affordability housing crisis, notes David Wood, director of the Initiative for Responsible Invest- ment, a project of the Center for Public Leader- ship at Harvard Kennedy School. Investors that say they are participating in affordable housing don’t necessarily distinguish between “deep” affordable housing that serves the population below 60 percent AMI and workforce housing at between 80 percent and 120 percent AMI. “I do think we need more public policies that support affordable housing, but from the investor’s side, we want investors actively seek- ing and changing their behavior in order to cre- ate new affordable units, deeper affordable units and affordable units that are linked to other ser- vices, like transit or health,” says Wood. One impediment that survey respon- dents cited to investing in affordable housing is “onerous” government regulations in the development and funding process. Respon-
dents commented that government red tape and bureaucracy make investment in affordable housing “more cumbersome than investment in conventional multifamily projects.” Additionally, those who do not invest in affordable housing and do not intend to in the future, perceive the regulations and “specialized knowledge” on how to navigate these unique rules as their top reasons for staying out of this asset class. “Government programs can actually work to your benefit,” notes Burns. For example, project- based Section 8 vouchers provide an incredible insurance policy for steady income at a prop- erty. In addition, the default rates on affordable housing are miniscule, he adds. “Government programs are designed to financially support the residents so they can afford to live in apart- ments. For that, the government wants some restrictions on the rents going forward. Is that such a bad thing? I don’t think so, not if you
Case Study: Multiple Factors Influence UnitedHealthcare’s Affordable Housing Investment Strategy U nitedHealthcare Group looks at affordable housing investment through a fairly wide- angle lens. The group is looking to be an
Over the last nine years, UnitedHealthcare has invested a little over $400 million in LIHTC deals. UnitedHealthcare has further refined its affordable housing investment strategy over the past year in three core ways that allows it to take a more targeted investment approach. One, the firm is focusing invest- ment on extremely vulnerable populations, such as extremely low income families, seniors and people experiencing homelessness. Two, the group is target- ing investments in affordable housing that have some integration or connection with healthcare services. Three, they are looking at investing in projects where they can track the outcomes and impacts that having a safe, affordable place to live has on residents. Two other areas where UnitedHeatlhcare has been active in a limited capacity is on direct equity projects and also “pay for success” and other out- comes-based financing mechanisms. For example, UnitedHealthcare was the senior investor in Just-in- Reach, a 300-unit supportive housing initiative in Los Angeles County that focuses on getting people off of Skid Row and out of the L.A. County jail and into housing that is connected to support services that they need. “We are currently looking at other initia- tives where we could diversify the ways that we are investing to better use our resources to create hous- ing opportunities,” says McMahon. — Beth Mattson-Teig
investor, a partner with public housing agencies and developers, a policy influencer to support advocacy efforts around housing, as well as a data analyzer to better understand the impacts of safe, affordable housing. Part of that commitment to affordable housing is linked to its own core mission. “As an organization, we fundamentally believe that housing is healthcare, and that absent a safe, affordable place to live, it is impossible to have positive health outcomes in your life,” says Andy McMahon, vice president, Health & Human Services Policy at UnitedHealthcare Group. The organization does recognize that building safe, affordable housing helps with community develop- ment and community revitalization for its members, while at the same time serving as a solid investment instrument. “As part of our impact investing strategy, we’re certainly looking to make a modest return on our investment, but candidly if we were just looking to maximize our investment, we wouldn’t invest in that way. We are absolutely looking to understand the health impacts that our investments are having on individuals and families that they serve,” says McMahon.
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A Difference Maker
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