Season 2:

Episode 39

February 15, 2022

#39: The Gateway Project with Andrew Regenstreich of HANDS

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In today’s episode, I speak with Andrew Regenstreich, the Director of Real Estate and Economic Development at Housing and Neighborhood Development Services (HANDS). HANDS, Inc. is a developer of affordable housing in New Jersey. They engage stakeholders in community organizations, cultural spaces, and commercial properties to help revitalize spaces. Recently, they have planned the “Gateway Project” at 523 Freeman Street, a new construction project for mixed-use housing in Orange, New Jersey.

As an undeveloped lot at the corner of Scotland Road, the “Gateway Project” will provide opportunities for entrepreneurs, open space for public gatherings, showcasing local artists, and moderate-income housing. This project is planned to be a four-story development with nine residential units. It will include 1,479 square feet of ground-floor commercial space, and provide residents with access to the commercial space near the Valley Arts District. The project has received incredible help from the City of Orange along with support from New Jersey Community Capital, DCA, and a partnership with NJ Transit.

Join us on today’s episode as we discuss the role of affordable housing in shaping a longer-term and comprehensive vision for the future, how COVID-19 has been impacting developments for low-income households, and Andrew’s personal experience working at HANDS, Inc. More broadly, we discuss the role that public incentives play in housing production today.

Learn more about Andrew Regenstreich

Andrew Regenstreich is the Director of Real Estate and Economic Development at Housing and Neighborhood Development Services (HANDS). HANDS, Inc. is a developer of affordable housing in New Jersey. They engage stakeholders in community organizations, cultural spaces, and commercial properties to help revitalize spaces. Previously, Andrew worked at New Jersey Community Capital as the Assistant Director in Real Estate. He is a graduate of NYU and Northeastern. As a student at NYU, he had the opportunity to work at the Massachusetts legislature, the US Senate and the US State Department.

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Now let’s build something today.

Our guest is Andrew Regan. Andrew is the director of real estate and economic development at housing and neighborhood development services, or Hans Hans is a developer of affordable housing in New Jersey. Andrew previously worked at New Jersey community capital. He’s a graduate of NYU and Northeastern and wallet.

NYU. He had an opportunity to work at the Massachusetts legislature, the us Senate and the U S. We will be talking about 5 23 Freeman street and you construction affordable housing project in orange, New Jersey. More broadly, we will talk about the role that public incentives play in housing production today.

Thank you so much for being here with us,

[00:02:13] Andrew Regenstreich: Andrew. It’s a pleasure and thank you so much for all you do to elevate. Our industry, all the different components and nuances and craziness within, so they could happen.

[00:02:25] Atif Qadir: Absolutely. Really, really happy to have you. So, Andrew, you began your interest in public policy, through internship experiences at various levels of the U S government.

When you were at Northeastern, what did you learn through those experiences and how to all of that shaped. Towards a career and economic development. So

[00:02:47] Andrew Regenstreich: I, I really appreciate that question actually at the time it seemed like a lot of my experiences were, were quite whimsical, but in retrospect could actually fit within a nice tapestry of, of purposefulness and has fit together quite nicely as I’ve continued my career path.

So a lot of the opportunities I pursued, I tried to make them. And interesting. So that’s led me to some similarly. Opportunities ranging from working for the head of the Massachusetts state judiciary Senator disarray, where I was deep in various policy issues. It went to advising multinationals, uh, United States, multinationals who wanted to enter the UK market and subsequently the middle east and European market.

So I learned a lot about how businesses. Make decisions and some are their challenges and constraints and how they take advantage of opportunities. And then from there I had extensive international development experience, advising a small nonprofit on how to start and implement a microfinance program.

In a refugee camp in Zambia, as well as other places. So I learned about coalition-building. I learned about the interconnectedness of countries, institutions, and then from there, uh, were actually got my first housing job, which was taking a quick step back. I was exhausted. I had traveled extensively. I missed my family.

So I, you know, I was looking at an opportunity. To leverage some of my previous experiences, but domestically. So through my network, uh, I was put in touch with a individual. She was the department chief of, uh, uh, a department in Jersey city, department of community affairs that handled most of the affordable housing money that trickled into Jersey.

At the time they had been an early adopter of something called Agra abandoned property redevelopment. What that did was give the Ms. Trolleys anyone’s valleys across New Jersey, the ability to enact legislation to deal with they can properties. So what they needed to do was figure out how to use that legislation to deal with vacant and abandoned properties in Jersey city.

