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Welcome to today's episode of the real estate shop. On today's episode, we're lucky to have Christopher Donald, executive director and CEO of the D.C. Housing Finance Agency. How are you doing today, Christopher?
I'm doing well, man. I'm doing well. It's good to see you all.
Good, good. Great. We're going to just jump right in and let's get started. First off, tell us about your background and how you chose housing as a focal point of your career.
Wow. So that's a long, torturous story.
If you'd asked me whether I was going to be in housing a long, long time ago, I would have told you no. Like, I had no idea that this is where I was going to land.
And in fact, I thought I was going to end up in a political realm. Thankfully, I had more sense than that and got out alive early on in my career.
But I fell into finance. You know, I always love numbers. They always made sense to me. And when I was a little kid,
at one point, I thought I was going to be an architect and architect and a minister and this and that. But the built space was always really attractive to me.
And so I did the finance thing for a little bit, left the country for about 14 months to travel around the world and then came back and thought I was going to go to Divinity School
and finally my friends were like, hey, man, you don't have a trust fund. You need to get a job. So I started organizing tenants to exercise their right of first refusal here in the district.
And it was an interesting time. It was, you know, the early 2000s, lots of buildings were converting to condos at that time. That was a hot condo craze.
And I was training tenants and actually met my wife doing that, found my first home that we bought a condo doing that.
And it was interesting as we sat around the table, there was always this one guy at the table with a calculator and a spreadsheet.
And my thing is, what is he doing? Right? Like, what part does he play? And that was usually the development consultant or the developer.
I was like, yo, that's really very interesting to me because it's a convergence of these things that I'm really passionate about, which is real estate, which is politics, which is finance, and they kind of came into this space
that was very cool to me. And it seemed to be finally one of those moments. My father always told me, he was like, look, as a young black man, you know, you're going to be a great architect.
As a young black man, you got two responsibilities. Number one, you got a responsibility to give back to the community.
And then number two, you need to figure out how to make a million dollars before you're 30 years old. And for most of my life, I was like, dad, those two things don't go together. Like, I'm confused, right?
You know, how to have success and purpose kind of coincide. And I saw the opportunity to do well and to do good in this business. So it was really, really attractive to me.
And I really had a ball doing it for like the last couple of decades, just having an impact on the world around me, doing that in such a way that it has had a profound impact on the communities that I've been in.
I've learned a lot. It's been different every day, right? No day is the same. And you have an ability to be super creative, super numbers oriented, and can just do it.
And can just do a lot of cool stuff. So that's kind of how I stumbled into this place.
You went away for 14 months. Where'd you go, man? How'd you decide on where to go?
Yeah. So what happened is this was when I thought I was going to go to the rabbinical school, and I had never left the country before.
And so one of the things that I thought would be cool to do when I left was ask a question about who is God and how does God manifest himself in other places, right?
Is it just one God or is there are there many guys of, you know, all who reach back to the same person, right?
And so I did Europe for about three months, primarily like Eastern and Southern Europe. I wanted to get away from kind of the mainstays that everybody went to.
So I was in Hungary. I was in Poland. I went to the Netherlands. I was in Austria, but only for a day for historical reasons.
It's Spain and Turkey and Croatia. And then went to the continent.
Hopped to Morocco while I was in Spain, but did Egypt, Ghana, Nigeria, South Africa, Zimbabwe, Zambia, Tanzania, Ethiopia.
And then went through the Middle East, Israel and Jordan, and then hit the Far East, India, Thailand and China.
And so all these places, I will say, man, I never felt vulnerable. And I was out here with a backpack in a dream, right?
Never was robbed, was able to sit with people who I didn't know, had people who I didn't know put me up and let me live with them.
It was an amazing experience. And I would meet people in one part of the world.
Like I met these two cats when I was in Prague and they were like, they were Croatians. They were like, you got to go to our country.
