August 1, 2024 • 44 mins
Can innovative urban development turn the tide on housing scarcity? Through an engaging discussion on public-private partnerships and debunking myths of unattractive low-income housing, we explore tax credits and other effective tools for structuring successful affordable housing investments. In this week's episode, we're delving into one of the most pressing issues of our time and discussing innovative funding methods for those looking to make an impact.
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Episode Transcript
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Rachel Oh (00:04):
Welcome to Peaks and Portfolios, presented by PEG
Companies, your go-to podcastfor all things commercial real
estate investment.
I'm Rachel oh, and togetherwe're diving into current events
, trends, issues andopportunities impacting the CRE
investment space, fromdissecting the latest market
moves to sharing insights ontoday's commercial real estate
(00:25):
landscape.
It's time to maximizeportfolios here in the peaks of
the Mountain West and beyond.
Welcome everybody from thepeaks of the Mountain West high
up here on the Wasatch Front.
We are excited to talk againreal estate, a little bit about
the economy and anything elsethat might pop up.
We thank you again for joiningus for this week's episode of
(00:48):
Peaks and Portfolios by PEGCompanies.
For today's episode, we aregoing to dig into an area that
we hear a lot about in the newsbut not a lot of solutions,
often referred to as theaffordable housing crisis in
America.
We know that housing costs arerising, but wages are not rising
at the same rate.
It's also interesting howquickly the affordability crisis
(01:10):
has gotten worse, with thepandemic and remote work having
shifting people, where peoplelive and what type of homes
they're looking for.
We know that median home priceshave surged across the country
in comparison to medianhousehold income and estimates
of how many more housing unitswe need nationwide vary, but
according to Freddie Mac, theyput it at nearly $4 million On
(01:31):
the real estate investment front, or development front, I think
one thing that impacts this ismodern zoning laws that have
been in place since the 1980s orearlier.
I think it's really become moreof a problem as metropolitan
areas have filled out both theirurban centers and their suburbs
and, thanks to remote work,many smaller cities, including
Salt Lake City, are suddenlyseeing an influx of people from
(01:54):
larger metropolitan areas.
So to help better dissect thisand to help better explain this,
what better way than to consultwith an expert?
What better way than to consultwith an expert?
And I am so delighted that Iactually have a very good friend
and former colleague who isI'll call him a bit of a genius
and is also a doing goodchampion, if you will Mike
Akerlow, who is the currentDirector of Housing and
(02:17):
Community Development for theMayor of Salt Lake County.
Welcome, mike.
Mike Akerlow (02:21):
Hi Rachel, Thanks for having me.
Rachel Oh (02:23):
Thanks so much.
How are you, since you've leftthe corporate world?
Mike Akerlow (02:28):
I'm doing very.
I'm doing well.
I'm doing well.
I've made the transition okay.
Rachel Oh (02:33):
And you're feeling good about doing good.
How's that?
Mike Akerlow (02:35):
Yes, I do love this kind of work.
It's really good work.
So yeah, I'll be back in it.
Rachel Oh (02:40):
No, it's so good.
Just a little bit of backgroundfor listeners who may not know.
Mike AKerlow was with PEG justuntil about, I think, six months
ago and he was a developmentdirector here and we actually
had brought him from theaffordable housing space.
He is currently the director,as I mentioned, of housing
community development for themayor of Salt Lake County.
Previous to that he was withPEG for about a year or so and
(03:03):
then, previous to that, he wasthe CEO of the Community
Development Corporation of Utahin Salt Lake City and in these
different roles he has overseenhousing neighborhood development
.
He's currently working with thecounty's federal grants
provides leadership and it wasso interesting because in Salt
Lake City we have both a SaltLake City mayor and a Salt Lake
(03:25):
County mayor and I was justasking Mike in our prep session
about what the difference was.
And, mike, could you kind ofdescribe your role and what you
do?
Mike Akerlow (03:34):
Sure, yeah, so, as you mentioned, I'm the director
of housing, communitydevelopment, and our division
oversees pretty much all thingshousing for the county.
It's a little different from acounty versus a city perspective
, in that cities are much morelocalized.
They have their own zoningordinances.
The county is a higher levelorganization.
(03:55):
We have some unincorporatedareas where we assist them in
their housing policy and fundingprograms, but generally
speaking, we're a higher levelwhere we're just looking at
countywide policy.
We can't really tell citieswhat they have to do, but we can
help guide them with goodinformation.
One of the biggest things we do, though, is provide funding, so
either through our federalgrants or through our housing
(04:17):
trust fund, we can help providefunding for the development of
housing, but also communitydevelopment projects like
infrastructure or services forlower income households.
So that's kind of what I do ina nutshell.
Rachel Oh (04:33):
That's amazing.
I mean, the fact that you'reable to, you know, get access to
those types of resources andthen contribute them or making
sure they're being put to gooduse across the state.
That's amazing, superimpressive.
Okay, so I kind of did a littlebit of an intro and it was just
based off of what my team wasable to put together, but I'd
love for you to, if you couldmaybe, in more practical, real
(04:54):
terms, just kind of describe thecurrent housing situation and
again, we always hear about thisaffordable housing crisis, but
could you kind of, maybe, fromyour perspective, describe what
it really is, from yourperspective, nationwide and
maybe even locally?
Mike Akerlow (05:10):
Sure, yeah, and I think you did a great job of
introducing that.
I mean, we've heard, like yousaid, we are hearing a lot about
the affordable housing crisis,both on a local and a national
level.
So much of housing is localized.
You know, cities across thecountry are experiencing very
similar things, but when youreally look at it, we have
similar issues but we have somedifferent issues.
We look at Salt Lake County'spopulation and it's grown really
(05:33):
rapidly over the last decadeand so we're seeing a lot of
influx.
We're seeing natural growth.
And how do we manage all ofthat and provide housing for all
the people that are coming herebut also who live here?
Salt Lake County and Utah hasactually been making some
headlines not for great reasonsover the last little bit of
being one of the most expensiveplaces to live or to buy housing
(05:56):
.
A recent report came out andsaid we're the third least
affordable place to buy a homein the country.
Rachel Oh (06:02):
Which is crazy.
Mike Akerlow (06:03):
That's not a great headline you want to have.
Rachel Oh (06:06):
So when we look at homeownership, but isn't that
like for Salt Lake?
I mean, just so peopleunderstand, it's not like the
Bay Area where you have, I feellike the Bay Area housing
affordability versus Utah.
I mean Utah it's just like a,it's a supply issue, right, Like
there's literally nowhere tobuild.
It's really tough, or is thatwrong?
Is that a misnomer?
Mike Akerlow (06:23):
Sure, I think it's no, no, no, that's definitely
part of it.
We have a supply issue.
We also, it's just and supply isdifferent than prices.
There's a ratio that we look atthat is a price to income ratio
.
So what is it?
What was that ratio betweenyour income and what it costs to
buy a home?
And we're at about six.
So that means a house costs sixtimes the median income
(06:44):
household.
That number should be like twoto three.
So we're like double what weshould be.
So yeah, it just makes it.
You know, with the lack ofsupply, prices are higher, which
means a lot of people cannotget in the space to buy a home.
We're also impacted in ourrental market.
We're also impacted in ourrental market and at my office
we focus a lot on the very lowincome, on the lower incomes on
(07:08):
their access to housing and SaltLake County.
We have a shortage of about35,000 rental units for people
who are making $31,000 or less ayear Statewide.
That doubles it's almost$70,000 for people in are making
(07:29):
$31,000 or less a yearStatewide.
That doubles it's almost$70,000 for people in that
income.
Yeah, so that doesn'tnecessarily mean that we need to
build 35,000 units.
It may mean that people are inhousing currently, but they are
cost burdened.
They just can't afford it.
So they're paying like 50% oftheir income is going to their
housing costs, where the bestplace to be is about 30% of your
(07:51):
income going to your housingcosts.
So yeah, we're kind of gettinghit on all sides, both the
homeownership and the rentalside.
Wow.
Rachel Oh (07:59):
Yeah, no, because I, you know, we talk about housing
affordability and there's twoveins to that.
Right, like just the averagenot average, but maybe a healthy
income earning person it's hard, it's more difficult to buy
homes, and then you've got thelower income, as you mentioned,
who just don't have any accessto good housing, which is
important.
(08:19):
Right, it's important for ourcommunities.
They often service so many ofthe places that we need, like
everyone needs, and then I knowa big thing too is making sure
that they are able to live inthe communities that they serve.
And I'm thinking, you know,even like police officers or
nurses or whatnot, like it's,it's, it's too much of a burden
for them to live super far awayjust to afford something, but
(08:42):
they need to be in the county,you know, closer, and all that.
So I think there's so manytracks that we could go down,
but, um, but, okay, but what I,what I love about what you're
doing and just about you ingeneral um, I've always always
been impressed is you are alwaysfocusing on solutions in, in,
in how you're working to tacklethis, versus, you know, just
(09:04):
going on and on about the crisis, like I, what I love is that
you're more solution oriented.
Can you talk to me about someof the current solutions that
you're really focused on and howthat's changing, and and maybe
even describe something thatyou're super excited about right
now?
Mike Akerlow (09:18):
Sure, yeah, I think.
Um, let me hit a few points.
I think one thing you saidearlier on was, you know, wages
are not keeping up with housingcosts and that is fundamentally
one of the biggest issues wehave.
I can't do a lot about that inmy position here, but there are
things we can do and we can tryto provide access to housing.
So there's also you mentioned,zoning is a big, big part of
(09:40):
this.
It's a big factor and years ago,when I was at Salt salt lake
city back in 2017, we wrote thecity's first housing plan in
almost 20 years and we did a lotof research, a lot of data
gathering, a lot of work to pullthat plan together and what
came out, you know, in additionto hey, we need to provide maybe
(10:00):
we need to provide bettersubsidies, but a lot of what
came out was the impact thatzoning has on the development of
housing within our cities.
It's a really interesting topicbecause, you know, we talk
about density.
We talk about where densitybelongs and where it doesn't
belong and how it impactsneighborhoods.
But when you look at a lot ofour really successful
neighborhoods that have beenaround for a long time, you look
(10:22):
at them and they have a nicemix of density and then a lot of
the time it's these establishedneighborhoods that are the ones
coming out opposed to increasedor changes in zoning laws.
So there's kind of this.
It's kind of an interestingthing to watch, but certainly
density is a part of thisconversation.
How do we get more units outthere?
You know, we've seen downtownSalt Lake really explode in
(10:46):
multifamily.
