Talking Heads: Priya Jayachandran, President, National Housing Trust

11 min read

“We Need a New Rental Assistance Program for the 21st Century”

During her 25-year career as an affordable housing professional, Priya Jayachandran has played many roles—lender, developer, regulator, activist—and in the process has become one of the most widely respected advocates in the business.

Earlier in her career, Jayachandran spent 15 years in community development and real estate banking in New York and Washington, D.C., at both Citi and Bank of America Merrill Lynch.

During President Obama’s second term, she accepted a position as a senior policy advisor within the Department of Housing and Urban Development’s Office of Multifamily Housing to help guide the administration’s work with the Low Income Housing Tax Credit (LIHTC). Within a year, she was named deputy assistant secretary for Multifamily Housing and put in charge of the largest department within HUD and some of its most important programs.

Today, she serves as president of the National Housing Trust, Washington, DC, a nonprofit developer, lender, energy conservationist and one of the nation’s most recognized affordable housing preservation advocates.

Tax Credit Advisor sat down with Jayachandran to get her perspectives on preservation policy and trends and what role she sees NHT playing in that debate.

Tax Credit Advisor: What’s your assessment of the current affordable housing preservation situation? Do you consider us in a crisis? 

Priya Jayachandran: The need to preserve affordable housing is critical, but I don’t believe we are in a crisis yet. However, I think that resources and strategies are needed if we are going to avert a crisis.

TCA: What policy changes, or incentives, should Congress and the state legislatures be focusing on to help spur more preservation?  

PJ: There are two very important bills pending in Congress. The Affordable Housing Credit Improvement Act, introduced in June as Senate Bill 1703 and House Resolution 3077, would increase LIHTC allocations by 50 percent phased in over five years and establish a minimum four percent rate on projects financed using tax-exempt bonds. It would also make LIHTC more effective for housing preservation by modifying rights related to building purchases, replacing the existing right of first refusal with a purchase option, and including relocation costs in rehab expenses. It is estimated that the bill would incentivize the building and preservation of 500,000 affordable homes over ten years, generate $48.5 billion in wages and business income, $19.1 billion in tax revenue and 510,000 jobs. NHT is a strong advocate for this critically important bill.

NHT has led the effort to build congressional understanding and support for another piece of legislation that is crucial to long-term preservation efforts. The Save Affordable Housing Act, introduced in August as Senate Bill 1956 and House Bill 3479, would ensure LIHTC properties remain affordable for at least 30 years as Congress intended by repealing the Qualified Contract provision for new LIHTC properties and require existing LIHTC properties to be sold at a fair-market price rather than the statutory formula price, which typically exceeds fair-market value. Passage of this legislation is essential to preserve irreplaceable affordable rental housing.

There are other things that can be done to spur preservation at the state and local levels. State housing finance agencies can use their Qualified Allocation Plans to incentivize preservation and long-term affordability by requiring a waiver of the Qualified Contracts. At least 28 states already require a QC waiver with a nine percent LIHTC allocation. I also think state legislatures could be doing more. Oregon’s legislature recently passed a significant package of incentives to finance new construction and preservation of existing affordable housing. And in 2017, California passed a bill that gives tenants more advanced notice before owners can increase their rents and it requires owners to preferentially sell to qualified buyers who intend to maintain properties as below-market rental housing.

Another issue that states should be focused on is data. It’s difficult to preserve something if you don’t know what you’re trying to preserve. We’ve been big advocates of improving data on the existing stock of affordable housing. A good start is the National Housing Preservation Database, but many states and cities are taking it a step further. Denver, in addition to tracking expiration restrictions, has added risk factors and property and owner information to target resources.

TCA: Are there new financing tools that can be created? Is there enough support for this?  

PJ: Several Democratic presidential candidates have announced housing plans and Senators Cory Booker and Kamala Harris and former HUD Secretary Julian Castro have also proposed renters’ tax credits. But affordable housing still doesn’t get talked about enough. It costs money. I think we too often apologize about subsidizing housing. All our national priorities require a subsidy. We subsidize defense, transportation, education. We need to subsidize affordable housing. LIHTC is one way, but it was never meant to be the sole driver of affordable housing.When it was designed, LIHTC was part of a broader financing system. Now, it seems like we are down to one arrow in our quiver. We need a rental assistance program for the 21st century. Tax credits are great, but I think people are glomming on to them because they’ve given up on appropriations. That’s wrong. We must continue to fight for appropriated funds for affordable housing.

TCA: Is that something you’re pushing for in your advocacy efforts? 

PJ: Absolutely. Going into this election cycle and potentially into a new administration, we are thinking of ways we can advocate for more money for rental assistance. Project-based rental assistance is reappropriated every year with funding increases. That’s great. But it’s mostly cost of living adjustments and Rental Assistance Demonstration (RAD) conversions. We need a new program that allows new buildings to have the benefit of Project-Based Section 8-like contracts and whole new scores of renters who can access the program. Realistically, that’s not going to happen in the next two years, but I think there is an opportunity to highlight this during the presidential election cycle. We are eager to plant that idea with the candidates.

TCA: Since taking over as president of NHT what new initiatives have you undertaken to preserve more affordable housing?  