Right. And I was like, well, why am I going to go to your country? And they was like, it's beautiful. Right.
And so I show up in VAR and it's like this island. And as you're riding into the island or in the water, the rocks kind of come up out of the water like a James Bond movie.
Really funny story. So I hit the ground and VAR. I have no idea where I'm going to take the ferry across.
And so I'm on a bus sitting next to this cat. I was like, yo, where are you going? Like, where are you going to stay?
And he was like, oh, I don't know. Like, you know, I have a referral from one of my people and there's this house.
I was like, well, do you mind if I tag along to see if they have extra room? Right.
You're a wild boy, man. So we show up. There's one bed. Right. And I was like, well, look, man, I'm willing to share the bed if you are.
And he was like, yeah, I'm good. So basically I took the place that he had and he went and found another place and I had to do it deliberately.
But then I had a place to stay. So one of those those random moments where you just kind of fall into things.
But, yeah, they were just all of these moments that were really amazing.
And the biggest thing I would say is that, you know, when I was when I was in college, I fashion myself a little militant, you know, pan African is back to Africa.
And I got to the continent. I was like, I'm an American. Right.
I'm a fan of the USA. And it was really because there was an appreciation for our country at that moment, and all that it meant for all of the opportunity. Right, of all the things that we could do and meeting people around the world and seeing that there were a lot of folks who just
don't have an opportunity to choose their destiny. Right.
And no matter how you come to this, no matter all of the problems that we may have from time to time as a country right there's still so much opportunity and freedom in our country that people around the world long for and it gave me a deep appreciation for being
an American.
That's awesome. Thanks for sharing that experience. So you went overseas Christopher learn different cultures.
What was your first inspiration you come back to the states, and have you grow your career and become executive director.
Well when I first came back, I was like, look, I want to figure out how to work for six months and travel for six months right.
So I started watching Carlton sheets and all these late night guys you talk about flipping real estate and buy real estate with no money down.
And that didn't really work for me.
I got into the tenant organizing I said earlier because I needed that to have a gig, but didn't imagine that my career would evolve in the way that it did so when I first started organizing, I was more interested in the single family side because you may or may not be familiar
with this but some 20 years ago, the district used to have this program where they would sell you a house for dollar, and you could rehab that house and they had houses that were down here off of U Street on W Street which are like these
three four story brown stones that you could go in and buy and have you know those places that were $100,000 a day that over a million. Right. And so I imagine being a program administrator for something like that multifamily didn't make a lot of sense to me.
But once I started doing the organizing, I saw kind of the opportunity to do development. I headed across the river into Arlington.
I started working for a big nonprofit called AC cut my teeth there for about three or four years.
And then I raised money to start a company for the first time.
I went on on my own and my timing was perfect I just had my first child. And it was 2007. If you remember 2008 the whole world kind of crashed in a particular real estate right.
And so I had to quickly recalibrate and come back in I went back out to northern Virginia to work for APA on our partnership for affordable housing for another couple of years.
And then left there came into town to work for a really successful black real estate developer Bo McKee. And caught boys he was kind of on the rise spent some time working with him.
Left there went up to the housing authority Montgomery County Housing Opportunities Commission spent some time there and then went back out on a entrepreneurial step, and then ended up here doing finance.
And so I had a goal. When I started in the development space I wanted to have an opportunity to work around the region, each of the major jurisdictions to just get a feel for how things were done in each of them.
Right, what were the differences what were the similarities. What were the challenges right and so I actually got a chance to develop that footprint professionally so that was really great for me career wise.
And then being back in finance because I was really a deal jumper. Right, like I love to put deals together I love to be on the acquisition side right.
I could see things as they could be and so the adrenaline rush right the excitement that you get from pursuing deals was really very cool.
So I moved into finance here at the agency. And what I quickly found out is that I could see 10 to 15 deals a year. Right, I was like, oh my god, right. That's just like Nirvana.
