Carol Galante’s latest role calls on her many and varied affordable housing experiences.
The longtime developer and recent Federal Housing Administration (FHA) commissioner has joined the University of California at Berkeley, where she is teaching housing policy and establishing a unique center that will explore and spur innovations in developing affordable homes.
It’s a post that brings together Galante’s work in Washington, D.C., where she was a top official at the Department of Housing and Urban Development (HUD) for the past six years, and in California, where she led BRIDGE Housing, a major nonprofit developer, for 13 years.
Tell us about your new job.
I’m very excited about it. There are a couple of aspects to it. First, I’m teaching in the City Planning Department in the College of Environmental Design. I have one semester under my belt now. The students are just incredible. The main thing that I’m doing besides teaching is getting a new center up and running—The Terner Center for Housing Innovation—named after Don Terner. [An entrepreneur and developer, Terner was the first president and CEO of BRIDGE Housing.] We want to be a leading voice in formulating practical solutions and policies to meet the challenge of developing homes and communities that are both affordable and environmentally sustainable. We want to be a place where policy makers and private-sector partners can look at the things we’re developing and take those on to better achieve results for families and communities.
What did you teach this year?
I taught U.S. housing policy this past semester. In the fall, I’ll be doing a development and design studio with an architecture professor, which is going to be affordable housing development 101— finding a site, doing due diligence, financial feasibility, designing it, coming up with a community acceptance strategy, how you pull it all together, and doing it in a competition format as a class.
Do you see policy differently after spending six years in Washington?
I went (to Washington) because I really wanted to take my practical experience in the trenches and try to make a difference in the trajectory of federal policy. I did get some legislation done even with this divided Congress, but what was most meaningful to me was actually seeing how much you could change policy and practice with administrative actions, by looking at how the work was being performed at HUD or at Treasury and coming up with different ways that would be more effective for the properties, the residents, and also the effectiveness of the developers or lenders that we were there to support.
When I originally went I imagined that more of the work would have been legislative than it actually ended up being. I was surprised by how much good you could do administratively even when you couldn’t make major legislative change.
What was a key administrative change?
On the multifamily side, there were various small actions we took to enable nonprofit and for-profit developers to be able to combine and refinance existing HUD Sec. 202 properties or enable small properties to be recapitalized in a more effective way.
On the single-family FHA side, there were many issues we were dealing with during the crisis, but the big administrative change that was really impactful was how we disposed of loans or properties that were in serious default. We came up with something called the Distressed Asset Stabilization Program. It enabled us to get more money for FHA from these properties rather than taking them all the way through foreclosure by selling the loans early. It also gave the existing borrowers another bite at the apple in terms of being able to perform on their mortgage with a new lender because the lender was buying that loan at a lesser cost, so there was an ability to do a modification on that loan.
Is there a main lesson you’ve tried to pass on to your students?
In teaching them policy, it’s understanding that there are different paths to making change. While you may have a big idea or see something that is fundamentally wrong with the way the country approaches housing policy, you’ve got to look at attacking it with variety of tools, from the legislative process to the administrative and everything in between.
At the new center, will you be working with developers?
Yes, the work we want to do isn’t about pure research. It’s about things that will actually move the dial. That means impacting the practice of developers and communities. It’s not just policy action. It can be innovations in, for example, how you do construction in a way that will be more cost effective as an example. We definitely want to have developers very much involved in an advisory group that will help me determine the most important activities to be working on. We’ll be working with developers across the country. I would be remiss if I didn’t say that while I want this to have national impact, there are some particular opportunities and challenges in California. I think there’s a need for an entity like the Terner Center for Housing Innovation to focus on some of those particular California issues like how do we house and add new supply while at the same meeting very ambitious climate change goals.
What do you miss about being a developer?
The thing I miss most about development is seeing the very real result. The ability to actually see the finished product and then the wonderful people who get to call it home. I still love driving past or stopping into developments I worked on 20 years ago and seeing how they have held up, how the trees have grown, and seeing what an integral part of a community they are. In my current and former role at HUD, the impact of policy making and programmatic change is more indirect. However, I did love going out to communities to see the results on the ground, made possible, albeit in a more indirect way.
You’ve gained new perspectives and skills in Washington and at U.C. Berkeley. How would you be a different developer today? What would you do differently?
One interesting perspective I gained in D.C., which is being reinforced at Berkeley, is the importance of documenting and evaluating lessons learned from every creative aspect of a development—whether that is a financing technique or a technological innovation. In the drive to “get the deal done and meet deadlines and budgets,” the thoughtfulness about what worked, what didn’t, and how to improve in the future often got lost. I realize in a much deeper way how important those lessons are to making greater impact over the long term.
What’s a policy change that you would still like to see happen?
So many to choose from! The small changes we proposed for several years running in the LIHTC program would certainly be high on my list—particularly the ability to do more effective mixed-income developments by allowing for the rents to be on average 60%, but some could go to 30% and some to 80%. This is a very sensible and small change but would have a tremendous impact on reaching a broader range of needs in different markets.