Taylor Avakian
You were put in a position of power where you could change the landscape of how things are done, right? I know. What are some of the first things that you would do?
May 6, 2026 · 1 hr 5 min
How He Builds Homes Without Investing A Dollar
With Bob Buente — President & CEO, 1010 Development
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What this conversation gets into
Bob Buente, President & CEO of 1010 Development Corporation, joins Taylor Avakian on the No Vacancy Podcast for a deep dive into the real world of affordable housing development in Los Angeles.
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Episode show notes
Bob Buente, President & CEO of 1010 Development Corporation, joins Taylor Avakian on the No Vacancy Podcast for a deep dive into the real world of affordable housing development in Los Angeles. With over 30 years of experience as a faith-based nonprofit developer managing 400+ units, Bob reveals the "black arts" of financing affordable housing — from 9% and 4% tax credits, tax-exempt bonds, layered public subsidies, developer fees, and the full capital stack. Learn how these projects actually get funded with zero developer equity, why rents are capped at 50% of market yet remain extremely stable, the massive complexity of compliance and property management, and the brutal realities of California’s housing crisis — land costs, NIMBYism, bureaucracy, permitting delays, labor shortages, and why supply is so restricted. Bob shares candid insights on Emergency Directive 1 (ED1), Section 8 vouchers, the challenges facing new projects in 2026, why centralizing financing and approvals is essential, and what he would do with a blank slate to fix the system. Sponsor - Loan Titan Upscale your experience with https://loantitan.com/ Sponsor - AI for CRE Collective AI for CRE Community: https://www.skool.com/ai-for-cre-coll...A must-watch for developers, brokers, investors, policymakers, and anyone trying to understand why California struggles to build housing. Chapters: 00:00 - Intro & Guest Background 01:32 - Sponsor: Loan Titan 02:15 - History of 1010 Development Corporation 03:11 - Why Affordable Housing Has No Market Risk 05:30 - How Affordable Housing is Financed: The Black Arts 08:16 - Tax Credits Explained: 9% vs 4%, Bonds & TCAC 11:39 - Zero Equity for Nonprofit Developers 15:19 - Tax Credit Pricing & Syndication Realities 18:35 - Pigs at the Trough: All the Layers of Funding 22:00 - Making Money as an Affordable Housing Developer 23:33 - Property Management Challenges & Sweet Spot (500-750 Units) 27:24 - Why California Affordable Housing is So Broken 30:42 - Construction Costs, Labor, and ICE Impact 37:10 - NIMBYism, Zoning, and Supply Restrictions 39:19 - Emergency Directive 1 (ED1) Deep Dive 44:37 - Section 8 Vouchers, Compliance & Lease-Up Risks 50:33 - If Bob Could Fix the System: Blank Slate Reforms 57:27 - Advice for Young Developers Entering Affordable Housing 59:48 - Most Important Skills: Accounting, Planning & Law 1:02:05 - Final Thoughts & Resources 1:03:43 - Closing
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Episode transcript
This 11,250-word transcript is matched to English (Original) automatic captions. Timestamps seek the episode player to the matching passage.
0:00–10:00
Bob Buente
Tear everything down.
Taylor Avakian
Bob Buente is president and CEO of 1010 Development Corporation, a Los Angeles faith-based affordable housing developer and property manager.
Bob Buente
Our equity is zero. We don't put in anything. The nonprofit developer doesn't put in a dime. There are a lot of pigs at this trough. You've got the state, they want their money. The county wants their money. The city wants their money. The investor doesn't need any money because he's getting these tax credits every year. Where you can really make your company grow is if you have the property management. Problem is the property management side is almost as complicated as the developer side.
Taylor Avakian
Do you want to build condominiums for sale or do you want to build condominiums for rent? Or do you want to even just build apartments and not even worry about condominiums? Is there one skill set that you think is the most important when it comes to actually developing this affordable housing? I would say This episode is sponsored by Loan Titan, a leading residential financing loan company specializing in both conforming and non-conforming mortgage solutions. Loan Titan offers Fannie Mae, Freddie Mac, non-QM, and private money, hard money loan programs, helping borrowers who need flexibility beyond traditional lending guidelines or speed-driven financing solutions. Whether you're purchasing, refinancing, or investing, Loan Titan is known for smart structuring, clear communication, and reliable execution. Visit loantitan.com and mention Taylor Avakian to get started. Thanks to Loan Titan for supporting the channel. Welcome to the show. My name is Taylor Avakian, and I
Taylor Avakian
am here with my esteemed guest, Bob Buente.
Bob Buente
Thank you for having me.
Taylor Avakian
Okay, so Bob, you're not going to remember this, but I definitely cold called you at one point, maybe eight years ago, cuz I was working on a bunch of stuff in Koreatown, Pico Union. And we have stuff there? You have some assets there. Recently, you've retired. Yes, I have. were introduced by a mutual friend. And, why I wanted to have you on the show is because you are an affordable housing provider, owner. Not one of these massive, huge organizations, more of a smaller shop, right? 400 or so units. So, walk me through 1010 Development. That's your That's your company.
Bob Buente
Okay. Quick history is that 1010 was started in mid-1990s by First United Methodist Church of Los Angeles. And, they had a project They had sold this church, and they had land, and they had a big parking lot. And, so on some of the land, they built a project called Villa Flores, which was a HUD 202 project. It has ran fine now for close to 30 years. After that, with their connections with the Methodist Church, they started branching out looking at other church properties, possibly. They They were able to do one project uh at Pico and New Hampshire, called um Casa Shalom. Casa Shalom. It has never been vacant. Well, the one thing about affordable housing is you don't have market risk. And, that has always been an attraction
Bob Buente
for commercial developers.
Taylor Avakian
What What makes you say that? What do you mean?
Bob Buente
Well, our rents are, you know, by edict, sometimes 50% of what market rents are for a comparable unit. We have a project at Olympic and Hope, called Hope Village.
Taylor Avakian
Mhm.
Bob Buente
And, we have three-bedroom units there that were going for maybe 1,100 a month, 1,200 a month. I can't remember the last exact rents. But, you know, what's going on around there? You know, 3,000, 2,500. You don't have to wait very long before you realize you don't have a a lot of market risk. You don't have to spend a lot of money on swimming pools, tennis courts, spas, concierge service. That just doesn't happen in affordable housing. At least it hasn't in the past. Um So, back to 1010. So, over time 1010 did a number of projects in downtown LA. Um there was a kind of a stall in the early teens. We couldn't get anything done. There was just no financing and we'd always relied on a certain type of financing, bonds, tax exempt bonds issued by
Bob Buente
Sidewalk and California Debt Limit Allocation Committee. And so, we finally got kicked up and started going again. Uh the last project that we did was a project called Casa Carmen, which is a senior homeless project at corner of Burlington and No, Berlingame and uh I won't hold you to
Taylor Avakian
that.
Bob Buente
I forget.
Taylor Avakian
How quickly I forget. it's got to be like the the 300 block or the 700 1,100 block
Bob Buente
Burlington.
Taylor Avakian
Okay. So, south.
