Key Takeaways from the 2022 NY State Association for Affordable Housing (NYSAFAH) Conference
The New York State Association for Affordable Housing (NYSAFAH) Conference was held on May 18 and 19 in New York City, and was attended by LIHTC developers, lenders, government agencies, non-profit housing organizations, and vendors and professionals who provide services to those developing and financing affordable housing.
The majority of the focus this year was on issues facing New York and the surrounding regions, and topics ranged from financial discussions, regulatory updates, trends in construction, to housing’s relationship with community stakeholders. There was also a special focus on more recent laws and regulations. As COVID protocols start to soften, the pre-pandemic priorities are slowly coming to the forefront again.
Below are some key takeaways from several of the panels.
The Latest in Financing Housing for the Homeless
New York’s Department of Homeless Services has been extremely productive over the past two years in financing critical transitional housing. With the housing crisis exacerbated by COVID, the focus has been on creative ways of building more shelter housing through financial arrangements across various investment sectors. One new development involves banks selling shelter financing loans to life insurance companies. Typically, life insurance companies have a strong ESG directive and investing in shelter housing is a great fit. This new resource for funding helps to create a bridge between those firms managing this work (the developers) and those financing the projects. It enables a united front, with real estate and housing goals on the forefront, as well as key stakeholders working towards environmental sustainability, social equity, and portfolio-wide considerations for climate resilience, ESG and GRESB reporting.
Resiliency: Where and How We Build
Property resilience is a hot topic lately (especially in New York City) and with good reason. There has been increased attention to the climate crisis and rising sea level. New York is at the challenging intersection of a housing crisis and a climate crisis. In order to build to alleviate the housing crisis, the city needs to build in areas that are at great risk for flooding. This means resiliency should be a high priority when developing projects.
It is a multi-disciplinary consideration: designing properties that avoid flooding, stabilizing regional grids (“energy resiliency”) to limit power outages during natural disasters, and building resilient structures that can remain at temperature in cases of lost power and HVAC, to name a few. It is also a topic of social justice, as areas prone to more flooding and natural disaster impacts also tend to house more under-served populations.
A few of the many interesting observations presented by the panelists:
- Trees can lower the groundwater level by 2-3 inches (a lesson from the Florida Everglades).
- FEMA flood insurance maps linger way behind current reality, so everyone should be doing property resilience studies and using better prediction tools.
- Regardless of increasingly advanced tools for climate change adaptation, we will lose our ability to adapt if we don’t slash emissions with energy efficiency.
Government agencies’ push to crack down on emissions means developers need to evaluate how they finance green projects and the measures that allow them to comply with local laws (for example Local Law 97). The good news is that there is a variety of financing products, such as rebates, green loans, and tax credits, etc. The difficulty is that these products are often quite disjointed. It takes a multi-disciplinary team, and ideally one with experience in these areas, to create a solid path through the various opportunities. One thing that is clear, however, is that these requirements are not going away.
This question was posed at the panel: Why should developers and owners complete these green projects, and why is it the sooner the better?
Answers from the panelists included:
- Fines – Fines for non-compliance with green regulations are getting heftier.
- Insurance – What is a property’s climate risk? Properties could get more expensive to insure OR insurance companies could decide they don’t want to provide insurance at all to properties at risk.
- Valuation – Property’s valuation could be negatively impacted, especially for those in areas at risk for climate change and lack energy efficiency measures.
- ESG – They may not really have a choice. Investors who have an ESG policy may essentially force owners and developers to comply, and this is becoming a growing trend.
The last key takeaway is that LIHTC green financing, ESG, climate risks and property resilience are getting intertwined. Owners and developers will have to address all these areas going forward in order to secure funding. For guidance on navigating all these ever-evolving territories, consider consulting with a sustainability firm such as Partner Energy.
by Kelsey Shaw
Director, Business Development