And this was Jersey city 12 years ago. So it, you know, it wasn’t, it wasn’t the pioneer phase. But the level of interest and activity hadn’t reached the Cassandra you see now, so there was, there was opportunity to, to maneuver. So you’re going back to your question. A lot of my experiences taught me the primacy of institution, building coalition, building, understanding that affordable housing or really any endeavor, but just, you know, using, uh, affordable housing as, as, as the.

Yeah, it really necessitates seeing everyone’s different perspective. So, you know, people in government have various perspectives, everything from political to policy related their own institutional concerns, the private sector, whether that’s developers or any other business, um, invariably have some kind of profit motive, not necessarily a bad thing.

It just is what it is. Um, actually it could be a good thing. And then you get more, more specific. So affordable housing professionals. Uh, care about affordable housing community advocates. I care about the different things they’re advocating for, but within each, that is as a human being driven by a lot of same things that other human beings are driven by.

So my goal I realized early on, or my charge early on was. To take the essential human elements that came from each different perspective and try to call the different ways of seeing things put into a cauldron, if you will, and work towards whatever the goal was at that given time.

[00:07:06] Atif Qadir: And then one of your previous experiences and we’re effectively began this career and economic development was at New Jersey community capital.

Could you explain what they do and then what your role there was?

[00:07:21] Andrew Regenstreich: Sure. So in short, New Jersey community capital there, and I think this classification is central to what they do. They’re what you call a community development. Finances. Uh, otherwise known as CFI and CDF eyes. It’s a treasury department designation that gives money to certified members.

There’s a whole certification process to facilitate change within the communities. They, these. Primarily through lending functions. So New Jersey, community capital, they do a lot of different things. They do charter school lending, real estate development lending. They have a lot of different funds dealing with small business economic development, uh, various equity initiatives that they’re, they’re a source of capital.

Uh, and with that comes a lot of different opportunities to effectuate change. And when I joined New Jersey can cap. They were just scaling out a development arm. So the head of New Jersey queen capital, the time, uh, Wayne Meyer, who actually used to be the director of real estate at, at hands. Was very smart, had a whole array of experiences in the financial world, in the legal world.

Um, real estate world. I think he was an accounting by training. And when he was drugged to real estate at hands, he realized the importance of. Using private sector tactics to facilitate change. So one example, and this, this leads into what Neutrogena capital ended up doing was he was part of a team of academics and community leaders that ended up buying non-performing mortgage.

I believe from JP Morgan chase, the goal was to breathe life into the underlying assets behind these notes, the houses. And he, you know, after completing the purchase, I don’t have the full tick-tock on that. I’m sure it wasn’t easy, but you know, after. After doing this, he then had the ability to start dealing with these vacant properties and putting them back into productive use and hence revitalizing the blocks.

Um, if not the neighborhoods where these properties were. So eventually that program, it was called operation able recovery, gravitated to New Jersey, to many capital where it was rebranded as community asset preservation. Community asset preservation corporation. It still exists today is a phenomenally successful development entity existing within New Jersey community capital.

That does everything from rehabilitating abandoned properties to small condo developments in emerging neighborhoods and, and everything in between. When I joined, you know, they’re, they’re coming out party. If you will, with the bulk purchase of a lot of FHA mortgages. And the idea was to operate in a volume that’s big enough that they can really affect your weight change.

So it was my job to make sense that, you know, was I was part of a team that did this, but my responsibilities were to come up with a system or at least. Come up with a system to make sense of these mortgages that were thinking about buying, figure out a appropriate price for those mortgages and ultimate disposition strategy.

So that was really led by by Wayne and the coalition he had put together previously, as well as my boss at the time Jeff crumb, but it was a real eye-opener to the extent of the. Problem that in New Jersey. So this is 2012. We’re just a couple of years past the great recession and the opportunity in revitalization strategies, um, that we could use to be a, a positive catalyst for, for change and really stay.

And CAPSI ended up growing from, was that a pretty small shop? Um, I think we operate in just a few Ms. Valleys to not only a statewide organization, but I believe a tribal. Uh, organization. So at the very least it’s New York, New Jersey and Florida, and they might actually have operations elsewhere at this point.

So there were a lot of hats and that wearing a lot of hats as, as we all do in this profession, you know, everything from acquisition to project management, to helping people. Organizational processes and procedures as we grew, but it really just started with due diligence on a boat mortgage acquisition that ended up being a centerpiece of the development strategy that resided within New Jersey.

[00:12:18] Atif Qadir: And then the focus at hands is the production of affordable housing, but also related services, um, that focus more broadly on wealth generation and creation. So what does that, those terms mean? And why do you think that’s important?

