Guidebook to Successful Affordable Housing: Never set out on a journey without mapping the terrain • Macroeconomics and finance • Long-term interest rates (yield curve) • Currency rates relative to ‘stable’ currencies • Inflationary expectations • Political stability • Banking and capital markets • Domestic capital markets: breadth and depth/ secondary market liquidity • Experience with and receptivity to long-tenor fixed-income securities • Private-sector development • Locally produced versus imported materials and components • Experience with large-scale residential development • Specialized experience with professional multifamily rental • PPP environment • Established law or practice/ jurisprudence • Experience with PPPs in other industries (e.g. traditional infrastructure) • Judicial reliability when government is a sovereign counterparty • Intra-governmental national-provincial-municipal dynamics Define the goal in both demand-side and supply-side outcomes A home is a shield around a family, and it should be sized to match the family it’s protecting • Envision a target population • Composition > Ages • Income level > Income sourcing > Income reliability • Level of formality (income, housing, current tenure, registration) • Depth of demand: How many with our effective market radius? • Distinguish three consumption levels • Need: What a middle-income-plus household of this type would have • Effective demand: What our target population can regularly afford to pay monthly • Financeable demand: What they can borrow to buy • Down payment household can tap & • What a third-party evaluator will underwrite into a loan • Right-size the housing typology • Density (units per 100 m² of land area) • Bungalow, walkup, high-rise • Envision the city ten years from now • How much urbanization/ verticalization/formalization is there in the informal? Housing PPP’s are a journey into an unknown future Things always happen that no one could have foreseen • Cost of materials rises • Promised commitments prove unenforceable • Expected demand does not materialize • People who sign up for off-plan purchases don’t actually close • Change their minds later • Can’t pass credit underwriting • Need to be given their money back • The ‘wrong households’ move in • Latent defects appear 6-12-24 months downstream • Who owns the unknown risks? • Because somebody always does, whether they know it or not • Best strategy: form a true public-private team • “If you want to go fast, go alone; if you want to go far, go together” • A DevCo with GovSub and BidCo • With the right team of expert contractors Always have a viable offtake strategy: A sprint and a marathon are entirely different kinds of running • Offtake = Payment in full, in cash, for the development phase • ‘Rolling over the development debt’ is not an offtake, it’s a buck-pass • Ideal offtake is bulk offtake • Sell all the homes/ flats at one mass closing • One building, one subphase, one phase • A partially sold property is like a partially cleared fence • Off takers can include: • Homeownership • Direct (freehold or leasehold) • Via homeowners’ association (HOA), or condominium • Indirect via intermediary steward (demand aggregator) • Housing co-operative • Employer-assisted or employer co-owned • ‘Intentional’ landlords (professional, socially motivated) • University, hospital, or other entity needing dormitory-style accommodations • Mission-oriented landlord (e.g. faith-based group) • Government (via an entity dedicated to being a mission landlord) • What about ‘rent to own’? Always have a viable offtake strategy: A sprint and a marathon are entirely different kinds of running • Offtake = Payment in full, in cash, for the development phase • ‘Rolling over the development debt’ is not an offtake, it’s a buck-pass • Ideal offtake is bulk offtake • Sell all the homes/ flats at one mass closing • One building, one subphase, one phase • A partially sold property is like a partially cleared fence • Off takers can include: • Homeownership • Direct (freehold or leasehold) • Via homeowners’ association (HOA), or condominium • Indirect via intermediary steward (demand aggregator) • Housing co-operative • Employer-assisted or employer co-owned • ‘Intentional’ landlords (professional, socially motivated) • University, hospital, or other entity needing dormitory-style accommodations • Mission-oriented landlord (e.g. faith-based group) • Government (via an entity dedicated to being a mission landlord) • What about ‘rent to own’?