Redefining Affordable Housing: Mutual Housing California's Innovative Stratregies.

Craig Adelman: [00:00:00] The housing development department and the property management department work very collaboratively together to create what we call a basis of design that really informs our best practices going forward. What has worked, what hasn't worked. We partner with great partners, including consultants, contractors, architects that really not just bring their knowledge to the work, but their skill in helping us leverage.

These kind of best practice and information amongst the people we're serving.

Jeff Holden: Welcome to the nonprofit podcast Network Here, our purpose and passion are simple to highlight the incredible nonprofits that make our communities stronger. Each episode is a chance for these organizations to tell their story. In their words, sharing not [00:01:00] just what they do, but why it matters to the people they serve, to their supporters, and to all of us who believe in the power of community.

Through podcasting, we hope to amplify their voices, inspire connection, and give them one more tool to reach the hearts of donors, partners, and neighbors alike. This work is made possible through the generous support of our founding partners. CAPTRUST offering fiduciary advice for endowments and foundations serving Sacramento, Roseville, and Folsom and online@captrust.com and Western Health Advantage, a local not-for-profit health plan that believes healthcare is more than coverage.

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Visit cx OR e.com. Housing affordability isn't an inevitability, it's a design challenge. In this conversation, Craig Edelman of Mutual Housing California shares a model that doesn't just build doors and roofs, but builds community. He should know, having spent the majority of his career in affordable housing of one form or another, including stints in the San Francisco Mayor's Office, low income investment funds and multifamily development companies.

From resident leadership councils and onsite services to the 241 Home Monarch Development in eighth and r in downtown Sacramento, Greg explains how long-term ownership public-private partnerships and capital subsidies make permanently affordable, high quality, multi-family housing possible. We talk pipeline innovations like factory built housing, senior [00:03:00] projects in Stockton and Elk Grove, and why the roof is the start.

Food security, stability, and opportunity are the goal. Listen to learn how affordable housing can strengthen an entire neighborhood once the door has been opened. Craig Edelman, welcome to the Nonprofit Podcast Network. 

Craig Adelman: Wonderful to be here, Jeff. 

Jeff Holden: Thank you. Mutual Housing. California is not a newcomer to the challenges of equitable housing in our market.

You started in 1988. But it's not a name that's on the tip of the tongue. When people start to think about affordable housing and appropriate places for people to get a reasonable rent, tell us a little bit about the genesis of the organization and what's unique. What's the novelty of it in terms of.

The fact that you actually own your properties. 

Craig Adelman: Right? [00:04:00] Right. Well, indeed, we've been around for nearly four decades doing this, building a portfolio of properties, not just for mutual, but for the broader Sacramento region that is. Critical. The origins of the company come from the mutual housing movement, actually of the fifties and sixties, which really envisioned a model where people across the full range of income spectrum could have a.

Ownership either legally or figuratively of their housing. And that is very much a part of our DNA as a company. That idea that we aren't just building. Doors and roofs, but we are building homes in partnership with the communities we serve, and we go beyond the brick and mortar, if you will, and really think holistically about our [00:05:00] communities, not just the physical infrastructure, but the social infrastructure that that has the opportunity that we are constantly trying to realize in terms of better outcomes for.

Those households, but also again, for the region as a whole. 

Jeff Holden: You are certainly a developer in every sense of the word. How do you orient the proper locale? Where is it that you look for opportunities that might be best serving the community at large? 

Craig Adelman: Well, I would love to be able to tell you that we just listen to the community and what we hear we go after, 

Jeff Holden: right?

Craig Adelman: Um, that is true, but it's half the story because we are, frankly, even if we were just a market based developer, we could do that. And unless it makes financial sense. You're not gonna proceed with the development. Same thing in our world. [00:06:00] Our affordable housing developments are subsidized through programs both federal, state, and local.

And so what we need to do is really marry those two things the. The needs and to some degree, demands or wishes of the broader community, the region that we serve. And so we try and build relationships and partnerships, so we are continually up to date and current on what those needs are. We have like other nonprofits aboard that governs the company and in part of the function of that volunteer board is to hold us accountable and keep us current in terms of the needs, uh, of the region.

And as you mentioned, as a developer, a real estate developer, we have to have a deep knowledge, awareness, and sophistication around the tools, the programs, [00:07:00] the financing that's available to actually make these really large developments a reality. And so familiarity with that range of programs that are.

