Andrew Regenstreich of Housing and Neighborhood Development Services | Gateway Project in Orange | Nonprofits and Housing

Transcript

Announcer 00:02

Welcome to American Building, a weekly recorded show whose mission is to share an alternative perspective of what we build in America, and why. Together we discover how the work of the real estate industry connects to every American. In season two, we focused on how buildings changed as a result of the pandemic. In this season, we're revisiting conversations from previous seasons, to see where Americans put their heads down at night. Together, we will discover the many definitions of home across the New York City metropolitan area, which includes over 23 million Americans. Each week, we'll visit a new building and explore complex and confusing issues related to housing access to see what they can teach us about ourselves, and our country will meet those who work to develop in thoughtful and impactful ways, who build neighborhoods to be more sustainable, affordable, accessible, or inclusive, who labor to create thriving communities, and transform the lives of generations to come. Through their stories, we will humanize often polarizing topics. Profound, surprising, and hilarious. This show is for developers and builders with boots on the ground for innovators trying to find ways to improve our industry, for the policymakers and public employees. And for any person who has walked by a building and wondered why. And now your host award winning architect turned developer and startup founder Atif Qadir, AIA.

Atif Qadir 01:53

This is American Building. And I'm your host, Atif Qadir. I'm the founder of Commonplace. Join me as it take a drive by the skylines and strip malls, crosswalks, and rail crossings, balconies, buildings and boroughs to discover a new generation of housing. Let's build common ground.

Atif Qadir 02:27

In this episode, you will learn about the difference between unregulated and regulated affordable housing. Also, you will join me in hearing about the Gateway Project, a new construction affordable multifamily project in New Brunswick New Jersey. So when I use the terms unregulated versus regulated, it may sound like something illegal is going on. In the unregulated affordable housing. Less charged terminology can also be used that is little a affordable housing for unregulated units and big A affordable housing for regulated units. The regulation being referred to here is rent regulation, which is colloquially called rent control, rent stabilization or rent limits.

Atif Qadir 03:19

Therefore, a regulated unit is one subject to rent regulation that is specified through what is called a regulatory agreement. In practice, that means the rent that can be charged for the unit is bounded, as are the increases. Housing Units not subject to this are unregulated affordable housing and those in industry language are called naturally occurring affordable housing or Nola workforce housing or just housing and inexpensive areas. Regulated affordable housing is defined by area median income or AMI limits. AMI is a metric used to measure the median not average annual income for households of varying sizes in a particular geographic area.

Atif Qadir 04:13

A complex formula is used to determine rent limits based on AMI limits using the standard that a resident in a regulated affordable housing unit should spend no more than 30% of his or her income on rent and related to housing expenses.

Atif Qadir 04:30

Given the real income of the American office worker has effectively remained unchanged since the 1980s, as per a recent study by MIT, the demand for affordable housing is high. So regulated units often have a long waiting list. For example, at La Peninsula in New York's Bronx borough 75,000 people applied for just 183 units in the first phase of the development. As the housing crunch has become more severe in places like Metro New York City, even relatively high income earners are qualifying for affordable housing. This is increasing and diversifying the type of person eligible for regulated affordable housing.

Atif Qadir 05:16

Barbara Bollinger writes about this for a realtor magazine and her recent article, how affordable housing is changing? Check it out in the show notes. Despite this demand supply is the issue. Building new regulated developments is hard because of high barriers to entry based on existing political relationships, complex financing structures and limitations to economic upside from the rent controls. Also, they are often as are more expensive to build than market rate units. There is a misconception that regulated affordable housing is not high quality. This is often not true. Many are Class A and B with amenities and are operated by experienced operators.

Atif Qadir 06:05

So where does the money come in? Institutional capital can invest in regulated affordable housing in two ways. First, through buying affordable housing portfolios, which typically have near 0% vacancy and steady collections. Second, institutional capital can buy low income housing tax credits, which are a creative mechanism for corporations with tax obligations to find affordable housing now, and forego income taxes with a bonus over the long term. Because financing regulated, affordable housing is slow and complex. Many developers are trying to develop unregulated affordable housing with other incentives or no incentives at all. This has attracted new capital towards multifamily development in general, and unregulated affordable housing development specifically.