Bob Buente
So, 1,100 Yeah, it's it's still Pico-Union area, definitely. And uh it's it's been fine. Wow. I wanted to do a family project and LAPD said, "Nah, you don't want to do a family project here. Nah, you know, we we got enough teenagers hanging around doing nothing. We don't need more." I said, "Thank you. No problem. What about seniors?" We loved the idea.
Taylor Avakian
Wow. Okay. So, you made it happen. Okay. So, you're telling me I'm thinking about this from a financial standpoint, right? People don't understand how how it works, but if someone's saying, "Okay, how are you going to build housing where your rents are capped? How do you make money? Where where [snorts] you know, what what what does that look like?" So, how do you make money in affordable housing? You want me to tell you the black arts? Please.
Bob Buente
Okay.
Taylor Avakian
Yes.
Bob Buente
It's a combination of private equity and public money. So, to give you an example, it's not unusual at all for an affordable housing project to have five levels of financing. And it's an upside down wedding cake because the biggest piece are the tax credits. But nobody wants to be the first. So, you've got to build up from that. You've got to start with the smallest. And it used to be CRA, but when CRA went out of existence in what, 2012, 14? Was it something CRA, Community Redevelopment Association. And it was started by the state. The end result was they got rid of the CRA and they got rid of the money that CRA was able to disperse. And the way the CRA worked is they created almost a special tax district.
Bob Buente
And they would have a special area, Hollywood, Pico Union, um downtown LA I think was is one, was one, or might still be. And you would um the any tax money, any real estate tax money that was paid in that district went to the CRA.
Taylor Avakian
Mhm.
Bob Buente
So, and the money was supposed to be reinvested within the CRA district. So, that was the first source of funding you went to because you're in their district, they want to get the money out, it's supposed to go for you know, affordable housing or economic development. It's going for affordable housing. [snorts] Everything was fine and then it went away. But then that little piece of money was replaced by um a consortium of nonprofit lenders and the city, which would give you, you know, maybe a couple of million dollars. You say a couple of million dollars, that's not bad. Well, a couple of million dollars on a on a, you know, $40 million deal, not going to do that well. Casa Carmen was special. We only had to do we had to start off actually with a Federal Home Loan Bank
Bob Buente
affordable housing program loan and it was $250,000. But, that gave us more score more points cuz every one of these financings is um, competitive and it's somewhat objective. But, you get points for having financing in place. So, it's like you need the the first level of financing to get the second level of financing.
Taylor Avakian
Okay.
Bob Buente
And so, this just builds up until you finally reach the point where you can apply for tax credits. And there are two types of tax credits. There are tax-exempt bonds which are issued by Citadel, California um, development. And then there are a 9% which are issued by the California Tax Credit Authorization Committee. The 9% are the holy grail because that can easily be, you know, 50 to 60% of your total costs.
Taylor Avakian
Wait, what do you Okay, explain that. Explain that to someone who has no idea what [sighs] Yeah, give them give us the the the fourth grader level.
Bob Buente
The fourth grade level. The Treasury Department has a formula in which they allocate certain federal tax credits to each state. The tax credits are issued by uh, each state through some sort of agency.
Taylor Avakian
Okay.
Bob Buente
And it varies state to state, but in California it's Tax Credit Allocation Authority or TCAC.
Taylor Avakian
Okay.
Bob Buente
The number varies every year because they readjust it based on population or what the number is going to be that they're going to allow. This program was not it was always had a sunset provision through most of the '90s. And then in I think '98, '97 it was made permanent in the law. And from that point on there was always some legislator Mhm. I hate to say he was a Republican from the state of Oklahoma, but he was and they would try to kill it. And you know, it's again the classic example of you just keep doing the same thing wrong with the same results. What are you you're nuts.
Taylor Avakian
Insanity.
Bob Buente
Insanity.
Taylor Avakian
Yeah.
Bob Buente
This Sidlak, the tax exempt bonds, there is no cap on how many tax credits
10:00–20:00
Bob Buente
the state can issue. So, you've got the 9% which is capped and then you have the bonds which are not capped. But, you're only getting half the half the credits.
Taylor Avakian
So, what does 9% mean?
Bob Buente
9% of the approved basis which is all the aspects of a development that are depreciable. Okay. Excluding land and then some soft costs, um what it takes to build the project, engineering costs, accounting costs, uh attorneys fees, uh you can write off uh a pretty big chunk of your construction interest. And now, by you don't really write it off, but you get compensated for
Taylor Avakian
that. Cuz you're you're basically So, like let's say an example a $100 million project, right? 9% of that would be $9 million.
Bob Buente
Right.
Taylor Avakian
So, you get to effectively sell the 9 million to someone who's wanting to buy the tax credit and then you get those funds back, so your basis becomes 91 million.
Bob Buente
Effectively. No, it hasn't changed your basis.
Taylor Avakian
Your basis is still But, the the money I guess in the deal is That just changes what your capital stack looks like. So, if you only Okay, so It's not changing your basis or your depreciation basis at all. So, let's say that you were a developer and the equity required from you, which I guess we can go into, let's say it was like $2 million, right? Um and then you had the all the funding up to this. So, then effectively you get your equity out of the building because you Uh you're thinking like a market rate developer. Yeah, okay.
Bob Buente
Explain this to Our equity is zero. Zero. We don't put in anything. The nonprofit developer doesn't put in a dime. Okay. What they do is they go after every bit of funding they can to make certain they don't have to put in any money. So, when you go to T-CAC with your budget, with your development budget, and they're looking at your capital stack, Uh-huh. they don't want to see a number for uh for the for the developer unless there is the developer gets a fee for developing the project. From who? It's part of the stack. Got it. So, it's part of it's part of basis. Got it. And the developer fee is for considering the risk you take going forward.
Bob Buente
You can't flip this project out in 5 years the way a a commercial developer would. Cuz it's covenant restricted cuz it's it's restricted there. got these you know, and then you've also got you're putting up guarantees. Mhm. And so, these guarantees and sometimes they ask for personal guarantee, although we I never gave one, that you would need to perform a certain way. And they are usually um memorialized in the in sometimes in a separate document a guarantee, but usually they're in the the regulatory agreement and in the financing docs. And the really the only way that a project can go bad is bad acts. The developer Got it. is an idiot or a thief. But back to the capital stack and how the 9% and 4% work, you've got your basis. So, let's just say you have a Let's Let's do a little smaller.
Bob Buente
$20 million project cuz a $100 million project at 9% doesn't really happen. Nor can you really make it work on a 4%?
Taylor Avakian
Okay.
Bob Buente
Let's say you get 9% of the basis and the basis for a $20 million project or for a $40 million project is probably something in the neighborhood of 30 million.
Taylor Avakian
Okay.
Bob Buente
31 million. Maybe maybe plus minus 10%. So you take 9%. What is that?
Taylor Avakian
Mhm.
