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Abstract
The Housing Partnership Network (HPN) is a peer network composed of 87 nonprofit organizations involved in affordable housing as developers, lenders, managers, and providers of services to their residents. The members most commonly produce rental housing for low-income people, operating at large scale and on a regional rather than neighborhood level, and aiming for a high degree of financial self-sufficiency. In aggregate, they form a significant portion of the nonprofit industry in their fields of work. This study reports for the first time on their substantial productivity, the ways they do business to achieve their results, and the policy issues facing them as they grow.
Introduction
The Housing Partnership Network (HPN) is a peer network composed of 87 nonprofit organizations involved in affordable housing as developers, lenders, managers, and service providers. Its members are selected based on six criteria:
- Mission-driven nonprofits, whose primary objective is to provide affordable housing opportunities and related support services to lower income households;
- Sound businesses, built on good leadership, staff, systems, and financial performance;
- Public-private partnerships, including business, government, and other institutions;
- Large-scale impact, sponsoring large scale initiatives at the highest performance level in their geographic markets;
- Regional scope; and
- An entrepreneurial culture of collaboration among peers to improve current practices and pursue new opportunities.
HPN and some of its partners sought to improve their knowledge and the knowledge of potential supporters and collaborators about HPN members and their work. Their focus encompassed three elements.
- productivity: what array of housing units and other real estate developments, financing dollars, housing management services, and services for project residents and other community members do HPs deliver?
- models of business operation: how do HPN members perform their work, with what common approaches and priorities?, and
- policy obstacles and issues of its member organizations: what matters of public and private policy are impediments or challenges to HPs' success and how can they best be changed or accommodated?
These three elements are the subjects of this report.
Ultimately, the new knowledge is to be used to enable HPN and its members and partners to better serve HPs with appropriate activities and to better explain to others the unique nature, capabilities, value, and needs of the HPN organizations as a group, in order to gain
further support for their efforts. And understanding of HPs' approach to their business may allow other HPs and nonprofit developers to emulate the most productive aspects.
The questions of how and how well HPs conduct their work and are affected by policy are of substantial consequence in the field of housing generally and affordable housing in particular. As we shall see in more detail later, HPs are major developers of housing and particularly rental housing, substantial providers of property management and resident and community services, and significant housing lenders. As developers, they produced nearly 20,000 total units, including almost 18,000 rental units, in just the single year 2004. That compares for example to the about 112,000 units of all multi-family unsubsidized (and unfurnished) rental housing completed in the country in 2005. Were HPs developers of market-rate housing rather than, overwhelmingly, subsidized affordable units, the production by just 63 reporting HPs3 would be almost one-sixth as large as that of all other rental developers.
But HPs are in fact, by mission and by selection into HPN membership, developers of affordable housing. There is not one single number available to measure total assisted rental housing produced in the U.S. in a given period. But we can compare HPs' output with production under important public programs of housing development assistance and by other major groups of producers. Much of current affordable rental construction and substantial rehabilitation uses low-income housing tax credits (LIHTC) and/or funds from HUD's HOME program. Aggregate HP production is substantial when compared to housing assisted by these programs. Annual average LIHTC (all rental) production over relatively recent years is about 105,000 units. HPs' total annual output (including tax credit and other projects) is more than one-sixth as large as that total. About 31 percent of the tax credit total is produced by nonprofits, or 32,000 units. HPs' overall production is 60 percent as large as the nonprofit LIHTC total. Rental units completed with HOME assistance were a total of 22,000 in FY2005. HPs' rental production exceeded 80 percent of that HOME production by all developers. HPs' combined production level certainly puts them in a central place in production of affordable rental housing.
Many individual HPN members are developers and lenders on a substantial scale. As we shall see later in Chapter 2, though HPs are relatively few in number, their housing production is significant relative to that of other much larger networks of nonprofit housing producers. Individually, average lifetime production by HPs appears to exceed that of other
groupings of nonprofit developers by a substantial margin—developers including the aggregate of CDCs and the organizations assisted by major intermediaries. And current levels of production per HPN member well outstrip that of typical for-profit developers of rental housing—assisted or unassisted—as well.
In addition, HPN members manage a significant majority of their own rental units. And they provided a variety of services to residents of their projects and other community members, totaling as many as 80,000 people served in 2004. Tenants of HP projects, homebuyers and homeowners, and low-income community residents all shared in services provided.
In the lending field, the role of HPs is also of some significance—although only 15 lender members reported the dollar volume of their lending activities to HPN for this study. These 15 had over $1.1 billion in loans outstanding in 2004. This compares (very roughly) to a $5.7 billion combined value of loans somewhat earlier (2001) for 512 community development financial institutions. Again a small number of HPs shows at least in aggregate and on average a substantial portion of broader activity. HP lenders actually financed more housing in aggregate than they developed. Since founding, HPN members in total financed over 243,000 housing units, including nearly 220,000 rental units, with debt capital alone.
In sum, HPs warrant attention because cumulatively they play a very significant role in the development and operation of affordable housing and especially rental housing broadly; in delivering a variety of services on a major scale; and, more suggestively, in the financing of housing efforts by community development lenders. And they are individually sufficiently significant producers that their modes of operation deserve analysis, potentially to find common elements that help them become effective. But to date, they have received very little systematic study, either to measure their outputs or to learn about their practices and needs. Basic information about productivity and how it is brought about has not been previously available.
The Urban Institute was engaged to perform a study to obtain and analyze member information, in order to address the three issues of production, commonalities in approach to their business, and policy concerns. The study draws on an extensive mail survey of member organizations, a shorter survey designed to obtain at least basic production information about nearly every member, and site visit interviews at eight HPN organizations with key staff, board members, and partners. The Appendix contains additional specifics about study methods. As
the very first systematic research about housing partnerships, the study is necessarily and by design primarily descriptive of the housing partnership approach and results. Further work will be needed to analyze fully the factors that help HPN members to succeed and grow and to compare their performance and growth to that of other sectors of the broader affordable housing community.
In the three chapters that follow, this report addresses in turn the findings of the study regarding:
- Production of the multiple products HPN members generate,
- HPN members' business model, and
- Issues of public and private policy faced by HPN members.
The findings should allow HPN and potential supporters and partners to assess more accurately the value of HPs work, the means by which members accomplish their goals, and some of the ways that their efforts might be further enabled.
The executive summary and the complete paper are available in PDF format.
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