A Florida Developer on the Politics of Affordable Housing

COCONUT GROVE, FL—Matt Rieger, CEO of Housing Trust Group, one of Florida’s largest affordable housing developers, joined the company in 2004 and became its president in 2011. In the midst of an election year and the COVID-19 crisis, he offers his outlook on issues related to affordable housing and the company’s recent expansion.

Last year, several states took the initiative of passing rent control laws. I understand you think this is counter-productive. Why?

Right, to use a medical analogy, it’s like treating the symptom not the disease. Rent control doesn’t address one of the great underlying issues, which is the lack of supply of affordable housing. In fact, rent control will have the effect of constraining supply growth further. With rent control, developers are effectively dis-incentivized to build more units in that climate, and tenants who could afford to move up and out will stay put, locking out the very people who need the affordable units the most. You can already see how it plays out in places like New York and San Francisco, which have had rent control the longest – they are also among the least affordable markets in the country. It’s wonderful that lawmakers want to do something – but the wrong tactics can have a devastating effect.

What’s going to alleviate the housing burden that’s currently impacting some 37.8 million households?

We need to build more affordable units (i.e. rent capped and set aside for people earning less than 80% of the area median income), and the fastest, most economic way to do that is to subsidize development through the Low Income Housing Tax Credit program. This is the program that allows me, a privately owned developer, to build very high-quality apartments – communities that are nicer than some market rate housing – while still only charging $500 or less for rent in some cases. That would be impossible in a strictly market-rate setting – I’d have to charge more to cover the costs. So the 30+-year-old LIHTC program has been incredibly successful, and there is broad bi-partisan support to expand that program, but unfortunately, legislation is not advancing fast enough in our current legislative climate. There are other tactics as well, but in terms of getting the most bang for your buck, that’s the place where we need to focus.

You recently expanded Housing Trust Group into Texas, Georgia and Arizona markets. Are the same issues (low wages, high population growth) driving the affordable housing crisis in those states, or is something else happening? How would you say those states compare to Florida with respect to encouraging new affordable housing development?

To some extent, yes. We’re seeing a lot of people moving to the Southeast/Sun Belt states, so we’re dealing with a population surge along with a more universal trend of people wanting to rent rather than buy homes which is why rents are rising – more demand than supply. Fortunately, Low Income Housing Tax Credits are allocated by the Treasury Department each year on a per capita basis, so as these states grow, their allocation of valuable Low Income Housing Tax Credits grow in a corresponding manner.

We’re in an election year, and with a potential recession looming, one would think that the candidates would be actively addressing the issue of affordable housing, but they’re not. What do you attribute that to?

Partly, I believe, it’s because there are so many pressing issues and crises – healthcare, immigration and now of course COVID-19 – that have sucked all of the oxygen out of the room. Those are valid issues, and they’re actually quite intertwined with the housing crisis if you think about it. Another reason: I think as long as the economy is doing well, people are ‘making it work’ – even if that means living paycheck to paycheck. Many are resigned to spending half their incomes on rent or living in substandard housing. It’s a very fragile situation, though, and should our economy contract even a bit, I think there’s going to be a bit of a reckoning – forcing our leaders, hopefully, to address it. When they do, it’s my strong belief that our leaders should address it by expanding the public/private partnerships that the Low Income Housing Tax Credit program precipitates and not by going back to the failed Public Housing experiment of the 20th century.

You joined HTG in 2004 and became CEO & President in 2011. In terms of the evolution of the company and its ability to adapt to rising demand , what do you think was the best business decision you’ve made to date?

This is my life’s work and passion – it’s incredibly gratifying for me to see the profound difference affordable housing can make on an entire community, and to hear residents say things to me like, “Wow, this is the first time I’ve lived in a place with an automatic dishwasher” is deeply rewarding. It keeps me going – because, to be honest, this is a very challenging business with a lot of risk and red tape. As an organization, we’ve had to grow by leaps and bounds to get to a place where we can deliver 1,000 or more new units each year. I’m particularly proud of the work we’ve done to change the stigma that was formerly associated with affordable housing by delivering quality product and devoting significant resources to maintaining it as well as we do. At HTG, we always “level up” – we build Public Housing units (when we joint venture with a Public Housing Authority) to the Low Income Housing Tax Credit level, we build our LIHTC product to the “Workforce Housing” level, we build our Workforce Housing product to the “Market Rate” level, and we build our Market Rate housing product to the “Ultra Luxury” level.