David A. Smith Author Archives

As Michael Milken discovered, one can rue forever giving a good idea the wrong name, for even if it does not sour the public, the wrong name sends the innovators chasing the wrong direction and solving the wrong problem.

If my instincts are correct, a seven page complaint filed on March 28, 2019, HUD v. Facebook, may one day be seen as an industry-disrupting legal event on par with U.S. v. Microsoft (1998) and U.S. v. IBM (1969). HUD accuses Facebook of violating the Fair Housing Act’s prohibitions on discrimination:

In 1975, the year I got into this business, American residential rental housing was split into three utterly separate domains.

Over the last eight years, California’s Bay Area added 167,000 new homes, while adding four times as many jobs: 750,000. Yet when voters were asked to explain the causes of California’s runaway unaffordability, the worst in the nation, they cited lack of rent control first; restrictive zoning came in last.

Many executives I know and respect are afflicted with what I’ve dubbed the perception of essentiality – the belief that not only is their work broadly essential to the organization, each element of how they do it is likewise essential and personal, else the organization suffers.

Finance is not subsidy, though they are easily confused in people’s minds. Affordable housing always needs subsidy in one form or another – so why the recent fascination with state and local housing bonds?

In 2001, roughly as the New Markets Tax Credit (NMTC)was coming into effect, Apple introduced the iPod.

So powerful is the fear of the devil we don’t know that though everyone who works in affordable housing will admit privately that, as currently regulated, the Community Reinvestment Act (CRA) is broken in a policy sense, few will voice this publicly.

To stay profitable, an intermediary (syndicator, CDFI, mortgage originator, donor/technical assistance provider, development consultant) always has to have its own proprietary value proposition – a statement we make about ourselves that, if believed to be true, leads inevitably to the conclusion, ‘Do business with us’.

On September 6, 2008, the federal government nationalized Fannie Mae and Freddie Mac, a measure without precedent in global financial history, even more systemically dramatic than Pierpont Morgan’s single-handedly underwriting global liquidity to stop the Panic of 1907.

For affordable housing transactors, the goal line is the closing, and as it approaches, vision narrows until nothing exists but that.

Seventy years ago, American employers and insurance companies responded to the post-World War II economic and baby boom by developing over 50,000 apartments of largely unregulated private urban workforce housing rentals.