Bob Buente
There used to be a rule that you had to they had a factor the fact the tax credit factor where you weren't getting 9%, you were getting something less than 9%. And again, this was all magically done by the Treasury Department. A couple of years ago, it was codified that 9% means 9%. 4% means 4%. Okay. So you get 9% of 30 million and you're going to get 2.7 million. Yeah. In tax credits. That's multiplied by 10 years. So you're getting $27 million. What that does is that's only one year of your tax credits back up Well, that let's just say your basis is on a $40 million deal is closer 20 20 million dollars. That's just easier to multiply. So you're getting 9%. That's a million eight. You get a million eight every year. But you don't get a million eight every
Bob Buente
year. Because the tax credit buyer is it's considered Look at it as an annuity. And so you're buying a bond that is paying something over a period of time. And it pays out over 10 years. So you look at what the 10-year rate is on something and then you try to mark your you get the the vig over that because of quote risk. Although the risk for a a tax credit project in the state of California is de minimis. I've heard it's as low as 15 basis points of all the money that are out.
Taylor Avakian
Do they pay for it up front? The 10 years?
Bob Buente
Okay. They they pay for it up front after you have got your tax credits and after you found your tax credit buyer, your equity provider. They're a limited partner. The limited partner will then pay something less than 100 than par for it. So, right now the what you're getting on a bond deal and I was just talking to a financial an FA, a financial advisor on my way in because I wanted to get the current numbers. You're only getting 75 to 80 cents for each tax credit dollar.
Taylor Avakian
Whoa. Yeah, what's the yield on that? I mean, I don't want to pull out my 12C and try to calculate that, but So, they're take it's that Why are they charging so much? What do you mean why are they char- why are they why are they paying so little? Yeah, exactly. they're only paying you 75 cents on the dollar.
Bob Buente
75 cents on the dollar. Uh because they're they have a chance to make money. The other thing and and we can get into that when we're talking about ED1
Taylor Avakian
Yeah.
Bob Buente
is it's a it's a competitive world. And it varies that you know, when I was a tax credit syndicator it was very competitive on the um on the demand side. The the the supply side was really small. Mhm. And the demand side was pretty big. Well, it's kind of flipped now. Now you've got a a potential supply coming online with ED1, but you've got, you know, tax credit investors now are saying, "Hey, you know, maybe I don't want this project quite so bad. Yeah, I know I've done 10 deals with you in 5 years, but I don't know. You know, okay, maybe I'll give you 70 cents. Oh, you could you know, it's it's a negotiation. It is it is you're selling tires. Dang. Yeah, you just go crazy. Now, that part I really like. That part I miss, but the the the
Bob Buente
real thing is that you you have you get a dollar amount a dollar per credit and then you don't receive a dollar per credit from the investor.
Taylor Avakian
Got it.
Bob Buente
It is a spread. The spread, yeah. So, it there's an art to building up these um uh spreadsheets, these these uh development budgets. I'm on a housing panel uh with ULI LA and we did uh a program, an explanation for the non affordable housing developers and and we had a you know PowerPoint presentation a deck. It looked really good and it explained this, you know, you could just see how the you had to build up so much soft money plus tax credit equity to to make a project work. Now, when I say soft money, it's very difficult to foreclose Mhm. if not impossible. The banks don't want to foreclose, you know, the obviously the limited partner doesn't want to foreclose because the recapture, you know, you're going back to year one and if you get a foreclosure in year 10, you've got eight years of recapture
Bob Buente
and that's not a happy day to take to your board of directors. Mhm. You need to have this debt and it usually comes from nonprofit lenders and it is uh uh kind of you you you make it by interest by what you get off of the NOI of the project.
Taylor Avakian
Okay.
Bob Buente
And there are a lot of pigs at this trough. You've got the state with they want their money, the county wants their money, the city wants their money. The investor doesn't need any money because he's getting his tax credits every year. The developer would like to get his developer fee because that
Taylor Avakian
is that is when we we're talking about what does the developer put in?
Bob Buente
Yeah. I always refer to it as the other the other reserve requirement. And the other reserve requirement is the developer fee, say it's a million dollars. Well, if you're a little bit short at the end of the day, your developer fee gets reduced. Oh. But order to keep the developer fee in basis, it has to be paid out over 10 years. And so everybody's looking at that.
Taylor Avakian
Can you pay this out over 10 years?
Bob Buente
These These development budgets they are black arts. They are They are work of art. And you know, there are a lot more people that can do this stuff now.
Taylor Avakian
Yeah.
Bob Buente
But when I started in the business in the early '90s nobody was doing it. I mean, there were There was nobody out there. Interesting. It was kind of frightening. Yeah, it's like you had to be an actuary to to figure out what what had to be done. Well, it helps. Yeah. It helps. There used to be two big CPA firms that just specialized
20:00–30:00
Bob Buente
in this.
Taylor Avakian
Wow.
Bob Buente
Um one was called um uh Ruskin Red I can't remember the name. They were in the East Coast in Baltimore. And the other one was Novogradac.
Taylor Avakian
Yeah.
Bob Buente
In San Francisco. They're still there. Well, they're still kind of fighting each other. Now but now they were going after each other's turf. But Novogradac has, you know rows of see of CPA of CPAs in training and managers who are doing this stuff all the time. And to look at their I had a They They would sell you their financial model. And I looked at their financial model. It's huge. And then you look at the you know, some of the the budgets that I have seen that our FA has put together, they're 10 15 pages long. But they you've got to just spread out all this stuff. And you don't want to say, "Well, I'm going to do a tax credit deal. Never done one before. You know, my cousin Sid's a CPA. All he does are individual accountants." And you know, his his his twin brother Moshe, he you
Bob Buente
know, he's an attorney, but he hasn't done any tax credit deals. This is, you know, a a city or a lender and an intelligent buyer broker, seller broker will say, "No. No, no, no, no, no. You do not want to go there."
Taylor Avakian
Interesting. So so the money that you make as developer, like why would I, let's say I wanted to to to do one of these projects, right? I find a piece of land and I'm like, "Okay, let me figure out if this works for a light tech deal, tax credit deal, all this kind of stuff, affordable nonprofit, right?" For whatever reason, we don't have to go through the details, but it does. How do I make money? Do I make money from the developer fee? So let's say it's a million dollars for for a small example, and then when those tax credits or when the affordable covenants burn off, like what's the Do you just build as many of these as you can cuz you make the money from the fees? I guess what's the Why would someone Yeah, what's the motivation?
Bob Buente
Um Well, you never get rid of the the the the requirements to set asides. I mean, they they minimum 55 years. You get your money from the developer fee.
Taylor Avakian
Okay.
Bob Buente
You get a small amount of money for being the manager. You will get some money, the nonprofit.
Taylor Avakian
Mhm.
Bob Buente
The nonprofit brings a tax abatement. So, that's a lot of money. For property taxes. And that that goes into the capital stack.
Taylor Avakian
Got it.
Bob Buente
You still have to pay assessments. But the But the But the county tax you get a you get a pass on. You then as a as a nonprofit developer want to make your money when you re- re-syndicate the project, but that's 10 or 15 years out.
Taylor Avakian
Okay.
Bob Buente
So basically, you're right. You have to get a bunch of projects together to get a bunch of capital together so you can hire a bunch of people to keep looking at it because it really becomes, you know, a a numbers game. You've got to have a lot of projects. So you've got to have more than one person. And it just goes on. Now, where you really make your money, where you can really make your company grow and stay stabilize and grow is if you have the property management. Cuz you get the property management, you get those fees. They're all going to be blended together into your, you know, your roll-up balance sheet. You You get the the property management and you get the developer side. That's a good business to be in. The problem is the property management side is almost as complicated as the developer side.