Atif Qadir 07:01

In this episode of American Building, I am sharing an edited version of the conversation I had in February 2022 with developer Andrew Regenstreich. Andrew was formerly the director of real estate and housing and Neighborhood Development Services, or hands for short. Hands is a nonprofit affordable housing development organization based in Essex County in New Jersey. Prior to that, he worked at New Jersey Community Capital. He is a graduate of Northeastern University and New York University. Enjoy the conversation. And if you are interested in more stories related to housing and impact, visit the commonplace website. Commonplace is the company I founded to make it easier to finance impactful Real Estate projects.

Atif Qadir 07:54

Thank you so much for being here with us, Andrew. One of your previous experiences, and we're effectively began this career and economic development was at New Jersey Community Capital. Could you explain what they do? And then what your role there was?

Andrew Regenstreich 08:11

Sure. So in short, New Jersey Community Capital there, and I think this classification is central to what they do. They're what you call a community development finance institution, otherwise known as CDFI. And CDF eyes. It's a Treasury Department designation, that gives money to certified members. There's a whole certification process to facilitate change. within the communities they serve, primarily through lending functions. So New Jersey Community Capital, they do a lot of different things. They do charter school lending, real estate development lending. They have a lot of different funds dealing with small business, economic development, various equity initiatives. They're their source of capital. And with that comes a lot of different opportunities to effectuate change. And when I joined New Jersey, human capital, they were just scaling out a development arm.

Andrew Regenstreich 09:10

So the head of New Jersey couldn't capital the time, Wayne Meyer, who actually used to be the Director of real estate at at hands, was very smart. Had a whole array of experiences in the financial world in the legal world. Real estate world, I think it was an accounting by training. And when he was drugged to real estate at hands, he realized the importance of using private sector tactics to facilitate change. So one example and this this leads into what Neutrogena capital ended up doing was he was part of a team of academics and community leaders that ended up buying non performing mortgage notes. I believe from JPMorgan Chase the goal was to breathe life into the underlying assets behind these notes, the houses. And he, after completing the purchase, I don't have the full Tiktok on that I'm sure it wasn't easy.

Andrew Regenstreich 10:13

But after, after doing this, he then had the ability to start dealing with these vacant properties and putting them back into productive use, and hence revitalizing the blocks, if not the neighborhoods where these properties were. So eventually, that program is called Operation labor recovery, gravitated to New Jersey human capital, where it was rebranded as community asset preservation Corporation, community asset preservation Corporation, it still exists today is a phenomenally successful development entity existing within New Jersey Community Capital that does everything from rehabilitating abandoned properties to small condo developments in emerging neighborhoods. And everything in between.

Andrew Regenstreich 11:05

When I joined, you know, they're, they're coming out party, if you will, was the bulk purchase of a lot of FHA mortgages. And, you know, the idea was to operate in a volume that's big enough that they can really effectuate change. So it was my job to make sense that, you know, I was part of a team that did this. But my responsibilities were to come up with a system or at least help come up with a system to make sense of these mortgages, that were thinking about buying, figured out a appropriate price for those mortgages, and an ultimate disposition strategy. So that was really led by by Wayne and the coalition had put together previously, as well as my boss that time Jeff Crum, but it was a real eye opener to the extent of the abandonment problem in New Jersey. So this is 2012. We're just a couple years past the great recession.

Andrew Regenstreich 12:07

And the opportunity in revitalization strategies that we could use to be a positive catalyst for for change, and really statewide, and QFC ended up growing from was that a pretty small shop? I think we operate in just a few myths Valdez to not only a statewide organization, but I believe a tri state organization. So at the very least, it's New York, New Jersey and Florida. And they might actually have operations elsewhere at this point. So it were a lot of hats and wearing a lot of hats, as we all do in this profession. You're everything from acquisition to project management, to helping implement organizational processes and procedures as we grew. But it really just started with due diligence on a bulk mortgage acquisition, that ended up being a centerpiece of the development strategy that resided within nudism E capital.