[00:12:34] Andrew Regenstreich: Sure. So the name of the game is to leave the house the lot, the block, the.

Better than when you found it. And affordability is an extremely important part of that. People need to be able to afford what you’re producing from there. Uh, you can go to a lot of different directions, you know, going back to the central principle that, uh, you want to leave whatever it is you’re working on better.

So at hands, hands is a very interesting place. It’s it started. In 1986, started very small with the desire to do what I just mentioned to leave their piece of the role a little bit better. And in 1986, what that meant was really digging in to the, you know, again, going back to this abandonment issue and 1986 in orange, that that was certainly an issue.

And they start off just focusing on, on that, you know, how do we repair. This one property, how do we repair the property next door? You know, how do we come up with a strategy for this block? Um, let’s focus on neighborhoods. So that’s, that’s in the DNA, but as you start really approaching one problem, you start seeing what a multi-level.

Dynamic exists. That’s inhibiting your ability to really effectuate change. So for example, there was a, at the time, a lack of places to, to eat. So, you know, one of the things that was done early on was we start a restaurant for a place to eat good food and concrete and, and, and, and watch live music. There was a need for arts-based programming.

So Hans was at the forefront of creating an arts-based organization. Still exists today. It’s called valley arts, economic development initiatives, giving out grants to spearhead various programs. And over the decades, it’s really evolved to the point where we do extensive planning efforts to really understand what’s going on.

And the neighborhoods we serve, so we could figure out what programs they’re asking for and what we could do. It moved on from just doing, doing development. And in this case, we actually do, we’re fairly unique. It’s it’s not just affordable housing. It’s mixed use housing where we do commercial and residential.

It’s just commercial. You know, we really, the idea is to insert some vibrancy into, into where we’re operating. We’ve overlaid that with home improvement. It’s small grants for people to improve their homes, a small business program, small grants for businesses to make capital improvements or make payroll order goods, you know, financial education type initiatives, where people can learn best case practices in financial management, increasing, increasing their wealth and so on and so on.

So the idea here is the problems we’re trying to tackle are complex. Revolving a lot of different parts for a lot of different reasons. So affordable housing again is very important, but it just one piece of the puzzle. So adopting notions such as economic development or wealth creation, we think play to the larger issues here and allow us to incorporate many different tools to get to where you are.

[00:16:15] Atif Qadir: Okay. So let’s talk then about orange, New Jersey and the challenges of developing.

[00:16:22] Andrew Regenstreich: So, I guess I’d put it a different way. Almost anything you do is going to face challenges as a very funny Yiddish quote. Basically God man plans, God laughs. In between the planning and laughing, I think is, is your different viewpoints and different perspectives and different motivations and just life.

So you orange in that case is not. It’s hard work. Cause it’s, it’s, it’s hard work. It’s also a more challenging to operate in environments that are not fully fully what they could be. Orange has tremendous potential. It’s got to train lines. It’s a beautiful city with beautiful people, a nice history, but it’s, it’s still a work in progress.

And, you know, with that becomes economic constraints. The price of materials is the price of materials. And if you can’t get the rent, you would get in Jersey city, there tends to be a gap which adds layers to the process. It involves more parties, involves more creativity, maybe some more engineer city, and you know, each, each sort of like we’re word or process you, you add to something.

Yeah, it becomes the God laughing thing where it just it’s another opportunity for something to go wrong just because it goes wrong. So that, so I would say the challenge in orange is just bridging the gap between where our energy will be and where it is now. Yeah. But, but we’re, we’re also lucky it’s, you know, over the last, almost 40 years, Develop the culture of participation and community and utility.

So we don’t feel like we’re on that journey alone. There’s a lot of people who really care about orange and want to see it succeed. And this administration to their credit has done a lot of good work. So they’ve worked also very hard to get orange to a certain point.

[00:18:21] Atif Qadir: When you say administration, you mean the municipal administration or the Meryl office, right.

[00:18:26] Andrew Regenstreich: Okay. Um, so, so committed staff and invest in administration and we’re all sort of, sort of, sort of working together. To get orange to, to the promised land, but really the challenges are what you see in any kind of urban climate. You know, it’s, it’s a lot of different vested parties. It’s the need to involve various government entities to complete projects, uh, each with their own process and structure and way of doing things.

So, you know, it’s, it’s a big tent trying to do big things and invariably challenges.