We've heard a lot about missingmiddle, which are the kind of
medium density like town homesor smaller apartment buildings,
and that's kind of making acomeback.
We're starting to see more ofthat.
We've seen a lot of town homesbe built.
Rachel Oh (11:01):
Oh, I've seen tons.
I feel like they're everywhere.
Tons of towns.
Mike Akerlow (11:04):
Yeah.
So that's, you know it's a goodoption that kind of provides
that middle, that middle areawhich and, and and a lot of the
times those are for sale.
So that also gives people anopportunity to get in some home
ownership.
And we're seeing townhomes alsobe built as rentals, which is
really exciting.
So, we're seeing this but again,you know there's a lot of
cities out there that are reallyresistant to any zoning changes
(11:26):
.
People, communities, reallycome out and oppose this.
I think there's some ideas that, hey, if I get affordable
housing in my neighborhood it'sgoing to bring down my property
value, and there's a lot of databehind that.
The Kempsey Gardner PolicyInstitute here locally up at the
University of Utah did a studyon that which showed the
opposite, that that that doesnot decrease property values and
(11:51):
in some, in many instances Ithink, like the majority of
instances, actually increasedproperty values because it
brought, you know, the highervalues or it just helped.
It helped the neighborhood indifferent ways but really could
not prove out that it decreasedthe value.
Rachel Oh (12:02):
So I know we're getting super local here and
maybe only local listeners willcompletely understand.
But, for example, I, you know,I used to live in Sugar House
which is, at one point, Ibelieve, garnered the highest
rents in the area.
It's where all the youngerfolks, I think between, I think
the, you know the young singlesplus maybe the young marrieds
(12:23):
tend to like I mean, it's a cuteneighborhood, it's got access
to the eight, you know theBeltway, you know the park, it's
east side, so it's close to theslopes and close to the
University of Utah.
And then there was thatdevelopment there on the corner
of 21st and 21st, and I knowit's a huge issue, but now I've
seen it, it's been built.
There's also a bunch going ondown in the downtown area of
(12:47):
sugar house and whatnot.
But, and so I'm just saying, isthat like an example of some
changes to some zoning laws?
I mean, did that?
And again, that's just asomething I can think of, and
it's more of a prestigiousneighborhood, right, we're not
talking about way out someplace.
I mean, this is realdevelopment happening in a real
neighborhood.
That's actually, you know,desirable.
(13:08):
So thoughts on that.
Mike Akerlow (13:10):
And.
Rachel Oh (13:10):
Mill Creek, by the way.
So just curious if you cancomment on that.
Mike Akerlow (13:13):
Yeah, spot on.
I mean you are seeing those aregreat examples of where zoning
has allowed for greater densityin a neighborhood, the one on
21st and 21st that you justmentioned.
It's a nice medium density on abusy corner, so it's not in the
middle of a neighborhood, so itmakes sense on its location.
(13:35):
It was, I believe it was, orright nearby adjacent to the
property are some smallerapartment buildings, so it fits
in nicely.
Mill Creek is doing the sameand it's kind of in its capital
area where its office cityoffices are.
They're bringing in.
In fact PEG has a multifamilyproject right there.
Rachel Oh (13:53):
It's opportunity zone too, like, I think, all of Mill
Creek is an opportunity zone,so tons of capital came in right
during 2019, 2020 ish.
Mike Akerlow (14:02):
Yeah.
So it's good to see that kindof response happening.
I think what's hard these aretypically market rate units and
a lot of that is driven by otherforces such as land costs yeah,
not cheap.
Construction costs no, it's notcheap to build there.
So unless you get a subsidy itdoesn't make sense, it doesn't
(14:28):
really pencil for you to makethose affordable.
I will tell you, just down thestreet from Mill Creek, just a
little bit north, it's onRichmond, so it's literally just
on the street there from thecity offices there in Mill Creek
.
It's on the border of Salt LakeCity and Mill Creek.
My company that I was withbefore PEG, it was a nonprofit,
a portable housing nonprofit.
We built a 55-unit apartmentbuilding there and it was a
(14:54):
low-income housing tax creditproject.
So it has lower incomes there.
It fits in nicely into theneighborhood and it's providing
what you just said a minute ago.
It's providing housing to thepeople that live and work in
that community.
But it required a partnershipwith Salt Lake City for
assistance on the purchase ofthe land.
(15:15):
It required tax credits, whichis a federal program we can talk
about, and some very patientcapital from government entities
to make that project work.
But you're getting some nicelower incomes in there.
You're getting a place forpeople to live in an established
community with access toservices.
So it's a good example of whatcan happen in a community.
Rachel Oh (15:34):
So is it on Highland.
Where is it?
Mike Akerlow (15:36):
It's on Richmond, so Richmond is the street west
of Highland.
Rachel Oh (15:40):
Okay, okay, again, I used to kind of live around
there.
I love this story that you justmentioned and I feel like and
we'll talk about, I think, someof the things that we've done,
just because I think it'sinteresting to share as well.
But what I love is that, well,it reminds me to the point where
you want area a residence inwith the intent to convert, and
(16:07):
at the time the city was superopposed because they didn't want
quote, unquote you know class Bworkforce housing in that area.
Buckhead is kind of prestigious.
I don't know if you know this,but about six months after they
sort of initially denied us,they actually came back to us.
Do you know this story?
Denied us, they actually cameback to us.
Do you know this story?
Because they did a study, anindependent study from another
(16:32):
arm, another branch of the citygovernment, that did a study on
traffic congestion and thefindings found that this
increasing congestion, which thebusiness owners were
complaining about because itprohibited people coming to the
area, and the takeaway was youneed to build more affordable
housing options because thepeople can.
Part of the congestion was allthese workers coming into the
(16:53):
area and flood, you know,flooding the streets, and so
that's why if you built moreaffordable housing options in
the city center, then you wouldalleviate traffic and you would
bring more commerce to the area.
And then so after that, theygranted us approval approval for
multifamily.
Mike Akerlow (17:07):
I don't know if you knew that story no, that's
fascinating, though yeah, Icould see that.
Rachel Oh (17:12):
I could totally see how that would work yeah, so I
guess I just bring that upbecause I feel like this private
and public partnership is soimportant.
Let's talk about these taxcredits, because this is an area
I know nothing about and I alsoknow didn't you do something in
downtown salt lake city, rightthere when you come off the
freeway on 6th?
Wasn't that one of your guys'projects as well?
It's a super nice multifamily,but it's low income, am I right?
Mike Akerlow (17:36):
I didn't have any involvement with anything there.
Rachel Oh (17:38):
I thought you told me Okay, meaning I think people
have the misconception that lowincome housing is kind of ugly
and it's like it looks like theold.
You know government housingunits back in the day on the
East Coast and whatnot.
But it's not that case.
Right Like they fit, like yousay, nice in the neighborhood,
you wouldn't even know per sethat it's lower income housing.
(18:00):
So yeah, talk about that, talkabout tax credits.
I want to hear all that becausethis is an area I'll admit
we're a little bit more forprofit.
So I'd love to know how thesenot so profit oriented, but you
know providing good housingoptions, how that works and what
that looks like.
Mike Akerlow (18:15):
Yeah, I will explain that to you, let me.
Let me comment quickly on yourwhat you said about the quality
of housing going in and I thinkI remember the project you're
talking about.
It's on.
There's a project we helpedfund.
It was on 6 South and Main andit was an affordable housing
project.
They use they use low-incomehousing tax credits.
We actually gave them somefunding to buy down some rents
(18:38):
so they had done a tax creditproject that was more around
kind of a workforce housing typeproject.
We went to them and said, hey,if we give you additional
funding, could we help buy downsome of those rents, which we
did, so we were actually able toget some lower income levels in
that same apartment.
(18:59):
It was really interesting.
It was kind of a little trialproject we did and it seemed to
work well.
And before I jump into the taxcredit as part of this, I will
comment that you're so correcton saying what affordable
housing used to be and what itis now.
Back in the days it used to bepublic housing, public housing
got a really bad name and we'veshifted away from that through
the tax credit program, and taxcredits generally like to push a
(19:23):
mix of incomes in a building soyou can get very deeply
affordable all the way to marketrate, oftentimes in a single
building.
And the other thing is when Iwas mentioning earlier that
study done that Kim Garner didabout how it affects property
values, the things that it comesdown to are really good design
(19:44):
and good property management.
So if you bring in a buildingthat is nice looking, it has
nice amenities and features, butit's also managed really well,
there's no negative impact onthe community.
And that's the same with anykind market rate or affordable
housing.
We should always be looking atbringing things into communities
but build them rather than takeaway.
(20:04):
So let me just quickly give youa really brief tutorial on tax
credits, low-income housing taxcredits, or we call them
typically the LIHTC, theiracronym just because it's easier
to say.
LIHTC is a federal program.
Each state is given a certainamount of tax credits based on
its population, and then thestate disperses those tax
(20:28):
credits to developers.
Typically, developers who gettax credits are housing
authorities or nonprofits.
Sometimes for-profits will doit, but there's not many of
those and a lot of the time whena for-profit comes in to do it
they will partner with anonprofit.
But tax credits are a way toprovide a lot of equity for
(20:49):
affordable housing.
Gotcha.
There are two types.
There's a 9% and a 4%, and I'mnot going to get into the
details of those because it's alittle bit technical, but
essentially a 9% tax creditproject will give you a lot more
equity than a 4%.
Okay, so when you let's take a9%, for example A 9% you can
(21:10):
typically get about 70% of yourproject in equity.
So you've got to come up withthe other 30%.
Okay, and that's wheredevelopers look to governments
in particular to help providethat gap, and the reason why is
because oftentimes our money ismore patient, we don't mind
subordinating, our interest ismuch, much lower and deferred.
(21:33):
In fact, the county did aboutjust put about $25 million out
and we had simple interest,one-time payment deferred for
like 20 years.
So it's you know, we're reallywe have much more flexibility on
that gap financing which isneeded to make these projects
work.
In tax credits you don't reallylook at down like you do at PEG
(21:54):
, where you look at a rate ofreturn.
It just doesn't.
It's not the same.
Developers get into this becausereally where they make their
money is out of their fees,their development fees, and then
there may be some cash flow.
There's typically not a lot ofcash flow on high-tech projects.
There may be some.
So you're not really looking atcash flow as the way to run a
(22:14):
rate of return.
But you don't really have tobecause the credits are set up
differently.
So let's take, for example, mylast nonprofit.
They would come in and theywould apply to the state for tax
credits.
If they're awarded those taxcredits, they then sell those to
an investor and the investorgets the credit for a period of
10 years.