Entirely highly competitive, right? And so we have to compete with, with other folks, not only in the region, but statewide for competitive funding, 

Jeff Holden: which has to be a challenge in some cases because on one hand somebody's looking at it purely for the for-profit side of things. You're competing in a different space, knowing full well that you're not gonna realize that net rent as a profit.

How does that play into the equation? 

Craig Adelman: Gosh, how much time do we have? Uh, no, it's a great point. So a a couple of things I'll raise about the nature of the work we do, and I've been at this for over 30 years, so 

Jeff Holden: it's, and I applaud you for that. You know, I, I saw the San Francisco and the mayor's office and the engagement with nonprofit [00:08:00] organizations and housing.

That's a wealth of information and experience and equity that you bring to us in mutual housing. I'm thrilled to even be having the conversation because it means so much to what's happening in our community. 

Craig Adelman: Well, thank you. I've been fortunate to have both a broad and deep. Range of experiences in this space and hopefully the combination of those experiences really make me well suited for, for this role.

To your question, I would say specifically. There are oftentimes where we are competing directly with market rate developers. Mm-hmm. Whether it's for land or capital or getting in line for permitting and what have you. That can vary and does vary significantly based on the economy. I actually was fortunate enough to get into this business way back when.

I won't, uh, I won't tape myself too much, but during an economic downturn [00:09:00] when suddenly I. Lots of folks on the public and private side, were looking to affordable housing to, to prop up the building sector mm-hmm. That, uh, wasn't active in, in the market rate side. So there's that kind of market rate competition on things.

And then we have a very sophisticated system of programs that are intended to structure. Our developments in ways that really fit within a more conventional commercial real estate model, but use capital subsidy to write down the, generally the amount of debt that we need to. Hold on a property and therefore service because our rents are lower, therefore, our revenues or our net operating income is lower, and therefore we can't support the same level of debt that a market rate deal could.

So that's generally the structure of how we finance our deals. We commit. To long-term affordability caps on [00:10:00] our rents, and in return we get a capital subsidy that allows us to build these developments without leveraging as much debt as would typically be required. 

Jeff Holden: What's, if there is an average size development, what does it look like?

Craig Adelman: That's a great question. Well, when we talk about housing affordability, there is a, a broad spectrum of needs from. Housing that will serve people with special needs coming out of homelessness. Mm-hmm. That might be moving into a more permanent situation over time to rental housing that's permanently affordable, which is what we do.

Mm-hmm. To affordable home ownership opportunities. So we're in this kind of center segment of multifamily rental housing, which is. What most of the subsidy programs to address housing affordability, address, and so we have a box, if you will, within those programs that we work within. And that box's a long [00:11:00] way to answer your question 

Jeff Holden: in there.

I'm, 

Craig Adelman: I'm 

Jeff Holden: tracking 

Craig Adelman: is generally multi-family apartments that are, I would say between 40. And 200 units. 

Jeff Holden: Okay. 

Craig Adelman: We have some exceptions on either side. We just broke ground on the largest, affordable, new, affordable rental development in the history of Sacramento, downtown 241 units. That happens to be quite exceptional, both in terms of the size and to be able to get that size at a, in a terrific urban infill location 

Jeff Holden: for the benefit of the listener too.

Do you have the address, the location of that on 

Craig Adelman: the top of your head? It is at eighth and R Street and Oh, great area. It's called the Monarch. And Monarch is a great example of our partnership in innovations with the state. The governor implemented an executive order to create what's called the Excess Sites Housing Program where.

The state is taking excess state owned property and converting that into affordable housing. So this was an old [00:12:00] underutilized warehouse right there on our street in Sacramento, virtually a, uh, almost a full block. And we've been able to take that and turn that into 241 homes. 

Jeff Holden: Well, that's wonderful.

That's a, it's just a booming community, number one, right? It's surrounded by state work and light rail and access from the freeway. What a perfect location. For those who are able to get into the the building. Now the other thing I think that there's a misconception about is people think, well, it's affordable housing.

These are really cheap units and they're built differently. Nothing can be further from the truth. I've seen some of the units. Tell us a little bit about what goes into that process when you're building them out. 

Craig Adelman: Sure. 

Jeff Holden: The amenities, the facilities, you know, the maintenance, all that. 

Craig Adelman: Well, I think that really goes to not only the sophistication of the company and our real estate development unit, but the [00:13:00] breadth of our work under one roof.

At Mutual housing in particular. What comes to mind for me is the fact that we also property manage all of our properties. And so having been around for nearly 40 years and having all of that breadth of experience in terms of managing properties, the housing development. Department and the property management department work very collaboratively together to create what we call a basis of design that really informs our best practices going forward, what has worked, what hasn't worked.