Atif Qadir 13:07

And then the focus at hands is the production of affordable housing, but also related services that focus more broadly on wealth generation and creation. So what does that those terms mean? And why do you think that's important? Sure.

Andrew Regenstreich 13:24

So the name of the game is to leave the house, the bought the block the neighborhood better than when you found it. And affordability is an extremely important part of that people need to be able to afford what you're producing. From there, I think can go in a lot of different directions, you're going back to the central principle that you want to leave whatever it is you're working on. Better. So at his hands is a very interesting place. It it started in 1986 started very small, with the desire to, to do what I just mentioned, to leave their peace of the world a little bit better. And in 1986, what that meant was really digging in to the you know, again, going back to this abandonment issue, and 1986 and orange that that was certainly an issue.

Andrew Regenstreich 14:24

And they started off just focusing on on that. How do we repair this one property? How do we repair the property next door? You know, how do we come up with a strategy for this block? Let's focus on neighborhoods. So that's, that's an in the DNA. But as you start really approaching one problem, you start seeing what a multi layered dynamic exists, that's inhibiting your ability to really effectuate change. So for example, there was a at the time a lack of places to eat. So you know, one of the things that was done early on was, was start a restaurant for a place to eat good food and congregate and watch live music, there was a need for art space programming. So Hans was at the forefront of creating an art space organization still exists today. It's called Valley arts, economic development initiatives, giving out grants to spearhead various programs.

Andrew Regenstreich 15:32

And over the decades, that's really evolved to the point where we do extensive planning efforts to really understand what's going on, in the neighborhoods we serve. So so we could figure it out what programs they're asking for, and what we could do, it moved on from just doing doing development. And in this case, we actually do, we're fairly unique. It's not just affordable housing, it's mixed use housing, where we do commercial and residential, it's just commercial, you know, we really the idea is to insert some vibrancy into, into where we're operating. we've overlaid that with Home Improvement Program. It's, you know, small grants for people to improve their homes, a small business program, small grants for businesses to make capital improvements, or make payroll order goods, financial education type initiatives, where people can learn best case practices in financial management, including increasing their wealth, and so on, and so on. So, the idea here is the problems we're trying to tackle are complicated, involving a lot of different parts for a lot of different reasons.

Andrew Regenstreich 16:43

So affordable housing, again, is very important. But it's just one piece of the puzzle. So adopting notions such as economic development, or wealth creation, we think play to the larger issues here, and allow us to incorporate many different tools to get to where we want to go. Okay,

Atif Qadir 17:04

So let's talk then about Orange, New Jersey, and the challenges of developing there.

Andrew Regenstreich 17:10

So I guess I'd put it a different way, almost anything you do is, is going to face challenges is a very funny years, quote, basically, God made plans God laughs in between the planning and laughing, I think is, is your different viewpoints, and different perspectives, and different motivations, and just life. So you know, orange, in that case is not unique. It's hard work, because it's, it's hard work. It's also more challenging to operate in environments that are not fully, fully what they could be. Orange has tremendous potential, it's got to train lines. It's a beautiful city with beautiful people and nice history.

Andrew Regenstreich 17:56

But it's, it's still a work in progress. And, you know, with that becomes economic constraints, the price of materials is the price of materials. And if you can't get the rent you'll get in Jersey City, there tends to be a gap, which adds layers to the process involves more parties, involves more creativity, maybe some more ingenuity. And you know, each each sort of like Word or process, you you add to something, you know, becomes the god laughing thing, where it just, it's another opportunity for something to go wrong, just because it goes wrong. So I'd say the challenge in Orange is just bridging the gap between where orange will be and where it is now. But but we're also lucky, it's, you know, over the last almost 40 years, we've developed the culture of participation, and community and utility. So we don't feel like we're on that journey. Alone. There's a lot of people who really care about orange and want to see succeed. And this administration, to their credit, has done a lot of good work as well. So they've worked also very hard to get orange to a certain point.

Atif Qadir 19:09

When you say administration, you mean the municipal administration, the mayoral office, right. Okay.

