Bruce and Aaron Norris are joined again this week by Steve PonTell and Gregory Bradbard of the National CORE and the Hope Through Housing Foundation.
Episode Highlights
- What is their main focus when it comes to social services, and what impact can it have?
- Where does the funding come from for their programs?
- Who are some of their strategic partnerships?
- What is NIMBYism vs. YIMBYism, and is it partly to blame for controlling affordable projects?
- What are the biggest roadblocks to current and future projects?
- Do they see any regulation or legislation that is encouraging and any that worries them?
- What is the future of affordable housing in California?
Episode Notes
They began by talking about the services. Aaron wondered if every property they owned had a different bucket of services because of how they are approaching it and how things are financed. Greg said yes for a number of reasons. One of the things he has found is every community has a unique group of residents there. They have a unique set of needs and resources in that community as well. If you look across their portfolio, the services they provide on-site and in each of the apartment communities is a community room. It is not just for social parties, but they are really providing meaningful services. This could be pre-school or an after-school program, 30 of which are run on site. They also do their financial literacy shops there as well as their health and wellness programming. They will bring in Zumba instructors or yoga instructors, and they will even teach cooking classes. Finally, mental health work occurs too along with everything else that occurs in these community centers.
Greg called this a variation on the theme. You see a lot of similar type programming across the portfolio, but it is unique property by property. It also really depends on the set of residents there. Greg said they have a team of services coordinators who are staff people and whose job is really to get to know the residents. Their job is to identify what it is that each group needs and either provide the resources directly or have them go out and build partnerships to bring them in. This could be a bank that does a financial workshop or a hospital who brings in nurses to do health screenings. It could also be a university who brings in students to do some type of other educational work.
Aaron asked if this funding comes from the money raised through the foundation. As Steve described, there is a base that comes through National CORE and comes through the rents, but it is minimal. This provides the foundation, and the other half is privately raised. This is from individuals, foundations, corporations, and those who see the benefit of this model. Having spent 20 years in the nonprofit world, Hope Through Housing and National CORE has an incredibly powerful model, which is the ability to reach residents where they live right on site. They like to call it a place-based strategy. What it really is; the residents are already there. It is tough to get people to come to get help down the street, even if it is to a local school or community center. They can literally deliver it on site; put a flyer right on the door telling them what will happen and when. There are also multiple staff people there who have their relationships with them.
Aaron asked what the expectations are that they are mandated to attend the events if they live on the property. Greg said it is voluntary and not mandated at all. They are living there as individual residents, and everything they provide is voluntary. They do participate, and that relationship piece is big. It is not just on the Hope Through Housing side, and the property managers for National CORE are incredible. They care about the residents and communities and really pour themselves into it. This creates an atmosphere that encourages people to better themselves. What you find in their properties is so different because of the property management, and they take problems very seriously. Any problems that happen are moved off the property.
A great example is they have a no smoking campaign across all of the properties. There is no smoking allowed on any of the properties across the portfolio, which is incredible. This sends a message and is all kinds of smoking. Steve said many of the properties have market rate units in them. Of the 184 they are doing in San Bernardino, 36 of them will be market rate units without any subsidy. One of the things they have no trouble with is renting their market-rate units, even though it is 20% market and 80% affordable. It goes back to all of the participants and residents being treated the same. Nobody would know who is who. All of the participants and programs is voluntary, and the entire population participates.
Aaron asked if there is a standard unit size they typically use. Steve said you will usually have one bedroom in the senior properties, and in family properties, you will have three, sometimes four. Every once in a while, they have to do five if it is a replacement unit and there was an existing 5-bedroom unit there prior to that. Usually, however, it is 2 and 3 while seniors tend to be one. They are also buying properties that are sold and being renovated. They will do this as well as tear down and build new.
Aaron next asked about co-living and if they have looked at that model at all for seniors. Steve said they have talked about it and there is a variety of innovations that they are currently exploring. However, as of right now they have not talked about the co-living. The challenge is the funding tends to dictate pretty standardized responses. Right now they are looking at two motels to acquire in Pasadena and turn them into transitional housing for chronically homeless. The HUD standards require every unit has its own kitchenette and other features. They tear down walls in order to build that standard unit. There could be better alternatives, but the regulations do not tend to allow that level of flexibility. They are fighting for some of it, however.
Bruce said one of the problems in California is the beginning pieces of cost. In Florida, they bought a building lot for $13,000 and had a permit that cost $12,000. They were ready to build at $25 grand. In Riverside, they bought a lot for $80, which is actually a really great deal, and a permit for $40. They basically completed the house for what the cost of the permit and lot were in California. When you go to Texas and Florida, you have a running start at a tax break. California’s median income is about 60 while Florida and Texas are around 50. It is only a $10 grand difference, but the housing is at least 100% more.