So let's say, we apply for 750000 worth of state or of these,
(22:39):
these low-income housing taxcredits, and we're awarded those
, we get those and then we gosell them to an investor, and an
investor typically is like alot of the ones we worked with
are large banks like yeah chasebank or morgan stanley goldman
sachs, they all.
They need a reason, they need acredit for their taxes.
So they will go buy these,they'll buy these tax credits
(22:59):
and they get it for a period of10 years.
So that $750,000 that I gotawarded will actually give me
$7.5 million in equity becauseit's that 10-year time period.
So if my project is a $10 or$11 million or $12 million
project, now I got to come upwith that remaining balance in
debt.
But because my debt is such alesser amount and, like I said,
(23:19):
oftentimes more governmentfinancing, that is patient and I
don't have to make debt servicepayments.
It means my rents can be lower.
Rachel Oh (23:26):
Gotcha and so the whole building.
Then, is this lower income?
It's not like you werementioning earlier, how there's
like a mix, no, there's, sothat's a great question.
Mike Akerlow (23:36):
Um, there is a mix and typically, when you apply
for your credits, you go througha point system and you try to
meet as many things as you canto get the highest amount of
points, cause then you'll beawarded.
It's very competitive.
A lot of projects don't getawarded every year, um, so you
really want to do as much as youcan to get the most amount of
points.
So one of the things is thatyou provide a mix of incomes.
(23:56):
Okay.
Rachel Oh (23:59):
So that's attractive then, and that helps to win the
grant or the grant with thiscredit or whatnot.
These credits Got it Okay.
Okay, that's very smart.
Mike Akerlow (24:08):
Now, sometimes that doesn't happen and you'll
see that rarely, but in thecases that it doesn't, it's
usually for very deeplyaffordable housing.
Rarely, but in the cases thatit doesn't, it's usually for
very deeply affordable housing.
The Road Home, which is one ofthe largest homeless service
providers here, did a tax creditproject in Salt Lake I want to
say four years ago maybe and itwas 100% affordable for people
(24:30):
experiencing homelessness.
So 65 units, no mix of incomes.
It was a 9% tax credit project.
Rachel Oh (24:34):
Okay, and that's downtown Salt Lake, probably
somewhere or something.
Yeah, okay and successful, yeah.
Doing well and servicing thelowest of the lowest of the
lowest, I feel like right Likethese have no income, they're
not working, they're homelessright, absolutely yeah, yeah,
which is important right.
It's super important,absolutely.
Mike Akerlow (24:53):
And they are often supported by vouchers.
So that's a differentconversation, but we've talked.
We've probably heard of sectioneight, vouchers or housing
choice vouchers, and those areallocated through our housing
authorities.
They're given to either aproject or a person, and they
can use it then to helpsubsidize their rent.
Gotcha.
Rachel Oh (25:11):
This is super interesting because I know that
you know on our side so with PEGand you were here, we didn't do
any light tech or whatnot, butwhat we did do was, I think,
similar to kind of some of thethings you're talking about is.
I don't know if you you weren'there when we did paper box
apartments, but paper boxes indowntown Salt Lake City.
It's actually in a super nicepart of downtown, right there by
(25:31):
the arena where the Utah Jazzplay and and the soon to Utah
National Hockey group that'scoming.
But that one was in anopportunity zone so we were able
to raise equity through that.
But it was also land that wasgiven to us by the city of Salt
Lake in exchange for lowerincome units, I think up to 20%,
(25:52):
and, as you were mentioningbefore, and I don't know if
you've seen it, it's beautiful.
I mean it's smack right there.
It's beautiful design.
It even has that Tetris vendingmachine car thing going on for
the parking garage.
It has super high-end units, butI know that 20% of the units
are lower income and I alwaysthought that they put like those
(26:15):
lower income units in like thecorners and the dark parts that
you know no, no view, and theydon't allow that.
It is a mix of high top floors,beautiful views with lower
ground.
You know it's a total mix andwhat I didn't know about this is
that that multifamily isperforming very well.
One of the reasons why, in kindof our higher supply situation
(26:39):
that's going on right now,because of all the kind of a lot
of the building of units, so alot of deliveries, it is almost
100 percent occupied all thetime because the 20 percent
that's always filled Right.
So the lower income units arealways there and it's a great
location and it's a good, someaning it's doing very, very
well.
And I think it's a greatlocation and it's a good, so
meaning it's doing very, verywell and I think it's a great
example of a public privatepartnership.
We didn't get any tax credits orwhatnot for that.
(26:59):
We did use Opportunity Zonedollars, which is just an
interesting pool of capital backthen when it was announced and
I and you might know more aboutit because you were here.
You might've heard about it,but my understanding is it's
it's become a very successfuldevelopment that we did, because
actually having the lowerincome units in there helps with
the occupancy and it's beentremendous.
From my understanding, I couldhave that a little bit wrong,
(27:21):
but I think I'm right.
Mike Akerlow (27:22):
I think I'm right on that You're spot on, and that
is.
I love that you bring that up,because so much of what we talk
about in affordable housingdevelopment is around light tech
, and so developers are like Idon't really want to get into
that, but what can I do?
What you just described is aperfect example of a
private-public partnership toget more units in a building.
So there's a couple moreexamples.
(27:44):
Cottonwood Heights is doingsome interesting things with
density bonuses, which isanother great tool of saying,
hey, we're going to give you theability to build more units in
exchange for some affordability.
So there you've got a couplemultifamily projects coming into
their city that they did that.
They give them more density inexchange for some affordable
(28:04):
units Nice.
So I love that there's not justa one-size-fits-all to this.
We've got to be.
I mean, like you said at thebeginning, our country is facing
this crisis, right.
And we can't keep doing thingsthe same way, so to provide some
more density in exchange forunits is a great way to bring
developers who may not want todo LIHTC to the table, to get
(28:25):
some of those affordable unitsinto the community.
Rachel Oh (28:27):
And then with that, so what area of Cottonwood
Heights?
Just so that, because I youknow I live down ish that way.
And how much density are wetalking?
And was there opposition fromthe city?
Is the city in support?
Did you have to, or does thegroup have to get variances on
height?
Is there you know?
Tell me a little bit about thattoo.
Mike Akerlow (28:45):
Yeah, great questions and I don't know the
specifics on those two.
I just know that they weregiven.
One is up by the gravel, yeah,up there on Wasatch, there's one
going in there and I'm not surewhere the other one is going.
But yeah, two projects there.
But yeah, I mean there are.
Yeah, to your point, there are.
It's not always a slam dunktype of thing, but typically a
(29:10):
lot of this I mean many timesit's by right anyway, because it
comes with the property.
The zoning's already there, thecity may just be able to allow
greater densities.
I don't know if those twoprojects received any resistance
to the zoning or the approvalsof those, because that is, I
mean, that is east side, I mean,that is, you know, east Bench.
Rachel Oh (29:30):
They were okay with it.
Mike Akerlow (29:31):
Yeah, yeah, they got it approved.
Two projects yeah, both wereapproved.
That's amazing Moving forward.
But you bring up a good point,it's not always a slam dunk.
These things do take work andmany times there is opposition
to this and unfortunately thatis an ongoing battle within
cities.
Now the state legislature lastsession did start talking about
(29:53):
overriding some of these zoninglaws in cities, and that's going
to be a really interestingthing to watch this upcoming
session to see if they do that,because the argument can be made
that it's taking away therights of cities to implement
their plans.
On the other hand, if there's alot of cities who will not
bring in any affordable housing,they see density as kind of
opening the door to.
(30:15):
You know, now we're also goingto get all these apartments and
then our property values go downor our crime rates go up and
all these things that theybelieve will happen.
And so the state, I think, isstarting to push this
conversation of hey, if you guysdon't do it, then we may have
to.
Rachel Oh (30:28):
So they will usurp the cities like they'll just
come in and they'll.
Can they do that?
I mean, does the state have theright to do that?
I don't even know how thatworks, but I think through
legislation they could.
Mike Akerlow (30:40):
I don't, you know, I it was.
It was a discussion thatstarted last session but didn't
really go anywhere.
But I wouldn't be surprised ifyou start to see that rise to
the table or rise to the top ofsome of these conversations
about housing.
Interesting.
You know, the state didsomething interesting too this
last session.
They created this starter homefund.
This would be Steve Waldrop, whois a former legislator
(31:03):
developer.
He created a really greatprogram for workforce housing in
the northern part of the statevery successful.
And then the governor broughthim on to oversee affordable
housing efforts statewide andthey created this program where
there's about $300 million setaside for developers to use to
build starter homes.
The goal to increase supply,provide access for lower incomes
(31:28):
to get into some housing, andthen they also funded a down
payment assistance program sopeople who can get in these
homes can also apply for someassistance in getting funding
for a down payment.
So we'll see.
We'll see how that happens, butit's nice to see the state take
, you know, pushing some thingsthat are going to help hopefully
help alleviate the pressurethat we feel.
(31:49):
Yeah.
Rachel Oh (31:50):
No, I love that.
And this idea of starter homes.
I mean I think of you know wedid the build for rent David
Bourne was on our other episodesand that's exactly what they're
doing.
Right, they're building smallerhomes as an alternative to your
traditional stacked apartments,but it sounds like and those
are probably too small.
Honestly, I think these starterhomes are probably slightly
(32:12):
larger.
You know people.
I think a lot of people wouldrather or maybe when they're a
little more mature in theirrelationships or they're, you
know, if they're married andthey're starting to have
children probably do want, inaddition to your high rise or
stack departments, is theability to live in a home.
And so what?
I?
What?
I'm so amazed.
(32:32):
So I'm, you know I'm not alocal, but I've been here now
over 10 years and I did go toschool here.
The valley has completelychanged, right, like there used
to be copper mines I don't evenknow.
I don't think they're thereanymore.
Like it's.
We've completely built all theway out west.
It's crazy to me and thedensity all along State Street,
and I think you mentionedearlier that your office
(32:55):
supports Magna, which I alwaysfeel like Magna's in Timbuktu.
But if you're doing stuff outthere, I mean that means there's
communities being built way out.
I mean right Like this iseverywhere.
Mike Akerlow (33:08):
It's happening and it's exciting to see our state
grow like that.
But you look at the projectionsand we're on track to continue
this kind of growth.
The reality is do we have thehousing and the services in
place to accommodate that growth?
And we don't.
We don't have it in place, yeah.
So we've got to start havingthe hard conversations about
(33:30):
what does that look like forcommunities in terms of density
and access to services.
Rachel Oh (33:33):
Yeah, okay.