Andrew Regenstreich 19:16

So, so committed staff, and invest in administration, and we're all sort of sort of sort of working together to get aren't to, to the promised land. But really, the challenges are what you see in any kind of urban climate, you know, it's a lot of different vested parties. It's the need to involve various government entities to complete projects, each with their own process, and structure and way of doing things. So it's, it's a big tent, trying to do big things, invariably, challenges occur.

Atif Qadir 19:50

So 523 Freeman Street, what is the site like in terms of I'm not gonna say challenges considering what he said earlier? What are the opportunities Have that site tell us about it?

Andrew Regenstreich 20:01

Sure. So the biggest opportunity is its central location. It exists right next to one of the two train stations in orange. And right off, excuse me a major thoroughfare that goes through orange, which is Scotland road.

Atif Qadir 20:15

And then in terms of the project by the numbers walk us through the numbers of storeys number of square foot, so we get a gauge of what's going on at a site. And in terms of your, your development response.

Andrew Regenstreich 20:26

Sure, so it's about half an acre lot. And the project is four storeys, the first floor, it's about 2500 total, which will be about 1500 commercial, and then the, the systems will be on the ground floor as well. And then there's three floors each about 3300 feet, 3400 feet of three units each. So four storey building, nine units are residential, and roughly 1500 square feet of commercial.

Atif Qadir 20:57

Okay, so works out to about 1000 square feet, a unit plus or minus, what's the unit mix that you're going for? And how did you end up on that unit mix?

Andrew Regenstreich 21:06

Sure. So it's it's currently in flux, but it's going to be a mixture of ones and twos. And really what we're trying to tap into is young urban professionals, RS residents who are looking for their first place after leaving their parents house potentially, and also empty nesters from the surrounding towns. And we thought a mixture of ones and twos would best represent that demographic.

Atif Qadir 21:31

Okay, so it sounds like that the way that you decide on the unit mix was reflective of the need for units in that particular area. Yeah. Okay. And then we understand that affordable housing often has special design and construction requirements. So tell us about the team that you put together to address some of those issues and then create the overall product that you're you're planning on building?

Andrew Regenstreich 21:59

Sure. So affordable housing can have specific design requirements, depending on what financing sources you use. For example, low income housing tax credits requires a certain unit sizes, other sources do as well. In this case, we were pretty confident that we would easily meet the baseline requirements. However, our charge, if you will, our challenge was to reconcile the affordability and the desire for people of all demographics to live there with a superior design quality, and want to make sure the output is matched matched in place. And we didn't want to give the impression that we were Scotch taping something together, because we had to. So I got lucky as a very good team that was able to reconcile the need to make it affordable with that superior design. So the team, it's the old brothers who it's a fantastic architecture firm. It's actually one of our tenants, they made their home in orange.

Atif Qadir 23:03

So they're going to they're going to be renting the commercial space,

Andrew Regenstreich 23:07

they're actually their renters. Now, we have a few buildings around the corner. And they're, they're one of our tenants. And they're special people, they come from big, big architecture, background, but they also have the sensibilities of a small community oriented architect. So, you know, they be bullied with not only ingenuity and creativity, some of the soft skills they have, and commitment to the neighborhood, but they really tried to align contemporary notions of lived experiences with a healthy respect for the neighborhoods, in which the design is occurring. And, and really teasing in and this came about through our process, you know, the history of the neighborhood, how the buildings interact, the materials, the size, the scope, so they, they think in terms of tapestries, it's, you know, they're, they're artists, but they also have a planning sensibilities, and the technical expertise to put it together.

Andrew Regenstreich 24:11

And they and they really believe in what hands is trying to do, and, and the power of the neighborhood. So, you know, and with that comes, you know, an extra level of, of soul, if you will. So we've really gotten lucky there. You know, I, my experience has taught me a good good land use attorney attorney is extremely important. When used, you know, it's making sure that eyes are dotted T's are cross in terms of what's allowed in terms of what the area redevelopment plan so you could do, but also knowing when to stretch things, when to ask for what we call a variance where, okay, a plan says this, but in order to make the project happen, we would like to do something more something different. And that takes a lot of creativity and experience and persistence. So we have a great land use attorney A stainless Benjamin wine. He works for a firm called prime approval, who are extremely competent, and hardworking and persistent. And, you know, just great land use attorneys.