Bob Buente
Because you have this You have these compliance requirements that you have to live with and it's either the developer making certain the compliance is taken care of, it's the property manager that's doing that. So, I was a syndicator with Lennar and they had a group Their Their syndication was centered in Portland. Their people did the compliance because they didn't want to make a mistake. They didn't want to have anything go bad. Wow. So, that that's the best I mean, the sweet spot The sweet spot is you need 500 to about 750 units. You then get the property management.
Taylor Avakian
Got it.
Bob Buente
Okay. And uh there are some very big property managers now in Southern California. Some of them are very good. Some of them are not so good. I've always been fortunate enough to work with a really good ones. Yeah. Um but even then you've got, you know, you're your button heads. But that's just That's real estate property management.
Taylor Avakian
Yeah.
Bob Buente
You know, we don't have enough money to do this. You need to write us a check. We don't have any money. You got to figure this out. Oh, I don't have any money.
Taylor Avakian
What are we going to do?
Bob Buente
One of the big drawbacks in why it costs so much to build affordable housing Yeah. in California is you have to have you have these set aside requirements in your budget. You have reserves for replacement.
Taylor Avakian
Okay.
Bob Buente
Which makes sense. You have an operating deficit reserve so in case you can't make a one or debt service coverage, you know, you you can do that. You have sometimes a an exit reserve because you might need not have enough money for the limited partner to get out so you use the exit reserve or it those reserves alone can be, you know, they're all a percent of the total development cost. And they can be five to five to seven percent of your total cost. Or your total hard cost.
Taylor Avakian
Let's just say your total hard cost. Okay. I mean land sometimes is like 10%.
Bob Buente
don't have to know. Land is land's often its own world. You don't you don't have to worry about land. It's all you got to do is pay for it.
Taylor Avakian
Okay.
Bob Buente
And hopefully you don't have to pay for it. Hopefully you either get it on a very attractive lease from a municipality or you get it from a religious group. I've worked with tried to do deals with a lot of churches and it's always a shock to them when I say I can't pay you what the going lease rate is. Shock. I said, "Look, let's What's your mission here?
Taylor Avakian
You know, you got to move that away."
Bob Buente
And there's always somebody there who says, "Well, you know, I can do the my my brother's a broker. He can help me with this." And no, let's go back to the mission. Come on. You're doing well.
Taylor Avakian
Uh-huh. You're helping the community. You're doing God's work. Yeah, you are doing God's work.
Bob Buente
[Laughter] I have I have never had the nerve to use that.
Taylor Avakian
Yeah, I might have said that a few times. Yeah, I but a broker's were you know Yeah, you're brokers. You're trained to lie. [Laughter] No, we don't lie.
Bob Buente
lie.
Taylor Avakian
We say the truth. We just say the truth that is in the best interest of that person. All right? Of your customer. Of our client. Who do you have your agency relationship? fiduciary relationship. What needs to be exactly But we don't need to talk about that. to talk about that. No, not that.
Bob Buente
You've got enough brokers running around.
Taylor Avakian
They all know what they're supposed to do. Let's talk about why So, we were getting into it a little bit, but like why is California affordable housing so [bleep] up? Like why do we have such a problem? Why is there a housing shortage? Why can't we build enough? Why? Cuz it sounds like there's plenty of land from what I'm hearing. Um the funding is obviously very difficult to make happen, which doesn't make it any easier. But I mean, market rate is really hard to get done, too. And if you and I are on the same page with economics 101, supply and demand tends to to work itself out, right? So, why do we have an affordable housing proj- uh problem in California?
Bob Buente
Let's go back to Econ 101. Supply is so restricted because it One One of the things is it costs so much money. Once you Once the the land seller listens to their broker and you actually end up paying that amount of money, you know, when you're paying, you know, you might have been paying 10 years ago, you might have been paying $15,000 a door. You're now paying $75,000 a door. And your costs of construction have gone up exponentially. And your costs of capital, they vary. I mean, you know, I I started in finance in California when it was an 18% world. So, you know, as far as I'm concerned, this is still the golden age of of finance. Um it's it's not something that can be solved quickly.
Bob Buente
You're right, there is a lot of land. But is it a lot of land where the people want to be?
Taylor Avakian
Mhm.
Bob Buente
You know, the the whole rule in Southern California was you keep building building out building out and you drive till you qualify. You build a house and then somebody goes out and they say, "Well, you know, we can't afford Monrovia. Well, let's keep going a little farther. Claremont, oh, that's too expensive." You know, keep going all of a sudden you're in San Bernardino.
Taylor Avakian
Yeah. You know, what do you want to live in San Bernardino? And then do you want do you want to take that drive every day?
Bob Buente
There's a lot of things going on. So, if we think about how do you build supply in a restricted area? You've got to reuse what is there. Then you can reuse it by taking a large commercial building and trying to um convert that to residential. Uh that has been successful in some large cities. I know they're looking at it around here. I I I'm trying to recall if there was a developer who has successfully done a big project a big you know Jameson's doing some of that right now. Yeah, Jameson's you're exactly right. Jameson's and they're also buying land. I mean God, Jameson's got more money than they would to do with really.
Taylor Avakian
They're pretty good they're they're pretty smart. They're they're oh, yeah, they're very smart. Lee
30:00–40:00
Taylor Avakian
on the show and she is I'm like, man, you're Yeah, she's a she's a rock She's thinking on different
Bob Buente
levels. I was I was on a committee with her on ULI and I just went, huh?
Taylor Avakian
Yeah. Um Special. We have a sponsor for today's episode and that is AI for CRE Collective. 25 listings at the moment. Four or five deals a month. It's been incredible. So, if you want to learn if you're in commercial real estate how to use AI in your business whether you're a property manager a broker an investor really anyone. We have a huge group over 400 people in this community and the website if you want to go check it out is AI for CRE Collective.com. So, appreciate you guys and now back to the episode.
Bob Buente
The issues with uh commercial you've got to deal sometimes The older buildings, they will have concrete pillars in the middle of a of a plate. So, you got to design around that somehow.
Taylor Avakian
What do you got when you design around that?
Bob Buente
You still have a lot of requirements you've got to make. You know, I don't know do do commercial developers have to deal with accessibility and adaptability and those type of
Taylor Avakian
codes? Yeah, not as not as much, I'm sure. But yeah, there's it's ADA compliance and stuff like that. Yeah, yeah, yeah, ADA. I just heard and I don't know if it's going to affect affordable too, but I think they're trying to change the laws of or maybe it had passed a single staircase instead of two staircases, right? Which is going to make it a lot easier cuz you can build on a a smaller lot framework effectively and get more density in those units which which might be helpful. So, you're saying effectively there's so many hoops to jump in and the costs are expensive that it becomes burdensome or very difficult to make deals pencil.
Bob Buente
I think it is.