So, but not only that because of the time that I had spent out in the rest of the world. I actually do most of the people who are coming in front of me. And that was really cool too because I can quickly suss out, you know, at times what they're up to how they thought
about things right, anticipate where they were going. And then, you know, as you're negotiating you go into a process, just have a lot of fun with people who you had spent side spent time with on the other side of the table.
Right.
And that was really very intoxicating effect right just be on that side. As we grew this business and started doing more direct lending versus conduit lending. That was really exciting. And so I did that for about three years and then we had a tragic loss and my
predecessor, and I ended up being in this seat, and I had, you know, I've been telling people, I had no idea what my path would be right like if you had asked me, you know, 1020 years ago where will you end up.
I will not have thought to say that I would end up running a housing finance agency right which I effectively referred to as a bank.
At the point of my career, it's just not something that I conceived of doing. But the opportunity presented itself.
And I've kind of grown into it over the last three years right it required lots of growth for me in terms of leadership, right, understanding how to lead an organization and not manage, you know, Todd used to say a lot of times, there's a difference
between a leader and a manager. Right. And, you know, leaders inspire people to go with them on a journey right a manager insist that you pursue a certain path or action right leadership develops loyalty right managers really develop kind of this imperative
and people hold on to their jobs, because they have to not necessarily because they want to write, and the beautiful thing about this organization is the level of intimacy because it's so small.
There's only 50 people here.
So we all know each other we know each other's families, we know each other's stories, and so that level of familiarity really offers up an opportunity to know and appreciate people for who they are as human beings, other than just professionals
right so it's been a great time for me you know it's stretched me in terms of learning how to work across different agencies and what the political within a political context.
Right there, there are nuances to the work that we do that you wouldn't necessarily have in the real world. Right, or the private sector.
And so that's really challenging my chief of staff says, if you can figure out how to do something in government, you can do it anywhere. Right. And I am now a firm believer in that having been on both sides of the workforce, that the challenges you have here are
always clear.
Right. They can change, given the facts on the ground they could change, given who might be sitting in a seat, right as an elected official, they're all of these calculations that you're constantly doing to figure out how to make your way towards success so I ended up
this in the seat by accident.
But it's presented to so many opportunities for growth for me personally.
Excellent.
We have a folks that follow us and pretty much nationwide, and I'm always a big component of DC, even on back and forth between DC and Philly. So they're not may not be familiar with HFA, and specifically, but can you talk about it.
And it's a mission for those who aren't aware.
Yeah so HFA style stands for housing finance agency in every state as a HFA, right, and its primary purpose is to allocate tax exempt bonds and low income housing tax credits on the 4% side.
And each state may also have some other powers and things that they do here in the district we have three lines of business we have a multifamily business, right, and we do about $300 million every year, and tax exempt bond allocations right and if you say that that is
the number of that capital stack that equals about a billion dollars in production, right, and that's usually somewhere between 1500 to 2000 units each year that we finance, and then about 1500 to 2000 units that come online from the pipeline.
So we have a multifamily program, and effectively, we finance or we will provide liquidity to the market for loans that they bring back to us that meet certain requirements right.
And then we have uniquely, we're not the only one but we're one of a handful, taking money off of our balance sheet to co invest with emerging developers, folks who don't typically have access to capital to produce some for sale housing.
Now, in other jurisdictions, HFAs will also allocate the 9% tax credit, right, that's used with conventional or taxable debt, and they'll also administer some of the HUD housing programs.
We don't do any of that. So that that still remains with the ACV we strictly administer the 4% tax credits, and the tax exempt bond so we've got a very narrow lane with some homeownership as well.
And on that note, is there another city that you admire from a housing policy standpoint, you know, I'm, I'm not one who has any lack of affection for my ego or my, my way of doing things and so I feel like we're a leader in the space.
Right. There are some places that we looked at like Colorado, New York City, Massachusetts, California, but all those places are much bigger than we are right.