So then let's back up a littlebit.
So tell me your role in thecounty then.
What are you like?
I think you've kind of dabbledin on it, but maybe be more
specific.
What are you folks doing tokind of lead the housing efforts
?
What are the tools that you'retapping into efforts?
What are the tools that you'retapping into?
(33:55):
What are some of the innovativeor interesting things that your
office is doing specifically tohelp alleviate?
And I know you've kind ofmentioned a few things, but
maybe whittle it down to somevery specific initiatives that
you folks are working on.
Mike Akerlow (34:03):
You know I mentioned towards the beginning
that we have a gap of about35,000 rental units for people
at about $31,000 or less a yearwhen you look at the demand or
the need for units based onincome levels.
The higher the income, thelower the need.
So what we've decided in ouroffice for the next five years
(34:25):
is to really focus on the deeplyaffordable.
That's where the greatest needis and it's really where
government dollars can make themost impact.
So over the last year we haveput out through our housing
trust fund $25 million.
This came through the federalgovernment.
It was some of the Recovery Actfunding that came to the county
(34:46):
and we put it through ourhousing trust fund and did these
loans to developers.
And out of that 25 million wegot about just over about 1550
affordable units in the county.
So really great impact.
But what that really was isleveraging.
We were just part of a largercapital stack, which is a really
(35:09):
important role that we play.
So that's what we did there.
And those projects are, youknow, some are already in
construction, some will be inconstruction soon, but we'll see
over the next couple of yearsanother 1500 units come online.
Rachel Oh (35:23):
That's amazing.
And this is for the deeply.
What did you call it Deeply?
Mike Akerlow (35:28):
So this is mostly deeply affordable.
It's about.
I'm getting a little technicalhere, but when we talk about
income levels we talk about areamedian income.
So AMI, and so our AMIs, thatwe focus on that.
$25 million.
The majority of that fundingwent to 50% of area median
income and below.
A good chunk went to 30% ofarea median income and below.
(35:50):
Wow, Okay, that good chunk wentto 30% of median income and
below.
Rachel Oh (35:52):
Wow, okay, that's amazing.
Mike Akerlow (35:53):
But we also, we look at it.
It is, it's good, but some ofthat funding went into mixed
income projects too.
So you can say, hey, you know,we did some 50%.
We also did some 60 and 70%,while getting some 30%.
So I think what it's impressivewhat we did with that money.
So we've got that.
We also oversee several federalfunding sources.
In fact we're releasing anopportunity for funding just
(36:20):
under $5 million and this issome short-term funding for
developers to come in to acquireland or to do pre-development
work.
Even in construction costs.
Three to five-year term, thegoal is to just get some
projects off the ground and getthem into production.
But that will be also focusedon.
The goal is below 50% of areamedian income.
On that funding.
We're exploring some differentoptions too.
(36:41):
We met with a group out of NewYork who is funding some
affordable housing through apartnership with the.
I think it's the state.
I can't remember if it's thecity of New York or the state,
but anyway they are doing.
I think they're using theirbalance sheets of the government
entity to help borrow funds,which is, I think, a really
interesting idea we're exploring.
(37:01):
Right now.
We've kind of put together ourfirst draft of looking at a
community land trust.
So this is the way to takepublicly owned properties, put
them into a trust that then canbe put out for development, and
the really cool thing about thatis that the way it increases
affordability is that thatproperty always stays in the
trust but the building is ownedby either a household or a
(37:25):
developer.
But because the land doesn'thave to go in at a cost, it
makes it affordable.
So really great.
These are done all over thecountry and typically by
nonprofits.
But we're looking at one.
I started one when I was at thecity and now we're looking at
one countywide.
So another way to start gettingproperties in holding those
(37:46):
while some affordable housinggoes on top.
So doing that, that, we arelooking at some.
Um, we're helping bluffdalecity with their accessory
dwelling unit toolkit, sohelping them develop a toolkit
so that people know how to buildadus and they've, and utah has
lifted that need for permittingon earth.
Rachel Oh (38:06):
Is that right?
Like you can, anyone can buildan adu anywhere yeah, yeah, well
, well, yeah, well you stillhave to get them permitted.
Okay.
Mike Akerlow (38:15):
But you do, yeah.
Yeah, you still would have toget them permitted.
It's just making them easier todo so yeah, there were some
barriers to that.
Cities had some barriers.
Rachel Oh (38:23):
Yeah, those have been lifted right.
Mike Akerlow (38:25):
Yeah.
Yeah, there's been somelegislation passed for internal
ADUs.
So if you want to do like amother law apartment, you could
do that.
The external ADUs so if youwant to do like a mother-in-law
apartment, you could do that.
The external ADUs is a littlemore localized, but more cities
are coming online and that'skind of a zoning thing, because
you're talking about now likeputting a new building on a lot.
So what does?
that look like in terms ofsetbacks and your neighbors and
things like that.
(38:45):
So cities are working on theirordinances, like I said,
bluffdale did theirs.
So we're in the process.
Rachel Oh (38:52):
I can't believe Bluffdale is a city.
I just have to tell you.
I just cannot believe that's acity.
But I drove through there andit's nice.
You know they've done a nicejob, that's great.
I mean, and it's pretty dense,so I can see how they're
offering affordable for allincome levels.
But yeah, bluffdale is a thingnow, right.
Mike Akerlow (39:10):
Yes, it is, and it's growing like crazy.
I mean, like you said, I grewup in the Sugarhouse area,
that's what I was used to, andnow you drive to South Jordan or
to Bluffdale and Harriman andit's a whole different.
I mean, it's just crazy.
Rachel Oh (39:23):
The nice thing about new is everything just looks
nice.
So yeah, there's something tobe said.
And I will say on that side, onthe west side, they get the
beautiful Wasatch Front as aview.
It's incredible.
Like, our views aren't as goodif you're on the east, like the
ochres are so far away, but ifyou're looking east, it's
beautiful.
Mike Akerlow (39:41):
It's amazing.
Yeah, I totally agree with you.
It's incredible, the views ofMount Olympus.
I mean, it's majestic.
Rachel Oh (39:46):
It's really beautiful , ok, so one last question my
investors, my listeners, whatnot?
You know they're all about realestate for different things.
Help, just if you could maybejust briefly kind of explain
what are opportunities forinvestors in affordable housing?
I imagine a lot of that isthrough like impact funds and
you mentioned patient capital,but is this just a carve out
(40:09):
where they can get a steadyreturn, or is it mainly just its
impact, like they know they'redoing some good?
Or how can investors approachaffordable housing?
Mike Akerlow (40:20):
Great question.
I think you know there's.
Like I mentioned, there'salways the opportunity to be an
investor on a light tech projectand that would be something I
would never try to even counselthem on.
That is, they've got to go totheir attorneys and help figure
that out because that's justkind of its own animal.
But there is opportunity thereif they want some credits.
I think more in line with whatyour investors are looking for
(40:40):
is what you said is what's moreof this impact investing?
Can we fund projects wherethere's increased densities for
affordable housing, or even onprojects where we don't get
increased densities foraffordable housing?
Or even on projects where wedon't get increased densities?
Is there a willingness to maybenot get as high of a return in
exchange for some community goodputting more making, like you
(41:01):
said, 20% or 10% of your unitsaffordable?
So yeah, it's a really toughconversation because at the end
of the day, investors put theirmoney out to get a return, and
that's what they want.
And so when you start talkingabout lowering rents, then you
start talking about decreasedreturns.
It's just simple math, so Iguess there's got to be.
(41:25):
Is there an appetite for lowerreturns?
If so, what kind of lowerreturn?
would we be talking about?
Is it 2% lower?
I don't know.
But it's kind of playing withthose numbers and seeing what
would be acceptable.
I think if you can look atincreased unit or you know
increased densities so you don't, so you make up some of that
difference is another great wayto do it.
But we have to start pushing.
We just have to start askingthe questions and maybe get out
(41:48):
of the comfort zone of a.
You know, this is our project,this is the standard project we
do.
We've always done it.
We know our return.
That's very safe.
Yeah.
If we want to help contribute tothe affordability in
communities, we have to get alittle more creative.
Yeah.
And see if there's differentways to do it.
I think also you know youmentioned on Paperbox you got
the city to participate.
Yeah, you got them to put inthe land.
(42:22):
That makes a huge difference.
So again at PEG, going to thecities and saying what would you
guys give us in exchange for adozen affordable units in this
building construction costs?
we know what we can lease themfor, and now we just have to
decide what is that delta?
What's that difference?
That we need to still get adecent return but also provide
maybe some affordable units to aproject yeah.
Rachel Oh (42:40):
No, I, yeah, that's so great.
I appreciate that.
Again, I think it's just likeanyone's allocations right and
they've got their investmentgoals, and I always feel like
it's just maybe bringing thatinto sort of your allocation and
just knowing, hey, this littlechunk may not be getting the
outsized returns that we'relooking for in different areas,
but it is the area where I canfeel good Right, and so I to
(43:04):
your point.
I think it's rethinking and Ido think this next generation is
.
They are so focused on doinggood, you know, and being so
open and welcoming, and maybethey're the ones that will think
less about maybe what theprevious generations and really
carve out more of that doinggood.
Mike Akerlow (43:18):
So so maybe, maybe .
I mean I have kids in thatgeneration and they've all said
to me dad, we have no hope ofbuying a house.
Yeah.
We have no hope of a house andwe are even concerned about
being able to rent.
We're going to have to rentwith friends.
You know there's got to be alot of people in there just to
even afford the rent and live ina community where we want to
live.
And so, yeah, there are some.
(43:39):
They're facing some prettytough challenges and I think
you're right, they may look atsome things differently than we
do.
Well, and we should help them.
Rachel Oh (43:46):
We really should.
We can do that and I know youare.
You're such a good dad.
Okay, well, mike, thank you somuch for taking time out of, I
know, your very busy day andschedule and responsibilities.
I learned so much and itactually makes me I don't know,
just makes me kind of rethinkthings.
So I really appreciate yourtime.
I'm hoping maybe we can haveyou on a future episode.
(44:08):
You can kind of give us maybemore of a progress report about
how some of those projects aredoing.
I would love it, We'd love tohear, have a check in.
Mike Akerlow (44:14):
So maybe we do something after the session next
year and talk about someupdates and funding, or there's
new zoning or something that wecan do a little update.
Yes, perfect, okay, well, thankyou, well, thank you so much.
Rachel Oh (44:26):
So.
Thank you, mike, for joining us.
Your insights have been amazing.
In the meantime, thank you toall our listeners who have
joined us today.
