…to us that we're implementing the the mayor's priorities. Um, but but basically, um, you know, what we're about at Hackla is building creating affordable housing for people in LA. We focus only within the city of Los Angeles. Okay. So, we use all these different tools that we have. I'm sure we'll get into that, but that's basically our mission. Affordable housing primarily for people of lower income, very low income, etc. The other thing that I think we'll get into and I'll just touch on is we run the section 8…
…to go back to school and I went to school uh on the East Coast for a master's program, but I kind of had the idea that I wanted to work in this affordable housing space cuz I had been really exposed to it
uh in New Orleans because a lot of the focus was we want to rebuild and build units, but we need affordable housing, too. And there was a lot of tax credits and things that came up around that. And so, I kind of went in with that idea that this is kind of the field that I want to be in. And I really focused my time there on taking all the classes I could, you know, networking, doing internships, etc. that were focused on that. And I kind of realized like, yes, this is a field that I really enjoy. Um, when it came…
…Companies. Yeah. I worked for Jeff Jagger working on doing what they call west coast production which is kind of running deals on the west coast affordable housing acquisition rehab tax credits section 8 all that stuff I had been doing in Boston I did it out here um but fast forward um and that was a fantastic experience which you know
of shelter in LA, which believe it or not did not exist. Wow. We've built technology for the whole ecosystem and we got into housing. So I started investing with affordable housing developers including Model Mhm. Z development. So I would started initially with Sola Housing Mhm. and working with Sola Impact on their projects and then Martin Muoto came to me with the idea for Model Z. I became the lead investor Mhm. for Model Z
with the first check written. I thought it was an incredible idea to build a modular manufacturing facility in South LA Mhm. to do affordable housing in LA. Yeah. And that's been a really effective program that I think is transformative for the space, which will dramatically lower the cost of building affordable housing and thereby enable much cheaper rents as it comes to affordable housing.
And you're like, "What the heck is this?" Yeah, so then I got even deeper into it with starting the Better Angels Affordable Housing Fund where we are literally ourselves now co-general partners with developers building affordable housing in LA. And the goal is to build it at a third of the cost in less than half the time of what the city is doing today.
…but there's clearly an opportunity in this model to also enable master leasing, Mhm. which we think is much needed by the city. My head of housing, Andre Bueno, comes from HACLA, Mhm. which understands the need for more affordable housing, the need for more workforce housing, the need to to leverage tools like master leasing to speed up the entire process and to stabilize faster. So, all these things enable not just the more rapid building of housing, but private sector market-rate returns
Yes, so HACLA is more than an acronym. Uh it's the Housing Authority of the City of Los Angeles. And we are one of the oldest housing authorities across the country, going on almost 90 years. 1938? 1938, that's correct. So, in 2 years we'll be celebrating our 90th anniversary. Yeah. Uh we're also the second largest housing authority across the country. Uh there are roughly about 30 uh 300 housing authorities across the United States of all sizes, um small, medium-size, and large. We're considered a large housing…
program, which serves just about 6,200 households across the City of Los Angeles. Um so, we're able to provide deeply affordable housing to Angelenos, uh where families are not uh having to pay more than 30% of their income. And it's important for me to mention this because I think oftentimes people think that public housing is government paying everything, um but families pay 30% of their income to to stay housed. We also administer the Section 8 Housing Choice Voucher Program, which is done in partnership with…
Yeah. Well, you know, I am old. Um But I I never thought that I was going to make a career in housing, affordable housing, community development. I never thought about that because I was born in Mexico. My family immigrated to the US when I was four years old. I'm the oldest of nine children and the first first to graduate from high school. I went to college to UCLA, got a bachelor's in political science and Chicano studies. As I was in my last year of undergrad, I'm like, what am I going to do with my life? Well,…
…So So, said, I'm going to apply to graduate school and I got accepted to the urban planning program at urban planning principles, social policy, affordable housing. And my first job after um my urban planning degree was actually working in Ventura County for a small non-profit um community economic development group called Cabrillo Economic Development Corporation. They were formed to uh provide affordable housing to agricultural workers in Ventura County. Uh Ventura County uh depends um a lot on agricultural…
…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…
…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.
…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
…for that. These guys are you know, they need to heal. Yeah. and and some of them may never heal. Yeah. You know, but the least we can do is get them housing. Yeah. That is the very least, you know, and I think the whole affordable housing model is absolutely broken. I mean, the the VA, I mean, the you know, when they do these deals with the affordable housing developers for the permanent support of housing, they're they're it's like a million bucks a unit for on a ground lease, you know, and you're kind of going,…
You know, so and the other part is just the capital stack. The capital stack is you got like six sources, you know, of of different layers of capital for these affordable housing deals. So, it's like a game with the developers where they piece together these these grants and tax credits and the bond financing and the ching ching ching ching. I mean, it's it's it's broken. And the ULA tax, God almighty, it's brutal.
New tax dollars, new investments, new people, affordable housing. Right? Like let's let's make it a little bit easier for us to do what you said you need to do.
…at in that whole pendulum swing, but I'm really hoping so because uh I mean, you know, 2 weeks ago there was a a vote that changed the way that RSO housing is rental increases, and I did a video on um, 1920s buildings. And I've historically, that's where I started my business was selling a lot of these brick buildings in Koreatown. And that's some of the most affordable housing in the city. And they just basically chopped its knees off by not allowing it to have the excess rent increases because it's master…
…how about you run this and you lose money? And um we're going to make it so you lose a little more money now coming up. So, thank you for providing affordable housing. It's like, no. No one in their right mind is going to be Uh you know, giving losing money on an investment. These are investments. There's risk associated with that. Um Why would anyone spend their money to go and do that? And it it just kind of baffles me that These are these are the decisions that are being made by uh people who say one thing and…
It was called the mansion tax. They didn't read the 29 pages. Should we tax rich to pay for affordable housing? Yes or no? Well, yes. People are out there lying, saying it's created 10,000 jobs, which is absurd. When Measure ULA took effect, transaction volume in the city of Los Angeles above $5 million where Measure ULA works fell by 50%. Well, they projected would be up to a billion a year.