And I like to think that we punch above our fighting weight, and are able to do some things that some of our peers are not, and we're constantly seeking to innovate to have a greater impact right so we've got some natural limits by our size,
the resources that we get are based on a per capita allocation, right, based on our population so we're relatively small, we get the same amount of resources as places like Wyoming.
And Idaho, folks that are states that have very low populations, right.
But we are actually more dense in some instances than those places and we have different housing needs and so the requirements for us.
And also with our cost structures are much our constraints are much higher than they are other places where things are a lot cheaper, and that small allocation can go a lot further so I find that the things that we talked about and the approaches
that we are taking to solving our problems.
Actually pretty, pretty advanced and ahead of the market.
I know most of the folks that are familiar with you and I know I certainly am as well, has been on the lie tech side in the multifamily rental, you did mention that you all have a for sale element as well, and I guess a program for emerging developers
with respect to for sale.
I think a lot of people don't know about that, could you kind of speak to that a little bit. Yeah, no, it's something that we've been doing, I'd say, over the last four or five years and so effectively, what we've done is we've
created a program it's called a hip program a housing investment platform, and that platform is open to emerging developers and it was created to do a couple things.
Number one, it was created to provide the housing for the missing middle.
So folks between 60 to 120% of am I, what we found is a lot of those folks long term district residents, you know kids coming back from college are being displaced, particularly as a district becomes more and more desirable for people to be in.
And so they're not places for them to buy and live and be able to stay here so that was number one. Number two.
It was the opportunity to provide access to capital for developers who typically couldn't get capital, right, like they had no ability to access it when they did access it.
It was really very expensive capital. And so by giving them that capital allowing them to build that muscle of being a fiduciary, it was input them in a position down the road, where they can act more independently and access different forms of capital.
And then finally it was an opportunity to help these residents who are going to be able to stay in the city to develop and to begin to build wealth, right, being a homeowner does not mean you're wealthy being a homeowner means that you have an asset.
And then over time you develop equity in that asset, and that begins to anchor you and your family and to provide other opportunities right one of which may be at the end of your own journey to pass that on as an asset to the next generation, so that they have a platform,
we created this platform and we structured it such that the agency will put in 80% of the equity, and the developer would put in 20%. Once we had a single digit return hurdle, the economics would flip 80% to the developer and 20% to us, we did this because at the end of the day,
we were asking those developers to cap the sales price, right so that folks between 60 to 120% could still afford to buy them. And what's happened is not only has it been really successful in terms, pardon me, of the home selling, but it also mitigated a lot of risk for the
developers because instead of, you know, we had one of our most prolific developers used to develop all along 16th Street along the Gold Coast here in the district and built million dollar $2 million homes in the Washington and the Washington Post.
We brought that same level of quality and care and attention to detail, down to the workforce level right. So these units have flown off the shelf when he delivered them and really developed a following for that product, what we're able to do in that particular
scenario is he would have to put all of his marbles into that one project and so that million $2 million home didn't fly off the shelf he was stuck right. Whereas here, if you invest a fraction of that, right, you've got five lots that you're producing, you can break even
that second or third lot right and have little exposure, so that if things go wrong you're still okay right and you can continue to move forward. Now, he's done two or three of those reps, he could go to a mid tier private equity firm, talk about the portfolio
of work that he's been able to pull off a partnership with us and have access to capital at a much higher level. Right, but at much better terms because he's now got a track record of success.
So, on the other side in terms of the people, we've had buyers on Marshall Heights that were, it was an ANC member, and his wife who was a school teacher, and they had two little children, one was a toddler, one was in the baby seat right, and they were
able to get up, being able to buy in their community remain in their community for another generation, began to develop wealth in their homes, right, and it really to be a transformational experience right like that's the kind of stuff that we're doing with
this hit program which is really exciting to me right we're able to anchor and stabilize and help these communities kind of flourish.
