Authority Magazine’s Jason Hartman conducted an in-depth interview with CPP Senior Vice President Seth Gellis for its series, "How We Are Helping To Make Housing More Affordable." Read on to learn more about Seth, who heads up our Eastern Division, including some interesting stories, his favorite life lesson from Steve Jobs, and most importantly, why we believe preservation is the immediate solution for affordable housing.
Thank you so much for doing this with us! Before we dig in, our readers would like to get to know you a bit more. Can you tell us a bit about your “backstory”? What led you to this particular career path?
I was born in Indianapolis and lived there until my parents divorced. My mother and I, along with my grandmother, all moved to Florida, and we lived there until my grandmother passed away. We then moved to California to be closer to family. I was shaped by all of these events, but even more so by growing up in a single-parent household. Seeing my mother work so hard to make sure we had food and decent shelter really impacted my outlook on the world and my work ethic in general. I was taught to fight for what you need, be who you want to be, and stand up for those that need help.
I feel very fortunate to have had some really great mentors both personally and professionally. In college I was part of a fraternity, Lambda Chi Alpha. Most fraternities had a house, but ours did not. So, I went to raise money to buy one. Through those efforts I met some great people that liked the hustle I was putting into the endeavor. I had always liked the idea of real estate development and at that point, didn’t really know the differences between housing types.
My first foray into housing was working with the facilities team in my dormitory, which led to a job in leasing for a student housing community while I was going to school. That is where I really started running numbers and getting excited about real estate finance. Through the mentor relationships I had formed I was able to segue into real estate and worked as a runner/marketing associate for an industrial-focused brokerage shop until I graduated. While there, I found the financing and how the projects were put together more interesting than the listing and selling side, and that experience solidified that I should take the real estate development route instead of brokerage.
I landed in affordable housing after securing a position as a land acquisition analyst for Simpson Housing Solutions. There I rose up the ranks and met some really fantastic people, one in particular, Moe Mohanna, who became a lifelong friend and mentor. He entrusted me to take on whatever I could put together so long as we were always treating people the right way and being fair in our dealings. I guess you can say I got hooked on the deals but as I learned more about the people we were helping, the work became even more exciting.
There is simply nothing better than doing for others and being rewarded for your efforts in doing so. Our team motto, “do the right thing, always,” started during my time at Simpson Housing and I’ve carried it throughout my career. I’ve been incredibly fortunate to have opportunities that others may not have had, and that’s why it’s important for me to give back. At CPP, along with its parent company, WNC, the leadership team fosters a people-first mentality, and we truly live it. CPP President Anand Kannan has pushed CPP to become a national presence, and like Moe, very much believes in doing the right thing, always. It’s a guiding principle that has led to our collective success and why we work so well together.
Can you please give us your favorite “Life Lesson Quote”? Can you share how that was relevant to you in your life?
“Stay Hungry, Stay Foolish.” — Steve Jobs
This quote is especially relevant in my work at CPP. As a mission-based developer, we are continually looking for opportunities to make a difference for our sellers, partners and the residents whose lives we can positively impact. This quote resonates in many ways:
Housing in general lacks innovation, and being foolish to me means looking for the less-obvious way to make a deal happen. Often times it takes creativity and a solution-oriented mindset.
When it comes to underwriting, relentlessly pushing for the next housing opportunity and overcoming the next obstacle to creating housing, without regard for how you previously transacted, keeps you fresh and gives you an advantage.
Financial products are constantly changing. In the environment we operate in, we want to be first and we want to find ways to make things work for everyone, which ultimately results in getting deals done that others may not have believed in.
Ok super. Let’s now shift to the main part of our discussion about the shortage of affordable housing. Lack of affordable housing has been a problem for a long time in the United States. But it seems that it has gotten a lot worse over the past five years, particularly in the large cities. I know this is a huge topic, but for the benefit of our readers can you briefly explain to our readers what brought us to this place? Where did this crisis come from?