We still try and innovate and then. Analyze how those innovations are working. So that's a big part of it. And then another big part of it is, I think typical of the best real estate and housing developers, which we is, that we partner with great partners, including consultants, contractors, architects, that really not just bring their knowledge to the work, but their.

[00:14:00] Skill in helping us leverage these kind of best practice and information amongst the people we're serving. Mm-hmm. And so our units and our amenities at eighth and R Street might be different than what we're developing in Vacaville. Mm-hmm. Right. Different. Different populations, different locations, et cetera.

Um, different density, different, different expectations too. Different expectations, potentially different unit sizes. We, we house a whole range, including what's called permanent supportive housing, which has emerged over the last decade or so as the, the primary response to homelessness in terms of homelessness being an outgrowth of a, a lack of housing affordability.

So those are. Individuals or households at the lowest end of the population spectrum who have experienced or are at risk of homelessness, oftentimes needing some service connectivity for challenges that they have, all the way to seniors who are on [00:15:00] fixed income, oftentimes only social security or maybe not even that, and.

But for the housing affordability would also be homeless in between, we have lots of working families, individuals in a range of affordability spectrums. I think maybe the one thing I would point out about that is that when we think about affordable housing, prospectively being for low income people, even low income people are not a monolith.

That's a, that's a, a big range of mm-hmm. Income levels from people who. Are just outside of being able to afford what's in the market to people who are just outside of homelessness. 

Jeff Holden: Mm-hmm. 

Craig Adelman: But for the types of housing that we offer, 

Jeff Holden: and we've had Salvation Army and Volunteers of America and, and Right.

These organizations, that spectrum is huge. And, and you're right, it's just on the tip of either side where one thing. Send you into homelessness and sometimes that one thing is the prevention to getting back in and you know when, when you might have [00:16:00] all the capability and capacity except, you know, just, just that one little thing.

You mentioned seniors too. Thank you for that because I was going to ask the question, and we see that as the fastest growing population of homeless now, which is frightening, you know, at 65, 70 years old to think that all of a sudden now you are on the street. Is there a percentage that you have that you might know?

I know this wasn't one of our questions that maybe goes to senior at this point. 

Craig Adelman: I, I couldn't cite that. Okay. To you from our current portfolio, we could get back to you on that. It's typically opportunity driven as well. I'll be frank, from a. A development perspective. Seniors are a home run when we have to go to a city council or to a, a neighborhood council or what have you.

Right. It's, it's tough to speak against seniors and they, they tend to, to be a lower impact population, if you will. Mm-hmm. Uh, I think there's a fair amount of truth to that and then a fair amount of [00:17:00] perception. Yes. All that said. You're entirely right that it's a, it's a, a growing segment amongst lots of growing segments.

Yes, yes. Right. Unfortunately, in, in terms of the challenge, to the extent there is funding available, because as I mentioned, a lot of the programs that we use, they have very specific. 

Jeff Holden: Criteria, 

Craig Adelman: directions, populations, et cetera. We'd be, we'd love to do more senior housing. We've got our, our next development slated to start, which is our first one down in Stockton, our first one in San Joaquin County.

Mm-hmm. Fairview Terrace is, is going to be a senior development. And then we have another one in development in Elk Grove that's senior. And we're excited about both of those. 

Jeff Holden: Well, there we go. Appropriate right at the, uh, the tail end of that question. Right. Something's unique about your properties as well.

They're built. They're immediately rented, which for most developers, that's a home run. And, and you have the list, the list is sitting there. I mean, [00:18:00] it's, it's not, it opens and then people come, there's a, a list, a waiting list, and it's usually full you. On the waiting list Sure. Of people to be accommodated into the facility, but you've, you've also got a process in the building of management by resident Share that if you would, because that's really unique where you've got leadership opportunities inside the facility for.

Again, what people typically expect to be, well, you just take care of everything. No, you have some skin in the game in your properties. 

Craig Adelman: Right, right. Well, I really think this goes to one of the core things that differentiates Mutual from others and we, we love. Our sister organizations that also do affordable housing and welcome their great work.

Again, our origin story, our DNA starts with a concept around resident agency in in the work, and we try to. [00:19:00] Infuse that in all aspects of our work, right? So from the top, which I mentioned, our board of directors and making sure that we regularly not only have residents, but other members on the board that govern the organization that have lived experience with affordable housing and homelessness, so that they bring that perspective to the work, to the sites themselves and resident.