Again, from the peaks of theMountain West, I am Rachel Oh,
your host for Peaks andPortfolios by PEG Companies as
we dig into all things realestate and today, maybe just a
little bit of doing good too.
Thank you all for joining.
Welcome to Peaks and Portfolios, presented by PEG
Companies, your go-to podcastfor all things commercial real
estate investment.
I'm Rachel oh, and togetherwe're diving into current events
, trends, issues andopportunities impacting the CRE
investment space, fromdissecting the latest market
moves to sharing insights ontoday's commercial real estate
(00:25):
landscape.
It's time to maximizeportfolios here in the peaks of
the Mountain West and beyond.
Welcome everybody from thepeaks of the Mountain West high
up here on the Wasatch Front.
We are excited to talk againreal estate, a little bit about
the economy and anything elsethat might pop up.
We thank you again for joiningus for this week's episode of
(00:48):
Peaks and Portfolios by PEGCompanies.
For today's episode, we aregoing to dig into an area that
we hear a lot about in the newsbut not a lot of solutions,
often referred to as theaffordable housing crisis in
America.
We know that housing costs arerising, but wages are not rising
at the same rate.
It's also interesting howquickly the affordability crisis
(01:10):
has gotten worse, with thepandemic and remote work having
shifting people, where peoplelive and what type of homes
they're looking for.
We know that median home priceshave surged across the country
in comparison to medianhousehold income and estimates
of how many more housing unitswe need nationwide vary, but
according to Freddie Mac, theyput it at nearly $4 million On
(01:31):
the real estate investment front, or development front, I think
one thing that impacts this ismodern zoning laws that have
been in place since the 1980s orearlier.
I think it's really become moreof a problem as metropolitan
areas have filled out both theirurban centers and their suburbs
and, thanks to remote work,many smaller cities, including
Salt Lake City, are suddenlyseeing an influx of people from
(01:54):
larger metropolitan areas.
So to help better dissect thisand to help better explain this,
what better way than to consultwith an expert?
What better way than to consultwith an expert?
And I am so delighted that Iactually have a very good friend
and former colleague who isI'll call him a bit of a genius
and is also a doing goodchampion, if you will Mike
Akerlow, who is the currentDirector of Housing and
(02:17):
Community Development for theMayor of Salt Lake County.
Welcome, mike.
Mike Akerlow (02:21):
Hi Rachel, Thanks for having me.
Rachel Oh (02:23):
Thanks so much.
How are you, since you've leftthe corporate world?
Mike Akerlow (02:28):
I'm doing very.
I'm doing well.
I'm doing well.
I've made the transition okay.
Rachel Oh (02:33):
And you're feeling good about doing good.
How's that?
Mike Akerlow (02:35):
Yes, I do love this kind of work.
It's really good work.
So yeah, I'll be back in it.
Rachel Oh (02:40):
No, it's so good.
Just a little bit of backgroundfor listeners who may not know.
Mike AKerlow was with PEG justuntil about, I think, six months
ago and he was a developmentdirector here and we actually
had brought him from theaffordable housing space.
He is currently the director,as I mentioned, of housing
community development for themayor of Salt Lake County.
Previous to that he was withPEG for about a year or so and
(03:03):
then, previous to that, he wasthe CEO of the Community
Development Corporation of Utahin Salt Lake City and in these
different roles he has overseenhousing neighborhood development
.
He's currently working with thecounty's federal grants
provides leadership and it wasso interesting because in Salt
Lake City we have both a SaltLake City mayor and a Salt Lake
(03:25):
County mayor and I was justasking Mike in our prep session
about what the difference was.
And, mike, could you kind ofdescribe your role and what you
do?
Mike Akerlow (03:34):
Sure, yeah, so, as you mentioned, I'm the director
of housing, communitydevelopment, and our division
oversees pretty much all thingshousing for the county.
It's a little different from acounty versus a city perspective
, in that cities are much morelocalized.
They have their own zoningordinances.
The county is a higher levelorganization.
(03:55):
We have some unincorporatedareas where we assist them in
their housing policy and fundingprograms, but generally
speaking, we're a higher levelwhere we're just looking at
countywide policy.
We can't really tell citieswhat they have to do, but we can
help guide them with goodinformation.
One of the biggest things we do, though, is provide funding, so
either through our federalgrants or through our housing
(04:17):
trust fund, we can help providefunding for the development of
housing, but also communitydevelopment projects like
infrastructure or services forlower income households.
So that's kind of what I do ina nutshell.
Rachel Oh (04:33):
That's amazing.
I mean, the fact that you'reable to, you know, get access to
those types of resources andthen contribute them or making
sure they're being put to gooduse across the state.
That's amazing, superimpressive.
Okay, so I kind of did a littlebit of an intro and it was just
based off of what my team wasable to put together, but I'd
love for you to, if you couldmaybe, in more practical, real
(04:54):
terms, just kind of describe thecurrent housing situation and
again, we always hear about thisaffordable housing crisis, but
could you kind of, maybe, fromyour perspective, describe what
it really is, from yourperspective, nationwide and
maybe even locally?
Mike Akerlow (05:10):
Sure, yeah, and I think you did a great job of
introducing that.
I mean, we've heard, like yousaid, we are hearing a lot about
the affordable housing crisis,both on a local and a national
level.
So much of housing is localized.
You know, cities across thecountry are experiencing very
similar things, but when youreally look at it, we have
similar issues but we have somedifferent issues.
We look at Salt Lake County'spopulation and it's grown really
(05:33):
rapidly over the last decadeand so we're seeing a lot of
influx.
We're seeing natural growth.
And how do we manage all ofthat and provide housing for all
the people that are coming herebut also who live here?
Salt Lake County and Utah hasactually been making some
headlines not for great reasonsover the last little bit of
being one of the most expensiveplaces to live or to buy housing
(05:56):
.
A recent report came out andsaid we're the third least
affordable place to buy a homein the country.
Rachel Oh (06:02):
Which is crazy.
Mike Akerlow (06:03):
That's not a great headline you want to have.
Rachel Oh (06:06):
So when we look at homeownership, but isn't that
like for Salt Lake?
I mean, just so peopleunderstand, it's not like the
Bay Area where you have, I feellike the Bay Area housing
affordability versus Utah.
I mean Utah it's just like a,it's a supply issue, right, Like
there's literally nowhere tobuild.
It's really tough, or is thatwrong?
Is that a misnomer?
Mike Akerlow (06:23):
Sure, I think it's no, no, no, that's definitely
part of it.
We have a supply issue.
We also, it's just and supply isdifferent than prices.
There's a ratio that we look atthat is a price to income ratio
.
So what is it?
What was that ratio betweenyour income and what it costs to
buy a home?
And we're at about six.
So that means a house costs sixtimes the median income
(06:44):
household.
That number should be like twoto three.
So we're like double what weshould be.
So yeah, it just makes it.
You know, with the lack ofsupply, prices are higher, which
means a lot of people cannotget in the space to buy a home.
We're also impacted in ourrental market.
We're also impacted in ourrental market and at my office
we focus a lot on the very lowincome, on the lower incomes on
(07:08):
their access to housing and SaltLake County.
We have a shortage of about35,000 rental units for people
who are making $31,000 or less ayear Statewide.
That doubles it's almost$70,000 for people in are making
(07:29):
$31,000 or less a yearStatewide.
That doubles it's almost$70,000 for people in that
income.
Yeah, so that doesn'tnecessarily mean that we need to
build 35,000 units.
It may mean that people are inhousing currently, but they are
cost burdened.
They just can't afford it.
So they're paying like 50% oftheir income is going to their
housing costs, where the bestplace to be is about 30% of your
(07:51):
income going to your housingcosts.
So yeah, we're kind of gettinghit on all sides, both the
homeownership and the rentalside.
Wow.
Rachel Oh (07:59):
Yeah, no, because I, you know, we talk about housing
affordability and there's twoveins to that.
Right, like just the averagenot average, but maybe a healthy
income earning person it's hard, it's more difficult to buy
homes, and then you've got thelower income, as you mentioned,
who just don't have any accessto good housing, which is
important.
(08:19):
Right, it's important for ourcommunities.
They often service so many ofthe places that we need, like
everyone needs, and then I knowa big thing too is making sure
that they are able to live inthe communities that they serve.
And I'm thinking, you know,even like police officers or
nurses or whatnot, like it's,it's, it's too much of a burden
for them to live super far awayjust to afford something, but
(08:42):
they need to be in the county,you know, closer, and all that.
So I think there's so manytracks that we could go down,
but, um, but, okay, but what I,what I love about what you're
doing and just about you ingeneral um, I've always always
been impressed is you are alwaysfocusing on solutions in, in,
in how you're working to tacklethis, versus, you know, just
(09:04):
going on and on about the crisis, like I, what I love is that
you're more solution oriented.
Can you talk to me about someof the current solutions that
you're really focused on and howthat's changing, and and maybe
even describe something thatyou're super excited about right
now?
Mike Akerlow (09:18):
Sure, yeah, I think.
Um, let me hit a few points.
I think one thing you saidearlier on was, you know, wages
are not keeping up with housingcosts and that is fundamentally
one of the biggest issues wehave.
I can't do a lot about that inmy position here, but there are
things we can do and we can tryto provide access to housing.
So there's also you mentioned,zoning is a big, big part of
(09:40):
this.
It's a big factor and years ago,when I was at Salt salt lake
city back in 2017, we wrote thecity's first housing plan in
almost 20 years and we did a lotof research, a lot of data
gathering, a lot of work to pullthat plan together and what
came out, you know, in additionto hey, we need to provide maybe
(10:00):
we need to provide bettersubsidies, but a lot of what
came out was the impact thatzoning has on the development of
housing within our cities.
It's a really interesting topicbecause, you know, we talk
about density.
We talk about where densitybelongs and where it doesn't
belong and how it impactsneighborhoods.
But when you look at a lot ofour really successful
neighborhoods that have beenaround for a long time, you look
(10:22):
at them and they have a nicemix of density and then a lot of
the time it's these establishedneighborhoods that are the ones
coming out opposed to increasedor changes in zoning laws.
So there's kind of this.
It's kind of an interestingthing to watch, but certainly
density is a part of thisconversation.
How do we get more units outthere?
You know, we've seen downtownSalt Lake really explode in
(10:46):
multifamily.
We've heard a lot about missingmiddle, which are the kind of
medium density like town homesor smaller apartment buildings,
and that's kind of making acomeback.
We're starting to see more ofthat.
We've seen a lot of town homesbe built.
Rachel Oh (11:01):
Oh, I've seen tons.
