Purpose and Overview

The New York study tour was attended by 13 Australian delegates and focused predominantly on ethical investment, Australia’s obligations as a signatory to the UN and in particular Sustainable Development Goal #11 (SDG), contemporary research on housing and urban development, and Environmental Social and Governance (ESG) trends and reporting.

As per the previous San Francisco and Manchester study tours, our New York Study Tour and Immersion provided a unique and valuable opportunity for delegates to engage directly with key social and affordable housing academics, investors and practitioners.

In summary the New York tour provided:

• Strong positioning of Australian CHPs as partnering with global best practice for social and affordable housing;
• Strengthening of networks for ongoing support to PowerHousing positions and advocacy;
• Direct engagement with some of the largest social and affordable investors;
• Ability to further inform the global asset class work that PowerHousing is championing;
• ESG investment awareness and links to the largest institutional investors, intermediaries and partners in North America (and Canada);
• Best practice member exchange with US housing practitioners;
• Academic linkages to New York University (NYU) Furman Centre and world leading academics in social and affordable research.

 

Takeouts and the Australian context

PowerHousing arranged key strategic meetings on behalf of Members through relationships that have been developed over many years and through different roles that the PowerHousing CEO has held. These meetings, held across New York City, were an informative and productive exercise. We aim to further build on these relationships to help create a network of international expertise that will inform the work we do in support of the Australia push for institutional investment from super funds.

In the past three months, Australia’s new federal government has begun the urgent work of enabling large scale superannuation investment in social and affordable housing. This will take a large step forward with the November Investment Summit which Minister Collins’ office is seeking sector engagement with.

This federal interest is long overdue and may provide the permanent capital stream needed to fund affordable housing. However, without comparable changes in zoning and regulatory policy, it’s unclear whether inclusionary zoning and density reform will also occur. As an example, all new and/or repurposed apartment buildings funded with the tax credit system in the US must be at least 30% affordable rental, yet many are 100% affordable rental. The minimum is typically 60% in Toronto. In contrast there is no consistent approach in NSW (or anywhere in Australia) and developers sometimes ‘voluntarily’ dedicate a mere 5% of the stock depending on the policy of the local council.

The United States has more than 30 years  experience with the Low-Income Housing Tax Credit (LIHTC), which has created an investment ecosystem around affordable housing delivery. We aim to create a similar ecosystem within Australia, with ambitions to build a globally relevant asset class. Our work to create a Global Asset Class for Affordable Housing commissioned by PowerHousing Members (see the 2019 Paxon report) will be amplified by this kind of engagement. It will also be boosted by the 2022 edit of the report.

Further to our emerging awareness garnered from the 2019 PowerHousing pre-tour of San Francisco with the San Francisco Foundation, Chan Zuckerberg (Facebook Foundation), Morgan Stanley and several CDFIs, ESG investment has expanded at a rapid rate.

Corporate Australia is also rapidly embracing ESG investing in the same way that Europe and North America are. Both PowerHousing and CHIA National have ESG projects underway that will support the sector’s ability to attract capital focus on these initiatives.

Of particular interest during the New York meetings was the need to be able to quantify and prove the value of ESG investment in affordable rental housing. The risk is that ‘greenwashing’ by other industries will divert capital that may otherwise have been attracted to the sector. Housing Trust has begun the arduous process of enabling ESG reporting and will continue to actively engage in the projects being led by our national peak bodies. Only a few CHPs have made any progress to-date.

The US corporate tax credit system is markedly different to anything in Australia and has facilitated billions of dollars of investment in social housing supply since the 80s. The system currently funds an additional 190,000 dwellings a year through not-for-profit housing companies. Mike Mantle, one of the original architects of the system and who heads sustainable investment at Morgan Stanley, is speaking at the PowerHousing conference in Canberra later this month. PowerHousing has secured several of the US experts including Mike Mantle (Morgan Stanley) and Alex Gold (BWD USA) who will be sharing their best practice at the 2022 Conference. They will also be meeting with Prime Minister and Cabinet, Department of Treasury and Finance as well as the Department of Social Services.

Also of great interest was a case study on the NYC Mayoral election advocacy campaign led by a coalition of community organisations. PowerHousing Members similarly led a strong regional campaign at the 2022 Federal Election with some take outs from the sector campaigns in New York. It was also noted on the pre tour that sector campaigns (including the Federal seat of Gilmore and local Council elections in the region of Housing Trust), compares very favourably to the New York campaign.

The study tour meetings with Morgan Stanley, Pension Real Estate Association, BWD, Federal Reserve Bank of New York, Amazon and others provided deep insights into impact and ESG investment, and we will be sharing our KPMG Yield Stack modelling and Paxon Group Global Asset Class 2.0 work (both currently in development) with them for their feedback.

As the fourth engagement in these meetings over seven years by the CEO for PowerHousing (and for the previous Property Council role), it is our vision that the 30 plus year affordable asset class can operate in a similar manner here in Australia. The eagerness of those that we met with to assist will be supported by Morgan Stanley and BWD USA being keynotes in Australia at our November conference.

The positioning of Australian CHPs as partnering world leaders in social and affordable investment and delivery is bolstered by way of the study tour and our meetings, and these learnings were covered by the Australian Financial Review featuring our Immersion and the key themes of the global asset class.

In conclusion, our positioning to see Australian institutional investment into social and affordable housing is seriously bolstered by these meetings and the tour has supported our position to build an investment eco system.

Summary of Meetings

Our New York meetings were with:

 NEW YORK UNIVERSITY (NYU) FURMAN CENTRE

• Rachel Fee – Executive Director at New York Housing Conference.
• Sarah Watson – Executive Director at Citizens Housing and Planning Council.
• Celia Smoot – Senior Vice President, Head of Fund Investments at Key Community Development Corporation (Key Bank).
• Callahan Seltzer – Principal at HR&A Advisers.
• Phillip Kash – Partner at HR&A Advisers.

PENSION REAL ESTATE ASSOCIATION (PREA)

• Gail Haynes – President of PREA.

UNITED NATIONS HABITAT

• Francesca De Ferrari – Programme Management Officer.

MORGAN STANLEY

• Mike Mantle – Head of Morgan Stanley Community Development Finance.
• Courtney Thompson – Executive Director, Global Sustainable Finance at Morgan Stanley.
• David Erickson– Senior Vice President, Federal Reserve Bank of New York.
• James Bason– President and CEO ofTruFund Capital.
• Alex Gold– Head of ESG and CEO of BWD North America.

COUNCIL OF NEW YORK COOPERATIVES & CONDOMINIUMS

• Mary Ann Rothman – CEO of CNYC.

NEW YORK CITY HOUSING AUTHORITY

• Persephone Tan, Debra Lopez, Heather Beck – NYCHA.

SENDERO VERDE SITE VISIT

• Nicole Zaccack – Rose Companies.

To see the full New York and IHP Toronto Report go to: .Final IHP New York Toronto 2022 Report Sept Oct 2022