[00:19:01] Atif Qadir: So 5 23 Freeman street. What is the site like in terms of, I’m not going to say challenges considering what you said earlier, what are the opportunities of

[00:19:11] Andrew Regenstreich: that site? Tell us about it. Sure. So the biggest opportunity is its central location.

It exists right next to one of the two train stations in orange and. Excuse me, a major thoroughfare that goes through our inch, which is Scotland

[00:19:25] Atif Qadir: road. And then in terms of the project by the numbers, walk us through the numbers of stories, number of square foot. So we get a gauge of what’s going on in the site in terms of.

Your development response?

[00:19:37] Andrew Regenstreich: Sure. So it’s about half an acre lot and the project is four stories. The first floor it’s about 2,500 total, which will be about 1500 commercial. And then the, the systems will be on the ground floor as well. And then there’s three floors each about 3,300 feet, 3,400 feet of three units.

So a four story building nine units of residential and roughly 1500 square feet of.

[00:20:08] Atif Qadir: Okay. So it works out to about a thousand square feet, a unit plus or minus what’s the unit mix that you’re going for. And how did you end up on that unit mix?

[00:20:17] Andrew Regenstreich: Sure. It’s currently in flux, but it’s going to be a mixture of ones and twos.

And really what we’re trying to tap into is younger than professionals. Orange residents who are looking for, you know, their first place after leaving their parents’ house potentially, and also empty nesters from the surrounding towns. Um, and we thought a mixture of ones and twos would best represent that demographic.

[00:20:42] Atif Qadir: Okay. So it sounds like that the way that you decide on the unit mix was reflective of the need for units in that particular area, then. Okay. And then we understand that affordable housing often has special. Design and construction requirements. So tell us about the team that you put together to address some of those issues and then create the overall product that you’re, that you’re planning on building.

[00:21:10] Andrew Regenstreich: Sure. So affordable housing can have specific design requirements depending on what financing sources you use. For example, low-income housing tax credits requires a certain unit size. Other sources do as well. In this case, we were pretty confident that we would easily meet the baseline requirements.

However, our, our charge, if you will, our challenge was to reconcile. The affordability and the desire for people to be able to have all demographics, to live there with a superior design quality, and want to make sure the outputs match, match the invoice. And we didn’t want to give the impression that we were scotch taping something together because we had to.

So. I got lucky. I have a very good team that was able to reconcile the need to make it affordable with that superior design. So the team it’s the, your brothers who, it’s a fantastic architecture firm. It’s actually one of our tenants. They, they made their home in an orange.

[00:22:15] Atif Qadir: They’re going to be renting the commercial

[00:22:17] Andrew Regenstreich: space.

They’re actually they’re renters. We have a few buildings around the corner and they’re, they’re one of our tenants and they’re special people. They come from big, uh, big architecture background, but they also have the sensibilities of a, a small community or. Architect. So, you know, they, they bleed with, uh, not only ingenuity and creativity, some of the soft skills they have and commitment to the neighborhood, but they really tried to align contemporary notions of lived experiences with a healthy respect for the neighborhoods.

But in which the design is. And, and really teasing in. And this came about through our process, you know, the history of the neighborhood of the buildings. The materials, the size, the scope. So they, they think in terms of tapestries, it’s, you know, they’re, they’re artists where they also have, you know, planning sensibilities and the technical expertise to put it together.

And they, and they really believe in what Hans is trying to do and, and the power of the neighborhood. So, you know, and, and with that comes an extra level of, of soul, if you will. Um, so w we’ve really gotten lucky there, you know, I, my experience has taught me. Good. Good land use attorney attorney is, is extremely important.

Leah news, you know, it, it, it’s making sure that I’s are dotted, T’s are cross in terms of what’s allowed in terms of what the area we developed plan. So you could do. Um, but also knowing when to stretch things when to ask for what we call a variance where, um, okay. A plan says this, but in order to make the project happen, we would like to do something more, something different.

And that takes a lot of creative. And experience and persistence. So we have a great land use attorney. His name is Benjamin whine. He works for a firm called prime and travel who are extremely competent and hardworking and persistent and you know, just great land use attorneys. Uh, we have a good civil engineer.

Her name is Kiersten Osterholm who sort of fits within the theme of this team, which is young, hungry, and dedicated. Everyone believes in this mission they’re tying in not only their extensive professional expertise, but also a real desire to move neighborhoods forward and, and spend the time to do that.

So it’s. It’s a great team, New Jersey transit is part of this because we are utilizing some of their land. Um, and they’ve been fantastic. And then New Jersey community capital actually has been really great as strategic partners in helping think through how we can do this project as well.

