Stephen Whyte is the founder and managing director of Vitus, a national owner and developer of affordable housing.
Headquartered in Seattle, the firm, which specializes in preservation projects, has provided stable homes to more than 25,000 residents in 25 states.
Whyte, an authority in putting together complex transactions, discusses his start in the business, industry trends, and what he’s reading.
What was the first affordable housing project you worked on?
The first project I worked on was a long time ago! It was in 1989, and I was a commercial real estate broker in Portland, Oregon, trying to figure out how to put my degree in economics and finance to good use. A client had just placed a large apartment project under contract that the Resolution Trust Corp. had taken back from a failed savings and loan institution, and he asked me to “figure out” the very new low-income housing tax credit (LIHTC) program for him. I did that, resulting with the first bond-financed 4% project in the state. We got all of $0.51 for the tax credits, and the bonds were backed by only a 10-year letter of credit.
What did you learn from that first project?
Well, what was considered adequate rehab at that point would be considered a joke today. I think the rehab was $6,000 per unit, and of course it was woefully insufficient. The lesson was to make financial assumptions that truly support a minimum 15-year holding period.
What was a pivotal moment in your career?
In those early days of the tax credit program, the various parties at the table had no idea what the role of the other parties was. I saw a clear opportunity to create a consulting practice that introduced and coordinated all of the parties in a housing transaction. Beyond that, there was an opportunity to create financial tools that enabled developers to optimize pricing and other development outcomes, and to enable the LIHTC investor to easily assimilate the project’s financial characteristics. But this “pivotal moment” was a product of time and place. Ten years later, the industry had grown so much that there was not much need for a consulting role like that. By then we had moved on to developing our own projects.
What’s a good move that Vitus recently made that other developers can learn from?
It’s not a matter of a move we have made as much as a philosophy we have practiced. Over time, we now see that disruptions in our space should be expected—disruptions like the post-9/11 recession, the 2009 Great Recession, and more recently the corporate tax rate reduction. Those disruptions put a temporary chill on our marketplace and resulted in a new pricing framework for the credits, which can make things very challenging for developers with an active pipeline. The philosophy that we drew from then, and continue to practice, is to value relationships above all else. It’s certainly more important than getting that last quarter cent in tax credit pricing or 10 basis points in interest rate. When times are difficult you need your relationships more than ever, and it’s our key relationships that have pulled us through many challenging situations. Strong and positive relationships are part of our brand.
If you could add any amenity or feature to a development, what would it be and why?
I think it’s critical for us in affordable housing to think long term about climate change. For instance, Hurricane Ida showed us that with these massive weather events that have now become the norm, there can be grave hardships and even fatalities related to the heat. When heat like that can become deadly, we should be asking what can be done to make our affordable apartments safer, before the next storm comes.
What housing trends are you watching?
Permanent supportive housing for the homeless, to see if it can begin to turn the tide against the enormous problem of homelessness that we see in all of our cities.
What books are on your nightstand?
Most recently, while traveling this summer, I finished “Hamnet,” which is a beautifully descriptive novel of the late 1500s imagining the life of Hamnet, Shakespeare’s actual son, as a possible inspiration for the play Hamlet. Apropos of travel, I also completed Paul Bowles’ epic “The Sheltering Sky,” which tells of the North African voyage of three tragic travelers, in a way that weaves together both their exterior journey and their equally arduous interior odyssey. I highly recommend both.