PJ: We have highlighted the Qualified Contract issue and advocated heavily for addressing that hemorrhaging in the Saving Affordable Housing Act. We worked with HFAs and encouraged them to close the [QC] loophole by screening requests more thoroughly and requiring owners who apply for nine percent credits to waive their rights. We supported the ‘right of first refusal’ litigation and will be signing onto an amicus brief that advocates LIHTC properties remaining in the hands of mission-driven organizations. We believe it was the clear intention of Congress to protect the long-term affordability of LIHTC properties by giving mission-driven partners the option to purchase their properties. That intent is increasingly under threat as new investors try to wrest control of LIHTC partnerships with the objective of achieving cash windfalls.

We are taking our preservation experience and expertise and applying it locally. We recently engaged with a partner to develop a preservation plan for the city of San Diego. We see an opportunity for us to share what we have learned around the country and offer best practices. It also gives us an opportunity to learn from cities that are grappling with this on the ground. We have done similar work in Denver and Miami.

Finally, we have increased our own preservation efforts. NHT launched a fund in 2016 to bring capital to neighborhoods of opportunity in exchange for the owners agreeing to introduce Section 8 portable vouchers. It has been hard for vouchers to penetrate these neighborhoods. Our thesis was if we could provide low-cost capital those projects might consider accepting vouchers and afford the ‘haircut’ that voucher acceptance often requires. We have invested in a couple such properties, including one that we closed this summer: a 450-unit property in a nice neighborhood of Austin in partnership with the Austin Housing Authority and Community Development Trust.

TCA: A comment was made at NH&RA’s Summer Institute that “private ownership groups” are going to play a bigger role over the next decade supplying the necessary capital to preserve affordable housing. Do you believe that statement is true? Is this a positive trend or cause for concern? How do these groups differ from traditional partners you’ve worked with? 

PJ: I spent most of my career in the private-sector, so I don’t think that ‘private’ is bad. The operative word in your question is ‘group.’ We’re seeing more institutional capital interested in affordable housing. Whereas we had a lot of for-profit owners, many of whom owned a handful of assets, now we’re seeing funds and bigger corporate owners, which I think is a little bit newer. It’s both an opportunity and a challenge. The challenge is that you often don’t know who you’re dealing with. You’re a couple steps removed from the actual owner. Trying to put a face on it and make it more personal is important. Successful affordable housing comes down to being part of, and interacting with, the community. Much of the research from recent years shows that affordable housing works as part of a modern system of poverty alleviation. It’s a roof over somebody’s head, but if we’re talking about changing life outcomes, the most successful owners plug into that broader system of good schools, good jobs and access to transportation. That’s a little bit harder with institutional owners, but it’s not insurmountable.

TCA: What types of things do you consider when evaluating a potential property for preservation? Are there specific markets that are ripe for affordable housing preservation?

PJ: LIHTC properties developed in the late 80s and early 90s have reached, or are approaching, their 30-year affordability commitment. We are hyper-focused on maintaining their affordability status. We also look at a property’s physical and financial condition, historical vacancy rates, local market, resident population and neighborhood composition. Even if it’s not located in the highest opportunity neighborhood, we will still consider preserving it because we can’t afford to lose any more affordable housing.

TCA: The last person I interviewed said nonprofits are becoming more like for-profits because they desire a specific return on their investments. What is your business philosophy as head of NHT? Do you believe that businesses—for-profit and nonprofit—need to embrace new business models in order to preserve more affordable housing?  

PJ: Nonprofit doesn’t mean you don’t earn a rate of return. It means you’re taking the profits and reinvesting them in the business, but you still need to generate a rate of return. We run our business like any other. We have staff to pay and we do a lot of work that doesn’t earn income; for example, our policy innovation work, which we are highly committed to, our Capitol Hill advocacy, we run the national Preservation Working Group. All that costs money. We can pay for it because of the return that we earn on our investments. That’s the reality and it’s not a bad thing.

TCA: What are your priorities for the balance of the year and into 2020?

PJ: We are committed to enacting the Affordable Housing Credit Improvement Act and the Save Affordable Housing Act and developing and promoting best practices at the state and local levels. We are a unique organization in that our policy work is national and yet our applied work is largely local. We are a local developer in the Washington, DC metro area, a local Community Development Financial Institution (CDFI) for almost 20 years and a local energy developer that has promoted energy efficiency and sustainability throughout the mid-Atlantic region. We have this interesting juxtaposition of being a national policy player and a local practitioner. This gives us the opportunity to glean a lot of takeaways that we can share with other communities, like what we’re doing in San Diego. Another priority involves growing our real estate development and our lending work. The problem with affordable housing is only getting worse. As the problem gets bigger, our response must get bigger. So, we are really focused on growing our impact in the development and lending spheres.

Finally, we will be promoting in the election cycle the importance of affordable housing preservation. Our industry is more unified than it has ever been. In some ways, that’s bred by how bad the problem is. Everyone agrees that a solution is needed. That’s also a testament to how far we’ve come as a field coalescing around a few tried and true solutions. I am hopeful we can get to the same place on a rental assistance expansion as we have on expansion of the LIHTC.

Story Contact:
Priya Jayachandran
President, NHT Communities
[email protected]

Darryl Hicks is vice president, communications for the National Reverse Mortgage Lenders Association and a 24-year veteran of associations managed by Dworbell, Inc., the management company of NH&RA.