Councils, but also really investing in resident leadership and productive and constructive relations with our residents, which is one of the, the things, our three core programmatic areas. We talked about two of them already. One being real estate development, the other being property management. But the critical third one is what we call community development, which is a range of things including resident services, but also.

Literally community development, building that connective tissue at our properties and more broadly in our communities of connection. So that's connection between the residents and [00:20:00] property management, which is rare to see in affordable housing or market rate housing. 

Jeff Holden: Right. 

Craig Adelman: But also. Between the residents and prospectively neighboring properties or the public sector or governing bodies in that either neighborhood or city or locality, et cetera, so that we really can grow both a, a positive relationship, but also the leadership capacity of our residents who historically have really been disenfranchised.

Mm-hmm. From that type of process. 

Jeff Holden: I think that's the beautiful part of this. There is not only the safety from the streets, you may not have a place that's yours. You can call your own, but you are developing people through the process, instilling that confidence, giving 'em the opportunity to at some point, possibly move on to get their own place.

And I'm talking about purchase, not moving to another 

Craig Adelman: right, 

Jeff Holden: you know, apartment unit [00:21:00] that just fosters a cycle of positivity through the community in that economic development in so many different ways. 

Craig Adelman: A cycle of positivity and opportunity, right? Mm-hmm. When I took this, this job, I was really moved in kind of searching myself and my connection to mutual housing and its mission in terms of really thinking about both myself and so many people I know.

I think the listeners hopefully can relate. To not just the fact that I had stable housing growing up, but that I had a community of support, of resources of mentorship that really were so fundamental in my ability to. Achieve both personally and professionally. Mm-hmm. What I've been able to do on, on my part, and when I think about how much of that can be lacking in so many of our communities in low income populations more broadly, that's so [00:22:00] fundamental to what we are trying to provide.

The roof over the head is the starting point, but it is so critical. I think one of the things that really excites me is the roof over the head is the expensive part, and then. The frosting on the cake, if you will, with just a little bit more investment gets us, leverages us so much more in terms of outcomes, again, for these households themselves, but for our community as a whole.

Think about how much better off we all are. When one of our households is stably housed, their kids are in school and getting support, whether it be afterschool programs or programs on site that we do to enrich their lives, but also that the parents are freed up from that stress of housing instability to be able to be, uh, stably employed and contributing to, to our communities 

Jeff Holden: well, and to see people not unlike themselves.

In leadership roles, it's it's demonstration of [00:23:00] capability. It shows that this can be done and I think it gives everybody that, that sense of wellbeing that. Hey. He's like me. She's like me. I can do this. My family's like this. I want my children to see this. To break this cycle of generational poverty. And you're doing that.

You are absolutely doing that. You also have, if I'm not mistaken, in some of the facilities, you even have food pantries, correct? 

Craig Adelman: Oh yeah. Yeah. 

Jeff Holden: Tell us a little bit about that, because we know food insecurity now goes with. All of this, and we're seeing food insecurity in our community continuing to grow post pandemic at rates that are beyond comprehension in some cases.

How does that work inside the facility? 

Craig Adelman: Well, I would start by, thank you for pointing that out. I would I, I'll start by taking a quick step back and just recognizing that income inequality and poverty affect. Virtually all aspects. Mm-hmm. [00:24:00] Of, I'm going to say our lives, but of course specifically people who are, who are challenged Yes.

On the income range. And so for us that core scarcity is around housing. Yeah. And having a place to live. That's just the tip of the iceberg though, right? You talk about food security, we can talk about transportation, we can talk about health, we can talk about climate impacts. And so again. We exist to be responsive to the communities we serve, right?

And so that's where the food insecurity comes from us. Mm-hmm. Now, granted, similar to the housing point I made earlier, we need to be able to find funding to make that happen. In this case, we have food banks, we have a system on that. In that sector, right? That really is there and able to partner with us.

And we have a real symbiotic partnership where we have communities of people that are, that they're trying to reach and are eligible for the that kind of assistance. And of [00:25:00] course, they're providing the food assistance for us to partner with. And so that's one of many examples of ways that, again, just like I was saying, that added.

Leverage that added investment that can get us so much better outcomes. Mm-hmm. So we have families Yes. That have a roof over their head and have food in their, in their stomachs. Right? Yes. And most of us know, it's pretty tough as a child to be able to, to go to school hope. Thankfully, most of us don't know firsthand.

Yeah. But hopefully most of us know secondhand that unfed. Students don't learn well and oftentimes are, are just challenged to be able to sit and play by the rules, if you will. Right? Because of those stresses. 

