to Locate things that you don't always get with some of the business investments. Okay, great Debbie Debbie Campbell community housing capital. We're a CDFI located just outside of Atlanta and we Lend for affordable housing development and preservation This year we closed a bit over a hundred million dollars in activity and Our borrowers are community-based nonprofit developers who are developing housing solutions specifically geared toward the needs of the communities they serve and often have resident services layered in and are are looking at proximity to transit and Other attributes in the properties they developed that helped to make their residents More prosperous Thanks, Debbie. I'm Marilyn. I'm Marilyn Rivera with the community development trust. We're in our 19th year We are a national investor in affordable housing. We do long-term fixed-rate mortgages To help create affordable housing and we can also invest equity to preserve the affordable housing since inception we've had invested in about 1.4 billion dollars worth of assets 44,000 units in about 44 states So we have a have a very wide Wide band we work always with local partners both nonprofits and for profits and we're opportunistic we really look for Projects where we feel that we can add value Where there may not be that kind of capital that would come in to do what we're doing And so we are choosing about our partners and always looking toward making positive impact on the on the residents and their families And we track that carefully to know what those impacts are Thanks to Marilyn Michael. Hi. I'm Michael Solomon. I lead the community development program at Charles Schwab Bank Which I've been doing since 2010 Our our lending and investment program is driven by the banking regulations, but we're in the middle of Three-year program where we're lending for to buy lending and investing four to five hundred million dollars a year in economic development significant portion of it probably 70% is affordable housing driven and impact On low and moderate-income people so you know people who really need a place to live as as the driver of their financial security Starting next year starting in 2019 will probably be doubling our program Which is driven by the growth of the bank Before that I was at Merrill Lynch. I've been doing this for a long time and have lent and invested with all these folks In the past where we invest and lend for impact And we are willing to be any part of the capital stack. We do unsecured lending. We do equity investing. We do Structure finance we do innovative structures. Sure. We'll get into some of those today. Yeah Great. All right. So now that we have a few more folks in the audience We wanted to do a quick survey of everyone who's here so Could we have folks who have invested in affordable housing before could you could you raise your hands? Okay, it's about maybe a fifth of the audience So for those who have invested in affordable housing previously Have you done it through if could you raise your hands if you've done it through Individual projects so a deal here or a deal there Like using lie tech or some other history, maybe historic tax credits who's done the individual projects Not too many How about through funds? So, you know, whether it's there's different kinds of mortgage mortgage back securities funds. Okay, so And up for for everyone in the audience We're also interested in You know to what extent is community Ownership or engagement or participation in affordable housing development You know to what extent is that important to you in terms of the your your due diligence as impact investors Assuming you all consider yourselves impact investors So raise your hands if you feel like community engagement or ownership is an important piece of affordable housing for you Okay All right So I wanted to ask that question because You know, we have different kinds of investors and different kinds of fund managers up on stage So, um, I want to ask start with the fund managers and ask you a little bit could you say a little bit about your your model and who your borrowers are and what makes them particularly unique or special or different, you know, is there anything that that You know that makes that sets your borrower network apart from Just, you know any conventional affordable housing Uh, just the whole affordable housing industry So community housing capital, as I said as a cdfi we have nonprofit tax status And our borrowers are members of what's known as the neighbor works network So there are About 240 neighbor works organizations across the country. They're chartered by neighbor works america Which means that there is an extra layer of due diligence because in order to be a member of the neighbor works network You have to go through a lengthy and extensive review process And you're also subjected to Regular, um audits and and reviews of your business Our Our borrowers in the network, there are about 140 members of the network who actively engage In development or preservation of property As as part of the way that they Provide for the housing needs in their communities others others do counseling and those sorts of things But about 140 that do development And within those 140 it's a really interesting model Because what they are charged with are being Deeply connected to their communities and understanding the specific housing needs of those communities so the Transactions the properties that we finance range from transitional housing emergency homeless housing to senior housing to Housing for workforce And it is both multifamily and single family Rental and for sale and remember we're lending to