Andrew Regenstreich 25:14

We have a good civil engineer planner. Her name is Gearson Osterholm, who sort of fits within the theme of his team, which is young, hungry and dedicated. Everyone believes in this mission, they're tying in not only their extensive professional expertise, but also a real desire to move neighborhoods forward. And, and spend the time to do that. So it's, it's, it's a great team, New Jersey Transit is part of this because we are utilizing some of their land. And they've been fantastic. And then New Jersey, commuter capital actually has been really great as strategic partners, and helping think through how we could do this project as well.

Atif Qadir 26:03

So walk us through what our listeners would see when they visit the building as it will be when it's completed.

Andrew Regenstreich 26:11

Sure, so the design still in flux. But the main picture I want to paint for the viewers is is an initial impression about what the valley could hold, where it's been, where it's now and what it can be. And to do that, we've been very careful with how we framed out what the design can be. Like I mentioned before the Valley has industrial past, it's a lot of factories, it was a blue collar working class, but very community centered. And we want this building to be just that. And the President, manifestation of that is a commitment to small businesses, to health and wellness, to arts based programming. So what what the building aims to achieve is conjuring up visions on an industrial past. So it's been me a brick facade, it's big, spacious residential units, where you think think you're so hauled off, where you could engage in a wide array of activities. And you don't feel like you're in an urban environment.

Atif Qadir 27:23

Were you thinking of calling this perhaps Soho West? Is your you're the name of your project?

Andrew Regenstreich 27:28

We could right now It's the Gateway but

Atif Qadir 27:34

you don't actually it's funny that you're that we've mentioned that because originally before Hoboken became Hoboken, there was a tongue in cheek and descriptor of it from the earliest residential brokers calling it's so whole west. So like that upper part of Jersey City and lower part of Hoboken around the train yards. But there it is, that's, that's the brand name perhaps for Jersey. So West,

Andrew Regenstreich 27:57

I feel like at this point, I should give a shout out to my wife, who her profession is advertising and marketing. So I really internalize the notion of portraying something through targeted use of words and pictures and and narratives. So you could definitely take that consideration, is it your words, tell a story, it's it sounds sounds simple, but you know, whether it's gateway or so, whereas we want to conjure up an image even before that visual occurs.

Andrew Regenstreich 28:31

So you want the viewers to have an you know, just, you know, for viewers who don't know, orange or haven't seen renderings, you know, I think the whole West is, is a good a good frame, actually. So, you know, bright spacious residential units, ground floor commercial, where we aim to put tenants in there that will be really integrated into the community, perhaps makerspace, where, you know, whether it's light industrial, or some kind of activity that that contributes to, to an essence of this neighborhood, we're gonna have public art and a rain garden. We want this to be an oasis where people are comfortable, they feel proud to call it home. And they really feel like they're part of a lineage that's very proud and purposeful.

Atif Qadir 29:20

So is affordable housing really necessary in America? Why? And can you please explain the difference between little a affordable and big A affordable?

Andrew Regenstreich 29:31

To answer the question, I think in a way that does service to your listeners, I'll slowly change the premise. Do people's wages align with housing?

Atif Qadir 29:43

That is an excellent, excellent point of view switching, explain what you're what you're saying.

Andrew Regenstreich 29:48

So, a formula is important, of course, and one way to define it is the price of an apartment. Another way is to define it by ate what people could afford. And I think the two are conflated very often. But they're, they're, they're different, I think in several ways. For instance, if everyone could afford 2000 hours a month in rent, then it doesn't seem to be a problem that rent is $2,000 a month, it's when their wages can't afford it, then it becomes a problem. So what do you do? Do you lower the cost of housing to comport with? What people could afford? Or do you raise people's wages?

Atif Qadir 30:33

Or do you increase the supply of housing?