Jeff Holden: Took the words right outta my mouth. We'll get back to our discussion of development for the greater good with Craig Edelman of Mutual Housing, California, right after we hear from those making this program possible.

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Craig, the collaborative efforts, which you've already touched on a little bit, are extreme in the ways that you have outreach and connectivity to the community. We were talking about food banks. Obviously there's gonna be a developmental issue in terms of the physical properties and of organizations you work with.

Let's talk a little bit about that first, and then maybe just drag in some of the others that are. Less obvious to people. 

Craig Adelman: Right. Well, great point. I think our listeners would be shocked and probably overwhelmed to realize the level of partnership that we engage in, in part out of necessity, and in part because we end up with better outcomes as a result of those.

So [00:29:00] the obvious ones would be public private partnership, right? Mm-hmm. We're, we're a private nonprofit entity. We partner very closely with government at all levels. I mentioned. City, county, regional, state, federal, on so much of our work, and not just the real estate, but other aspects of it. So those partnerships and those are both financial but also process.

It's critical for us to work with the public sector on 

Jeff Holden: Yeah, 

Craig Adelman: moving permitting and approvals and what have you forward and through their policy leadership. But then we have, I mentioned our permanent supportive housing as probably the most notable example of service partnerships on site between our property management and our community development teams at Mutual, and then bringing in.

Service providers like Lutheran Social Services of Northern California, turning Point Community Programs. These are [00:30:00] providers that work very closely with homeless and formerly homeless populations in stabilizing their living situations. Then we have community partners more broadly. For instance, the Midtown Association.

Mm-hmm. In Sacramento. We have now, uh, an increasing number of downtown developments. Two of them that just broke ground that we're excited to, again, find synergies. We are. We are several properties in, for instance, the 16th Street corridor, but Midtown is doing incredible work to, to really create synergies across not just housing, but all of the, the elements that make a neighborhood similar in this new development.

We're looking forward to breaking ground on, and we're working with the Stockton Boulevard, a group called Stand, and then we have development partners, insight Housing out of the Bay Area has a Sacramento office. Mm-hmm. We're co-developing our Vacaville. Site with, as well as we've got some great experience with our friends at Habitat [00:31:00] here in Sacramento.

Jeff Holden: Habitat for Humanity 

Craig Adelman: for the benefit 

Jeff Holden: of 

Craig Adelman: Yes, thank you. Habitat for Humanity. Yes, we, we completed a, a tremendous development a couple years ago called Cornerstone with them, and we're working on another one in Sacramento as well as Habitat There. Their organization up in Yuba County. Mm-hmm. So all of these partnerships across, so, you know, this range of, of of folks really speak to what we've more broadly been talking about, which is kind of the complexity of the systems and the responses, right?

That, for instance, mutual as a microcosm has this combination of both real estate hard assets and then services and property management, that complexity, 

Jeff Holden: which. Is is truly complex because it is an integration into the community, and I don't want to gloss over the the physical asset that's there too, because you take a blighted building [00:32:00] and you either raise it or you restore it and the next thing you have is you have a beautiful facility.

It changes the entire neighborhood outside of the benefit for the people who are inside the building as well. Now you have a source of pride in your community. Somebody put a new building in our neighborhood. Mm-hmm. When nobody's building new, new buildings in our neighborhood, why would they? You are, and you're bringing these people into the neighborhoods and that just changes everything.

It changes the economic development around your facilities and it changes the schools because the influx of children that are coming into the schools, I mean, the collaborative pieces just. They really are the depth of the community in every way, shape, and form. 

Craig Adelman: It can, 

Jeff Holden: yeah. 

Craig Adelman: Typically take some intention intentionality, which is also what we've been talking about, right?

Yep. Which is what we try and do is seize those opportunities. We're making this enormous investment in terms of a housing development [00:33:00] in a community that will be there hopefully for generations, upon generations to come. And with that investment comes all sorts of other opportunity to leverage around that.

I'd be remiss if I didn't recognize this is also a complex issue more broadly nationally, especially here in California around gentrification, displacement. Mm-hmm. Influx of capital into low income communities and just recognizing ours as a country is one that has a history of racial and economic segregation.

Especially in urban environments that we're still very much living with. In fact, it's the patterns, uh, are in fact worse than they were in the sixties when the Fair Housing Amendment was passed. Mm-hmm. And so over the last 10 or 15 years, a lot of my work has also been. Focused in these, these areas of how to invest equitably in these areas so that it's not just gentrification that brings in influx of [00:34:00] investment that drives the low income folks out and makes way for people with, with resources.