the developers. So this is not this is not consumer mortgages We track impact fairly deeply And our model is that we have financial institutions who Provide us with the capital with the debt capital that we lend We use our equity to lever that debt and Michael is is one of our investors and I somebody asked earlier what separated us from the panel before And and the thing that immediately struck me is that It's not just about the the money not saying that the other panel was but it didn't come across in the conversations That I one of the things that sets us apart Is that we really enjoy thinking deeply together and figuring out How to best make our resources and our expertise work together all of us really to to get this work done and Just a little bit more about the neighbor works network of organizations. So this is a federally supported network of affordable housing developers all over the country And there's a there are board requirements that are that are important to community kind of leadership and ownership And so Neighbor works america is congressionally chartered And receives an appropriation and a significant portion of that appropriation Goes out in the form of grants capital grants and operating grants to members of the neighbor works network And of course they also have many other sources Of of capital and funding that come into their organizations Yeah, and is it is it is it 50 of the board members must be residents of the neighborhoods where they're building housing It varies some that that is A typical thing to see but in the in the very large organizations that have the bigger footprints While there is a deep stakeholder engagement that 50 number doesn't necessarily hold true Okay, thanks So maryland may I ask you the same question? You know tell me a little about your model Tell us about your model and who who are your borrowers? What makes them different? We have both nonprofit and for-profit borrowers Rather than having a network like chc People we tend to be opportunistic and people tend to find us It's unusual to have long-term patient Equity to preserve affordable housing And we have really gotten some traction on that with nonprofit Borrowers who are the general partner say in a property that's coming out of compliance for tax credit Or a vulnerable property That's going to be Made into To market rate housing and they know about us and know that we can act quickly And would come to us to do that On the on the mortgage side, I would say We have a lot of repeat borrowers, but we tend to do if it's a nice juicy Eight or ten million dollar first mortgage in in san francisco or new york There's a lot of lenders who want to do that. We tend to do Smaller mortgages maybe something with some hair on it. It's a rad transaction. It's it's something about it that makes it A little bit more complex and that we can you know take the time and be able to do that We can also do Long-term fixed rate forward commitments. So if you're building a low-income housing tax credit property You need to know when you close the construction loan What the rate on your permanent mortgage is going to be three years from now when you deliver it And that's a place where where we Where we compete very well, I think to be able to do that. So One of the great things and working with cdt for a long time Which I have is is to know that we have repeat borrowers to know that people came to us Maybe through a debt window and now we're looking at the equity I mean if you're as old as I am you've been in this field for a while You see these properties, which you know started it was great when they were built But now what are we going to do to preserve them? Yeah And I'm going to ask you to dig a little bit deeper into how is it you're able to offer equity as part of this finance It has to do with your structure your primary structure. This is really cool for affordable housing Thank you have one of these so we have all the acronyms. We're a cdfi community development financial institution but we elect to be Taxed as a real estate investment trust And the our deepest roots were in a non-profit and non-profit was great We thought we had a great credit compass and we were able to do Interesting work, but we're really limited by the amount of capital that we had And in 1998 we had this idea that if we Created a mission-driven real estate investment trust that we'd be able to sell stock So we went out closed our first raise in 1999 Prudential was in our first raise and has been with us, you know ever since We have a lot of people that were with us and and so we've been able to sell stock We've had two common stock raises and we are just about to close our third Preferred raise so we look at the capital stack. We know that we need a lot of you know common equity And then that enhances the preferred equity So we've been able to raise this money and put it into the these properties to ensure long-term affordability great and so We have we have two Investors in each of these organizations up here. So You know, we've heard a little bit about their borrowers. We've heard a little bit about their model Can I ask? I don't know if michael or omidie want who wants to go first What about this makes makes makes it work for you? We know why is it important for you to work to invest through these organizations there there are a limited number but growing number of tools to Create and preserve affordable housing CDFIs are one of the most critical tools we have in order to Create impact and increase the both the amount and quality of affordable housing CDFIs with whom we lend and invest are A linchpin of our program. We have over 300 