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Is Julian Castro Serious About Affordable Housing?

Last week, Julian Castro gave his first major speech as Secretary of Housing and Urban Development before an audience at the Bipartisan Policy Center in Washington, D.C. The speech was conspicuously short on details on how he planned to address the problems facing his department, but rich in rah-rah booster talk that one associates with sentimental movies about coaches guiding come-from-behind sports teams.

“It’s time to remove the stigma associated with promoting homeownership,” he said. “When done responsibly, it strengthens communities and boosts our economy.”

I am not certain when or where the promotion of homeownership earned a stigma – when I last checked, it was still the American Dream. But what Castro failed to mention was that it is difficult to promote homeownership when people cannot afford to buy a house.

For confirmation of that sad fact, Castro and his Bipartisan Policy Center audience did not have to look very far. A recent article published in the Washington City Paper cited data from the District of Columbia’s Office of the Chief Financial Officer that found 27.3 percent of single-family homes sold in Washington in July sold for at least $1 million. During the first half of this year, 18.6 percent of single-family homes in the nation’s capital sold for at least $1 million.

Aaron Wiener, City Paper’s housing reporter, covered this story with a bit of commentary that deserves to be shared: “[In] a city with a pressing need for affordable housing, the seven-figure prices for single-family homes – many of them rowhouses that just a few years ago would’ve sold for half that – don’t just squeeze middle-class residents who might have tried to buy these houses. They also keep upping the incentive for developers to buy up once-cheap properties, which may have earlier served as apartments or townhomes for working-class Washingtonians, and rehab them as, well, million-dollar houses, or a few half-million-dollar condos. If the trend continues without redoubled efforts to preserve affordable housing, diverse sections of town could quickly become enclaves of the wealthy.”

That scenario is hardly unique to Washington. With very few exceptions, the nation’s major metropolitan markets have seen no expansion of affordable housing inventory over the past decade, making it harder and harder for too many individuals – not only working-class, but also middle-class and recent college graduates just starting their careers – to buy into the American dream. The situation has become worse since 2008, when a toxic combination of a frayed economy, excessive regulation and insensitive government agencies (both federal, state and local) created the worst shortage of affordable housing since the Great Depression.

It is no secret that Castro got his job for reasons that have nothing to do with his knowledge of housing policy. But if he is going to succeed at his duties, he is going to need to spare us the canned platitudes on the value of homeownership and offer a vigorous leadership strategy that directly addresses the problems that continue to ensure the lack of availability of affordable housing.

However, if Castro’s speech is any indication, he doesn’t quite seem to get the right idea. When he touched upon the concept of affordable housing, he focused instead on public housing projects – not the same thing. And Castro went off on a weird tangent by taking charge of an effort to give everyone Internet access. “Over the next two-and-a-half years, I’m going to place a special focus on expanding broadband access,” he insisted.

Our Secretary of Housing and Urban Development is more interested in online access than affordable housing? Wake me when January 2017 rolls around!

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Shining A Light On OPIC

You Can Download This Full Article As A PDF HERE

TME-PHhallFor too many years, the federal government has been doing more harm than good when it comes to the U.S. housing finance market. Strangely, Washington has been much less obvious when it comes to providing aid to housing markets in other parts of the world – thanks, in large part, to a somewhat obscure agency that rarely receives media attention.

Established in 1971, the Overseas Private Investment Corp. (OPIC) defines itself as the development finance institution of the U.S. government, with a mission that mobilizes “private capital to help solve critical development challenges and in doing so, advances U.S. foreign policy.”

Housing and real estate finance is among the priorities that OPIC pursues. Last month, the agency announced that it was sending money overseas to assist in a number of endeavors: Up to $75 million in financing to First City Monument Bank to expand access to real estate development and infrastructure finance in Nigeria; up to $56 million in financing to Delaware-based La Hipotecaria Panamanian Mortgage Trust to expand affordable housing mortgage lending in Panama; up to $80 million to International Housing Solutions Fund II, which will invest in affordable housing across Sub-Saharan Africa, and up to $50 million to Peninsula Investments Group Fund III, to focus on investing in middle-income housing in Colombia, Peru, Panama, Uruguay and Mexico.

OPIC is intentionally vague on the exact nature of its financing, but one might assume that there are tight requirements attached – there is nothing in its literature to suggest this is no-strings-attached grant money. The agency’s website claims that it “operates on a self-sustaining basis at no net cost to American taxpayers,” so one can assume that OPIC is getting (and receiving) something in return for its outreach.

