Housing Stability: The Foundation of All Other Impact
Edward Chien is director of economic mobility at Connected Communities, the resident services affiliate of WinnCompanies. Connected Communities is a non-profit organization dedicated to the creation and growth of community-based programs, services and public policies that support measurable social outcomes for affordable housing communities across the country.
Why is housing stability so important for multifamily residents and for apartment owners/operators who are interested in creating positive impact?
Housing stability underpins most other forms of stability, not to mention higher-order needs as you travel up Maslow’s hierarchy, so to speak. If someone’s shelter is disrupted, or even if they are worried that it may be disrupted, they’re not going to be able to spare time or attention for much else. Helping residents feel stable and supported in their housing really should be the prime objective for apartment owners and operators.
How is Connect Communities’ work with rental payments helping to create housing stability for multifamily residents?
One exciting program we’re operating with some CDC partners in Boston right now is a “reset” opportunity for residents who have gotten underwater with back rent. It’s a program of mutuality, where the resident demonstrates good faith by repaying a set portion of their arrears over the course of six months, and then we reciprocate and wipe out the remainder of their balance through a combination of grant funding and pure debt forgiveness. Compared to “classic” rental assistance, this model multiplies the impact of each grant dollar, and we believe it will strengthen the relationship between residents and property management and help preserve tenancies over the long term.
For example, we have one tenant who accumulated five figures of arrears, was unlikely to qualify for local rental assistance, and realistically, might not really have had a way to dig out from that. But they are employed, and if they can swing paying back what’s going to amount to 3% of their debt each month, by this summer they’re going to have a clean slate. This particular resident is also a participant in our Family Self-Sufficiency Program and has been trying to save money toward homeownership, so we’re hopeful that through this reset, we can help them stay on that path.
How does housing stability lead to solid investment returns?
We’ve previously estimated the all-in cost of an eviction to be around $8,500 in the Boston area, including legal costs and vacancy losses. Compare that to investing a few thousand in a tenancy reset, which in many cases is the magnitude of a tenant’s arrears that we’re talking about at affordable and subsidized properties. And since we’re conditioning the arrears forgiveness on the tenant first doing their part to get back on track, the only capital we’re staking is a potential extra month or two of lost rent if the tenant agrees to participate in the program but then defaults. The value proposition is black and white.
What else should multifamily owners and operators know about this topic?
In the day-to-day grind of multifamily operations, it can be easy to drift toward thinking of the residents’ purpose being to fill up the property, as opposed to the property’s purpose being to provide shelter for the residents. At Winn, we try to stay centered on the latter. As our CEO, Gilbert Winn, said at one ribbon-cutting, “At the end of the day, it’s the people who live here who make the project worthwhile.”