million dollars out to CDFIs And we work with them both geographically We work with them across the capital stack. We work with them in specific programmatic initiatives for example We've worked with CHC to try to create a program that works on tribal lands CDT does a lot of programmatic initiatives and That are tailored to what the needs of their lenders and investors are And as we move forward It's also where a subsidy is, you know, there's a special part of a treasury department that provides over 200 million dollars a year in grant funding to CDFIs that can be used as equity For them to go and do higher risk things that banks like us would not be able to get approval to do But by lending and investing through the CDFI We can we can get that money out to where it's really needed the most so We couldn't we could banks couldn't work without some of these tools that create subsidy for the So that the chcs and the CDTs of the world can go out there and do the higher risk things that we could Couldn't lend indirectly but through a CDFI. We can we can do that work and have tremendous impact For people who are sort of new to the field, I think this is one of the things that is sometimes sort of Confusing is that in a large measure the affordability and affordable housing Is set by the various government programs that provide subsidies So it isn't because you've got a CDT or somebody else who owns the property that the actual affordability levels change Or even really the number of units that change But what does change radically depending on who you invest with are a couple of things so one The way the various federal programs are set up You can actually put different levels of sort of improvements into the property So depending on who owns a property you can have a lot more resident engagement You can have a lot more services on site You have property managers who really do a lot more to care about their tenant well-being Who bring in social services on site who create community and do all sorts of other sort of things that have huge impacts Actually on livelihood and well-being So when you think about families living in affordability The affordability is somewhat set by the regulatory regime, but the quality of life differs radically based on who owns it The other variable that I think is at play is that you have An important distinction I think between people who buy real estate looking to flip it on a relatively short horizon Who typically will go into existing affordable housing complexes and all of us living in expensive cities know this phenomenon Put money into kind of a class b property and try to raise rents radically The alternative to that is to actually find mission-owned stewards who will own those assets Put in the necessary capital improvements often get long-term tax statements and other Benefits to keep it affordable for a long duration And that's a huge part of the affordable housing puzzles that we really can't the amount of new We can create is largely fixed The amount we preserve is often a function of who owns those assets And that's why it's really important to have institutions like cdt So when maryland talks about why they're always going back to raise capital It's because they don't want to sell the properties. So every time they have to buy a new property They need to raise more and more capital For those of us who are sort of looking to invest though It's sort of the opposite of a lot of what you see an impact investing where you're investing in an unproven idea with very Uncertain economics. This is the polar opposite if you look at the sound of preferred stock that cdt sells every year It produces a reliable and fixed dividend Even the common equity produces a reliable and growing dividend It's a it's a very predictable place to invest and for those of us who are looking to have Predictable and relatively durable yield. It's a place to have A tremendous amount of impact by just simply having a longer Term perspective on capital and being able to work with great partners who can really improve tenant services And if you're a long-term owner the the payback for that is that actually Properties that are managed well and have great tenant quality of life have low turnover low vacancy And very little kind of physical maintenance because people take care of the complexes and properties And that all comes back to you as returns So it's a nice place for both having predictable returns and a deep alignment between returns And doing right by the occupants. Yeah So it really works for an insurance company In terms of the other things that you mentioned that you bring up So as as the as the investor in in the in funds like these What's your sort of way of interacting and gathering data and trying to make sure that you're holding yourself accountable to your goals Yeah, so for us from sort of it was interesting, right? Once we sort of recognize that to some extent the affordability of the units and the number of units is somewhat set by the Financial mechanisms and you can spend hours on that What we really started to look at as we chose investees was To look at people who were much who are treating tenants better And looking at people who took tenant livelihoods seriously and who looked at sort of reducing sort of the things If you've read books like evicted The the social costs of sort of high turnover poorly maintained complexes is really pretty horrific And what's interesting right is that even We've actually invested in some turnaround strategies where people take over kind of failing complexes And it's incredible to watch, you know with the desperate need for affordable housing