Many of areas targeted by OPIC have significant political and economic problems. For example, in November 2011, OPIC announced plans to finance a $100 million project to establish Guatemala’s first multi-bank, market-wide mortgage platform that involved both origination and securitization. At the time of the announcement, Guatemala had a housing shortage of more than one million homes.

In June 2010, OPIC provided nearly half of the funding for a $500 million mortgage finance program designed to double the number of families who are able to purchase homes in the Palestinian Territories. In May 2012, OPIC announced an agreement to provide $30 million in financing to a private equity fund designed to invest in Palestinian companies.

In regard to the Guatemalan and Palestinian projects, OPIC has not offered any public updates on how its money has been spent or what kind of results have been generated. Indeed, that is one of the more troubling aspects of OPIC – we have no idea what (if anything) the agency has accomplished.

On occasion, OPIC makes a public relations blunder – most egregiously in February 2013 when it teamed up with the U.S. Agency for International Development and the Clinton Bush Haiti Fund to launch a mortgage finance program in Haiti. This endeavor was announced while ignoring the sad fact that many Haitians were still homeless as a result of the devastating 2010 earthquake – the very last thing that the Haitian people needed at that time were home loans.

OPIC also seems to have its own Middle Eastern policy: in its press materials, OPIC refers to this part of the world as “Palestine” even though the U.S. State Department uses “Palestinian Territories.” Go figure!

And while U.S. taxpayer money is reportedly not being spent on housing finance in far-flung corners of the globe, I still cannot overcome the confusion of why a federal agency is spending its time and energy in building mortgage platforms in other countries. After all, these countries have governments – and I don’t recall ever seeing a developing country leader who lives in poverty and struggles for food and shelter. And I can’t see how these efforts improve U.S. foreign policy – really, do the Palestinian and Guatemalan people love the U.S. more because it is helping to finance a local mortgage program?

Perhaps the OPIC executives would like to take some time and present an overview of what they have accomplished recently, especially in regard to improving the quantity and quality of affordable housing around the world? The agency’s goals are noble, but their results are somehow missing from the spotlight.

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Executive Spotlight: Heidi Burkhart of Dane PCG and Saxon/Hart

Heidi-BurkhartThis week, our Spotlight is shining on Heidi Burkhart, president of the New York City-based affordable housing brokerage firm Dane Professional Consulting Group (Dane PCG), and founder of cause marketing company Saxon/Hart. At Dance PCG, Burkhart facilitated closings in excess of 10,000 affordable housing units and over $1 billion in transactions. And with Saxon/Hart, which she founded last year, she has created a cause marketing company focused on reinvesting its net profits into direct impact, giving forward initiatives.

Q: What was the inspiration for creating Saxon/Hart?

Heidi Burkhart: When you start loving vulnerably, you find yourself drawn to like-minded people – those with similar morals and ethics, those you truly respect, those who bring out the best in you – both in work and in play. In times when I’ve struggled in life – times of lost confidence, lost loved ones or lost deals – it was the kindness of my community, family, friends, colleagues and clients that always got me through. With the right people pushing me towards love, light and positivity, I found I could reach, and in many cases exceed, my personal best. By loving vulnerably, I truly learned to love life.

Because of these inspirational people in my life, I wanted to give forward and make a positive impact in others’ lives. In 2013, I formed Saxon/Hart – a unique cause marketing company that reinvests its net profits into direct impact, giving forward initiatives. Our motto sums it up nicely: “Give to live. Live to give.”

Q: Many people have a misconception of real estate professionals as being “more than a little shady.” From your experience, how would you categorize the level of altruism in the real estate world?

Heidi Burkhart: At the end of the day, we’re lucky – we get to pick and choose who we work with. Given the choice, I choose to align Dane PCG with those working to make a positive impact within their communities. I say, treat others as you would like to be treated – this holds so true in our profession.

I recently approached two of the top real estate firms in New York City to inquire about space for an event to benefit a friend who was just diagnosed with colon cancer at age 28. Without hesitation, both my clients agreed to assist and welcomed the opportunity to be a part of this amazing event. I consider myself blessed to be a part of such a giving professional community.

Q: You are involved in an extraordinary number of volunteer endeavors. Where do you find the time to do all of this while running a successful career?

Heidi Burkhart: My volunteer endeavors are a part of who we are here at Dane PCG. With an appreciation for the art of giving, they ultimately lead to the creation of Saxon/Hart. With the “Give to live. Live to Give” motto as the cornerstone of our company, my team – my extended family – continues to inspire me. We keep challenging ourselves, by exploring various volunteer passion projects, ultimately growing and impacting our community in a positive way.

