Talking Heads: Bernie Husser, The Richman Group

9 min read

During Bernie Husser’s two-year term as chair of the National Housing & Rehabilitation Association (NH&RA), which ends at the annual meeting in March, the organization has launched its Preservation Through Energy Efficiency initiative, fought for affordable housing in Congress and watched over the launch of a new federal program to recapitalize public housing. Husser has been in the business of affordable housing for more than two decades. Now an executive vice president for The Richman Group, from 1999 to 2009 he acquired low-income housing tax credits (LIHTCs) as a managing director at Boston Financial Investment Management (also known as MMA Financial). Before that, he served as vice president of acquisitions at First Financial Management Corporation.

As an officer of NH&RA, before he became chairman, he participated in early discussions with officials at the U.S. Department of Housing and Urban Development (HUD) as they developed the latest program to redevelop public housing, the Rental Assistance Demonstration (RAD) program.

TCA: How did NH&RA participate in the creation of the RAD program?

Husser: When HUD first floated this idea of a new approach to preserving public housing, Thom Amdur, our NH&RA executive director, immediately understood this would be a major initiative. So he organized meetings with HUD officials and staff. We had NH&RA members come down to D.C. so we could be part of the discussion.

TCA: How is RAD different than the old HOPE VI program to revitalize public housing?

Husser: The HOPE VI program did a lot of great things. I was heavily involved in financing several HOPE VI transactions. But there was a lot of criticism of the program. It was never large enough to make a difference. By changing low-income housing into mixed-income developments, it eliminated affordable units. Over 15 years, HOPE VI demolished 96,000 units of public housing and developed 105,000 new units, but only 56,000 of them were affordable housing units. George Bush tried to eliminate HOPE VI and Congress cut the funding year by year. So HUD was trying to address some of the criticisms.

TCA: Was displacement a concern?

Husser: Absolutely – HOPE VI did not require one-for-one unit replacement, so many low income units were being lost. Also, there was only so much money for HOPE VI, so you were only going to affect maybe 15 cities in any one year during the good years. The program got smaller and smaller. Meanwhile the whole rest of the assisted housing stock was suffering.

I was already an officer with NH&RA when this effort started. I had built an expertise in underwriting and understanding public housing and understanding how investors looked at it and how lenders looked at these transactions. What we learned from the HOPE VI program was that we needed a really good way to leverage money. But because of the way public housing regulation worked, the subsidy wouldn’t support debt.

So HUD started to shift to this idea: Let’s make public housing more like Sec. 8, which is a program that had been around forever. Make it a voucher program. Lenders understood how this worked and would be willing to lend against it.

HUD built areas of consensus with Congress and with funders to get some money for a RAD demonstration program. It was limited to 60,000 units, but that’s still a significant number of units. Along the way NH&RA was really a leader, pulling together meetings with HUD officials and staffers and having our members come in a talk to them. HUD listened.

This year, Congress has passed a new appropriations bill that has increased the RAD program from 60,000 to 185,000 units. It’s a huge opportunity for housing authorities and their residents and the members of NH&RA to improve the housing stock.

The beauty of the program is it’s far broader than HOPE VI. We’re talking about 185,000 units in communities of every size and everywhere in the country. HOPE VI would have taken forever to achieve that many units, and maybe never would have.

TCA: Are you working on any RAD deals at the Richman Group?

Husser: Right now, I am working on my first RAD deal out in Richmond, Calif. The Richmond Housing Authority and their administrative general partner and property manager the John Stewart Co. are recapitalizing 155 seniors and family housing units at Friendship Manor and Triangle Court. We have to deal with all the issues that go on in the San Francisco Bay Area, like high construction costs and development costs. But we fully anticipate closing in the next month and a half.

We’ve also closed a lot of mixed-finance deals, including several deals with people that I have met or whom I developed a relationship through NH&RA.

TCA: During your time as chair of the board, NH&RA developed its Preservation Through Energy Efficiency initiative (PTEE). How has that worked out?