when you see a complex That's only 60 70 percent occupied How when that happens, right? It means that somebody is really screwed up If you go into an affordable housing complex and it's not 99 percent occupied someone's doing something wrong And so we we really look to sort of bring in managers who know how to turn around complexes And the radical change in quality of life by both adding Filling the units that are empty, but addressing the underlying conditions is pretty profound. So that's how we look at And and debbie you you've done some of these deals where you you've gone into a neighborhood where there's there may be some interesting existing owners And you've helped these community-based organizations take over those properties And convert them into something that meets community needs. We have yeah Um, it's it's not unusual if if you look at the kind of endeavors that often exist in Neglected communities you have um I know the one that you're talking about where of of An owner was a um a bail bondsman and pretty much owned an entire block And had been renting that block for probably a long period of time and the houses were falling into disrepair they were would say everything from single room occupancy up to apartments and our nonprofit borrower acquired the entire block And worked with the capital stack was really complex as you could imagine to do to do such a large parcel of Gigantic mansion type single family homes that had fallen into disrepair in a historic district And so they were able to renovate all of the properties on the block. They were gorgeous and Create um of a fairly mixed income street again And offer housing choices that continue to be everything From SROs in this case if I recall correctly into some almost condominium sort of ownership opportunities so really Create a diversity of housing stock And economic diversity as as the street was reborn And uh on on the totally Opposite end of the spectrum There was a crazy deal in austin that I want I would love marillon to talk about tell me about tell us about this Deal with the austin city housing authority we were approached through a partner um that uh Subsidy area of the housing authority of the city of austin wanted to buy a market rate property About 640 units large property proximate to jobs great transportation maybe seven years old And they needed a lot of equity and a big chunk of debt to do it We loved the property and the idea was that this would be put into a single purpose entity And because the city of austin was involved in it that the the entity would not pay real estate taxes All of the savings from that real estate tax that wasn't being paid went to restrict 50 of those units at 80 percent of area median so Not quite overnight, but I think within about nine weeks that we you know heard about the deal and closed the deal And they could put the regulatory framework on it 320 units um and it's a beautiful property and it's you know just seems to hit everything and I Really applaud the um housing authority of the city of austin for being so entrepreneurial for for seeing this for seeing the need for the units And our great partner um who uh, you know the woman that introduced us to this transaction to say You know we think this is something that a cdt could do or you guys flexible enough to do this And i'll just brag on one transaction that we just closed Near the twin cities There's a large property there 440 units and it's sort of sister property which had been Naturally occurring as as lisa davis says there's nothing natural about naturally occurring, but it was just an affordable property It changed hands the new owner jacked up the rents and really almost everybody had to leave So there's a very strong non-profit in the twin cities area called aon and aon wanted to make a bid for this large property But needed you know the equity to be able to act quickly on it So we were able to close that preserve 440 units and when we looked at the number of children in that some 200 Uh preschool age kids and 250 school age kids don't have to move to a new school And i'm probably preaching to the choir here when you talk about the importance of affordable housing and There's a lot of various studies about health and outcome, but just you know having a kitchen table on which to do your homework You know can sort of help your performance at school to not being disrupted and happy to leave So we were delighted to work with aon and that And had some subsidies from the state of minnesota, but that's another one where Having the equity to act quickly with a great partner who we know Can really work with those families and give them whatever they need You know stories like these that really show why we funnel A significant portion of of our lending and investing through the cdfi community You know, they're the ones who are on the ground in the local communities Hearing what the actual needs of those communities are And while we we see trends so for example over the last, you know 15 years, there are any number of acronyms Today the latest is NOAA, which is the naturally occurring affordable housing But we've seen to which is the transit oriented developments after the financial crisis. We saw single family Home ownership become a critical need and and And cdfi's that had always done multifamily turned, you know their attention to single family Today what we're seeing a lot of returning veterans who are either homeless or lost or Both I suspect that in a few years we'll start hearing about Transitional housing for folks impacted by the opioid crisis, you know, we we we look at them to be to be on the ground We don't have