Starting a company is hard. Starting a real estate company without a balance sheet is even harder. Starting an affordable housing development company in Los Angeles is super hard.
In many large cities in the US, there is a crisis caused by a shortage of affordable housing options. This has led to a host of social challenges. In this series called “How We Are Helping To Make Housing More Affordable” we are talking to successful business leaders, real estate leaders, and builders, who share the initiatives they are undertaking to create more affordable housing options in the US.
As a part of this series, we had the pleasure of interviewing Greg Comanor.
Greg Comanor is a native Angeleno focused on affordable housing and public policy. He completed his undergraduate degree at Washington University in St Louis and completed his MBA at UCLA Anderson School of Management. He’s worked in investment banking, consulting, and affordable housing development before founding Daylight Community Development. He is an avid Philadelphia sports fan and fully Trusts The Process.
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?
You’re right! Affordable housing, and particularly, building and financing the construction of permanent supportive housing, is a weird, wonky space, and I zig-zagged my way here. I grew up in Los Angeles, and have always been acutely focused on issues relating to the City. After college and a brief stint working in Washington DC, I came back to LA to work in finance. After a few years, and more uncertainty about my future, I enrolled at UCLA Anderson to focus on social entrepreneurship. Right when school started, I read a great book — Evicted by Matthew Desmond — that really laid out the problems and shortage of affordable housing, specifically in the Milwaukee community. It’s really a heartbreaking book, and made me dig in to learn more about affordable housing.
At the same time, LA’s homelessness crisis was really getting worse, and we had collectively voted to pass HHH. I ultimately spent my time at UCLA Anderson meeting and learning from practitioners in the affordable housing space. Ultimately, alongside Aaron and Sonya, we decided to get involved, and purchased a site in Watts. We had this crazy idea of bringing costs down through modular construction. We developed all of the key relationships on the construction, financing, and service side, and ended up getting a $2.4mm award from the City of LA. They were open to new ideas and ways to streamline affordable development, and we’ve been running on these projects ever since.
Can you share the most interesting story that happened to you since you began your career?
This isn’t exactly housing related, but right before graduation at UCLA Anderson, a buddy asked if I would go on The Price is Right with him. I reluctantly obliged, and we stood in the heat for 3 hours waiting to get in. I actually ended up being called up to play, and ended up winning a Tesla Model 3. Random story, but my mom now drives it. That night, I bought beers for my two business partners, Aaron and Sonya.
Are you able to identify a “tipping point” in your career when you started to see success? Did you start doing anything different? Are there takeaways or lessons that others can learn from that?
The tipping point for our business was really our selection into Mayor Garcetti’s HHH Innovation Challenge. This was really an open-ended RFP aimed to target faster and cheaper ways to build supportive housing. We proposed a scattered-site modular model with a simplified capital stack. In July of 2019, a month after graduation, we were awarded just under $24mm for three new projects. We’ve worked hard ever since pushing those forward, and two are already in construction. The third “triplet” as we call ’em, will begin in Q3.
None of us are able to achieve success without some help along the way. Is there a particular person to whom you are grateful who helped get you to where you are? Can you share a story about that?
Affordable housing in LA is a small, insular space, and we all know each other. I was really lucky to meet some incredible mentors early in my career that helped shape my approach. These are folks across the board — from City and County employees to fellow developers to service providers and financing partners. There are really too many to name, but one person that comes to name is Amy Turk, the CEO of the Downtown Women’s Center. We met when she was the Chief Innovation Officer at DWC, and she was tasked on expanding the mission of the Center. We proposed that DWC work on a small project in North Hollywood, which will break ground this summer. That first chat in the UCLA Anderson Accelerator led to a great partnership we’re incredibly proud of. We’re working on three projects together, with 175 supportive housing units for women living on the street.
Do you have a book, podcast, or talk that’s had a deep impact on your thinking? Can you share a story with us? Can you explain why it was so resonant with you?
The book that really inspired me to get into affordable housing was Matthew Desmond’s Evicted. It’s a story of housing and segregation and the broken cycle of eviction in Milwaukee. It tracks tenants, landlords, and city administrators, and shows how our underinvestment and lack of coordination in the housing space has created irreparable damage in our communities. Evictions destroy neighborhoods, and we need to find a way to build and project qualify housing for everyone.
Can you please give us your favorite “Life Lesson Quote”? Can you share how that was relevant to you in your life?