Andrew Regenstreich 30:37

So another another way to look at it? Right? So we'll just just take on that on that one point, right. So I would argue need a little bit of both. So what that would necessitate is take a step back, and focus on the adaptive challenge of increasing economic activity in a way that's equitable for everyone. But I think that cuts a little bit into the affordability issue. Now, it won't do everything. Another way you could approach it is increased the supply of housing. So restrictive zoning tenants, tenements, across the country, in study, after study has shown increases the price of housing, supply and demand.

Atif Qadir 31:16

I can tell you as a city planning commissioner in Hoboken, a small, very wealthy city in North Jersey, I wish I had the opportunity to hand out Oscars for some of the performances that people give about the provision of affordable housing or any other new development in their city, absolutely destroying the life that they live in their $4 million townhouse. So please, yes, I would love to hear another one of those.

Andrew Regenstreich 31:41

And that's, I think that's, that's a byproduct of an us versus them mentality, right? Where you need to lower the cost of housing, because that's the only way you approach affordable affordability. And if you're living in a $4 million, condo, on one hand, a squared off against someone who is making a force magnitude a percentage below their immediate income, it's going to be antagonistic there, right. But if you try to put forth programs, and processes that result in everyone, I mean, we're where I went $20 trillion dollar economy, there's a lot of room where people can participate. They're not, that's a problem. That's a structural inefficiency in our macro economy, but I think if you can, if you can start digging into that a little bit, then a byproduct of that will be making things more affordable.

Andrew Regenstreich 32:41

You know, for instance, a CEO now makes 400 times what the average worker makes. That wasn't always the case, if you could reduce that gap a little bit. And then also increase the supply of of housing, in general. And actually, there's, there's been studies that have shown that market rate housing increases the affordability in neighborhoods. So just increase the supply, I think you'll, you'll get at least part of the way towards accomplishing the goal of making things more more affordable, we have an affordability problem, affordable housing is important. But I think we could be, we could define it in a more broad based way. And that's the notion of what's facilitate economic development, and wealth creation.

Atif Qadir 33:28

I think particularly what I find so emblematic of the absolute clown clown car or the clown show, that is the budget reconciliation project process on Capitol Hill right now, is the war against things that actually allow people to work. So for example, the allowance for the exploration of the child care tax credit, right, um, it's just one tiny example of this larger system that we've allowed to create, I think, with our government where we celebrate wealth over work. And I think that once we go down that path, you end up in a scenario where the idea of affordability is one that is so tainted with politics, that any aspect of it seems like there is this zero sum game, where if you allow for a housing and Hoboken that is affordable to a cleaning person, or affordable to a firefighter or a police person, then somehow you have absolutely destroyed the way that that city exists. And I think as long as that fallacy exists, it's gonna be so difficult to get any of these solutions across the board in a large national way as as necessary.

Andrew Regenstreich 34:39

Yeah, and I, you know, still still no, another angle to this is fed policy, where for a lot of decades, the supremacy of of inflation was used as the frame for how we make certain decisions.

Atif Qadir 34:56

Oh, that we can't have nice things because otherwise it's going to make inflation

Andrew Regenstreich 35:00

I think that's exactly what I'm saying. And specifically, we can't have people like it's a bad thing if wages rise. It's not been my lived experience, where I'm not an economist full disclosure. So any economists who are listening to this, you're right, I'm not.

Atif Qadir 35:13

But do you know the best part is that the decision makers themselves are an economist, as well, yourself, how many people in the US Senate or real estate developers, oh, maybe we'll actually understand this process, really.

Andrew Regenstreich 35:27

And maybe we should all be humbled that what we we don't know. And, and maybe a little bit, you know, on the flip side, a bit more confident what we do know, and that is your lived experience. And the benefit that I've had is having a lot of different experiences, I could speak intelligently about rural areas of Dourdan just as much as I could speak to planning efforts in Jersey City consulting services in the UK tech market. And, and sort of everything in between. And I just, I highlight two, I guess the, you know, insight into how I think, in general, I value experience and perspective, I don't believe there's a right or wrong, I think there's a lot of gray in between.