I feel like they're everywhere.
Tons of towns.
Mike Akerlow (11:04):
Yeah.
So that's, you know it's a goodoption that kind of provides
that middle, that middle areawhich and, and and a lot of the
times those are for sale.
So that also gives people anopportunity to get in some home
ownership.
And we're seeing townhomes alsobe built as rentals, which is
really exciting.
So, we're seeing this but again,you know there's a lot of
cities out there that are reallyresistant to any zoning changes
(11:26):
.
People, communities, reallycome out and oppose this.
I think there's some ideas that, hey, if I get affordable
housing in my neighborhood it'sgoing to bring down my property
value, and there's a lot of databehind that.
The Kempsey Gardner PolicyInstitute here locally up at the
University of Utah did a studyon that which showed the
opposite, that that that doesnot decrease property values and
(11:51):
in some, in many instances Ithink, like the majority of
instances, actually increasedproperty values because it
brought, you know, the highervalues or it just helped.
It helped the neighborhood indifferent ways but really could
not prove out that it decreasedthe value.
Rachel Oh (12:02):
So I know we're getting super local here and
maybe only local listeners willcompletely understand.
But, for example, I, you know,I used to live in Sugar House
which is, at one point, Ibelieve, garnered the highest
rents in the area.
It's where all the youngerfolks, I think between, I think
the, you know the young singlesplus maybe the young marrieds
(12:23):
tend to like I mean, it's a cuteneighborhood, it's got access
to the eight, you know theBeltway, you know the park, it's
east side, so it's close to theslopes and close to the
University of Utah.
And then there was thatdevelopment there on the corner
of 21st and 21st, and I knowit's a huge issue, but now I've
seen it, it's been built.
There's also a bunch going ondown in the downtown area of
(12:47):
sugar house and whatnot.
But, and so I'm just saying, isthat like an example of some
changes to some zoning laws?
I mean, did that?
And again, that's just asomething I can think of, and
it's more of a prestigiousneighborhood, right, we're not
talking about way out someplace.
I mean, this is realdevelopment happening in a real
neighborhood.
That's actually, you know,desirable.
(13:08):
So thoughts on that.
Mike Akerlow (13:10):
And.
Rachel Oh (13:10):
Mill Creek, by the way.
So just curious if you cancomment on that.
Mike Akerlow (13:13):
Yeah, spot on.
I mean you are seeing those aregreat examples of where zoning
has allowed for greater densityin a neighborhood, the one on
21st and 21st that you justmentioned.
It's a nice medium density on abusy corner, so it's not in the
middle of a neighborhood, so itmakes sense on its location.
(13:35):
It was, I believe it was, orright nearby adjacent to the
property are some smallerapartment buildings, so it fits
in nicely.
Mill Creek is doing the sameand it's kind of in its capital
area where its office cityoffices are.
They're bringing in.
In fact PEG has a multifamilyproject right there.
Rachel Oh (13:53):
It's opportunity zone too, like, I think, all of Mill
Creek is an opportunity zone,so tons of capital came in right
during 2019, 2020 ish.
Mike Akerlow (14:02):
Yeah.
So it's good to see that kindof response happening.
I think what's hard these aretypically market rate units and
a lot of that is driven by otherforces such as land costs yeah,
not cheap.
Construction costs no, it's notcheap to build there.
So unless you get a subsidy itdoesn't make sense, it doesn't
(14:28):
really pencil for you to makethose affordable.
I will tell you, just down thestreet from Mill Creek, just a
little bit north, it's onRichmond, so it's literally just
on the street there from thecity offices there in Mill Creek
.
It's on the border of Salt LakeCity and Mill Creek.
My company that I was withbefore PEG, it was a nonprofit,
a portable housing nonprofit.
We built a 55-unit apartmentbuilding there and it was a
(14:54):
low-income housing tax creditproject.
So it has lower incomes there.
It fits in nicely into theneighborhood and it's providing
what you just said a minute ago.
It's providing housing to thepeople that live and work in
that community.
But it required a partnershipwith Salt Lake City for
assistance on the purchase ofthe land.
(15:15):
It required tax credits, whichis a federal program we can talk
about, and some very patientcapital from government entities
to make that project work.
But you're getting some nicelower incomes in there.
You're getting a place forpeople to live in an established
community with access toservices.
So it's a good example of whatcan happen in a community.
Rachel Oh (15:34):
So is it on Highland.
Where is it?
Mike Akerlow (15:36):
It's on Richmond, so Richmond is the street west
of Highland.
Rachel Oh (15:40):
Okay, okay, again, I used to kind of live around
there.
I love this story that you justmentioned and I feel like and
we'll talk about, I think, someof the things that we've done,
just because I think it'sinteresting to share as well.
But what I love is that, well,it reminds me to the point where
you want area a residence inwith the intent to convert, and
(16:07):
at the time the city was superopposed because they didn't want
quote, unquote you know class Bworkforce housing in that area.
Buckhead is kind of prestigious.
I don't know if you know this,but about six months after they
sort of initially denied us,they actually came back to us.
Do you know this story?
Denied us, they actually cameback to us.
Do you know this story?
Because they did a study, anindependent study from another
(16:32):
arm, another branch of the citygovernment, that did a study on
traffic congestion and thefindings found that this
increasing congestion, which thebusiness owners were
complaining about because itprohibited people coming to the
area, and the takeaway was youneed to build more affordable
housing options because thepeople can.
Part of the congestion was allthese workers coming into the
(16:53):
area and flood, you know,flooding the streets, and so
that's why if you built moreaffordable housing options in
the city center, then you wouldalleviate traffic and you would
bring more commerce to the area.
And then so after that, theygranted us approval approval for
multifamily.
Mike Akerlow (17:07):
I don't know if you knew that story no, that's
fascinating, though yeah, Icould see that.
Rachel Oh (17:12):
I could totally see how that would work yeah, so I
guess I just bring that upbecause I feel like this private
and public partnership is soimportant.
Let's talk about these taxcredits, because this is an area
I know nothing about and I alsoknow didn't you do something in
downtown salt lake city, rightthere when you come off the
freeway on 6th?
Wasn't that one of your guys'projects as well?
It's a super nice multifamily,but it's low income, am I right?
Mike Akerlow (17:36):
I didn't have any involvement with anything there.
Rachel Oh (17:38):
I thought you told me Okay, meaning I think people
have the misconception that lowincome housing is kind of ugly
and it's like it looks like theold.
You know government housingunits back in the day on the
East Coast and whatnot.
But it's not that case.
Right Like they fit, like yousay, nice in the neighborhood,
you wouldn't even know per sethat it's lower income housing.
(18:00):
So yeah, talk about that, talkabout tax credits.
I want to hear all that becausethis is an area I'll admit
we're a little bit more forprofit.
So I'd love to know how thesenot so profit oriented, but you
know providing good housingoptions, how that works and what
that looks like.
Mike Akerlow (18:15):
Yeah, I will explain that to you, let me.
Let me comment quickly on yourwhat you said about the quality
of housing going in and I thinkI remember the project you're
talking about.
It's on.
There's a project we helpedfund.
It was on 6 South and Main andit was an affordable housing
project.
They use they use low-incomehousing tax credits.
We actually gave them somefunding to buy down some rents
(18:38):
so they had done a tax creditproject that was more around
kind of a workforce housing typeproject.
We went to them and said, hey,if we give you additional
funding, could we help buy downsome of those rents, which we
did, so we were actually able toget some lower income levels in
that same apartment.
(18:59):
It was really interesting.
It was kind of a little trialproject we did and it seemed to
work well.
And before I jump into the taxcredit as part of this, I will
comment that you're so correcton saying what affordable
housing used to be and what itis now.
Back in the days it used to bepublic housing, public housing
got a really bad name and we'veshifted away from that through
the tax credit program, and taxcredits generally like to push a
(19:23):
mix of incomes in a building soyou can get very deeply
affordable all the way to marketrate, oftentimes in a single
building.
And the other thing is when Iwas mentioning earlier that
study done that Kim Garner didabout how it affects property
values, the things that it comesdown to are really good design
(19:44):
and good property management.
So if you bring in a buildingthat is nice looking, it has
nice amenities and features, butit's also managed really well,
there's no negative impact onthe community.
And that's the same with anykind market rate or affordable
housing.
We should always be looking atbringing things into communities
but build them rather than takeaway.
(20:04):
So let me just quickly give youa really brief tutorial on tax
credits, low-income housing taxcredits, or we call them
typically the LIHTC, theiracronym just because it's easier
to say.
LIHTC is a federal program.
Each state is given a certainamount of tax credits based on
its population, and then thestate disperses those tax
(20:28):
credits to developers.
Typically, developers who gettax credits are housing
authorities or nonprofits.
Sometimes for-profits will doit, but there's not many of
those and a lot of the time whena for-profit comes in to do it
they will partner with anonprofit.
But tax credits are a way toprovide a lot of equity for
(20:49):
affordable housing.
Gotcha.
There are two types.
There's a 9% and a 4%, and I'mnot going to get into the
details of those because it's alittle bit technical, but
essentially a 9% tax creditproject will give you a lot more
equity than a 4%.
Okay, so when you let's take a9%, for example A 9% you can
(21:10):
typically get about 70% of yourproject in equity.
So you've got to come up withthe other 30%.
Okay, and that's wheredevelopers look to governments
in particular to help providethat gap, and the reason why is
because oftentimes our money ismore patient, we don't mind
subordinating, our interest ismuch, much lower and deferred.
(21:33):
In fact, the county did aboutjust put about $25 million out
and we had simple interest,one-time payment deferred for
like 20 years.
So it's you know, we're reallywe have much more flexibility on
that gap financing which isneeded to make these projects
work.
In tax credits you don't reallylook at down like you do at PEG
(21:54):
, where you look at a rate ofreturn.
It just doesn't.
It's not the same.
Developers get into this becausereally where they make their
money is out of their fees,their development fees, and then
there may be some cash flow.
There's typically not a lot ofcash flow on high-tech projects.
There may be some.
So you're not really looking atcash flow as the way to run a
(22:14):
rate of return.
But you don't really have tobecause the credits are set up
differently.
So let's take, for example, mylast nonprofit.
They would come in and theywould apply to the state for tax
credits.
If they're awarded those taxcredits, they then sell those to
an investor and the investorgets the credit for a period of
10 years.
So let's say, we apply for 750000 worth of state or of these,
(22:39):
these low-income housing taxcredits, and we're awarded those
, we get those and then we gosell them to an investor, and an
investor typically is like alot of the ones we worked with
are large banks like yeah chasebank or morgan stanley goldman
sachs, they all.