branches schwaab Out there where we have, you know The local community can walk into the branch and say why aren't you doing this or why aren't you doing that? You know, we're out there listening to our communities through our intermediary partners In and hoping to put out as much capital That that we can We fund studies about what's important, you know the veteran the veterans crisis Which is just starting to bubble up on the surface Is not as well known because there have not been as much there's not been worked on around it But I can assure you that that you're going to see a lot more of it And the intermediary community Particularly a network like chc, which you know, they're an intermediary, but they're They're at a level above the actual Local developers that work within the neighbor works america network They've got tentacles everywhere and and we can go to them and say Hey, we want to put money here or we want to put money there Not only geographically but but there is a focus that that We've decided are important to the bank and and They they put it out there. We can leverage tremendous amounts of capital And we'll open it up for audience questions in a minute, but I think omid you wanted to add something I just wanted to build off what maryland said, which is that I think one of the things that's really distinctive about affordable housing in the us is that People have been trying to solve these problems now for the better part of 40 50 years if not longer And so it's a somewhat mature industry and generally speaking There's a decent set of federal policies that provide a pretty solid underpinning for a lot of institutions The problem is those federal programs while there's generally pretty good bipartisan support for them There's no support for really expanding them. And so there's a positive enabling environment But it's a largely fixed enabling environment at the federal level And so some of the most exciting things that are going on or where localities like austin or new york city or other Places between cities are really thinking about what can they do in local communities to make this happen? And so whether it's inclusionary zoning, whether it's tax abatements to provide for affordability This is one of those fields where actually local communities can Do a lot and especially because they're working out the margin It's a huge difference between projects that can and can't happen where you have good localities And I think what's exciting for people in this room who are advocates or even who are investors Is that there are opportunities to really push Municipalities and places in which you live To think much more creatively about what tools can be brought to bear on solving for some of these affordability issues And then you know, and I think again these these models are great because you can trade Some of the strength that a lot of the markets that we're all in To provide the affordability, right? So you can give people up zoning You can give people infrastructure You can give people lots of benefits in exchange for the affordability And that's where I think the next five to ten years of this field are going to get really interesting And you know for investors out there who Who are looking to to do something different, you know, there's There's a long history It's very difficult to lose money In an environment where the government is subsidizing your investment To some degree you're not going to make a 30 i or r and and you know have 25 companies where you're expecting Five zeros and and you hope for a 10x or a 20x But you're going to be doing as much important work as any as any of those companies are and You're you're not going to lose money and you're going to be able to create impact in your local community We should be screaming to the rafters about how How how it's a profitable thing to do In in, you know for the SOCAP community Yeah, so one more question to the audience before we get go to them for questions So so who here is looking to expand their impact investing to other parts of their portfolio beyond Say a venture capital or a private equity piece Um, you know, who is looking to do impact investing as a fixed income fund of some kind or You know, uh, or or yes one person We have one Two three, okay Um I mean the the interest I think in this space has been become really exciting Just in the past year, you know, we've had two CDFIs community development financial institutions actually access the bond markets earlier this year two two public bond offerings Lisk, um, they're here. Also their investment bank is also here Morgan Stanley And then reinvestment fund worked with back Bank of America Merrill Lynch on their offering. Those are Both investment grade bond offerings On terms as short as five years and as long as 20 years So there in this other parts on these other parts of the of the of the of the capital world Are starting to see and have opportunities to invest in this kind of work And I think they need it right if you're an insurance company You've got like your there's a there's a there's a model that you have and this just works for you Yeah, so um audience any questions from the audience? We have a mic that's going to come around so I think we do But we did at some point Certainly there is more caution when you hear about some of the things that that um Are are potentially out there from folks who are being put there to Not to to end it, you know Having said that I I think that You know, you said I said earlier there is significant support for these things across the aisle and Nobody is going to be diminishing the funding to such a degree that um, it's going