900,000 is all that's been spent on affordable housing. That has grave impacts to our economy that the people who drafted measure ULA did not fully account for.
…to society. and they added in all of these investment properties, office buildings, apartment buildings, movie studios, manufacturing centers, even affordable housing that's not owned by nonprofits. Um, all of that now is in this bucket and it's getting taxed at between four and five and a half%.
…the mansion tax. Nobody read all 29 pages before deciding to vote yes or not. They just they just said, "Should we tax the rich rich to pay for affordable housing?" Yes or no? Well, yes, obviously. Yeah. And um unfortunately, because Measure ULA uh is so so tightly crafted, it can't really be fixed by the city council of Los Angeles. Um now, I I I I should say what what needs to be fixed about it. Yeah. Um you Okay.
…sort of edge in the marketplace you know beyond just hitting the phones and trying to get a deal before the next operator gets the deal and you know affordable housing capital A was where I started to look because there is it's a bit more more esoteric of an industry right like a lot
of affordable housing comes down to how you structure the financing right and then understanding tax code and and so forth not that I'd really get the tax code side of things but there's more barriers to entry you know I mean just anecdotally I can tell you when we used to like you know compete on properties here in La I knew it was time to start looking in you know at at another space when I was competing against you know soccer moms and soccer moms are great but I would about question you know the whether or not…
…granted countertops and be like I'm a genius like look what I can do so that's kind of where um I started pivoting and looking more at more into the affordable housing
mean capital A affordable is what we all know as like low-income housing tax credit deals like right which is um which basically our our our apartment buildings that get financed using tax credits and other public uh uh subsidies to go build um and then that all you know cap often times that would also these properties come with Project based vouchers which are basically having Section 8 vouchers attached to the property rather than looking for individual people who have section 8 vouchers but that's attached to…
…estate markets in the world Southern California enjoy welcome to the podcast my name is Taylor Ven and my esteemed guest who knows everything about affordable housing in Southern California Dan tabom is here to tell us about everything he was actually on the inside of the city and dealt with the city council and worked on some boards and governments and so he's going to tell us all about that Dan thank
you for being here glad to be here I'm there are better affordable housing Specialists than I but maybe not ones that that only manage uh an an own market rate department so that that'll be my Niche yeah exactly so so tell
affordable housing sure so um I mean I moved here in 1992 so it's been quite a while okay so you're La native yeah and and if you come from Montreal the weather aspect is important part but the other part actually was the entrepreneurial opportunity opportunity to start off in a new place and and kind of feel like it's an environment where you may not know as many people but that if you can make things happen and you can you know you can do something in fact so in that way the American dream and the California…
awesome um so then walk me through how you became part of this affordable housing you know U how how you became part of Los Angeles affordable housing community because you eventually ended up working for hacka right the city of Los Angeles and so walk me through how
new proposals to tackle the city's affordable housing crisis California is the pain of the a to Bill change of zoning in La it's almost impossible to develop right now in today's market interest payment that you're paying property taxing what you're paying and you're seeing no cash flow you can't give me the land for free and I won't develop it why why are they saying that so the interest just shot up like crazy so now each month you're paying double what you anticipated that you would be paying everyone always…
…it's it's executive directors one it's a mayor Karen bass I I I really like this program um when she first got into office she's like we're in a housing crisis we need to build more housing more affordable housing which is what we were already leaning towards with building uh no amenity type building so we can have charge a a lower price point uh price per foot uh for the render and that's where really the demand is and in the more affordable space everyone can build super luxury and that's where most of the…
…so in some ways it's terrible in other ways it could be a benefit um I hope it doesn't happen yeah because one of the things we want to see is more affordable housing and I think what we've learned in the past and historically is that more regulation like this limits the supply which actually increases prices which is actually the exact opposite what I think these people want to do yeah um and so I think it's not founded in actual
…realized sort of right around 2020 that despite having built and and rehabbed and and improved these buildings, we had not added one unit to the housing stock of Los Angeles. And what has been a throughine of uh you know the last 15 plus years is how do we solve the affordable housing crisis?
…construction. You know, for for many years we um avoided government programs and we avoided um historically we've avoided things like low-income housing tax credits because very complicated, incredibly long timelines and to some degree drive up costs. Mhm. Um and hence the you know the headlines of of affordable housing being built for 700800 you know a million dollars a unit. Um but but opportunity zones was was different. It was a it you know despite some criticism it really has led to uh the creation of a large…
…myself that. You want to explain what it is first? Yeah. So, Model Z, you know, takes a unique approach to creating what we refer to as radically affordable housing. For us, it's all about basis. You've got to drive down the cost of construction. It is one of the major issues facing Los Angeles. It's one of the major issues facing California and the country, right? and and and when when the prices are getting to $700 to a million dollars to house someone, you know, that that barely has an income, it just is not…
…no sense. No manufacturing company would be structured that way. Yeah. And so what we do is we build the Honda Civic or the Toyota Prius maybe of affordable housing we can build at scale. It's repeatable. We were very fortunate um to hire a bunch of SpaceX SpaceX engineers and and people from the automotive industry that came with an incredible amount of manufacturing discipline. They set up the factory. They run the operations. They have done incredible things um to drive down the cost.