They need a reason, they need acredit for their taxes.
So they will go buy these,they'll buy these tax credits
(22:59):
and they get it for a period of10 years.
So that $750,000 that I gotawarded will actually give me
$7.5 million in equity becauseit's that 10-year time period.
So if my project is a $10 or$11 million or $12 million
project, now I got to come upwith that remaining balance in
debt.
But because my debt is such alesser amount and, like I said,
(23:19):
oftentimes more governmentfinancing, that is patient and I
don't have to make debt servicepayments.
It means my rents can be lower.
Rachel Oh (23:26):
Gotcha and so the whole building.
Then, is this lower income?
It's not like you werementioning earlier, how there's
like a mix, no, there's, sothat's a great question.
Mike Akerlow (23:36):
Um, there is a mix and typically, when you apply
for your credits, you go througha point system and you try to
meet as many things as you canto get the highest amount of
points, cause then you'll beawarded.
It's very competitive.
A lot of projects don't getawarded every year, um, so you
really want to do as much as youcan to get the most amount of
points.
So one of the things is thatyou provide a mix of incomes.
(23:56):
Okay.
Rachel Oh (23:59):
So that's attractive then, and that helps to win the
grant or the grant with thiscredit or whatnot.
These credits Got it Okay.
Okay, that's very smart.
Mike Akerlow (24:08):
Now, sometimes that doesn't happen and you'll
see that rarely, but in thecases that it doesn't, it's
usually for very deeplyaffordable housing.
Rarely, but in the cases thatit doesn't, it's usually for
very deeply affordable housing.
The Road Home, which is one ofthe largest homeless service
providers here, did a tax creditproject in Salt Lake I want to
say four years ago maybe and itwas 100% affordable for people
(24:30):
experiencing homelessness.
So 65 units, no mix of incomes.
It was a 9% tax credit project.
Rachel Oh (24:34):
Okay, and that's downtown Salt Lake, probably
somewhere or something.
Yeah, okay and successful, yeah.
Doing well and servicing thelowest of the lowest of the
lowest, I feel like right Likethese have no income, they're
not working, they're homelessright, absolutely yeah, yeah,
which is important right.
It's super important,absolutely.
Mike Akerlow (24:53):
And they are often supported by vouchers.
So that's a differentconversation, but we've talked.
We've probably heard of sectioneight, vouchers or housing
choice vouchers, and those areallocated through our housing
authorities.
They're given to either aproject or a person, and they
can use it then to helpsubsidize their rent.
Gotcha.
Rachel Oh (25:11):
This is super interesting because I know that
you know on our side so with PEGand you were here, we didn't do
any light tech or whatnot, butwhat we did do was, I think,
similar to kind of some of thethings you're talking about is.
I don't know if you you weren'there when we did paper box
apartments, but paper boxes indowntown Salt Lake City.
It's actually in a super nicepart of downtown, right there by
(25:31):
the arena where the Utah Jazzplay and and the soon to Utah
National Hockey group that'scoming.
But that one was in anopportunity zone so we were able
to raise equity through that.
But it was also land that wasgiven to us by the city of Salt
Lake in exchange for lowerincome units, I think up to 20%,
(25:52):
and, as you were mentioningbefore, and I don't know if
you've seen it, it's beautiful.
I mean it's smack right there.
It's beautiful design.
It even has that Tetris vendingmachine car thing going on for
the parking garage.
It has super high-end units, butI know that 20% of the units
are lower income and I alwaysthought that they put like those
(26:15):
lower income units in like thecorners and the dark parts that
you know no, no view, and theydon't allow that.
It is a mix of high top floors,beautiful views with lower
ground.
You know it's a total mix andwhat I didn't know about this is
that that multifamily isperforming very well.
One of the reasons why, in kindof our higher supply situation
(26:39):
that's going on right now,because of all the kind of a lot
of the building of units, so alot of deliveries, it is almost
100 percent occupied all thetime because the 20 percent
that's always filled Right.
So the lower income units arealways there and it's a great
location and it's a good, someaning it's doing very, very
well.
And I think it's a greatlocation and it's a good, so
meaning it's doing very, verywell and I think it's a great
example of a public privatepartnership.
We didn't get any tax credits orwhatnot for that.
(26:59):
We did use Opportunity Zonedollars, which is just an
interesting pool of capital backthen when it was announced and
I and you might know more aboutit because you were here.
You might've heard about it,but my understanding is it's
it's become a very successfuldevelopment that we did, because
actually having the lowerincome units in there helps with
the occupancy and it's beentremendous.
From my understanding, I couldhave that a little bit wrong,
(27:21):
but I think I'm right.
Mike Akerlow (27:22):
I think I'm right on that You're spot on, and that
is.
I love that you bring that up,because so much of what we talk
about in affordable housingdevelopment is around light tech
, and so developers are like Idon't really want to get into
that, but what can I do?
What you just described is aperfect example of a
private-public partnership toget more units in a building.
So there's a couple moreexamples.
(27:44):
Cottonwood Heights is doingsome interesting things with
density bonuses, which isanother great tool of saying,
hey, we're going to give you theability to build more units in
exchange for some affordability.
So there you've got a couplemultifamily projects coming into
their city that they did that.
They give them more density inexchange for some affordable
(28:04):
units Nice.
So I love that there's not justa one-size-fits-all to this.
We've got to be.
I mean, like you said at thebeginning, our country is facing
this crisis, right.
And we can't keep doing thingsthe same way, so to provide some
more density in exchange forunits is a great way to bring
developers who may not want todo LIHTC to the table, to get
(28:25):
some of those affordable unitsinto the community.
Rachel Oh (28:27):
And then with that, so what area of Cottonwood
Heights?
Just so that, because I youknow I live down ish that way.
And how much density are wetalking?
And was there opposition fromthe city?
Is the city in support?
Did you have to, or does thegroup have to get variances on
height?
Is there you know?
Tell me a little bit about thattoo.
Mike Akerlow (28:45):
Yeah, great questions and I don't know the
specifics on those two.
I just know that they weregiven.
One is up by the gravel, yeah,up there on Wasatch, there's one
going in there and I'm not surewhere the other one is going.
But yeah, two projects there.
But yeah, I mean there are.
Yeah, to your point, there are.
It's not always a slam dunktype of thing, but typically a
(29:10):
lot of this I mean many timesit's by right anyway, because it
comes with the property.
The zoning's already there, thecity may just be able to allow
greater densities.
I don't know if those twoprojects received any resistance
to the zoning or the approvalsof those, because that is, I
mean, that is east side, I mean,that is, you know, east Bench.
Rachel Oh (29:30):
They were okay with it.
Mike Akerlow (29:31):
Yeah, yeah, they got it approved.
Two projects yeah, both wereapproved.
That's amazing Moving forward.
But you bring up a good point,it's not always a slam dunk.
These things do take work andmany times there is opposition
to this and unfortunately thatis an ongoing battle within
cities.
Now the state legislature lastsession did start talking about
(29:53):
overriding some of these zoninglaws in cities, and that's going
to be a really interestingthing to watch this upcoming
session to see if they do that,because the argument can be made
that it's taking away therights of cities to implement
their plans.
On the other hand, if there's alot of cities who will not
bring in any affordable housing,they see density as kind of
opening the door to.
(30:15):
You know, now we're also goingto get all these apartments and
then our property values go downor our crime rates go up and
all these things that theybelieve will happen.
And so the state, I think, isstarting to push this
conversation of hey, if you guysdon't do it, then we may have
to.
Rachel Oh (30:28):
So they will usurp the cities like they'll just
come in and they'll.
Can they do that?
I mean, does the state have theright to do that?
I don't even know how thatworks, but I think through
legislation they could.
Mike Akerlow (30:40):
I don't, you know, I it was.
It was a discussion thatstarted last session but didn't
really go anywhere.
But I wouldn't be surprised ifyou start to see that rise to
the table or rise to the top ofsome of these conversations
about housing.
Interesting.
You know, the state didsomething interesting too this
last session.
They created this starter homefund.
This would be Steve Waldrop, whois a former legislator
(31:03):
developer.
He created a really greatprogram for workforce housing in
the northern part of the statevery successful.
And then the governor broughthim on to oversee affordable
housing efforts statewide andthey created this program where
there's about $300 million setaside for developers to use to
build starter homes.
The goal to increase supply,provide access for lower incomes
(31:28):
to get into some housing, andthen they also funded a down
payment assistance program sopeople who can get in these
homes can also apply for someassistance in getting funding
for a down payment.
So we'll see.
We'll see how that happens, butit's nice to see the state take
, you know, pushing some thingsthat are going to help hopefully
help alleviate the pressurethat we feel.
(31:49):
Yeah.
Rachel Oh (31:50):
No, I love that.
And this idea of starter homes.
I mean I think of you know wedid the build for rent David
Bourne was on our other episodesand that's exactly what they're
doing.
Right, they're building smallerhomes as an alternative to your
traditional stacked apartments,but it sounds like and those
are probably too small.
Honestly, I think these starterhomes are probably slightly
(32:12):
larger.
You know people.
I think a lot of people wouldrather or maybe when they're a
little more mature in theirrelationships or they're, you
know, if they're married andthey're starting to have
children probably do want, inaddition to your high rise or
stack departments, is theability to live in a home.
And so what?
I?
What?
I'm so amazed.
(32:32):
So I'm, you know I'm not alocal, but I've been here now
over 10 years and I did go toschool here.
The valley has completelychanged, right, like there used
to be copper mines I don't evenknow.
I don't think they're thereanymore.
Like it's.
We've completely built all theway out west.
It's crazy to me and thedensity all along State Street,
and I think you mentionedearlier that your office
(32:55):
supports Magna, which I alwaysfeel like Magna's in Timbuktu.
But if you're doing stuff outthere, I mean that means there's
communities being built way out.
I mean right Like this iseverywhere.
Mike Akerlow (33:08):
It's happening and it's exciting to see our state
grow like that.
But you look at the projectionsand we're on track to continue
this kind of growth.
The reality is do we have thehousing and the services in
place to accommodate that growth?
And we don't.
We don't have it in place, yeah.
So we've got to start havingthe hard conversations about
(33:30):
what does that look like forcommunities in terms of density
and access to services.
Rachel Oh (33:33):
Yeah, okay.
So then let's back up a littlebit.
So tell me your role in thecounty then.
What are you like?
I think you've kind of dabbledin on it, but maybe be more
specific.
What are you folks doing tokind of lead the housing efforts
?