to fall apart, you know For project-based section 8 for example, so that's a that's for those of me that know that's actually a set aside for the entire project For affordability instead of the section 8 voucher system where individuals could just go walk around Even if they were cuts those deals are still going to get funded For the next 10 or 15 years. Maybe it'll affect new things I would say with the low income housing tax credit what you saw Frankly after the election confirms the view that it's going to be around Because immediately. Yeah, the market seized up But immediately the federal government within four months of the worst financial crisis in our history in our lifetimes Came in and and created this, you know cash for converted some of the credits to cash and so Yeah, there's there's certain there's uncertainty. There's always going to be uncertainty But I think that that that there's such a need and it's so out there that You're going to see eventually the support stabilize and and yeah, you got to use more caution, but The investments are there and they always will be that's my view Any others want to respond I just add that You know, we have seen dislocation in the in the low income housing tax credit market and that slowed down a lot I'd say that we've seen the an uptick in the last just a few weeks With people thinking, okay, it's going to end up here. That's what my return is going to be I'll go ahead and make those investments But I think it underlines the importance of preserving what we have That you know, this is an incredibly valuable resource for for families for individuals for people getting started the affordable housing that we have And where we're never going to be able to create our way out of the demand that we have for it We really need to underline the The preservation of it and you can do that sometimes without the national sources Like we did in in austin with the city of austin understanding that and willing to forgo the real estate taxes on those units to preserve those Right and here in california. We just passed Finally, you know, there's about three billion dollars now that's going to be coming through To for for affordable housing under the you know, what was just passed It took a long time, but we got there Up here How are you sort of are you sort of actively looking for opportunities? Are you changing your underwriting standards? Are you you know, what what's your thinking on that? I've got a great houston example and we're very proud of it. It's a property that we own outright Usually we're the limited partner But in this one our general partner wanted out There's no There's no formal restrictions on that property, but we've asked the manager to keep it affordable 40 percent affordable But about a year and a half ago we put several million dollars in it including hurricane glass redoing all the roofs and the You know and I'm really glad that we did it because that property did really well in in through the through the hurricane We've had some other properties that Were more adversely affected, but I really feel as though That understanding and building physical needs and and taking care of those When you buy a property or or can when you acquire the property to be able to make sure that that happens Um is is vitally important. We have another one named coney island Which suffered badly under sandy? Residents were stranded on the ninth floor elderly people with no elevators going up and down and with a partner We moved the mechanicals up a floor and a half so that the burner was up there redid a lot of the HVAC systems on it and you know made it a more resilient property It's just blocks from the beach the whole building was was raised up anyhow But to put the mechanical system up at least next time that's not going to happen. So We usually when we acquire a property with an equity investment We we have a long-term look at what the physical needs assessments will be And and want to ensure that So that those are two examples And in our case, I would say that because our borrowers are community-based nonprofits They are on the ground and they have a deep understanding of what their community needs and As mission-based organizations, they're looking far beyond providing a unit of housing So they're looking at increased energy efficiency. They're looking at proximity to transit. They're looking at how what they do Raises the the opportunities for prosperity of not only their residents, but they're often in underserved communities So they also look at how what they're doing can can lever other ass other assets and other investments into the communities where they work Um, could I In terms of this question this question has come up a few times and I think it's an important one And I want to also link it to another question Which is Uh, so the low income housing tax credit properties generally speaking Uh, after 30 years, that's when they come up for you know, the investors will pull out and they'll come It'll we'll lose that stock of affordable housing after 30 years Well, when did the for when did the low income housing tax credit first come into use? 1987 1988 when did it really start ramping up in the early 90s? So in the next five ten years We're going to have massive opportunities You know the the the the tax credit funded health fund the creation of around three million units of affordable housing across the country as those Units come up to the end of their compliance periods periods as it's as it's known Um, are there opportunities that you've seen to step in refinance and when that refinance happens Oh, we might as well do some kind of climate