To make a long and complicated issue as simple as possible, I believe our housing crisis stems from inappropriate land use policies that have been in place for a very long time, combined with ramped NIMBYism and bureaucracy controlling the process.
The real way out of this is to encourage the creation and preservation of as many housing units and types as possible. Increased supply, so long as we don’t lose supply, will drive down or stabilize rents.
Preservation happens to be a lot more efficient than new construction due in large part to the minimum construction requirements that most agencies require. The result is much higher costs to construct affordable housing than market-rate housing. The answer is complicated but begins with stopping the bleeding and keeping the housing we have for as long as possible. Encourage this at all costs — not only is it less costly than replacing the housing, it also is preserving housing located in irreplaceable locations that serve an existing community.
Uncertainty for housing developers becomes a barrier for preservation and new construction, so cities and counties should look hard at their PILOT and tax abatement programs and codify them whenever possible to benefit the preservation or creation of affordable and workforce housing. This will give an advantage to affordable housing developers and a reason for sellers of existing communities and/or land to provide the time needed for an affordable housing community to become a reality.
Once you stop the bleeding, create more certainty in underwriting so you can then focus on the barriers and processes limiting or delaying the creation of new supply. These include entitlements, impact fees, and plan review processes that include lengthy environmental reviews in some states. These processes allow the opposition to control the outcome of proposed affordable developments with irrational fear. Reviews by state agencies, in some states, can lengthen the process even further beyond what market-rate developers face. To the extent affordable housing can become by right in the approval process, we benefit by shortening the approval process and creating certainty in new supply. From a seller’s perspective, certainty of a quick execution might be enough for them to choose an affordable developer over a market-rate developer.
It is worth noting that there are states that have recognized this issue of uncertainty and NIMBYism. Unfortunately, they have mixed public policy goals when addressing the issue and mix certainty and streamlined processes with prevailing wage requirements. This solves one problem but substitutes it for driving up costs, still limiting how many units can be produced.
There is also opportunity for states agencies to take a hard look at their scoring, minimum construction requirements, and QAPs, and ask themselves if they are encouraging the greatest number of units being preserved and created or, are there other noble causes being placed ahead of the housing goal itself. If they are a housing agency, I argue that housing should always be the lead priority over other public policy initiatives.
If a state isn’t using all of its volume cap for 4% tax credit and bond deals, it should take a look at why it can’t put its volume cap to use. I guarantee you the answer is not a lack of available projects; it more likely lies with the projects that score under their QAP, or the systems, timing and processes that limit the ability to produce, enhance and protect housing.
Housing is a basic human need and I believe that all of us in the housing industry should focus first on housing and then on the other benefits that we can provide through it to society. The fact is that there are always competing public policy objectives and goals that have to be balanced responsibly. The core of why the housing gap continues to get worse is that as an industry we continue to create advantages for producing new construction market-rate housing over affordable housing, yet still continue to make the production of housing costly, uncertain and time consuming in general.
Can you share something about your work that makes you most proud? Is there a particular story or incident that you found most uplifting?
I’m extremely proud of the placemaking and lives that we are positively changing in some of the properties we have invested in that previously were known as high-crime neighborhoods. From seeing children play in the playgrounds and use the services we install, to the seniors who come out and find comfort in our courtyards, I can’t help but feel like we are doing the right thing, and that we are providing opportunity and housing security where it is needed most. As a brand that is mission-driven, it is gratifying to see our creativity, performance and purpose come to life at each of the communities in which we invest.
For example, our community Winton Garden Towers in Rochester, New York earned a Multi-Housing News 2020 Excellence Award in the Transaction of the Year category and reflects the innovative financing, creativity, and positive impact that CPP strives for with each of its neighborhoods. CPP, with our partner Rochester’s Cornerstone Group, rehabilitated the 206-unit Winton Garden Towers, a community that once had a poor reputation marred by major problems of crime, drugs and physical neglect. Despite the myriad challenges, CPP saw an opportunity to enhance the quality of life for these residents and turn the towers into a beacon of light for the community. We completely transformed both the exterior and interiors, and closely worked with law enforcement and neighborhood groups to ensure everyone felt safe in their new homes. It truly is a Different Way to Home.