[00:25:14] Atif Qadir: So, so walk us through what our listeners would see when they visit the building, as it will be.

[00:25:22] Andrew Regenstreich: Sure. So the, the design stone flux, but the main picture I want to paint for the viewers is his initial impression about what the valley could hold, where it’s been, where it’s now, um, and what it can be, and to do that. We’ve been very careful with how we framed out what the design can be. Like I mentioned before, the valley has industrial past, it’s a lot of factories.

It was a blue collar working class, but very community centered. And we want this building to be just that. And the present manifestation of that is a commitment to small businesses to health and wellness. To, you know, arts-based programming. So what, what the building aims to achieve is, you know, conjuring up visions on, on the industrial past.

So it’s going to be a brick facade. Um, it’s big spacious, uh, residential units where, you know, you think, think you’re so whole off where you could engage in a wide array of activities. And yeah, you don’t feel like you’re in an urban environment where you thinking

[00:26:34] Atif Qadir: of calling this perhaps Soho west is your, your, the name of your project.


[00:26:39] Andrew Regenstreich: we could, uh, right now it’s the gateway, but the whole Western

[00:26:45] Atif Qadir: do you know, actually, it’s funny that years that we’ve mentioned that because originally before Hoboken became Hoboken, there is a tongue in cheek. And descriptor of it from the earliest residential brokers calling it Soho west, that the upper part of Jersey city and the lower part of Hoboken around, uh, the train yards.

But, uh, there it is. That’s, that’s the brand name perhaps for New Jersey. So

[00:27:08] Andrew Regenstreich: I feel like at this point, I, I should give a shout out to my wife, who her profession is advertising and marketing. So I really internalized the notion of portraying something through targeted use of words and pictures and, and narratives.

So we can definitely take that consideration. Is it words, tell a story. It’s. You know, sounds simple, but you know, whether it’s gateway or Soho west, we want to conjure up an image even before that visual occurs. So, so you, I, I want the viewers to have, and you know, just, you know, for viewers who don’t know orange or haven’t seen rendering.

Yeah, I think Southwest is, is a good, is a good frame, actually. So, you know, bright, spacious, uh, residential units know ground floor commercial, where we aim to put tenants in there that will be really integrated into the. Perhaps Makerspace where, you know, whether it’s light industrial or, you know, some kind of activity that, that contributes to, to an essence of, uh, of this neighborhood, we’re going to have public art and a rain garden.

And we want this to be an Oasis where people are comfortable. They feel practical at home and they really feel like they’re part of a lineage. That’s very proud and purposeful.


[00:28:35] Atif Qadir: going to pause here to let our listeners know that we will be having a Melissa Birch on the podcast. Next month, Melissa is the executive vice president of the Lend-Lease development. And she’ll be talking with us about 100. A new residential high rise in upper Manhattan designed by Robert am stern.

Visit American building podcast to check out previous episodes and make sure to subscribe on iTunes, Spotify, Google, or wherever you like to listen. Read just as a new venture backed technology company that is working to transform how public financing is used to encourage building construction across our country.

The commercial observer said in an article about. Among the most archaic opaque, convoluted and labor-intensive processes in development is finding real estate incentives. It involves knowing Byzantine laws and regulations. It involves expensive lawyers and understanding politics on various government levels.

In short, it’s extremely difficult and extremely right for a PropTech. Learn more about Redis and finally, for any real estate person going from the home office to the office, the actual office to the construction site at finding clothes to look good and stand up to these crazy days is a big deal.

That’s why I’m a huge fan of Bonobos. In fact, I’m wearing their pants right now and Andrew May or may not be as well. You can tell us and check them out for yourself at Bonobos.

so is affordable housing really necessary in America? Why? And can you please explain the difference between little, a affordable and big, a affordable

[00:30:31] Andrew Regenstreich: to answer the question? I think in a way that does service to your listeners, I’ll slowly change the premise. Do people’s wages align with housing?

[00:30:43] Atif Qadir: That is an excellent, excellent point of view switch.

And it explained why. So

[00:30:48] Andrew Regenstreich: affordably is important of course. And one way to define it is the price of an apartment. Another way is to define it by what people could afford. And I think the two are conflated very often, but they’re there they’re different. I think in formal ways, for instance, Everyone could afford $2,000 a month in rent, then it doesn’t seem to be a problem that, um, rent is $2,000 a month.