resilience lending on top of that Is that something that you guys have seen? Yes, the answer is yes. Yeah, so yeah absolutely And and frequently the limited partner who invested in the tax credit Doesn't want to wait for the full compliance. They want out year 14 15 So when we buy properties at that time, we do a full physical needs assessment They don't often need a full, you know gut rehabilitation They may be ready for a four percent or a nine percent credit But yeah, that's a time to look to do that and we I think that we are long-term holders But the idea is that at a certain point of building, you know, we have the first equity property. We ever invested in But at some point that building is going to need more rehabilitation than even our, you know, good management Has done and and we've reserved for at that time. It would make sense for us to take our fair market value out And to have a new limited partner that will re-syndicate that property and do a full rehab so But we we think about that all the time, you know How how long those buildings are going to be in good enough shape and and what we can do to maintain them But to your point, I mean, I think socially this is a big challenge, right? Is that The credits that get used to essentially Read, you know called re-syndicate the affordability so extended another 30 years our credits that don't go Into something else And so if you're looking at this on sort of a macro level We are at a place where we do need either increase funding or other mechanisms to promote affordability Otherwise we already have a gross insufficiency and those problems are only going to get worse Go ahead. Oh, here's the microphone behind you Considering that we're at so cap and there's been so many sessions on Combining impact investment with hospital funding and all these other creative funding sources What is the appetite and what is the most creative way that you have? Help to make affordable housing happen One of the things that's really interesting to your question is that I you know some of the obama care reforms that actually sort of put a big burden on hospital systems and others to actually care for the well-being of their catchments Have taken actors who never thought about affordable housing into thinking about it As being somewhere they can put capital and actually improve well-being And so you're starting to see like hyzer a few of dignity health and a few others invest in entities like cdt invest in affordable housing it is sort of another really creative opportunity to bring in New sources of capital and then people quite frankly who on our side. We've been desperate to bring into those complexes So it'd be great to have primary care facilities and other facilities integrated into some of these complexes So I think you're right that it's a really exciting opportunity you know Creating and preserving Existing affordable housing I think are two sides of the same coin and there are any number of things that happen over a long period of time that can adversely impact that And and so when I think about something creative that that we did in the past It goes all the way back to 2001 after september 11th If you lived in an affordable housing property You couldn't get insurance For your property or it was 10 times more expensive than and then Then before september 11th and so we worked with with a nonprofit to actually create an insurance company That would provide stable pricing insurance To a to these to these properties And it's now a 15 billion dollar insurance company And it it's not the cheapest But it doesn't go up and down when you think about the variable costs for for managing a property insurance, you know labor Are are one of the you know are the main variables and to have a stable pricing insurance over the long term This company makes a lot of money too for the owners who are all nonprofit developers who put their projects into this insurance company so You know Creating and preserving affordable housing you have to you think of it from a lot Yeah, I think of it from a lot of different angles because by doing that you can you can make it more affordable Well, yeah, I would say you mentioned being at SoCAP that I think we're not talking about on this panel and not even that much at the conference But it's a big part of the equation is that It's too expensive to build Right. I mean here at an end of paragraph and we haven't seen a lot of innovations actually San Francisco Is the most notorious probably in the country, right? So a huge part of the affordability crisis Costs you $700 a foot to build something It's you know, no amount of creative financing is going to solve for just systematic lack of sort of innovation and scaled models to build No, but to that point, you know SoCAP is a place for people to think creatively about solving problems You know, there are ways There are other ways to do it and and people are thinking about those things So for example, there's a company out there, which the name escapes me that takes old shipping containers and stacks them and designs them and attaches them and creates housing Out of them and these are just stuff that would get thrown away And you see some really cool designs And people come by them and they're they're affordable or the they build a building out of it and and rent it That's what we need to be thinking about and that company makes money So, you know, it's up to you folks too to think about how we can solve this problem in different ways You guys are the creators of the future or the present And I would say oscar that We have struggled across sectors as far as sourcing capital To invest in creating