Jeff Holden: I'm glad you brought that up too, and that would be a whole nother show. 

Craig Adelman: Yes. 

Jeff Holden: We could spend 

Craig Adelman: absolutely 

Jeff Holden: a long time on that conversation. As much as I'd love to get into that with you too, in terms of funding. The, the, the literal funding of the organization, not so much just the process of a building.

Craig Adelman: Mm-hmm. 

Jeff Holden: How are you funded? 

Craig Adelman: We are funded. We have a combination of streams of revenue. We are both, as I mentioned, a, an owner of real estate in technical terms. We call that an asset manager, right? Yes. And so therefore, we have this portfolio of. 24 properties now, I believe, and gratefully I have inherited a company that has a really healthy portfolio of properties, which is not the case across the board everywhere.

Everywhere. So, so part of our sustainability is to be able to [00:35:00] derive revenue and income over time, over those properties to cover our costs and then to invest back into those communities. Second key revenue driver is our development itself. So by developing, we earn a developer fee. Again, similarly, because our properties are income restricted.

The return on those properties generally comes through a developer fee rather than over time or as a market rate developer would be making a play on big appreciation, 

Jeff Holden: right? 

Craig Adelman: And right selling or realizing this huge increase in rents over time. I 

Jeff Holden: say rents, 

Craig Adelman: we. We not only don't do that we aspire not to do, that's our purpose.

Yes. Right. So in, in lieu of that, we earn a fee for developing the property that's established in the field, again, by those programs that we use typically. Mm-hmm. And so we pay not only for our development. Department, but also some of the overhead and costs of the organization through that mechanism. [00:36:00] And then lastly, we fundraise like, like a lot of, uh, your nonprofit friends.

Our nonprofit friends, right? Mm-hmm. And so we just had last week our most successful annual event ever, our building. Congratulations. Thank you. And in particular, those components that don't have the capacity to pay for themselves, which is really. Primarily our community development work. Right. Our property management hopefully pays for itself by the properties themselves.

Mm-hmm. Paying property management fees and costs. Our development work hopefully pays for itself through those developer fees. Now, that frosting on the cake that I talked about earlier, that we try and add in terms of the opportunities with the communities. Those are the ones that we have to have the, the figurative and sometimes literal bake sales for.

Mm-hmm. Right. So we try and. Broadens with those 

Jeff Holden: unrestricted things that you can actually do what you need to do with to 

Craig Adelman: function, do what we need to do with and for which there aren't public or philanthropic sources readily available. Right. And yet [00:37:00] we have seen the, the need and the opportunity in this model of, of mixing these, these components together and, and feel like that's, that's the, that's the, the model that works 

Jeff Holden: well.

It's truly a social enterprise, 

Craig Adelman: right? 

Jeff Holden: A social. Enterprise. When you look at it from that perspective, how many employees do you have? 

Craig Adelman: We're about 110 now. 

Jeff Holden: Okay. Good size organization. 

Craig Adelman: Yeah. 

Jeff Holden: What's, what's the total. Budget you work with roughly? 

Craig Adelman: We're at just shy of 30 million. 

Jeff Holden: Okay. 

Craig Adelman: For our, our, our corporate entity.

Yeah. 

Jeff Holden: I actually would've thought more just because of all you have going on. 

Craig Adelman: Well, this is not great podcast material, but technically we have our corporate entity and then our properties are under separate. Individual ownership. And so the, certainly the assets owned are, are you Oh, far 

Jeff Holden: greater? 

Craig Adelman: Yes. Far greater than that.

And the amount of economic activity in those assets, 

Jeff Holden: do they tend to self sustain? Yes. In the [00:38:00] operational 

Craig Adelman: they tend to. We have programs like housing vouchers that pay us an an increased contract level rent on our properties, which is one way that we can get a little more revenue 

Darrell Teat: mm-hmm. 

Craig Adelman: On those properties and serve even lower income households.

So if we wanna split hairs, there are components like that. I would consider that still self-sustaining. Oh, 

Jeff Holden: absolutely. 

Craig Adelman: Yes. But on balance, the model is that we subsidize these developments upfront through this capital subsidy that I mentioned, yes, earlier, so that they aren't saddled with an unbearable burden of debt, 

Jeff Holden: right?

Craig Adelman: And in return then can operate ideally in perpetuity. Now, on occasion, we'll go back and we'll recapitalize. Properties that we've now had for 30 years. 

Jeff Holden: Right? Sure. You see the appreciation in the property. You can minimize some of the debt 

Craig Adelman: and make 

Jeff Holden: it work. 