Bruce asked how they concentrate on California when the opportunity would be so much easier in Florida or Texas. Steve said one of their mantras is “If not us, who?” It falls into the category that the housing need in California is so great and the obstacles and challenges are huge. They are doing and looking at projects in Texas and Florida, but at the same time, they are committed to their home state to figuring it out. One of his arguments is if cities really want something to happen, they can make things happen. The great example is in San Bernardino, from the time they got site control on a parcel until the time they had it completely entitled, including environmental review, it was 90 days. From the time they had site control to having construction completed and occupied, it was 18 months. If the city wants to, they can make it happen.
It is not so much about the cost of land since 5 acres in San Bernardino was $500,000, a reasonable price. The permits are what they were. However, the fact they could do that in 18 months versus 5 years made it an incredibly beneficial product. If cities want to, they can make things happen. Aaron asked who led the charge in San Bernardino. Steve said it was a bankrupt city with no staff. However, those involved were supportive, and the planning director and staff were given the best multifamily project in San Bernardino. It was not like they were trying to do something they would not be proud of since they knew they had to build something where if anybody walked on the property, they would say “Wow!” Their confidence in their ability to deliver gave them the confidence to make sure everything was expedited along the way. The city staff really made it happen.
Aaron asked if there was any city in particular in California he was impressed with other than San Bernardino. Steve said there are cities that want things to happen. Sometimes the processes and fees can become problematic. Inland cities tend to be more responsive as well as coastal cities, and a lot of it has to do with political pressure, which is high along the coast. It is not a political ideology, but rather a selfishness ideology. You want to protect what is yours, and there is always a fear about those people. Even if you talk about a community where your own children can afford to live and grew up in, most people would still say that’s their problem. We have had a societal breakdown about the feeling of responsibility and producing communities that are holistic and can be afforded by everyone.
The last place he would want to live during a disaster is in coastal California because none of the first responders lived there. If there is an earthquake, the nurse or fireman is in Temecula, and you are in Malibu, they’re not going to drive to Malibu to take care of you. If a community was smart, they would be producing housing for the people working in their community for their future. Unfortunately, people don’t think that way. Aaron said this was the first time he heard this and thought the median price in coastal cities just went down a little bit.
Aaron asked how big a problem NIMBYism is for projects on which they are working, which they said it was a huge problem. Aaron was disappointed in that specific panel a year ago. It was wide-ranging since the county and different non-profits were there. Somebody from Fannie Mae who specialized in homelessness also flew out to speak. One of the panelists did not want to talk about a project that involved a retirement community for veterans. The community was the one that squashed it, not the city. The county was really upset because they were ready to go, and it was the community who got behind, got the council member to squash it, and it is now one place less for veterans to retire.
The challenge is the forces of NO are getting more sophisticated and litigious. For $5,000, you can file a lawsuit about anything. It is becoming an increasing challenge to move projects forward there. One of their affordable housing developers has an infill project in Redlands that got a sequel lawsuit on environmental issues for which there are none. It is purely a harassment lawsuit. There are some issues the state of California should deal with, such as the abuse of regulations. You are no longer using SEQUA to defend the environment, but rather to stop things you do not want. What they find is the more energy and time you invest in building relationships in the neighborhood, the more likely you will get through the process.
National CORE invests a ton of energy building those relationships, touring people through the properties, and explaining what they are doing in order to make sure they generally can move forward and bring the community along with them. However, it is getting harder and harder. If you are not sophisticated about it, then odds are you will have opposition. Elected officials have a hard time standing up to that opposition.
About a year ago, Damien O’Farrell was on the radio show talking about the housing first. The question is how you can convince somebody who is homeless to get off of drugs when they don’t know where they will sleep or how they will get their next meal. Housing them first and surrounding them with services is really interesting. Aaron lived part-time in Downtown Los Angeles, and he just laughed at the amenities they had compared to what National CORE and Hope Through Housing have.
Aaron asked about the percentage of the people who live on their site and how many are taking advantage of all they have to offer. Greg said it varies site by site. It would be tough to put a percentage on it; but if you look at what is being done on a family property with 100 families, regularly you might have 20-40% who are taking advantage of those services on regular basis. After school is a huge one since this is a place where those families rely on this every afternoon so they can go off to work and not worry about where their kids are.