and preserving affordable housing Our The banks get it the banks are in there in a big way And while everybody acknowledges The role that having a stable Good place to live that you can afford is fundamental To health to education to all of these these other outcomes We have really really struggled To figure out what is it going to take to get some resources that Are typically motivated by their care around education or health or these other things To come into housing to help to build that foundation that will make their other strategies have longevity Any other questions from the audience? I think I did I guess we're coming up to the end here. So I'll come I did have one last question to kind of Since again since since we are at soak up as we What are either from the investor's perspective or from the the cdfi's perspective? What are some of the the wacky ideas you have for accessing In the cdfi's case accessing other parts of the capital spectrum or as from the investor's perspective Ramping up, you know, like do you need is it our Would having other kinds of investors Along for the ride that you're going on with that. How would that help you and what kinds of vehicles or mechanisms? Have you seen where You could engage others Well, certainly diversifying the sources of capital, you know, the the banks Are are heavily regulated and have certain things that they can and can't do and so there are Dimensions of the work that that we do that their money can't be used for And so money that fills that flexible that that flexible niche also Because of the way that our organization is structured We use equity to lever debt And our ability To lever debt and to really scale the response depends on bringing in equity And it's hard and so figuring out that equity piece And then I think that there are also a lot of opportunities around pris Now that the guidance has been clarified The stumbling block in my mind is is an elegant entry point and I go back to Our multibank facility that was led by morgan stanley Where a framework was created that all of the banks could agree on And it your your third party cost dropped your your Compliance reporting became more efficient and more streamlined So one of the questions that I grapple with is whether or not That that same structure and those lessons learned could be applied to create a more elegant and efficient entry point for pris One of the things I think we're we're going to look at you mentioned that the asset profile This is actually quite compelling to insurance companies to pensions to high net worth individuals And so we're working with our asset management businesses to sort of look at strategies to commercialize that a little bit more And bring in capital I think one of the things that's changing for for big institutional holders is that There are not a lot of places to be able to get kind of predictable returns, especially long dated into the future And so I think that's something that could change and then I think you mentioned something that's also exciting Which is that so much of what we talked about at soak up soak up isn't available to retail investors So there's very little any of us can do with our sort of limited assets But I think some of the retail products you mentioned are really exciting and that there are other examples of stuff that is coming into Things that you know individuals can invest in through their retirement accounts You know, I'd just like it to see to be a part of everybody's portfolio, whether your mission related investment from a foundation or a family office, this is low risk high impact and I think Somehow people think oh the government's handling it or whatever But when you think where where do your kids preschool teacher live, you know, what can they afford to live? and I think that Working with partners and there's many of partners beyond the two of us sitting here at the at the table But that as a part of your portfolio, I know that there's Higher return things that you could do, you know betting big on a on a nascent entrepreneur That there's very impactful things that you could do with a Project in a in another country, but I feel like this could just be as amid says sort of your long dated bond I mean it just pays it's low risk, but it's great impact And would like to to see that spread and have more people Engage and invest I don't think there's anything wacky that comes to mind, but What I would say about soak up, you know, so The entrepreneurship around the people who come to soak soak up is just tremendous So for example, think about the things that you do and think about every day So why can't you crowdfund affordable housing? You know you crowdfund everything else Why can't you Figure out ways to you know, we talked about climate change figure out ways to marry Some of the things we're doing in the energy sector with housing, you know, we've we've tried for a long time to put solar You know to deal with solar, you know, we don't we're not we don't know how to do everything I suspect that there are people who can figure out a way to do that better than than we've tried You know, we're hearing about what's going on in Puerto Rico and Elon Musk has said he can Can solve all their energy problems. Well, how they're going to do it. They're going to put in people's homes So I I would say think about the things that you're thinking about every day and how can you apply it to housing Okay well One last chance for an audience question Otherwise, uh, our time is coming to a close So let me just thank you our panelists again Thank you And I thank everyone for coming to our our discussion. Have a great rest of soak