Craig Adelman: And we, we have replacement reserves, but oftentimes the revenue that we're, we're gaining over [00:39:00] time isn't enough to be able to address that level of recapitalization.

Jeff Holden: You answer a question I was gonna ask in there in terms of the, the equity value of the properties. 'cause you don't spin 'em, you don't sell 'em. Unless there was some really compelling reason, I would imagine they continue to serve. 

Craig Adelman: That is not our model. Our model is to, to hold our properties and maintain them, not just, again, the affordability, but fundamentally, as a community-based nonprofit, our function is to be managers and stewards of these community assets.

Mm-hmm. And when I talk about us as community and regional infrastructure. That is literally true, right? We are, we are managing this housing resource, which is critical infrastructure for the region. Again, hopefully in perpetuity. 

Jeff Holden: This is the fun part. Dream big. What would it look like if you had an unlimited budget?

If somebody said, here, Craig, [00:40:00] fix whatever you're working on. Make it better. Do he, if you gimme a good enough reason, I'm gonna give you this blank check. What would it look like? What would be different? 

Craig Adelman: Hmm. It's a great question. I, I think the best way for me personally to respond to this question is that I, I took a, a study trip actually.

The, the, the company I'd been working for before this. Azar has originated a number of, uh, study trips to Vienna mm-hmm. To, to study their social housing system. And I was fortunate enough to do that three years ago. And I think the one thing I'd want listeners to know is that housing and affordability in America and in California and Sacramento is not an inevitability.

It's of our making. It can be solved. I'm not being naive that that's going to change, frankly, anytime real soon. But there are so many of us, myself included, who have grown up in [00:41:00] California and just take for granted that this is an inevitability and it's not. Mm-hmm. So I think there are systems. I think we need to address both the resources and the inefficiencies of housing production, right?

And affordability. Fundamentally, I am not seeking for us to abandon a market-based system, but to recognize that a market-based system is insufficient to meet the needs of our full population, right? And so. Once we make that recognition, the rest will fall into place. We have the best practices. We know what fundamentally works, and I think there's fodder for both sides of the aisle, if you will, in terms of, again, mm-hmm.

We need to do this more efficiently and with less regulation. And there's no way around the fact that we need more resources to make that happen. I think the, the one fundamental thing I would say about the system that people need to understand that I read almost on a daily basis or talk to [00:42:00] neighbors about when they say, well, we're throwing money at this problem and it's just throwing it down the drain.

Jeff Holden: We are, 

Craig Adelman: and I say, and what's been happening with your property values? Right. I don't see you complaining about that, and you need to recognize that those two are inextricably linked. 

Darrell Teat: Mm-hmm. 

Craig Adelman: Right. So those of us that have that own. Are deriving significant benefit from this system. And frankly, that is at least in part, at the expense of, of those that don't.

Right. And that's the, yep. That's the balance of the system. And if you are going to be a proponent for a market-based system, then I think we just need to honestly recognize what the limitations of that are. Right. 

Jeff Holden: What, what did Vienna show us? 

Craig Adelman: You know, it showed us that there is. There is a, a culture that can be realized that celebrates a mix of housing types and opportunities, not just in silos, but that exist together.[00:43:00] 

We viewed development after development. First of all, their system. It's, it's a point of, of community pride there. They, they put signs up on their social housing for everybody to see. That literally, not because they're marketing or what have you, but because right, they, they, they are proud as a society about meeting the needs of their neighbors.

And so I think that is possible. There is a mix of a combination of market based and then what we call limited profit housing. 

Darrell Teat: Mm-hmm. 

Craig Adelman: And then the equivalent of public housing. So these three layers, but that they can coexist and actually work synergistically together. Interesting. I think beyond that. We continue to look at ways to contain cost and realize stronger efficiencies.

Our system is one for good reasons. I, I am not one, you know, so many people tell me, well, we could just solve this [00:44:00] whole thing if we just did that and i's 

another 

Jeff Holden: whole. Episode. 

Craig Adelman: Right. A four 

Jeff Holden: hour 

Craig Adelman: episode. I'm not a subscriber to that theory. It's a complex problem. Yes. And there's a reason it has been intractable for so long.

Mm-hmm. But finding better ways, more efficient ways. Our system is one that awards in our world, project by project that's very incremental. Mm-hmm. And I do think moving towards something that thinks more in terms of a broader scale and the economies of scale, which is a big part of what Mutual is doing.