It’s when their wages can’t afford it, then it becomes a problem. So what do you do? Do you lower the cost of housing to comport with what people could afford or do you raise people’s

[00:31:32] Atif Qadir: wages or do you increase the supply?

[00:31:36] Andrew Regenstreich: So another, no way to look at it. Right. So we’ll just, just stick on that, on that one point.

Right. So I, I would argue you need a little bit of both. So would, that would necessitate is take a step back and focus on the adaptive challenge. Um, increasing economic activity in a way that’s equitable for everyone. I think that cuts a little bit into the affordable issue now, and it will do everything another way you could approach it is increase the supply of housing.

So restrictive zoning tenants, uh, tenements across the country in study after study has shown increases the price of housing. Supply and demand.

[00:32:15] Atif Qadir: I can tell you as a city planning commissioner in Hoboken, a small, very wealthy city in north Jersey. I wish I had the opportunity to hand out Oscars for some of the performances that people give about the provision of affordable housing or any other new development in their city.

Absolutely destroying the life that they live in their $4 million townhouse. So pleasing. Yes. I would love to hear another one of those.

[00:32:41] Andrew Regenstreich: And that’s. That’s a by-product of an us versus them mentality, right? Where you need to lower the cost of housing. ’cause that’s the only way you approach afforded affordability.

And if you’re living in a $4 million condo on one hand, a squared off against someone who is making a force magnitude, or percentage below the already medium income, it’s going to be antagonistic there. Right. But if you try to put for us programs, And processes that result in everyone. I mean, we’re w w w we’re a $20 trillion economy.

There’s a lot of room where people can participate. They’re not, that’s a problem. That’s a structural inefficiency in our macro economy. But I think if you can, if you could start digging into that a little bit, Then a byproduct of that will be making things more affordable. You know, for instance, a CEO now makes 400 times with average worker makes that wasn’t always the case.

If you could reduce that gap a little bit, and then also increase the spy of, of housing in general. And actually there’s, there’s been studies that have shown that market rate housing increases the affordability in neighborhoods. So just increase the supply. I think you’ll, you’ll get at least part of the way towards accomplishing the goal of making things more, more affordable.

We have an affordability problem. Affordable housing is important. But I think we could be, we could define it in a more broad based way. And that’s the notion of let’s facilitate economic development and wealth creation.

[00:34:28] Atif Qadir: I think particularly what I find so emblematic of the absolute clown clown car or the clown show that is the budget reconciliation project process on Capitol hill right now is the war against things that actually allow people to do.

So, for example, the allowance for the expiration of the childcare tax credit as just one tiny example of this larger system that we’ve allowed to create. I think with our government where we celebrate. Overwork. And I think that once we go down that path, you end up in a scenario where the idea of affordability is one that is so tainted with politics that, uh, any aspect of it seems like there is this zero sum game where if you allow for a housing and Hoboken that is affordable to a cleaning person or affordable to a firefighter, Please person then somehow you have absolutely destroyed the way that that city exists is.

And I think as long as that fallacy exists, it’s going to be so difficult to get any of these solutions across the board in a large national way as

[00:35:38] Andrew Regenstreich: is necessary. Yeah. And I, you know, still still know another angle to this is fed policy where for, for a lot of decades, The supremacy of, of inflation was used as the frame for how we make certain decisions.

[00:35:55] Atif Qadir: Oh. That we can’t have nice things because otherwise it’s going to make inflation. Right. That’s exactly

[00:36:00] Andrew Regenstreich: what I’m saying. And specifically we can’t have people, like, it’s a bad thing if we just. It’s not been my lived experience where I’m not economist full disclosure. So any economists who are listening to this you’re right.

I’m not, you know, the

[00:36:12] Atif Qadir: best part is that the decision makers themselves are an economist and ask yourself how many people in the us Senate are real estate developers. How many people actually understand this process? Really?

[00:36:25] Andrew Regenstreich: So. And maybe we should all be humble about what we, we don’t know. And, and maybe a little bit, you know, on the flip side, a little bit more confident what we do know, and that is your lived experience.

And the benefit that I’ve had is having a lot of different experiences. I can speak intelligently about rural areas of, of Jordan. Just as much as I could speak to planning efforts in Jersey city consulting services in the UK tech market. And sort of everything in between. And I just, I highlight too, I guess, that insight into how I think in general I value experience and perspective.

I don’t believe there’s a right or wrong. I think there’s a lot of gray in between. And specifically with affordability. I don’t think it’s a bad thing to create the macro conditions where people can, can live. I have two young kids. Um, I cannot imagine what it’s like. To make $10 an hour or $50. Now I have, my respect is endless for people who exist with limited resources and try to account for basic needs, healthcare, housing, you know, that that needs to change.