Taylor Avakian
Is it Is it Is it a government thing though? No, I mean, you know, Or is it a market thing?
Bob Buente
It's a market thing. You can't ask as much money as you're asking right now for a land.
Taylor Avakian
Got it.
Bob Buente
And and and make a deal work that, you know, makes it makes any sense, I think. Mhm. You know, I mean, there's a lot of there's a a lot of developers who are going back to their lenders and investors and saying, "Yeah, we need a you know, we need a break here. We need to Let's work this out."
Taylor Avakian
Yeah.
Bob Buente
I mean, look look at downtown LA and, you know, the art gallery is what I call it, the project across from Staples. Mhm. I was on the South Park Business Improvement District for a long time and I remember when they would come in and they'd talk about this project and and this and that and this and that. And then for two or three years, you had a 10-story hole in the ground because they hadn't kissed enough rings to get it through the city council. Oh, man. And then when you start building, you kind of, you know, you can miss the market. Do you want to build condominiums for sale or do you want to build condominiums for rent? You know, or do you want to even just build apartments and not even worry about condominiums? I mean, these are all the decisions that market-rate developers had to deal with.
Bob Buente
I think that the the issue comes down to costs. It And now, since you have a difficult time finding subcontractors, the subcontractors are, you know, those that are aware of what's going
Taylor Avakian
on in the world. about ICE?
Bob Buente
Didn't say ICE. Haven't got there yet. Uh they they are able to to just they can charge a fortune for work. Uh ICE has not helped at all.
Taylor Avakian
Wow.
Bob Buente
I have talked to some people and they have said that you know, first, oh, yeah, all of our people are approved, you know, that's a big Mhm.
Taylor Avakian
Yeah.
Bob Buente
over there. I'm all right. I'm all right. That's all right. They've been able to avoid it. The problem The problem, of course, is getting the the laborers, the trades to come out of their houses.
Taylor Avakian
Mhm.
Bob Buente
You know, they're driving to work, they've got an ICE van behind them. They They get on the job and ICE pulls up. You know, so far, I think in California, or in Southern California, they've been headed more for the farm workers than they have for the construction Mhm. construction world.
Taylor Avakian
Mhm.
Bob Buente
I'm pretty certain that if there was a uh a a building that was being constructed in this in Southern California that had the Trump money behind it, you wouldn't have any problems. Mhm.
Taylor Avakian
But I I don't want to be political on Well, I'll tell you something that's quite interesting which you may not be aware of because you're obviously retired now, but what I've been hearing from a lot of the existing landlords, just existing apartment buildings is the leasing has been super flat if not lower. A lot of these people are their rents where they were getting 1,500 for a studio are 1,300. Yeah. And 2,100 for a one are 1,900. And they're saying that a lot of it is because some of these tenants, who right? They're they're part of the ecosystem, they need to be there. Um ICE has really been an issue for them in terms of leasing. And it's kind of when you're thinking about it that way you're like, oh yeah, I mean that makes sense, right? For these more affordable quote-unquote apartment units, not the high-rise stuff.
Taylor Avakian
Like it's affecting it's affecting the rents, it's affecting the market.
Bob Buente
about about to me I think about real estate is this. It's from the bottom up. And if you don't have people buying the introductory homes, you don't have people buying the the the the less costly apartments, you're not going to have people moving up who are now can afford a bigger house or now can afford a higher level. And it's just it just builds up like that and it's been there's there's just been so many exogenous events that have happened. The meltdown in 2008, 2010, COVID in 2019-20, ICE in 2025. Those are all things that really have affected an a real estate market that if they weren't there, might be an entirely different world. I just think that you can't you you've got to cities have got to and city
Bob Buente
of Los Angeles is starting to do it. Um I live in Pasadena, they're kind of starting to do it, which is Southern California has to stop being a single family paradise.
Taylor Avakian
Mhm.
Bob Buente
Single family residences are really nice, you know, three bedroom, two bath, 2,000 square foot ranch house with a pool in the back.
Taylor Avakian
Yeah.
Bob Buente
You know, I mean, that was the dream in the San Fernando Valley. But, that doesn't that doesn't house a lot of people.
Taylor Avakian
Mhm.
Bob Buente
So, are you going to try to cut off the flow of people in? Well, you know, people are still having babies, and we don't have guards at the border, well, Los Angeles County border, Mhm. [clears throat] yet.
Taylor Avakian
Yeah.
Bob Buente
There's just been, oh god. I I was at a ULI seminar, and I was listening to a guy who had done his doctorate at UCLA in planning, and he had a graph which showed the number of units that that the city was zoned for, Mhm. and the effect of of of community organizations, neighborhood groups, as they were formed, how the number of available zoned units kept dropping while you had more and more neighborhood associations. And the neighborhood associations would go in and say, you know, too dense, too dense, too dense. Wow. The city, when the in all of its wisdom, would say, okay, you're right.
Bob Buente
We're going to have this is all going to be zoned R1. You know, and you're not going to be able to do anything. This has been going on since 1950.
Taylor Avakian
The NIMBYs, is what they call them?
Bob Buente
The Oh, yeah, the NIMBYs. And it And it actually one of the best things that happened, in my mind, was when the state, under Brown, and then under definitely under Newsom, where they basically declawed the NIMBYs.
Taylor Avakian
Mhm. Mhm.
Bob Buente
You know, they said you you can't do this anymore. If you're going to have affordable housing, you you've got to be able to do this, you know, it's you know, the the old incentive
Taylor Avakian
Phillips who who that Oh, I don't remember. From UCLA? Oh, what was his name?
Bob Buente
He's in Canada now.
Taylor Avakian
He's teaching, I think, in then no.
Bob Buente
in the University of Alberta. Interesting. It was a it was a really a fascinating to me presentation.
Taylor Avakian
Yeah.
Bob Buente
And then they had another another uh uh data point going up showing population. You had more and more neighborhood associations resulting in fewer and fewer units being zoned for, and your population's going up.
Taylor Avakian
Yeah, it's opposite effect.
Bob Buente
It didn't go.
Taylor Avakian
Yeah. It didn't go. The the the economics supply demand was not working there. There's There's one of your reasons why the supply demand curve is so far off. Let me ask you about uh a topic that has been highly [snorts] discussed probably in the last 2 years when it became a thing. Um of uh emergency directive one or ED1 ED1 as as we like to call it. There's a lot of different people here who have different opinions on it. When it first happened, it was like lightning out of a bottle, right? People were just running to go and try to get these projects Yeah. in entitled and things like that. The development process takes a long time. So, right now in 2026, this happened in '24, I believe.
Bob Buente
First thing Best did.
Taylor Avakian
Yeah. And so, uh they're kind of coming to market now, right? And there has not been, to my knowledge, in the I would say more impoverished areas, the lower income areas, a successful {quote} {unquote} sale of an existing
40:00–50:00
Taylor Avakian
ED1 project, which a lot of What was unique about ED1 is you didn't have to be a nonprofit, right? You could have a 100% affordable, get market rate,
Bob Buente
Sure.
Taylor Avakian
private capital, right? So, it was a lot
Bob Buente
market rate, though.