I think talked about helping this home builder, can you talk more about how the HFA supporting CBEs as well. Yeah, so we try to get really intentional.
If you heard me speak before, you know that's a word that's really important to me and not intentions which are now right, but attention though which is a way of acting meaning we're very, we want to be very deliberate with our resources.
So we've got our hip program.
What we're also doing is, and bond and credit deals, requiring that there be participation from true CBEs, not just on the services side right, but also on on the ownership side.
So you make fees and you go away. But again, building capacity. So, if you're going to come in if you're going to use some of our resources, you're actually going to have to reinvest them and and folks who are in the community so they have a chance to be successful.
Got it. As we start winding down and appreciate you going through your personal journey.
So, you know, able to do it all over again. Was there anything different you would do either professionally or business. That's a great question and I want to be thoughtful about that I don't want to say the cliche thing is, no, there's not anything that I would ever change
right.
I really don't feel like I would read that my, my path, I think for me, I was and I am a seeker. Right, I am stimulated by asking questions and see where those questions lead me.
I think the most powerful thing or piece of advice that I would give anybody, or young person is the most effective question that you can ask it any environment is why.
Don't be afraid to not know, and be ignorant. Right. I found so much success in terms of sitting in a room with a whole bunch of people who know more than I do, and listening and then say why, how does that work, why is that important why can't you do this,
why can't you do that. If you thought people, when I started, they're probably like, I was a real pain in the butt because I wouldn't let, I wouldn't let the basics walk right I'd be like well why do we have to do it that way, particularly as I got in the room with
the DCs and we were having construction meetings and we were doing draws. I was just like well why, why does an HVAC system have to be installed at this point in the process was something very basic if you work in construction you understand but I didn't know.
But I also didn't mind being ignorant. And I also understood that I was in the position where we were signing the checks, so that people had to answer those questions. Right.
So, that would be the first thing the second thing that a mentor Maya told me and this is just, this is for whomever this may not apply to everybody. But if you want to understand how something works follow the money.
Right. If you understand the financing of anything you can understand the business, where the pinch points are, and how to get something done. Right. So those will be the two things.
First be intellectually curious. Right, never think that you know everything. And second, understand your business or the flow of capital and your business if you understand the flow of capital in your business, you will be light years ahead of even some people who have
been doing that for decades and decades, because you understand how to make things happen.
Where do you see the district in the next five years.
So the district is really in a unique place.
COVID was really challenging a lot of ways.
But in the district, there was a moment at least as it relates to affordable housing, where there were significant resources deployed to allow us to do some incredible things so over the last couple of years the mayor has invested almost a billion dollars in affordable
housing and substance right, which is huge you know per capita basis smokes everybody around the country right.
And so we have a pipeline that could easily go nothing else happens.
Over the next three or four years, we will be busy through 2025 probably 2627.
From a business perspective, I'm really excited about it. There's a real opportunity to continue to have an impact and make a difference in the community. In addition to continuing to build our platform to help grow these communities to provide affordable
housing or affordable homeownership to retain long term residents in the district. And then we're working on some cool stuff around single family mortgages and program called the special purpose credit program, which will allow us to design a product to reach more
people who have historically not been able to access the capital markets specifically as it relates to mortgages right.
So we want to continue to be innovative like I'm very upbeat about the district and then the market itself is doing some incredible stuff as well. You know we have our challenges just like anywhere else but in the business of real estate and housing specifically,
I'm super excited about what we have an opportunity to do over the next five years.
It won't be easy, but you know, there's work to be done.
Got it. Well certainly appreciate your time. Chris for stopping by and talking to us at the shop.
I get questions, a lot of times from folks outside of DC because they know that I've touched DC as well and you're right there's no other place in the country that has those type of resources, and a mayor who's hung her hat on that, which
is a big difference. So, once again, thanks for stopping by and I'm sure I'll be seeing you down the road.
Sure, sure. Take care now. Thanks, Emory.