What are the tools that you'retapping into efforts?
What are the tools that you'retapping into?
(33:55):
What are some of the innovativeor interesting things that your
office is doing specifically tohelp alleviate?
And I know you've kind ofmentioned a few things, but
maybe whittle it down to somevery specific initiatives that
you folks are working on.
Mike Akerlow (34:03):
You know I mentioned towards the beginning
that we have a gap of about35,000 rental units for people
at about $31,000 or less a yearwhen you look at the demand or
the need for units based onincome levels.
The higher the income, thelower the need.
So what we've decided in ouroffice for the next five years
(34:25):
is to really focus on the deeplyaffordable.
That's where the greatest needis and it's really where
government dollars can make themost impact.
So over the last year we haveput out through our housing
trust fund $25 million.
This came through the federalgovernment.
It was some of the Recovery Actfunding that came to the county
(34:46):
and we put it through ourhousing trust fund and did these
loans to developers.
And out of that 25 million wegot about just over about 1550
affordable units in the county.
So really great impact.
But what that really was isleveraging.
We were just part of a largercapital stack, which is a really
(35:09):
important role that we play.
So that's what we did there.
And those projects are, youknow, some are already in
construction, some will be inconstruction soon, but we'll see
over the next couple of yearsanother 1500 units come online.
Rachel Oh (35:23):
That's amazing.
And this is for the deeply.
What did you call it Deeply?
Mike Akerlow (35:28):
So this is mostly deeply affordable.
It's about.
I'm getting a little technicalhere, but when we talk about
income levels we talk about areamedian income.
So AMI, and so our AMIs, thatwe focus on that.
$25 million.
The majority of that fundingwent to 50% of area median
income and below.
A good chunk went to 30% ofarea median income and below.
(35:50):
Wow, Okay, that good chunk wentto 30% of median income and
below.
Rachel Oh (35:52):
Wow, okay, that's amazing.
Mike Akerlow (35:53):
But we also, we look at it.
It is, it's good, but some ofthat funding went into mixed
income projects too.
So you can say, hey, you know,we did some 50%.
We also did some 60 and 70%,while getting some 30%.
So I think what it's impressivewhat we did with that money.
So we've got that.
We also oversee several federalfunding sources.
In fact we're releasing anopportunity for funding just
(36:20):
under $5 million and this issome short-term funding for
developers to come in to acquireland or to do pre-development
work.
Even in construction costs.
Three to five-year term, thegoal is to just get some
projects off the ground and getthem into production.
But that will be also focusedon.
The goal is below 50% of areamedian income.
On that funding.
We're exploring some differentoptions too.
(36:41):
We met with a group out of NewYork who is funding some
affordable housing through apartnership with the.
I think it's the state.
I can't remember if it's thecity of New York or the state,
but anyway they are doing.
I think they're using theirbalance sheets of the government
entity to help borrow funds,which is, I think, a really
interesting idea we're exploring.
(37:01):
Right now.
We've kind of put together ourfirst draft of looking at a
community land trust.
So this is the way to takepublicly owned properties, put
them into a trust that then canbe put out for development, and
the really cool thing about thatis that the way it increases
affordability is that thatproperty always stays in the
trust but the building is ownedby either a household or a
(37:25):
developer.
But because the land doesn'thave to go in at a cost, it
makes it affordable.
So really great.
These are done all over thecountry and typically by
nonprofits.
But we're looking at one.
I started one when I was at thecity and now we're looking at
one countywide.
So another way to start gettingproperties in holding those
(37:46):
while some affordable housinggoes on top.
So doing that, that, we arelooking at some.
Um, we're helping bluffdalecity with their accessory
dwelling unit toolkit, sohelping them develop a toolkit
so that people know how to buildadus and they've, and utah has
lifted that need for permittingon earth.
Rachel Oh (38:06):
Is that right?
Like you can, anyone can buildan adu anywhere yeah, yeah, well
, well, yeah, well you stillhave to get them permitted.
Okay.
Mike Akerlow (38:15):
But you do, yeah.
Yeah, you still would have toget them permitted.
It's just making them easier todo so yeah, there were some
barriers to that.
Cities had some barriers.
Rachel Oh (38:23):
Yeah, those have been lifted right.
Mike Akerlow (38:25):
Yeah.
Yeah, there's been somelegislation passed for internal
ADUs.
So if you want to do like amother law apartment, you could
do that.
The external ADUs so if youwant to do like a mother-in-law
apartment, you could do that.
The external ADUs is a littlemore localized, but more cities
are coming online and that'skind of a zoning thing, because
you're talking about now likeputting a new building on a lot.
So what does?
that look like in terms ofsetbacks and your neighbors and
things like that.
(38:45):
So cities are working on theirordinances, like I said,
bluffdale did theirs.
So we're in the process.
Rachel Oh (38:52):
I can't believe Bluffdale is a city.
I just have to tell you.
I just cannot believe that's acity.
But I drove through there andit's nice.
You know they've done a nicejob, that's great.
I mean, and it's pretty dense,so I can see how they're
offering affordable for allincome levels.
But yeah, bluffdale is a thingnow, right.
Mike Akerlow (39:10):
Yes, it is, and it's growing like crazy.
I mean, like you said, I grewup in the Sugarhouse area,
that's what I was used to, andnow you drive to South Jordan or
to Bluffdale and Harriman andit's a whole different.
I mean, it's just crazy.
Rachel Oh (39:23):
The nice thing about new is everything just looks
nice.
So yeah, there's something tobe said.
And I will say on that side, onthe west side, they get the
beautiful Wasatch Front as aview.
It's incredible.
Like, our views aren't as goodif you're on the east, like the
ochres are so far away, but ifyou're looking east, it's
beautiful.
Mike Akerlow (39:41):
It's amazing.
Yeah, I totally agree with you.
It's incredible, the views ofMount Olympus.
I mean, it's majestic.
Rachel Oh (39:46):
It's really beautiful , ok, so one last question my
investors, my listeners, whatnot?
You know they're all about realestate for different things.
Help, just if you could maybejust briefly kind of explain
what are opportunities forinvestors in affordable housing?
I imagine a lot of that isthrough like impact funds and
you mentioned patient capital,but is this just a carve out
(40:09):
where they can get a steadyreturn, or is it mainly just its
impact, like they know they'redoing some good?
Or how can investors approachaffordable housing?
Mike Akerlow (40:20):
Great question.
I think you know there's.
Like I mentioned, there'salways the opportunity to be an
investor on a light tech projectand that would be something I
would never try to even counselthem on.
That is, they've got to go totheir attorneys and help figure
that out because that's justkind of its own animal.
But there is opportunity thereif they want some credits.
I think more in line with whatyour investors are looking for
(40:40):
is what you said is what's moreof this impact investing?
Can we fund projects wherethere's increased densities for
affordable housing, or even onprojects where we don't get
increased densities foraffordable housing?
Or even on projects where wedon't get increased densities?
Is there a willingness to maybenot get as high of a return in
exchange for some community goodputting more making, like you
(41:01):
said, 20% or 10% of your unitsaffordable?
So yeah, it's a really toughconversation because at the end
of the day, investors put theirmoney out to get a return, and
that's what they want.
And so when you start talkingabout lowering rents, then you
start talking about decreasedreturns.
It's just simple math, so Iguess there's got to be.
(41:25):
Is there an appetite for lowerreturns?
If so, what kind of lowerreturn?
would we be talking about?
Is it 2% lower?
I don't know.
But it's kind of playing withthose numbers and seeing what
would be acceptable.
I think if you can look atincreased unit or you know
increased densities so you don't, so you make up some of that
difference is another great wayto do it.
But we have to start pushing.
We just have to start askingthe questions and maybe get out
(41:48):
of the comfort zone of a.
You know, this is our project,this is the standard project we
do.
We've always done it.
We know our return.
That's very safe.
Yeah.
If we want to help contribute tothe affordability in
communities, we have to get alittle more creative.
Yeah.
And see if there's differentways to do it.
I think also you know youmentioned on Paperbox you got
the city to participate.
Yeah, you got them to put inthe land.
(42:22):
That makes a huge difference.
So again at PEG, going to thecities and saying what would you
guys give us in exchange for adozen affordable units in this
building construction costs?
we know what we can lease themfor, and now we just have to
decide what is that delta?
What's that difference?
That we need to still get adecent return but also provide
maybe some affordable units to aproject yeah.
Rachel Oh (42:40):
No, I, yeah, that's so great.
I appreciate that.
Again, I think it's just likeanyone's allocations right and
they've got their investmentgoals, and I always feel like
it's just maybe bringing thatinto sort of your allocation and
just knowing, hey, this littlechunk may not be getting the
outsized returns that we'relooking for in different areas,
but it is the area where I canfeel good Right, and so I to
(43:04):
your point.
I think it's rethinking and Ido think this next generation is
.
They are so focused on doinggood, you know, and being so
open and welcoming, and maybethey're the ones that will think
less about maybe what theprevious generations and really
carve out more of that doinggood.
Mike Akerlow (43:18):
So so maybe, maybe .
I mean I have kids in thatgeneration and they've all said
to me dad, we have no hope ofbuying a house.
Yeah.
We have no hope of a house andwe are even concerned about
being able to rent.
We're going to have to rentwith friends.
You know there's got to be alot of people in there just to
even afford the rent and live ina community where we want to
live.
And so, yeah, there are some.
(43:39):
They're facing some prettytough challenges and I think
you're right, they may look atsome things differently than we
do.
Well, and we should help them.
Rachel Oh (43:46):
We really should.
We can do that and I know youare.
You're such a good dad.
Okay, well, mike, thank you somuch for taking time out of, I
know, your very busy day andschedule and responsibilities.
I learned so much and itactually makes me I don't know,
just makes me kind of rethinkthings.
So I really appreciate yourtime.
I'm hoping maybe we can haveyou on a future episode.
(44:08):
You can kind of give us maybemore of a progress report about
how some of those projects aredoing.
I would love it, We'd love tohear, have a check in.
Mike Akerlow (44:14):
So maybe we do something after the session next
year and talk about someupdates and funding, or there's
new zoning or something that wecan do a little update.
Yes, perfect, okay, well, thankyou, well, thank you so much.
Rachel Oh (44:26):
So.
Thank you, mike, for joining us.
Your insights have been amazing.
In the meantime, thank you toall our listeners who have
joined us today.
Again, from the peaks of theMountain West, I am Rachel Oh,
your host for Peaks andPortfolios by PEG Companies as
we dig into all things realestate and today, maybe just a
little bit of doing good too.
Thank you all for joining.
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