Taylor Avakian
Couldn't do market rate, but it was it was 80% of AMI, right? Which Section 8 vouchers, they were kind of underwriting to this,
Bob Buente
which More importantly, tax credits would go to 80%.
Taylor Avakian
They used to cap at 60. Interesting. Okay. So, from my understanding, there's not been a successful, quote-unquote, sale of a finished, leased up, and done ED1 project, um, besides a government organization buying the building, right? So, I'm curious to know your thoughts on ED1. When it first came out, you were still in the business, right?
Bob Buente
Okay. And then today, give me your opinion. seen. Okay. When an ED1 first came out, I thought, "Oh, great. Another way to get projects into the pipeline faster, and where's the money going to be to build them?" A very good friend of mine, who's a financial advisor, he explained to me a couple of weeks ago why ED1 was working in terms of getting units built. And he said, "Basically, you can almost avoid the Los Angeles Housing Department. There are people in the Los Angeles Housing Department who are dedicated, I mean, totally dedicated to getting housing built, to getting affordable housing built. But they are so restricted by the organization and the way things have been done since the Stone Age, that they nothing can get done.
Bob Buente
It's just it's and it has not gotten better over the time. Tina Johnson Hall, who's now the general manager, she's had a lot of experience. I have a lot of respect for. I hopefully she can get it turned around. But anyway, back to ED1. You can avoid ED1 and you can avoid the Housing Department entirely, because you can go and get You have still go to council, because you're going to use tax-exempt bonds. So, you get tax credits on tax-exempt bonds. The design restrictions and market amenities. You know, you have to be so many feet from a post office, so many feet from a drugstore. You know, there's it's four pages in the regs, by the way. Um that's part of also the dark arts of trying to figure out how to do an affordable housing. You don't Sidlick doesn't have the same requirements that TCAC
Bob Buente
does. So, Sidlick, you can get your bonds and there's kind of a move of what used to have a what was called a 50% test. 50% of your total budget including land, that was what was the big jump. 50% of your had to be um tax credit eligible. You were in a good spot. Well, now they're talking about going down to 25%, which is going to open up even the doors for more projects. Where are you going to get the bond allocation to fund all these projects? And all everything comes back to financing. But, ED1 is working because you don't have to go through the housing department. You still have to go and get your approvals, your building approvals, you have to go through that, but because you're ED1, you're able to, you know, say, "Hey, ED1, okay.
Bob Buente
Hey, let me sign." You you are able to maybe, you know, you maybe have to put up some of your own money because you're not going to be using a lot of these soft money. It's just basically almost back in the good old days. Bond money, construction funds, perm, go for it. That is a very attractive world to be in. Mhm. But, you still have a regulatory agreement. And the housing department has to sign off on the regulatory agreement, but for something like that, they're going to do it. And what I haven't seen yet, and nobody has any experience yet, because as you say, ED1 projects are just coming out of the ground, is how are these owner developer operators going to deal with the compliance?
Taylor Avakian
Mhm.
Bob Buente
You know, the the the annual compliance that you need to go through for to to qualify someone for find for the financing for their income is horrible. [snorts] But you got to do it. I mean, I almost that's the one compliance thing I actually think is a good thing that they have. Some of the other stuff is just total [bleep]
Taylor Avakian
Yeah.
Bob Buente
[Laughter] Just unmitigated [bleep] So, I I guess I'm holding off my my initial Yeah. My initial feeling of ED1 is eh. Then my friend talked to me and he's I thought, well, maybe it'll work. But I'm still thinking you got to manage it, you got to pick your tenants, you got to be in compliance, you got to make certain the regulatory agreement they're not trying to put something in there. It's it's easier, but it's not that still not that
Taylor Avakian
easy. Here's where I'm I'm going to tell you my opinion.
Bob Buente
Please do.
Taylor Avakian
On what's going on here because one of the things that you mentioned to me about the LIHTC deals and things like that, which ED1 is a little bit different. Tax credits that you get to sell, right? And you have when the first things you said was the lease up risk on these Right. is is very low. Right. I would say the lease up risk on ED1 is actually significantly higher. And the reason I say that is because what a lot of these developers were doing is they were underwriting the Section 8 voucher limits, right? Which in a lot of these places was a significantly above Huge difference.
Bob Buente
where market rate is.
Taylor Avakian
Like hundreds and hundreds, if not thousands of dollars to what the Trust me. Like absolutely. And so that's how they were underwriting cuz people were looking at, "Oh my gosh, we're at an 8% yield, we're at a 9% yield, we're at a 10% yield. Okay, but that's if you get top-of-the-line vouchers, which as of right now, Section 8 is a very strange place because of what's going on nationally and locally and the the funding. We're at a big deficit in in the state, quote unquote, and the and the city. And so, there wasn't this upfront like I don't think they sold, you know, tax credits. So, they didn't get And there was no the developer fee from the private the capital was different. And so, a lot of these developers, from my understanding, they weren't planning on buying this and holding it for 10, 20, 30 years.
Taylor Avakian
They're buying it and then looking to potentially sell
Bob Buente
it. That was magical thinking. Number one, any lender who would look at a spreadsheet and say, "Do you And you don't have your vouchers? We got to underwrite this at 80% rents." So, that to me is is is a lender major fuck-up.
Taylor Avakian
Mhm. [clears throat] Interesting.
Bob Buente
Because, you know, as long as you you know, developers live to develop. Yeah. And so, if a lender will give you money to develop, you're going to develop. And then if it doesn't work out, well, let's have a talk.
Taylor Avakian
Here you go.
Bob Buente
Here are the keys. Yeah, exactly. The old uh [Laughter] And the keys back. Crow, you know, those 15 key keys out and says, "Here guys, this is all yours."
Taylor Avakian
And walk away.
Bob Buente
Yeah. It That's going to be It's going to be very painful. It's going to be very painful to them. I don't you know, not knowing how the underwriting is going um I I I can just can't imagine that a lender would underwrite to a Section 8 voucher that's not there. Plus, they're they're sticky vouchers. So, the the voucher can move.
Taylor Avakian
Totally.
Bob Buente
Unless you are able to get a HAP contract,
Taylor Avakian
Mhm.
Bob Buente
which in itself is a painful experience.
Taylor Avakian
Super difficult, right?
Bob Buente
And then again, the compliance cuz then you're basically you've you've got HUD all over your stuff. Mhm. It's not a happy place for me. I never liked it.
Taylor Avakian
Yeah. Yeah, which Although Goldrick and Kest has made a fortune doing that. So for those who don't know, you can have vouchers, right? Which run with the tenant or they can run with the building. And if they run with the building, that is an extremely valuable, great asset because there's plenty of people who have section 8, they would love to be able to go and No, who qualify for section I'm sorry. For section 8, that would be moving in there, right? It's a It's a lot easier to fill up for my
Bob Buente
understanding. And the the one of the problems that I have read about is that the section 8 sticky vouchers, this is the individual voucher.
Taylor Avakian
Yeah.
Bob Buente
The market rate developers don't want to take them. Number one, oh, we don't want these people living in our unit, you know. And number two, those that have been there know, I don't want to get involved in this
Taylor Avakian
compliance. Mhm.