Made a big move into factory built housing in this commitment for our next five developments to be built in factories as a way to realize both economic and time efficiencies in the delivery model. Mm-hmm. And to leverage, this is not a new solution, factory built housing, but we're one of the first to commit to a pipeline of deals.

So we're committing to 500 units rather than 50 units and trying to realize the efficiencies [00:45:00] of both. Building that system over time, but also that the scale can buy us. 

Jeff Holden: So part of that in, in the big scheme of things is just the vision that this can be rectified. And I think a lot of people do agree with you that there are ways to do it.

Obviously the process and the means to do so are the arguing points. But nonetheless, I would agree as well. If we take it back to today where we are today with the projects that you've got and what you see, what is the greatest need? 

Craig Adelman: You know, the easy answer would be to tell you more money. Mm-hmm. And granted today for our pipeline, yes, we, but I'm confident we're gonna, we're gonna find the, those funds.

What we really need socially within the system is will. And that can be manifest in all sorts of ways. People can contribute, people can get involved, people can. Advocate with their electeds and what [00:46:00] have you. But at the end of the day, a recognition of this challenge and a will to address it to my earlier point, because it is solvable, is what we need.

And I don't hear that broadly. I rarely hear it on, on a small scale. Mm-hmm. From my friends and neighbors that I talk with, they, I think we. As a whole have, have a mindset of defeat around this issue because we've, you know, for the most part, we've never known anything else but hasn't, we've thrown money 

Jeff Holden: in and thrown our hands up.

Craig Adelman: Yeah. 

Jeff Holden: And it just perpetuates itself. 

Craig Adelman: Right. 

Jeff Holden: And we know that's not the answer. I mean, we clearly know, and I think people have gotten to the point. I, I do believe we're at a tipping point. I hope we're at a tipping point to where it's like, let's really get serious about this. We have examples of where it can work and how it can work, and we have really smart people all around this, so.

Again, we, we can go off on a [00:47:00] tangent when we're right near the end of the conversation and, and spend another, you know, couple of hours discussing this. But I, I think that's so very, very true. What's the best way to learn more and, and I think learn more in this conversation's a little bit different than in most.

About mutual housing because of the constituents that you serve. So somebody may be interested in learning more about what it is you are doing. Somebody may be interested in learning about new opportunities, what housing is coming up because they have an interest or an organization where they wanna start.

Some of the people to apply what, where's the best place to go? Is there, is there one source? Stop. 

Craig Adelman: Well, the OneStop shop is www.mutual housing.com. Perfect. That's the OneStop shop for Mutual Housing, and I would say connect with us on social media for that ongoing awareness of what's going on and what what we are up to.

And we of course, all, uh, you know, post regularly about what's going on more broadly in the field. I would say to the, the earlier question though, also, if you have [00:48:00] any time. Get involved, meet with your local electeds, talk with them about your electeds or your staff at the Housing and Community Development Department within which you live.

Ask what, what? What they're up to. We would love to engage with, with the listeners, and for me to the earlier response, it's a responsibility and in our own self-interest to build awareness and capacity of our own community around these challenging issues, which are so fundamental. Seldom understood 

Jeff Holden: and so many opportunities given the nature of the constituents, the clients you serve, there's so much community opportunity that exists, again, back to the organizations that are involved in supporting the people who are renting places for mutual housing.

Housing inequity in our communities is one of the highest priority issues, and, and getting homes for the lowest income families. You guys are doing that. You're [00:49:00] providing housing, you're providing dignity with the acceptance of community leadership from within the housing community, and the people who are involved in those developments are experiencing opportunities to not only grow, but to thrive into their communities.

Through education, through leadership, through demonstration, through confidence. Just the simple steps of acceptance to say you have a place to live and we have food to feed you. So what you and your team do is making such a difference. I'm happy to be able to share some of this with people because again, you're one of the best kept secrets.

You sell out or you rent out so fast, you know everything's gone. So we don't hear the volume of activity. It's done. As soon as the facility is complete, it's full. Back to the social pieces, we will post those on the website so people can stay engaged and understand, okay, well that Monarch is gonna be opening in two years.

I wanna make sure I get on the list for it. Or each of the developments, [00:50:00] whether it's Stockton here, Yuba City, 

Craig Adelman: right. 

Jeff Holden: Vacaville it. It's just neat to see that there really are some answers to the problem. Just not enough of 'em. 

Craig Adelman: Right. 

Jeff Holden: And we need more. So Craig, thank you. I appreciate your time. 

Craig Adelman: Thanks, Jeff.

It's been a pleasure. 

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