Andrew Regenstreich 36:08

And specifically with affordability, I don't think it's a bad thing, to create the macro conditions where people can, can live, I have two young kids, I cannot imagine what it's like to make, you know, $10 an hour if acknowledged, I have my respect is endless for people who exists with limited resources, and tried to account for basic needs health care, housing, you know, that that needs to change. And I, what, going back to my experiences, what what I think is really important to insert into this discussion is allowing greater participation in the economy in a more fruitful way. And that's a whole nother conversation on how to do that. But I do think it's a frame that really needs to be paid attention to.

Atif Qadir 36:58

So speaking of frameworks, help our listeners understand what this black hole of incentives for affordable housing is, perhaps at the level of government, maybe explain that, and also the categories of incentives that exists. So there's a framework for people to understand what this is.

Andrew Regenstreich 37:18

Sure. So when you go to different countries, very often, you have to learn a different language, you have to learn about different institutions, you have to learn about different gatekeepers. So at this point, I'd like to introduce you to the country of affordable housing incentives. Amazing. Yeah, it's for the untrained slash trained I, it's very opaque. And you have to learn about, first of all, what types of incentives are out there? That's, that's factfinding itself, where the application is the qualifications like for those different applications? How does it tie into, you know, a capital stack? You know, do you do low income housing tax credits, or community block grant funds? And, you know, why do this? And why do that? And why don't do this by don't do that? How does it all fit together? That's, that's, that's his own puzzle piece.

Andrew Regenstreich 38:15

What's the push pull? If I do this? What do I give up in return? Who's the gatekeeper? Why are they making decisions? How am I being scored? What's worth my energy? What's not, there's probably 1000 micro decisions you need to make after you figure it out what's even out there? So, you know, it's complicated, because, you know, before Redis, I there was not many centralized systems that would allow you to plug in a scenario, I think, a huge advantage of redis actually, and, and spit out what you should be focused on. Because you're also dealing with an industry that that, that has limited resources, both on the personnel and financial front. So I can't spend six months trying to untangle all these different things I mentioned.

Andrew Regenstreich 39:03

Because you I don't have six months to gel. So it's, it's complicated, because, you know, we're, we're not a command economy. So that's, that's part of it. Like there's no centralized housing policy, the policy changes state to state, municipality to municipality, and over the last bunch of decades, what's manifests has been a result of that. It's different things occur at different moments for different reasons. And that's very complicated.

Atif Qadir 39:32

One thing that we like to think of redist in terms of understanding incentives is the division and the relationship between incentives at the federal level, the state level and the local level. And what is fascinating is the flow of money comes from the local level from taxpayers up to the federal government and then back through a waterfall of incentives, understanding that is very important, and then understanding the idea of incentive twins. So those are the ones that exist at the federal level and have a twin that at the state level, or exist at the state level of a twin at the local level, right?

Atif Qadir 40:10

Those are frameworks that we use to help understand opportunity. And the other one is categorization. So that particularly are the vehicles by which the incentive build is delivered. And the most common ones are tax credits, tax abatements, low interest financing, zero interest financing, grants, and rebates. And below that there are some more exotic species, like zoning bonuses, but those tend to be the dominant ones that that we think about.

Andrew Regenstreich 40:43

And each one of those categories has different funding sources with different political constituencies and difference scoring criteria, different types of byproducts they're willing, they're trying to stimulate. And then wrapped up in that is the priorities of municipalities, or particular state, or even the federal government, which always change. So it's, it's it's a shifting narrative, it's shifting array of actors, all sorts of things.

Atif Qadir 41:12

You may be interested in knowing this, Andrew, since you are a political junkie, like me, so I was in Washington, DC last week, and I was chatting with congressional staffers that I'm friends with. So actually one of the redistilled members as a former congressional staffer for a congressperson from Illinois, and we learned that the of the reconciliation budget, the most bipartisan, the most popular part of it, behind closed doors is all of the real estate tax credit incentives, because that is one that whatever your political party affiliation, it just screams Yes, this idea that you do not have a current outlay of cash, you're able to push that into the future as a government and use private sector as a means for delivering that cash upfront.