Bob Buente
You have a a tenant move out. You've got to get another stick another section 8 tenant to move in or you hope that your market rent by that time is equal to what the section 8 rent was at that time. But the the the FMR, the fair market rent is has been, you know, just almost right up there with real market rent. Yeah. Uh so I I just can't believe that it that a develop that a lender did that. I to me, that's just incredible.
Taylor Avakian
Well, and people forget with this the sticky vouchers, the tenants get to choose where they want to live, right? So like if you get a voucher and you get to go live in, you know, the West Side or Hollywood or something like that versus you got to live on 87th and Crenshaw, right? Like it's a little bit different of a
Bob Buente
haha But but let me tell you, that that develop owner operator on the West Side is not going to want to doesn't need to take a section 8 voucher. Section 8 tenant because one, he's able to catch more rent. Number two, you don't want those people living in my project. Number three, you still got this compliance. I keep coming back to compliance over and over again,
50:00–1:00:00
Bob Buente
but I think compliance is is just the we have five projects that required 30 plus reports every year. And most of them are duplicative.
Taylor Avakian
Wow. You know, you why don't you have one?
Bob Buente
Why don't you do one one compliance report and then you go on from there?
Taylor Avakian
It's That's crazy.
Bob Buente
It'll eat you alive.
Taylor Avakian
Bob, if you were um put in in a position to change, and I don't know what position that it is, if it's the government or whatever. Anyways, you have the you were put in a position of power where you could change the landscape of how things are done, right? I know, right? Fun fun fun experiment here. What are some of the first things that you would do?
Bob Buente
Tear everything down.
Taylor Avakian
What do you mean by that?
Bob Buente
have to just go with a blank slate. Okay. Because the way it has been operating and the way that the organizations have become so calcified that they are just they just they can't change. Mhm. And I have you know, I've Is that in regulatory, right? Everything. Regulatory. Permit approvals. You know, build the permit inspections, you know? Inspectors will go out and say, "I don't care what was approved. I don't like it." So, you've got to stop your project and make whatever the change is. I had to make a a change once that was a quarter inch on the curb. But it involved was it a quarter inch or a half a half inch on the curb? And I and it just we ended up having
Bob Buente
to almost it was a mess. Because then I ran into another problem there, you know.
Taylor Avakian
Mhm.
Bob Buente
Then one stacks on top of the other.
Taylor Avakian
Exactly.
Bob Buente
Exactly. So, for number one, I would just say, "Okay, we need a clean slate." Then the next thing I would do is I was I would centralize financing.
Taylor Avakian
Okay.
Bob Buente
You know, everybody has their own little bucket of money. And of course, that's because well, we want to we're local. We want to approve our local deal. Okay, that sounds great.
Taylor Avakian
What are you going to do, you know, in this world right now?
Bob Buente
So, let's just let's make it simple. Let's just say LA County. You get rid of everything in LA County. You then have one place to get your money. Mhm. You then and you cuz they took them a while, but they finally figured it out on the permitting. You don't have to drive all over town to get your permit signed off. You can go to one spot. You know, I always say what is it the fourth floor on Figueroa? I refer to it as Dante's seventh circle of
Taylor Avakian
hell.
Bob Buente
[Laughter] To to to hear some of the stories people tell while you're waiting for your
Taylor Avakian
turn are yeah.
Bob Buente
Are just hilarious. Um but you know, centralize the financing. Centralize the uh approval process. So, you you you it takes long enough to build and long enough to get something going. You know, if you can just get the financing done. So, the financing takes usually 2 years. It shouldn't take that long. A commercial developer will go off and have financing in 90 days. You know, the way the financing works is every program has its own calendar. And so, you're have this great game of Jenga as you're trying to fit all the financing in with what's going to be your start date? How am I going to keep paying my option payments for the land if I don't really know what my start date is because I've got to make
Bob Buente
certain that all I get these applications in and then I got to make certain that I get the award. One of the things that hurt us a lot and that's problem of being in this running a small nonprofit is we had a a property that was on a church. I'm not going to say where.
Taylor Avakian
Mhm.
Bob Buente
We were ready to go. I mean, we had pulled together the three big pieces of financing that we needed and the city we were waiting for the city was supposed to come out with another NOFA, notice of funding availability. And they didn't. They didn't come out with a NOFA for this program. I think it was the I think it was the ULA program for like 9 months.
Taylor Avakian
Mhm.
Bob Buente
Well, we lost the project. That we've been working on for 5 years. We lost the project. $500,000, $600,000 sunk cost. That was it.
Taylor Avakian
Oh my gosh.
Bob Buente
And it's just because they didn't do that because because they didn't put out the NOFA. The funding wasn't there. The funding you couldn't go back to the church and say, "Hey, you know, we've always told you that, you know, we'll be dead honest and we didn't get this financing because they never issued the the awards. They never did the NOFA." [sighs] Goodness gracious. The The county The county 2 years ago we were getting money from the county. I can't remember We used to be called the City of Industry funds, but I can't remember what the name is now. I I'm real I didn't realize how successful I've been in forgetting all this stuff. [Laughter]
Taylor Avakian
The the You deserve it. You earned it. You had 40 years of this stuff, so.
Bob Buente
The city had God, that is a long time. This The city The county, excuse me. They put out a NOFA. They did the scoring. We were like number four. You know, they had they had They were able to go down to like the seventh or eighth applicant out of 40. Well, they didn't feel they had enough applications, so they reopened the NOFA. You know, we were supposed to get a funding letter in in May. We didn't get a funding letter till November. Oh my god. still got our award.
Taylor Avakian
Yeah. But by that time I mean time Yeah.
Bob Buente
Time costs money. the one thing a city, county, state employee does not understand is the time value of money.
Taylor Avakian
Yeah.
Bob Buente
One of our board members I was talking about at church land and I said, you know, they don't understand the time value of money. And her comment was, "Their time value is is infinity. It's eternal." I said, "Ah, you're right.
Taylor Avakian
I've got to look at it like that." Mhm. Cuz they're incentives, right?
Bob Buente
Well, they're they're doing God's work. Yeah. And God's eternal.
Taylor Avakian
Yeah.
Bob Buente
[Laughter] That's it. That was the whole logic. And then she [clears throat] she actually She and I grew up in little towns in Missouri like 50 miles apart. Couldn't believe it. Uh That's funny. Yeah, but that's you know, part of the joy of my of the business I used to be in.
Taylor Avakian
Yeah.
Bob Buente
I just think that, you know, if you could just centralize the financing and you don't think the state the city of San Francisco, the county of Los Angeles, Orange San Bernardino, Riverside, Ventura you know, San Luis Obispo and right up the the coast, the inland cities counties they're not going to they're not going to fall for that. You've got But that's what I think you've got to do. That will eliminate a huge amount of risk and it will cut the calendar at least in
Taylor Avakian
half. If you were, let's say, 25, 30, right? Or you were young and you wanted to start and get into this affordable housing game, right? Would you recommend someone get in this or is there a way that you would structure this quote-unquote new business, right? That knowing all of your experience and I know things and regulations change, but like how would you do it over again if you had to start from scratch or there's a young person out there who wants to get into affordable housing?