Read the full interview with Seth Gellis: https://medium.com/authority-magazine/seth-gellis-of-cpp-east-how-we-are-helping-to-make-housing-more-affordable-d5cfe39b5a69
CPP (Community Preservation Partners), a mission-driven affordable housing preservation developer, has announced the acquisition and planned renovation of Normandie Villas, an affordable housing complex in Los Angeles. The property is situated in the highly desirable Adams Normandie neighborhood of Los Angeles. This is the sixth community in the greater Los Angeles region for CPP.
Normandie Villas is located approximately one mile from the campus of the University of Southern California and five miles from downtown Los Angeles. The transit-oriented location allows residents easy access to a bus stop, grocery store, public park and elementary school. Originally built in 1983, the property has not received any major renovations. The property is comprised of a single one-story garden style building and three, two-story townhome style buildings. Designed to accommodate families, Normandie Villas offers 15 two bedroom and 10 three-bedroom units, two of which will become fully handicap accessible as a result of the renovation. CPP’s total development investment is approximately $20.6M, which includes the purchase price of $11.5M and estimated renovation costs of $165,916 per unit.
“The south-central region of Los Angeles has a strong need for quality affordable housing and as evidenced by its long wait list, Normandie Villas reflects this need,” said Evan Cramer, Development Manager at CPP. “We are pleased that we are able to preserve 25 units of critical affordable housing for this community for years to come.”
Normandie Villas will receive significant renovations, including new shingle roofing, and energy-efficient HVAC systems and gas water heaters. Additionally, by implementing energy efficient improvements throughout the project, including upgraded roof insulation, installation of Energy Star windows and appliances, and use of high-efficiency LED lighting, CPP expects to double the property’s 10% energy efficiency improvement required by the California Tax Credit Allocation Committee (CTCAC).
“We are proud to be part of the solution to the affordable housing crisis in south-central Los Angeles and look forward to seeing the positive impact these improvements will have for years to come,” said John Fraser, Vice President at CPP.
Additional in-unit upgrades include new kitchen and bathroom cabinets, sinks, faucets and solid surface countertops, new entry and patio doors, new flooring, new toilets, shower surrounds and shower heads, and upgraded patio fencing. During the renovations, two of the property’s units will be made ADA compliant.
CPP will also make significant improvements to the property’s community spaces, including new site signage, landscaping improvements, new mailboxes, leasing office and laundry room upgrades, the installation of a new playground, ADA path of travel upgrades, new fencing at pedestrian gates, and exterior painting, among others.
CPP is partnering with LifeSTEPS to provide on-site adult education, health and wellness, and skill-building classes and services to residents.
Renovations are expected to be complete by June 2025. The property’s affordability was set to expire in 2027, but with CPP’s involvement, the Section-8 Housing Assistance Payment (HAP) contract will be renewed until 2044. Units will be set to 30%, 40%, 50%, or 60% of Area Median Income (AMI).
Additional partners on the project include the California Tax Credit Allocation Committee (CTCAC), who issued and allocated 9% LIHTC. WNC & Associates serves as the equity partner. Banc of California is providing construction financing, while Key Bank serves as the permanent lender, using a Freddie Mac product.
CPP (Community Preservation Partners), a mission-driven affordable housing preservation developer, has announced the acquisition and planned renovation of MCA III Apartments, an affordable housing complex in Los Angeles. The property is situated in the highly desirable south-central region of Los Angeles, which has a significant demand for affordable housing. This is the seventh community in the greater Los Angeles region for CPP.