Q: What are your goals for Saxon/Hart?

Heidi Burkhart: Saxon/Hart seeks to lift up (and share the stories of) remarkable individuals who are faced with adversity and challenges – the people who ultimately find growth and fulfillment in the makeover experiences we provide. In just our first year, we’ve already built a strong network of altruistic health, fitness and beauty professionals united around giving forward initiatives within their communities.

Our goal is to first spread Saxon/Hart’s direct impact, giving forward initiatives nationwide, and then in the next five years, worldwide. My father once wrote a poem about how one small pebble can impact many. When you throw a pebble in a lake, the ripples grow in size and continue to spread. To have that type of impact, to inspire people – to let them know they matter – across the world, that is what I hope for Saxon/Hart.

Dane Professional Consulting Group is online at www.danepcg.com and Saxon/Hart is online at www.saxon-hart.com.

Revisiting “A Place To Live”

A few weeks ago, a newly digitized version of the 1941 documentary “A Place to Live” was uploaded to YouTube. There is an excellent chance that you never heard of this film, unless you are a rabid movie trivia buff – “A Place to Live” was among 11 films that were nominated in the first competition for the Academy Award’s Best Documentary Short Subject competition.

But for anyone with an interest in issues relating to affordable housing, “A Place to Live” is a milestone achievement that brought the conversation to a completely different level. By using the motion picture medium to push a socio-political agenda, “A Place to Live” forced the public – and, by extension, the political forces of the era – to take a long look at urban squalor and offer a solution to a problem that had been festering for too long.

“A Place to Live” was sponsored by the Philadelphia Housing Association, a nonprofit that was formed in 1911 with the goal of improving the quality and quantity of affordable housing options to the City of Brotherly Love. However, this group found its mission jeopardized when the Great Depression robbed Philadelphia’s municipal government of the funding needed to address the acute living situations in many neighborhoods.

During the 1930s and early 1940s, nonfiction filmmakers began to turn their cameras on the social ills that were created and/or exacerbated by the Great Depression. “A Place to Live” fell into this muckraking movie genre, and the Philadelphia Housing Association worked with filmmaker Irving Lerner to call attention to that city’s housing woes by detailing one family’s life in urban residential misery.

By contemporary standards, it may seem peculiar that the emotional center of “A Place to Live” – a beleaguered mother and her young son, who live in a broken down row house – relies on actors in a scripted narrative setting. But back in those days, it was not uncommon for nonfiction filmmaking to freely incorporate the protocol of dramatic films. However, Lerner shot most of his film on location in Philadelphia’s less desirable neighborhoods, and the scenes showing the boy scrounging for firewood amid the abandoned ruins of slum apartment buildings are highly disturbing – especially when Lerner juxtaposes this small tale of squalor against scenes of Philadelphia’s majestic historic sites and elegant luxury housing.

Oddly, “A Place to Live” is strangely vague about how to solve the affordable housing crisis. There is a brief view of the construction on the Richard Allen Homes, one of Philadelphia’s first federally funded public housing complexes. But the film avoids stating who is paying for this project. Indeed, there is no overt call for anyone – either Uncle Sam or the local elected officials or private developers – to step forward and fix the mess.

For its time, “A Place to Live” was an ingenious tool for affordable housing advocates, and the film enjoyed a number of screenings before organizations devoted to improving housing conditions. Of course, its Oscar nomination gave it a degree of prominence that helped bring audiences to its message. While World War II interrupted housing development in the U.S. for several years, the postwar years began to place a new degree of attention on affordable housing. The results were mixed, with many examples of admirable success and many more of dangerous failure.

Today, the subject of affordable housing generates a great deal of talk – not action, just talk. While there is an urgent need to re-evaluate the state of affordable housing, it seems that no one in either the public or private sector is interested in stepping forward and charting a cogent course of action in regard to this still-percolating situation.

According to a New York Times report in March, affordable housing is still an elusive commodity in Philadelphia, where 26.9 percent of the population is living at or below the federal poverty line and 110,000 families on a waiting list for public housing. Perhaps Philadelphia needs a 2014 edition “A Place to Live” to offer a reminder that this problem never went away – in fact, it appears to have become more dismal.

And if you wish to see “A Place to Live,” you can watch it on YouTube (courtesy of the Prelinger Archives) at https://www.youtube.com/watch?v=EsJ0bUsApC8.

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