Bob Buente
Right. Well, I always start I was on the finance side all the time. I my People say, "Why'd you become a developer?" I said, "Well, I've been a net I've been a provider of capital. Now I want to be a user of capital." And I have had uh um two or three people who worked for me as either interns or as graduate students and they end up really liking the business. And they said, "So, what do I do?" I said, "Well, you can stay here." No, I don't want to do that. I said, "Okay, I understand." I said, "Go find a a big affordable housing developer and spend a couple of years with them." One lady I had went to work for the county. You know, she's over in the community development uh uh whatever that Yeah, CDC Community Development Corporation. Um and they all seem to be enjoying it.
Bob Buente
Will they ever go off on their own? I don't know. Uh but if you wanted get into the business, that's how you would That's how I would start.
Taylor Avakian
What type of training do you have to get into this business?
Bob Buente
Obviously, a basic business background helps. I was an English major and I look at problems a lot different than an accountant looks at problems. Yeah. And I got my MBA and it was all basically finance, which I loved.
Taylor Avakian
Mhm.
Bob Buente
That's looking at a prod problem even differently than a philosophy major, even look different than somebody who's only done, you know, business.
Taylor Avakian
Mhm.
Bob Buente
You know, the more well-rounded you are, the better you're going to be. Obviously, you USC, UCLA, I think Santa Barbara and Santa I mean, Santa Clara, they all have some sort of real estate development program now and you can get a master's at USC and MRED.
Taylor Avakian
Mhm.
Bob Buente
Those are good programs. I don't know I've I've never seen anybody coming out of those programs who went well, I got my MRED and immediately got a job
Taylor Avakian
here. Yeah.
Bob Buente
I don't know.
Taylor Avakian
Do you know any? Very few.
Bob Buente
Very few.
Taylor Avakian
Very few. Is there like one skill set that you think would be the most useful skill set for an affordable housing developer? And what I'll give you some examples of what I'm thinking of. Is it your network? So you're really connected, you know how to get things done through the city or two it could be finances. You have really good connections with
1:00:00–1:10:00
Taylor Avakian
financing or something like that. Maybe you're a wizard at keeping costs low because you grew up with a hammer in your hand, right? You know what I mean? Or your your father, grandfather, whatever when I was a child. You know what I mean? Yeah. Exactly. Like is there one skill set that you think is the most important when it comes to actually developing this affordable housing?
Bob Buente
I would say accounting because that's the language of real estate, followed by planning. If you can get a planning degree, that you can then go and talk to the planners in their language. It's a It's totally different language. Then finally law, because affordable housing, you know, a a partnership agreement in a commercial enterprise may be 20 pages. A partnership agreement in affordable housing is 90, 110. It's a whole different thing. So those are the those are the three basic skills.
Taylor Avakian
Mhm.
Bob Buente
But then you got to tack on to that philosophy, English, history, you know, just something else so that you were thinking of problems differently. And that's that's the thing I I see a lot is especially, you know, especially true in with public employees. Phew. I'm looking at one thing one way.
Taylor Avakian
Do I think about what this action will do over here?
Bob Buente
No. It's not I'm working about this problem right here.
Taylor Avakian
Mhm.
Bob Buente
Now, do they bring that up to their supervisors, to their manage, to their general managers? Probably. Mhm. But, it doesn't go anywhere because they have to then go to a council person or they have to go to a city manager. And that person may think, "You know, we'll just keep it like
Taylor Avakian
this." The checks and balances make it almost impossible. The red tape I mean, it's it's really the red
Bob Buente
tape. is the bureaucracy in its most pejorative for a term.
Taylor Avakian
God goodness gracious. Well, um Bob, this was amazing. Are we done? We're done an hour. Oh. Can you believe that?
Bob Buente
Oh.
Taylor Avakian
I know. Went by like crazy. It did. I learned a ton. I'm There's I had some other people on here who were like LIHTC developers, affordable housing, and it's such a strange world to me. It is. And I think you almost have to feel like you get a PhD in affordable
Bob Buente
housing. It's It's not something you go to school for.
Taylor Avakian
Yeah. Did I bring up anything different than what they brought up? No, you gave Well, I think your experience is from a nonprofit perspective. All of them were were not nonprofits, right? Yeah, but they partner with nonprofits and stuff, but they're for-profit.
Bob Buente
to because you're getting that tax abatement.
Taylor Avakian
Yeah. I mean, you know, it doesn't take a rocket scientist to say to understand
Bob Buente
Yeah.
Taylor Avakian
Oh, boy, how to do this. That's where it makes sense.
Bob Buente
Yeah. It really does. I mean, that's the only reason you know, for a long time they were nonprofits for rent. A bunch of guys I know who had left Trammell Crow, two or three of them set up their own shop. Fairfield. One guy from Fairfield set up his own shop. And they got a nonprofit, and you know, they put out a good story. Yeah. But, they never did anything.
Taylor Avakian
Yeah.
Bob Buente
You know, they just signed on the line.
Taylor Avakian
Nonprofit for rent. That's funny. Yeah.
Bob Buente
Yeah, a C3 for rent.
Taylor Avakian
It was It was great.
Bob Buente
That was in my days in Fannie Mae.
Taylor Avakian
I would run across those things all the time. Oh, I'm sure. I'm sure. We didn't even get into all that stuff, but your your background is immense. I mean, one, congratulations on what you've been able to do in the career. I mean, you deserve the everything and and all the accolades that you've been able to do. It's It is not easy running one, a nonprofit, two, being an affordable housing developer, and three, doing it somewhat successfully. So, I got to give you props for that, Bob.
Bob Buente
Thank you.
Taylor Avakian
I I did keep the lights on. Yep. And thank you for coming and sharing that. And if people want to learn more, want to want to dig further into this, are there any resources you think that they should check out?
Bob Buente
I know Novogradac has a book about affordable housing. Harvard Center for Housing has one has has has white papers they come out with. Berkeley has really good white papers they come out. I know that I think USC is is starting to do stuff like that. You've got the Ziman Center.
Taylor Avakian
Mhm. Um UCLA?
Bob Buente
Yeah, UCLA. They're They're They They They look at everything. But at the point is you you you need to understand the whole market before you can really get into the the the black arts.
Taylor Avakian
Totally.
Bob Buente
Joining ULI is huge.
Taylor Avakian
I'm a big supporter of it. I'm a member. I'm a member. Yep.
Bob Buente
Let's go.
Taylor Avakian
so guys, hey, we're here. at an I know we'll be at an event hopefully soon. Probably.
Bob Buente
[Laughter] Uh the um I think that's that's really what you could do. You You need to get a good rounded education. I think that you know, to to come up without a college degree is, you know, it's going to take a long time. You got to take and it's luck.
Taylor Avakian
Yeah.
Bob Buente
But you know, it's a good I liked it. I really enjoyed it. It made me feel good at times. Good. Sometimes I felt like I had to take a shower, but usually it made me feel good.
Taylor Avakian
Well, I'm very appreciative of you being here, Bob. Thank you for sharing that. And yeah, this is great.
Bob Buente
It was great. Thank you.