Strategies for building a holistic affordable housing development team

Building an effective affordable housing development team that can plan, fund and develop housing while managing risk and turning a profit isn’t easy. But at Baker Tilly’s 2022 DevelUP affordable housing workshop in Milwaukee, a developer and a tax credit syndicator provided key tips for aspiring developers to become more successful, especially with their first project. The educational and networking event brought together underrepresented multifamily housing professionals, allies and advisors to learn the ins and outs of affordable housing.

Don Bernards, principal in Baker Tilly’s real estate group and leader of the multifamily housing practice, read from the Affordable Housing Investor Council’s Underwriting Guidelines, “A development team with the appropriate expertise and capacity is essential to the success of a housing credit project. Every member of the team needs to have the relevant experience and financial and organizational strength to deliver its contribution to the endeavor.”

Kevin Newell, founder and CEO of the real estate development company, Royal Capital Group, noted that when he started out, he understood real estate financing and property management from his time working at the Wisconsin Housing & Economic Development Authority (WHEDA), but he didn’t understand construction. Demonstrating his knowledge of how to mitigate risk and effectively use LIHTCs made it easier for him to enter into joint ventures with entities that could provide the construction expertise. Repeating the process successfully over several deals allowed him to build up his own balance sheet and reputation to the point where he could undertake development deals independently.

Lydia Smith, director of the Emerging Minority Developer Fund at the National Equity Fund (NEF), one of the nation's largest syndicators of the LIHTC, underscored the importance of partnerships for people starting out as affordable housing developers. She said, “the value you will get from partnering is going to far outweigh the cost in terms of the fee that you're going to receive on those early deals.” Talking specifically to the less experienced developers in the audience, she said that needing a partner to do a deal is not a barrier to accessing funds through NEF.

Learning while planning

Panelists noted that finding the right pieces for a development team is a combination of knowing the skills and experience you have as a developer, being able to identify what you need in a development partner, and then being able to effectively negotiate the terms of the partnership. Smith said “don't undersell yourself; really speak to what your experience is. If you're new, speak to your ambition, your hunger, your growth, where you actually want to be involved.”