MCA III Apartments is located nearby the desirable Baldwin Hills and Crenshaw neighborhoods, which offer residents convenient access to public transportation, groceries, and recreational activities. Originally built in 1958, the property has experienced significant deferred maintenance and has aging building systems. The two-story property consists of 20 units, including 12 one-bedroom units and eight two-bedroom units. CPP’s total development investment is $13.1M, which includes the purchase price of $7.25M and estimated renovation costs of approximately $163,000 per unit.
“MCA III Apartments has been an affordable housing option for residents of south-central Los Angeles for more than 60 years. As evidenced by the long wait list at the property, the demand for affordable housing in this region of Los Angeles is in extremely high demand,” said Evan Cramer, Development Manager at CPP. “We are excited to be able to not only preserve the affordability of MCA III Apartments, but also modernize the property and create more opportunities for community for its residents.”
MCA III Apartments will receive a comprehensive renovation, including the replacement of several large building systems, including water heaters, unit heating, plumbing, electric, flooring and roofing.
“By investing in modern, energy-efficient upgrades and creating new spaces for connection and learning, we’re strengthening the fabric of this community and ensuring that MCA III Apartments continues to be a vibrant affordable home for families for many years to come,” said John Fraser, Vice President, CPP.
Additional in-unit upgrades include new paint, energy efficient appliances, cabinets, countertops, LED lighting, ceiling fans and doors. To provide residents with more opportunities to socialize and gather, a brand-new common area and leasing office will be constructed. The property’s centrally located courtyard will also receive upgrades, including new concrete and landscaping.
CPP is partnering with LifeSTEPS to provide on-site adult education, health and wellness, and skill-building classes and services to residents.
Renovations are expected to be complete by June 2025. The property’s affordability was set to expire in 2024, but with CPP’s involvement, the Section-8 Housing Assistance Payment (HAP) contract will be renewed for 20 years. Units will be set to 30%, 40%, 50%, or 60% of Area Median Income (AMI).
Additional partners on the project include the California Tax Credit Allocation Committee (CTCAC), who issued and allocated 9% LIHTC, U.S. Bank as the equity partner and construction lender, and KeyBank as the permanent lender, using a Freddie Mac Product.
Originally published on Forbes Business Councils by Seth Gellis, President of CPP.
With the continued urgent need for more affordable housing across the country, industry experts and academics are looking for solutions, whether they involve preserving existing communities nationwide or creating additional units where they are needed most.
According to a recent study by the National Low Income Housing Coalition, there is a shortage of 7.3 million available affordable rental homes for the lowest-income renters in the U.S. While it’s a complex issue, one overlooked path to financing is the option to increase the use of private activity bonds (PABs), which pair with 4% low-income housing tax credits (LIHTCs).
Volume cap, a “use it or lose it” resource provided by the federal government to the states based on a per capita formula, allows tax-exempt financing to be issued for affordable housing at a lower interest rate. The lower interest rates offset the lower net operating income that debt is sized from as a tool to help keep project sources and uses in balance. This ensures a greater level of capitalization, reducing the need for other sources and increasing the funding available for construction activity.
This important resource is allocated and awarded by state finance agencies, some of which unfortunately do not use all the resources made available to them. This means that if a state agency has unused volume cap and a deal is unable to make it through the funding cycle for that state in a timely manner, the resource and accompanying economic and social benefits are lost for good.
So, what can affordable housing professionals and organizations do to ensure the volume cap does not go to waste or to use it in the most efficient manner possible?
One solution is to work with local bond issuers and agencies that support them.
Local bond issuers play a major role in identifying the projects most impactful for their community and often can reduce the overburdened load that housing agency staff must deal with.
At my company, we find that an average deal may take nine months to close, plus an additional year to complete the development or preservation of the property (with a few more months of time tagged on for an IRS Form 8609 to be issued). We consider that a quick turnaround. But when entities do not use a local issuer for the deal, the acquisition or renovation timeline can extend for an additional one and a half to two years—sometimes making the deal untenable.