People also like to be a part of a lot of the one-off workshops and training they offer throughout the year. Another big piece they like to do is senior connectiveness on senior properties. If you do any kind of reading on battling dementia, isolation, and depression, it is important to get them out and interacting with others. They have a lot of success here, and the seniors love to come out just to do things like play Bingo or having a meal together. Greg said those social activities allow them to build the connections, so when they provide a mental health workshop they can engage them in that way.
The number of seniors will skyrocket in the next 15-20 years. Bruce asked about most of the seniors in the big projects and if they would be homeless otherwise. He wondered what their bank looked like as far as safety. Greg said most of the residents he has interacted with and heard their stories are on a fixed income and living off of Social Security. If they were low wage-earners to begin with, their Social Security is not great. Even living on his properties with rent that is fixed and limited, they still struggle to meet their basic needs. This means they still have to bring things such as food pantries in to supplement their food costs.
Greg wished they had a lot more assets, but they do not. If they were not with National CORE or Hope Through Housing, they would possibly be living with another family member if they still do. Steve said their properties are all income-restricted. This includes both your income and balance sheet. All of this is monitored before somebody moves into the properties. The number of seniors on a fixed income is just going through the roof, and the shelter alternatives for them is getting tougher and tougher. This is especially true as the social fabric is breaking down and fewer families are taking care of their own parents and grandparents.
One of their seniors in a Fontana property won the lottery, $35-$50 million, but he liked living on the property so much he did not want to move out. All he wanted was a faster wheelchair, which he does have now. He has since moved out and has been very generous in making contributions back for his fellow seniors. He didn’t have to move and could have stayed there if he wanted. Once you are in, you are in and they won’t kick you out if you qualified and something happens.
Bruce asked if migration going out of California is a big problem for people who have no choices here, especially for the younger people who can’t own here. This could cause the younger ones to move out of state and the seniors to move back closer to their kids or grandkids. Steve said if you are thinking of the future of California, this is something which we should be very conscious of, especially to the extent it affects the brain drain. The Inland Region is an example. 70% of the college kids who graduated from the region left the region.
They are not doing the best job retaining the best and brightest in the region. California as a whole is holding on, but there is a key indicator to look at known as the U-Haul index. The whole issue of renting a U-Haul to go from San Francisco to Reno costing you $2,000 and Reno to San Francisco only $200 is because people are leaving in droves. Long-term, the best interest of California would be to have population growth, retain the best and brightest, and have shelter and housing choices for every life stage. This includes everyone from college, college graduates, single, married, married with children, empty nesters, and retirees. There are big holes in this spectrum throughout the state of California that would give people a reason to leave.
Aaron asked if they accept donations on the planned giving front and get approached by wealthy families with extra properties. He wondered if the organization is set up to receive these. Greg said they would definitely be open to it, although he does not know if they have received a lot of donated property in the past. However, Steve said they did from banks and others in the REO period of time. Greg said they would be open to land and would have to look at this on a case by case basis in terms of making sure it is a piece of land that makes sense for them.
Aaron does not get to talk to a lot of non-profits that don’t want to work with land. Greg said it could make sense, though, since he has taken some pieces of land that don’t look very appealing and turned them into something beautiful. He has some good relationships with the city; so if he can meet with the city before he takes it on, he could know it does not have an environmental problem and the donor could take the write-off or do something creative with the charitable remainder trust. Greg said they have an incredible team that can assess a property pretty quickly. Steve would welcome any donation of anything at any time.
Aaron ended by talking about the past year when the accessory dwelling unit legislation come out and they put a caveat on it. If the cities did not get it approved in 60 days, it was approved. It looks like they are doing timetables knowing the city is sitting on things and that NIMBYism is causing a problem. Aaron asked if they see this happening and the state forcing the issue due to cities not keeping up. Steve said the best way to look at that is the various buy right initiatives that have been proposed by both the governor and the legislature essentially saying that once you have gone through all the normal process and have an approval, you’re done. You now have a right to build as opposed to going through the whole process, somebody suing and having to start all over again. Whether it is accessory dwelling unity or multi-family if cities do not enable things to happen there is a higher likelihood the state will continue to intervene since the crisis is so great.
His recommendation to cities is that they do the job that needs to be done and make things happen. This is for their own population, the children who grow up in their community, and it is the smart, economical thing to do. You need adequate housing for the people who live and work in your community. Unfortunately, the days of true community builders and boosters are done and we now have people with a very narrow special interest. It is harder and harder to have a community as a system conversation that understands the critical role housing plays.
For more information, you can visit any of their websites: www.hopethroughhousing.org or www.hthf.org, or www.nationalcore.org. You can see their entire portfolio on these sites as well as donate here if you choose. If you want to volunteer, you can contact Greg Bradbard, and you can find his contact information on the website.
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