And I, you know what, going back to my experiences, what, what I think is really important to, to insert into this discussion is allowing grace to participate in. And the economy in a more fruitful way, and that’s a whole nother conversation on how to do that. But I do think it’s a frame that really needs to be paid, attend.

[00:37:58] Atif Qadir: So speaking of frameworks, help our listeners understand what this black hole of incentives for affordable housing is perhaps at the level of government, maybe explain that. And also the categories of incentives that exist. So there’s a framework for people to understand what this is.

[00:38:18] Andrew Regenstreich: Sure. So when you go to different countries, very often, you have to learn a different language.

You have to learn about different institutions, you have to learn about different gatekeepers. So at this point, I’d like to introduce you to the country of affordable housing incentives. That amazing. If for the untrained slash trained eye, it’s very opaque and you have to learn about first of all, what types of incentives are out there?

That’s fact-finding itself where the applications and qualifications like for those different applications, how does it tie into. You know, a, a capital stack, you know, do you do local housing tax credits or community developed block grant funds? And you know, why do this and why do that and why don’t do this?

I don’t do that. Um, how does it all fit together? That’s that’s uh, that’s his own puzzle piece. What’s the push pull. If I do this, what do I give up and return? Who’s the gatekeeper? Why are they making decisions? Um, how am I being scored? What’s worth my energy. What’s the. There’s probably a thousand micro decisions you need to make after you figured out what’s even out there.

So, you know, it’s complicated because. You know, before red is I, there was not many such light systems that would allow you to, to plug in a scenario. You know, I think a huge advantage of is I actually, and, and spit out what you should be focused on because you’re also dealing with an industry that, that, that has limited resources, both on the personnel and financial front.

So I can’t spend six months trying to untangle all these different things I mentioned because. Yeah, I don’t have six months to gel now. So it’s, it’s complicated because you know, we’re, we’re not a command economy, so it’s, that’s part of it. Like there’s no centralized housing policy. The policy changes state to state Ms.

Valley to Ms. Pality and over the last bunch of decades, what’s manifests has been a result of that. It’s, you know, different things occur at different moments for different reasons. And that’s very common.

[00:40:31] Atif Qadir: One thing that we like to think of a retest in terms of understanding incentives is the division and the relationship between incentives at the federal.

The state level and the local level. And what is fascinating is the flow of money comes from the local level, from taxpayers up to the federal government, and then back through a waterfall of incentives, understanding that is very important. And then understanding the idea of. Incentive twins. So those are the ones that exist at the federal level and have a twin at the state level or exist at the state level of a twin at the local level.

Those are frameworks that we use to help understand, uh, opportunity. And the other one is categorization. Uh, so that particularly are the vehicles by which the incentive is delivered and the most common ones are tax cuts. Tax abatements, low interest financing, zero interest financing, grants and rebates.

And below that there are some more exotic species like zoning bonuses, but those tend to be the dominant ones that, um,

[00:41:41] Andrew Regenstreich: that we think. And each one of those categories has different funding sources with different political constituencies and different scoring criteria, different types of. Byproducts, they’re willing, they’re trying to stimulate and then wrapped up in that is the priorities of municipalities or a particular state, or even the federal government, which always change.

So it’s, it’s, it’s a shifting narrative. It’s shifting array of, of actors, all sorts of things.

[00:42:11] Atif Qadir: You may be interested in knowing this, Andrew, since you are a political junkie like me. So I was in Washington DC last week and I was chatting with. Congressional staffers that I’m friends with. Oh, so actually one of the Redis team members is a former congressional staffer for a congressperson from Illinois.

And we learned that the, uh, of the reconciliation budget, the most bi-partisan the most popular part of it behind closed doors is all of the real estate tax credit incentives, because that is one that, uh, whatever your political party affiliation, it just screams. Yes. This idea of. You do not have. Outlay of cash.

You’re able to push that into the future as a government and use a private sector as a means for delivering that cash upfront to allow for a social good to happen, like affordable housing, most brilliant mechanism. There is what we also understood is that very much so the opposition, uh, that is happening pretty much to a T within.

50% of the us Senate, the reconciliation, um, has to do with political posturing. And the reality is from having talked to the staff of one of the Republican senators is that the intention is once January comes next year, that the reconciliation budget is may pass in another. It’s me, that’s the same exact thing.

