The Great QAP Debate is all about the distribution of resources—it’s a question ultimately of scale, or the lack thereof.
As an industry, we have finite resources to address a sliding scale of demand that slips off into infinity. So, the debate all boils down to prioritization.
That’s what a QAP should be—and in its purest form, essentially is—a prioritization of need and skill. Who needs housing the most, and who can build it best? Those are the two fundamental questions a QAP attempts to answer.
But each of those deceptively simple questions can spin off into a million voices.
How does an HFA decide which population needs housing the most? Who can possess that kind of perspective and foresight—what formula can rank desperation and despair, what calculation determines distress?
Who can build it best? That seems a bit more quantifiable—some developers are more qualified than others. But the way some states qualify developers is through a series of seemingly random requirements that ratchet up the total cost of development to the point where building safe, decent, affordable housing—the mantra—becomes financially impossible.
The mantra gets lost inside a prescriptive, and too often political, paper labyrinth. It’s a mismatch of term limits and unlimited need—QAPs, by design, reflect the moment, not the decade.
Usually, that infusion of politics is unwelcome. But right now, the QAP’s sense of timing works in our favor: Our nation is staring down the barrel of an affordability crisis so bad that even the market-rate side of the industry is flirting with the LIHTC.
And that opens a window of opportunity for us all.
E Pluribus Unum
The multifamily industry is highly fragmented—the public REITs, the biggest of the big, own less than 15% of all units in the nation, even as LIHTC syndicators such as Alden Torch are seeing more consolidation.
But the market-rate world is much bigger than the LIHTC world—in fact, we don’t really know how big the multifamily world is. The majority of units in some of our biggest markets are run by smaller, local owner/operators, and therefore aren’t tracked or counted by the big market-research firms—and then there’s the single-family rental market, which often goes uncounted.
So it follows that, as a highly fragmented industry, we also happen to be highly fragmented lobbyists in Washington, D.C.—like a pizza cut into 100 slices, each with its own topping.
Each industry association naturally tailors its agenda to its constituents. But market-rate interests and LIHTC interests don’t usually mix and mingle—in this corner, revenue management software, and in this corner, Sec. 8 vouchers—Ding.
Finding consensus on thorny issues such as housing finance reform and tax reform within the entire multifamily ecosystem can be an exercise in brain damage.
Yet, those involved in affordable housing know there’s a crisis, they knew it last year, they’ve known it all their professional lives: they live it every day—wading through wait-lists hundreds of names long. Those in the market-rate world, however, serve a much different renter in a much different way.
So it was heartening to see the National Multifamily Housing Council (NMHC) and National Apartment Association (NAA) recently join forces with associations such as the National Low Income Housing Coalition, Low Income Investment Fund, and National Council of State Housing Agencies to encourage an expansion of the LIHTC.
We should seize the opportunity this affordability crisis has given us, because now—in an election year no less—we have the strength of the entire industry speaking as one, and Congress is bending its ear. Just check out the testimony given by the NMHC and NAA March 22 to the House Financial Services Committee: Out of many, we’re becoming one.
Now, if the market-rate world can join hands with the affordable housing world—if Sam Zell can dance with Gale Cincotta—we should be able to reach some sort of consensus regarding the distribution of LIHTCs.
This article is the fifth installment of "The Great QAP Debate," a series exploring multiple perspectives about qualified allocation plans, culminating in a panel session at AHF Live! Housing Developers Forum.