Across the U.S., many affordable properties are in immediate need of preservation; and many of these deals use LIHTC as a part of their financing. Completing these deals as quickly as possible is integral to reducing the loss of affordable units and preserving options for communities.
According to a 2024 report from Harvard’s Joint Center for Housing Studies (JCHS), there was a loss of 2.1 million units with rents below the maximum amount affordable for the lowest income group since 2012. While creating new affordable housing units is a part of the solution, new construction alone won't be able to keep up with the need, especially if communities are losing more units than are being created.
I've found that when local leaders, community advocates, developers, lenders and agencies can work together, it creates efficiencies and the strongest outcomes in affordable housing development and preservation. Communities should have a say in their local housing choices. Local leaders and community advocates have the best understanding of residents’ needs and where and how to invest, and good developers will listen.
Working with local issuers increases the ability for local jurisdictions to control the terms and circumstances that preservation or new development must follow in addition to minimum state provided standards. When deals and terms are localized, it creates the largest impact for the community. Specific benefits may include:
• The community is empowered to decide the priorities they wish to address. Developers should foster dialogue with local housing advocates and community leaders to discuss and outline their wish list. Unsurprisingly, the goals are often the same.
• Related improvement projects (e.g., street, sewer, LEED), social service requirements, crime prevention programs, prevailing wage, are benefits that are, by and large, staying within their community (should they choose). This autonomy also relieves pressure on developers by having an equal partner in the myriad decisions.
• Locals control within the development what is done, where it’s done and who does it within the community. For example, they may have checklists or requirements (e.g., Section 3 that requires a local workforce) that directly benefit the local community and economy.
Affordable housing developers looking to finance their deals may have the opportunity to work with a local issuer to get the deal done. I recommend you keep these best practices in mind:
Just like when working with any financial partner, organization is paramount. As a developer, that means having the deal structure solidified, financial documents in place and a single point of contact for the local issuer identified. The more streamlined you can make the process, the better.
Developers likely understand that one of the key benefits of working with a local issuer is the ability to help impact the local community in specific ways. But, for that impact to be felt in the biggest way, developers must take the time to truly understand the local community and its needs.
Developers need to reach out early in the process to understand if the issuer has sufficient volume cap, and what their processes may be. Creating a relationship early makes the processing, organization and understanding of their needs much easier.
Ultimately, the ability to work with local agencies carries many benefits and can make developers and investors nimbler in their work solving the nation’s affordable housing crisis.
CPP (Community Preservation Partners), a mission-driven affordable housing preservation developer, has announced the acquisition and planned renovation of Normandie Villas, an affordable housing complex in Los Angeles. The property is situated in the highly desirable Adams Normandie neighborhood of Los Angeles. This is the sixth community in the greater Los Angeles region for CPP.
Normandie Villas is located approximately one mile from the campus of the University of Southern California and five miles from downtown Los Angeles. The transit-oriented location allows residents easy access to a bus stop, grocery store, public park and elementary school. Originally built in 1983, the property has not received any major renovations. The property is comprised of a single one-story garden style building and three, two-story townhome style buildings. Designed to accommodate families, Normandie Villas offers 15 two bedroom and 10 three-bedroom units, two of which will become fully handicap accessible as a result of the renovation. CPP’s total development investment is approximately $20.6M, which includes the purchase price of $11.5M and estimated renovation costs of $165,916 per unit.
“The south-central region of Los Angeles has a strong need for quality affordable housing and as evidenced by its long wait list, Normandie Villas reflects this need,” said Evan Cramer, Development Manager at CPP. “We are pleased that we are able to preserve 25 units of critical affordable housing for this community for years to come.”
Normandie Villas will receive significant renovations, including new shingle roofing, and energy-efficient HVAC systems and gas water heaters. Additionally, by implementing energy efficient improvements throughout the project, including upgraded roof insulation, installation of Energy Star windows and appliances, and use of high-efficiency LED lighting, CPP expects to double the property’s 10% energy efficiency improvement required by the California Tax Credit Allocation Committee (CTCAC).