Just a different name, perhaps. And the tax credits for affordable housing. The tax credits are middle-income housing, affordable housing. And also as a side for energy efficiency in buildings, it’s by the number one thing that we part of that. So it’s both absolutely maddening and it’s also, uh, both, uh, comforting as well to know that’s

[00:43:53] Andrew Regenstreich: the case.

And it makes perfect sense. You know, just, just go back to tax credits invitation. Uh, you know, I w we start off the podcast saying, I, I learned something from each one of my experiences, but the human element sort of carry, carry, carry through. And it always seems to come into me to find an area that touch upon each particular person’s priorities and allow the human element to come out with, with tax credits.

I think it’s a great example of, of interesting. Corporations want to pay less taxes, organizations committed to some kind of social purpose, want to further that social purpose. And a lot of times it needs, it needs money. So the tax credit is a genius way of allowing the government to retain its role in all this stuff.

While allowing corporations to pay less taxes and social service organizations, where at large to deal with. Yeah, it’s actually, it does all that. So, you know, government wants to be involved in the process because, you know, just because, you know, anyone wants to be relevant, it’s a human thing. Um, they get to.

Corporations get to go back to their stakeholders and say, you know, we’re paying less taxes and doing good, such an X, X, X, or a check mark, um, social organizations who a lot of times have greater ties to the communities they serve. Get to say we’re able to effectuate the change we want. Because here’s this money.

So I’m at, I’m very fascinated with the possibilities, text words, hold. I think we have just a hundred percent of the surface. It really could be a very powerful tool for a lot of things.

[00:45:35] Atif Qadir: I agree. And then, so we’ve talked about the framework of understanding incentives. We’ve talked about the political intrigue on Capitol hill.

One thing that I think our listeners might be interested in is understanding the timeline and how do incentive. Impact say critical design and construction timelines from say example projects that you’ve worked on, help us understand where this process fits into your design and construction schedule.

[00:45:59] Andrew Regenstreich: Yeah, sometimes it does. Sometimes it doesn’t.

I think a more universal perspective is the need to put a capital stack together, inappropriate timeframe and incentives have an application process. They’re not all the same, but they, again, sometimes they align, sometimes they don’t. So take low-income housing tax credits. You need to have a lot of things checked off before you can even apply.

For low-income housing tax credits. So you need psych control. You need, you need plans, you need a budget, all that stuff. And there’s, there’s an upfront cost to do that. So. You know, as an organization, you know, you need to be capitalized to a certain level. You other non tax credit stuff, you know, sometimes you need second trolls.

Sometimes you don’t, but really broadly speaking incentives are just one piece of the puzzle that you’re going to have to work through. And it, it works the same as any other pieces of the capital stack where, you know, you have to pay attention to the timeline. You have to understand your cost. What you could outlay wait, you could afford to, you know, to, to, to pay up front what you can, any governmental constraints.

The city wants you to complete the project in a certain amount of time who your stakeholders are. Perhaps you have an equity investor in a project that also needs subsidy. So when does that equity investor need their money back? Are they more patient? Yes. I guess they were able to answer the question is it really depends on what the subject source is, who your stakeholders are, what your liquidity looks like, how much cash can you really burn through and what size of the project.

So, you know, it’s, it’s another reason why I think, you know, and I truly mean this, whether this is providing great service is you’re evening out those rough edges.

[00:47:53] Atif Qadir: So. Thank you so much for taking the time to be on the American building podcast. Andrew,

[00:48:01] Andrew Regenstreich: they hope, hope this was helpful.

[00:48:03] Atif Qadir: It was. Yeah. And I think many of our listeners are curious about affordable housing and if they aren’t curious, they will be after this episode because not only of the.

Imperative that exists for housing. Every, every worker in America to have an opportunity to have a home, uh, to live in, but more importantly, the business opportunity that exists. Uh, so I think that that is something that I hope sparks an interest in, in many of our listeners. So listeners, if you do want to hear that.

Seen stories of how iconic buildings in our country were designed and built subscribe to this podcast on Spotify, iTunes, Google, anchor, Stitcher, or wherever you like to listen, rate and review us on iTunes to help us reach a wider audience and follow us on Instagram. American building podcast. We all know real estate is a tough industry to make it.

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Finally, we live in the richest country in the history of humankind. We must reach out beyond the boundaries that we see and the boundaries that we create in order to help build homes and communities today. Andrew and I have made donations to hams, which focuses on inclusive neighborhood revitalization in central New Jersey.

I encourage you and our listeners to support their worthwhile. As well, my name is Atif Qadir, and this has been American Building.

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