Atif Qadir 42:01

To allow for a social good to happen, like affordable housing was brilliant mechanism there is what we also understood is that very much so the opposition, that is happening pretty much to a tee within 50% of the US Senate, the reconciliation has to do with political posturing. And the reality is we're having talked to the staff of one of the Republican senators is that the intention is once January comes next year, that the reconciliation budget is we pass in another form, it's me this the same exact thing, just a different name, perhaps, and the tax credits for affordable housing, the tax credits, or middle income housing, affordable housing, and also as aside for energy efficiency in buildings is the number one thing that we part of that. So it's both absolutely maddening. And it's also both comforting as well to know that's the case.

Andrew Regenstreich 42:55

Yeah, it makes perfect sense. To just just go back to tech space, in particular, you know, I, we start off the podcast saying I learned something from each one of my experiences, but the human element sort of carry carried through. And it always seems a common to me to find an area that touch upon each particular person's priorities, and allow the human element to come out with with tax credits, I think it's a great example of, of interest in mining. corporations want to pay less taxes, organizations committed to some kind of social purpose, want to further that social purpose. And a lot of times it needs it needs money. So the tax credit is a genius way of allowing the government to retain its role and all this stuff, while allowing corporations to pay less taxes and social service organizations writ large to do what they do tax Where does all that.

Andrew Regenstreich 43:52

So, you know, Governor wants to be involved in the process, because, you know, just because anyone wants to be relevant. It's it's a human thing. To get to be relevant. Corporations get to go back to their stakeholders and say, you know, we're paying less taxes, and doing good such an extra extra check mark. social organizations who a lot of times have greater ties to the communities they serve, get to say, we're able to effectuate the change, we want to effectuate because here's this money. So I'm not I'm very fascinated with the possibilities tax when it's hold. I think we've just 100% the surface. It really can be a very powerful tool for a lot of things.

Atif Qadir 44:36

I agree. And then so we've talked about the framework of understanding incentives. We've talked about the political intrigue on Capitol Hill. One thing that I think our listeners might be interested in, is understanding the timeline and how do incentives impact, say critical design and construction timelines from say, example projects that you have worked on? Help us understand where this process fits into your design and construction schedule? Yeah,

Andrew Regenstreich 45:00

sometimes it does. Sometimes it doesn't. I think a more universal perspective is the need to put a capital stack together in appropriate timeframe. And incentives have an application process. They're not all the same. But they, again, sometimes they align, sometimes they don't. So take well, income housing tax credits, you need to have a lot of things checked off before you even apply for low income housing tax credits. So you need self control you need, you need plans, you know, your budget, all that stuff. And there's, there's an upfront cost to do that. So, you know, as an organization, you know, you need to be capitalized to a certain level, you other non tax credit stuff, you know, sometimes you need to control sometimes you don't, but really, broadly speaking, incentives are just one piece of the puzzle that you're going to have to work through. And it works the same as any other piece of the capital stack.

Andrew Regenstreich 46:02

Where, you know, you have to pay attention to the timeline, you have to understand your costs, what you could outlay what you could afford to, you know, to pay up front what you can, any governmental constraints, the city wants you to complete the project in a certain amount of time, who your stakeholders are, perhaps you have an equity investor in a project that also needs subsidy. So when does that equity investor need their money back? Are they more patient? So I guess they were able to answer the question is, it really depends on what the subject sources, yes. who your stakeholders are, what your liquidity looks like? How much cash can you really burn through? And what size the project so, you know, it's, it's another reason why I think, you know, and I truly mean, that's what it says providing great service is your evening out those rough edges.

Atif Qadir 46:52

So, thank you so much for taking the time to be on the American building podcast, Andrew. Thanks for joining me today on American building. If you enjoyed this episode, and want to hear more, subscribe on your favorite listening app. And don't forget to rate and review and friends. I've teamed up with writers for the New York Times and well magazine to launch a digital media platform. To tell the fascinating stories of the impact developers and capital providers. I work with a commonplace. Check it out@commonplace.us