“We are proud to be part of the solution to the affordable housing crisis in south-central Los Angeles and look forward to seeing the positive impact these improvements will have for years to come,” said John Fraser, Vice President at CPP.
Additional in-unit upgrades include new kitchen and bathroom cabinets, sinks, faucets and solid surface countertops, new entry and patio doors, new flooring, new toilets, shower surrounds and shower heads, and upgraded patio fencing. During the renovations, two of the property’s units will be made ADA compliant.
CPP will also make significant improvements to the property’s community spaces, including new site signage, landscaping improvements, new mailboxes, leasing office and laundry room upgrades, the installation of a new playground, ADA path of travel upgrades, new fencing at pedestrian gates, and exterior painting, among others.
CPP is partnering with LifeSTEPS to provide on-site adult education, health and wellness, and skill-building classes and services to residents.
Renovations are expected to be complete by June 2025. The property’s affordability was set to expire in 2027, but with CPP’s involvement, the Section-8 Housing Assistance Payment (HAP) contract will be renewed until 2044. Units will be set to 30%, 40%, 50%, or 60% of Area Median Income (AMI).
Additional partners on the project include the California Tax Credit Allocation Committee (CTCAC), who issued and allocated 9% LIHTC. WNC & Associates serves as the equity partner. Banc of California is providing construction financing, while Key Bank serves as the permanent lender, using a Freddie Mac product.
CPP (Community Preservation Partners), a mission-driven affordable housing preservation developer, has announced the acquisition and planned renovation of MCA III Apartments, an affordable housing complex in Los Angeles. The property is situated in the highly desirable south-central region of Los Angeles, which has a significant demand for affordable housing. This is the seventh community in the greater Los Angeles region for CPP.
MCA III Apartments is located nearby the desirable Baldwin Hills and Crenshaw neighborhoods, which offer residents convenient access to public transportation, groceries, and recreational activities. Originally built in 1958, the property has experienced significant deferred maintenance and has aging building systems. The two-story property consists of 20 units, including 12 one-bedroom units and eight two-bedroom units. CPP’s total development investment is $13.1M, which includes the purchase price of $7.25M and estimated renovation costs of approximately $163,000 per unit.
“MCA III Apartments has been an affordable housing option for residents of south-central Los Angeles for more than 60 years. As evidenced by the long wait list at the property, the demand for affordable housing in this region of Los Angeles is in extremely high demand,” said Evan Cramer, Development Manager at CPP. “We are excited to be able to not only preserve the affordability of MCA III Apartments, but also modernize the property and create more opportunities for community for its residents.”
MCA III Apartments will receive a comprehensive renovation, including the replacement of several large building systems, including water heaters, unit heating, plumbing, electric, flooring and roofing.
“By investing in modern, energy-efficient upgrades and creating new spaces for connection and learning, we’re strengthening the fabric of this community and ensuring that MCA III Apartments continues to be a vibrant affordable home for families for many years to come,” said John Fraser, Vice President, CPP.
Additional in-unit upgrades include new paint, energy efficient appliances, cabinets, countertops, LED lighting, ceiling fans and doors. To provide residents with more opportunities to socialize and gather, a brand-new common area and leasing office will be constructed. The property’s centrally located courtyard will also receive upgrades, including new concrete and landscaping.
CPP is partnering with LifeSTEPS to provide on-site adult education, health and wellness, and skill-building classes and services to residents.
Renovations are expected to be complete by June 2025. The property’s affordability was set to expire in 2024, but with CPP’s involvement, the Section-8 Housing Assistance Payment (HAP) contract will be renewed for 20 years. Units will be set to 30%, 40%, 50%, or 60% of Area Median Income (AMI).
Additional partners on the project include the California Tax Credit Allocation Committee (CTCAC), who issued and allocated 9% LIHTC, U.S. Bank as the equity partner and construction lender, and KeyBank as the permanent lender, using a Freddie Mac Product.