Husser: It’s really been a big success. PTEE wades through all the ideas and information out there on newer technologies and newer products that are energy efficient or are efficient with water. It identifies the ones that are the most cost-effective and the most efficient within the affordable housing environment.

In the conventional real estate world, it’s more straightforward. A company or a market-rate apartment renter might be willing to pay more for a particular energy saving feature. In the affordable world, we don’t have that advantage. Your rents are all capped in one manner or another relating to the income of the residents. At many LIHTC properties, the cost residents pay for electricity and water is subtracted from the maximum rent they can be charged. The cost savings from energy efficiency work can take their time to trickle back to the owner, as lower costs lead to lower utility allowances for residents and managers eventually increase the rent. Affordable housing owners often struggle to pay the upfront cost. PTEE can help by pointing owners to local funding programs or products with the most predictable savings.

We are coming to the end of the first round of PTEE Road Show meetings. These Road Shows reach out to people in various geographies, bring together developers, building management, utility companies and funders, and look at regional utility cost structures and the incentives.

I went to the first Road Show meeting in Philadelphia, last April. The program has been to several different cities in different regions: out West with Denver; and the Midwest with Minneapolis, and South with Atlanta. The last of the initial set of meetings is coming up in April in Indianapolis. It’s really impressive. It’s the first time a lot of these people with shared objectives have been in the same room.

There is also vast stores of information on the PTEE database, including reports and papers on energy efficiency. It is helping people wade through the vast amount of what is out there on the Internet and hone in on what they are looking for. Thom is now communicating with the MacArthur Foundation about lessons learned so they can plan the next steps.

TCA: What can NH&RA do when Congress threatens programs like the NMTC or LIHTC?

Husser: We have to be unified and vocal as an industry. For several years now, there has been a risk that Congress would pursue comprehensive tax reform, which could change or even eliminate programs like the Low-Income Housing Tax Credit. The New Markets Tax Credit is also regularly threatened with expiration and needs to be renewed by Congress. We know what we have to do. A lot of it is education. We need to show government officials the results of these programs.

That means inviting Congresspeople and staff to groundbreakings and grand openings. Showing them what these dollars have created. Getting some of your residents to tell their stories to the local media, who will come and cover the ground breakings because the politicians are there. Communicating these positive stories about how it has bettered people’s lives. We have to recognize, too, what resonates with the general public, which is job creation.

We are in a very challenging environment for what is perceived to be government programs. We have to present the facts to Congress and their staffs and the media. Talk about the cost savings. Show that supportive housing prevents people being homeless. Homelessness is not only horrible, it’s also expensive. Being put up in a shelter would cost $250 a night. Instead they are in a home that costs $600 a month.

The National Council of State Housing Agencies, the Tax Credit Coalition and several other groups have put out position papers, including a lot of these facts. NH&RA helped gather these facts and collaborated with other industry organizations.

TCA: How has NH&RA affected your business?

Husser: NH&RA has offered a huge opportunity to increase the relationships that I have been able to make through the industry, and the depth of those relationships. Just one example is David Reznick, who we recently lost. Just a great guy, and a great advisor to everyone in affordable housing finance. NH&RA gave me an opportunity to see him frequently, to learn from him more frequently, and at the same time to meet his wife, his family, and just know who he was as a person.

TCA: As you leave your role as chair, how do you look back on it?

Husser: It’s been a really enjoyable and valuable opportunity just to be able to say, “Here are the couple things that I would like to see in our industry,” and then see action on them. For example, I wanted to see us encourage younger people in the industry, who would only occasionally come to NH&RA meetings, to take a more active role. So a group of NH&RA’s younger members just held their first meeting in Boston in December with 35 or 40 people. Several agreed to be part of a steering committee. A bunch of people came from outside of the city, even some people who hopped on a plane. The group will get together again at the annual meeting in Key Largo. This is a way for us to give younger people more industry responsibility and build the leadership for the future.