AHI: Frequently Asked Questions
Why affordable housing?
Why use the U S experience?
Why David A. Smith?
Why found the Affordable Housing Institute?
How does AHI differ from Recap?
Where do we go from here?
Why affordable housing?
Good housing incubates good families, and good families incubate good citizens. Bad housing incubates bad families, and bad families incubate bad citizens.
If you are not prepared to believe this, stop reading now.
Whether or not sociologists can prove that proposition, those of us who have worked up close with properties know it to be true. So whether you come to affordable housing with your heart (helping those who need it) or with your head (making society better and safer for all of us), if you believe that housing incubates family, then you must conclude it is worth sustaining.
And affordable housing does not occur naturally in nature. Housing, like any business, is an economic organism: it must bring in enough money to cover its costs, or it dies. Left to its own devices, the private market makes housing 'affordable' by eliminating maintenance to lower costs and squashing people together to raise their rent-paying ability until the economics balance. For more than two thousand years, ever since human beings came together in cities, the private market has been ruthlessly effective in making this. It is called a slum. And slums not only breed disease, they breed misery, violence, and eventually riots.
We can do better.
Since early times, affordable housing has been the province of religious institutions, charities, and governments. In each case well-meaning people have contributed time and money to create what does not occur in nature: market-quality housing for people who cannot afford market prices.
Why use the U S experience?
Most affordable housing experiments have failed – or rather, they have succeeded only for a time. Affordable housing is a challenging business to sustain, vulnerable as it is to shocks from every direction. Any property will fail without both continuous talent and continuous financial support. Even with these things, many properties nevertheless fail.
In the US, government involvement with affordable housing dates from the 1937 Housing Act, born of the Great Depression. Our involvement with public-private affordable housing dates from the 1968 Housing Act. In the 34 years since then, the US government has invested, directly or indirectly, roughly $350 billion (2002 dollars) to create, operate, renovate, and preserve, roughly 4,000,000 public-private affordable apartments. That is a huge investment and a huge experience base. That money and that experience have bought us some wisdom – sometimes expensively, very expensively.
In affordable housing, every decision faces an inherent tension: maximize income or maximize affordability?
When we make mistakes, and we have made many, they stand as grim monuments to past theories about how people should behave rather than how they do behave. Doctors bury their mistakes. We foreclose ours. Sometimes we implode them, level them and start from scratch.
Why David A. Smith?
For twenty-seven years, my entire business career, I have worked on existing public-private affordable housing, usually fixing things that are wrong. Knowing nothing of the field when I started, I have become a passionate advocate for it, and a passionate critic when it is done wrong. Seeing it done badly, seeing money lost and people suffering, infuriates me. The residents deserve better. The taxpayers deserve better. We all deserve better.
For the last thirteen of those years, I've run Recapitalization Advisors, Inc. (www.recapadvisors.com), a for-profit consulting company. Recap recapitalizes and preserves existing affordable housing through innovation financial transactions. Though small, it is nationally known and respected as a transaction innovator and thought leader. We don't just talk about it, we do it.
For more than a decade – really, ever since I started Recap and even before – I've volunteered my help to academics, policy makers, program designers, HUD, Congress – in short, anyone who can influence policy – in an effort to make what we have work better. Everything I know about the inventory and its challenges, I learned by observing and doing (and, of course, making my share of mistakes). I've testified before Congress, served on HUD and Congressional practical working groups, written numerous articles and papers, and generally spread what I've learned anywhere and everywhere it will do the cause good.
I like this stuff. I believe in this stuff. I want to see it done better. Done right, it spans political ideologies: liberal or conservative, left or right wing.
Why found the Affordable Housing Institute?
For some time I have been convinced that, over the long term, the public-private model produces better affordable housing than either a pure market or a pure government approach. Since we in the US have had so much experience, I believe we have learned some things the hard way that can be applied elsewhere, to help other folks not make the same mistakes we have.
This doesn't mean everything we do in the US is right. Far from it. And even if a system works well in the US, it may not transplant into another ecosystem, because each ecosystem is unique. Yet the principles involved are surprisingly portable , if you make sure to understand the local environment and adapt the recommendations to local conditions. Indeed, once they bridge the vocabulary gap, and get past a desire for immediate superficial prescriptions, participants find they have a lot in common; each can learn from the other's best practices.
Hence the mission of AHI:
Helping people create, improve, sustain, and preserve affordable housing worldwide.
It's a worthy goal, one whose achievement is its own satisfaction.
How does AHI differ from Recap?
Recap is for-profit, and Recap is domestic to the United States.
AHI is non-profit, and AHI works exclusively outside of the United States.
Recap is an outstanding company pledged to give the best possible service and deliver value for money. AHI aspires to the same goals.
AHI will build its Web site and related resources into a free library of ideas, wisdom, best practices, and innovation. On a country-specific customized basis, AHI will help develop programs, policies, and financial infrastructure to grow a healthy affordable housing ecosystem.
People value only what they pay for, even if that co-payment is modest. So while AHI will give away its publications, it will not give away its customized services … but AHI will price these on a bargain basis, seeking government or grant funding to cover its income gap.
Where do we go from here?
We want to grow AHI. We have no monopoly on good ideas. If you want to help us grow and achieve, please drop me a note.