A little nerdy and cheesy, but my dad gives me a poem every year for my birthday. They’re always extremely timely, and offer a particular lesson for where I am in my life. One of the first poems I got still sits on my desk today. It’s Rabbi Hillel’s famous quote:
“If I am not for myself, who will be for me, If I am not for others, what am I? And if not now, when?”
It’s the perfect reminder of balance and mission and just jumping in. Diving headfirst can be scary, but I feel very blessed that we’re on this mission to build homeless housing here in Los Angeles. Now is the only time to dig in and help your community.
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?
So we talk a lot about production, and that’s critically important, but housing unaffordability and homelessness are really the visceral result of a lot of our societal programs. Wealth inequality has been growing in this country for a long time, and housing is really the most acute result of that growing inequality.
That being said, we are definitely not keeping up with demand for housing. Affordable, luxury, low income, supportive, every type of housing. Development is a slow game, and we have limited programs available to protect and maintain affordable housing.
We also have an innate fear and distrust of public housing in this country. After the failed public housing projects in the 20th century, we moved away from that model in favor of privately-owned, publicly-financed affordable housing. That being said, while that has been a great program for 30+ years, it’s slow, riddled with red-tape, and doesn’t match demand. We also just don’t have enough funding and flexible capital solutions to remedy these crises.
Can you describe to our readers how your work is making an impact to address this crisis? Can you share some of the initiatives you are leading to help correct this issue?
Of course. Daylight Community Development, the company I started with Aaron and Sonya, is building affordable and permanent supportive housing in LA to combat our homelessness crisis. While there is a network of affordable and non-profit developers in the space, we’re taking a fresh approach to try and keep costs down. This means modular construction, non-traditional financing sources, using new entitlement tools, and new types of build partners to keep costs down and shorten timelines. To date, we’re developing over 350 units of affordable and supportive housing, the vast majority are built through off-site modular construction.
We’re really proud of our work, and particularly the costs associated with these projects. While there have been a variety of reports about homeless housing in LA costing upwards of $600,000 or $700,000 per unit, we’re much cheaper. Our first project, Watts Works, will cost $372,000 per unit. That project will be completed this September, and we’re excited to get people moved in!
Can you share something about your work that makes you most proud? Is there a particular story or incident that you found most uplifting?
This story came up on our Virtual Groundbreaking on Watts Works, our first modular project going through the factory. We’re working with IndieDwell, a mission-driven benefit corporation based in Boise, ID with a factory in Pueblo, CO. One of their construction guys was chatting with a friend in LA who had fallen on hard times. He was living on streets, and gave his buddy a call to tell him he was looking to live in a new project, Watts Works. He told him the project would be built with one-time shipping containers. His buddy at Pueblo smiled and responded that he himself was working on the project, and that units would be delivered in the coming weeks.
It’s this type of story that reminds us how human this crisis is, and how close we all are to the problem. Our work really does help people, and that’s what keeps us pushing — even on the frustrating days.
In your opinion, what should other home builders do to further address these problems?
Now this is really up to the legislators, but workforce training and growing our labor force is critical in increasing our supply. Projects are getting more and more expensive, often times due to urban-specific labor shortages. These projects are mostly prevailing wage, and come with regulatory burdens that a lot of GCs and subs don’t want to deal with. We need to grow our labor force to not only build more housing, but also to offer jobs with a living wage.
Can you share three things that the community and society can do to help you address the root of this crisis? Can you give some examples?
This crisis really comes to appropriate financial support. Our industry has a lot of money — most of us would argue not enough — but these programs do not solve our crisis. We’re all for long-term housing development, but if it takes 5 years and costs $600,000 per unit, we’re not fixing anything. We need to rethink our approach, and to offer flexible solutions on a go-forth basis.
We should be able to buy cornerstone neighborhood buildings, or be able to convert office or retail into housing. We need more money for rehabs, especially as we re-think our work environments post COVID. We need more rental assistance. We need a lot of everything, but there is an efficient way to utilize those dollars to unleash the private market.
If you had the power to influence legislation, are there laws which you would like to see introduced that might help you in your work?
Absolutely! Let’s get down to it. I’m convinced that our public agencies and current funding programs are not appropriately targeted. Rather than offer capital to build affordable housing, we should be offering rental assistance to both new and existing buildings. Not only would this relieve our affordable housing crisis, but it would also unleash the private market in developing a variety of affordable housing.
For example, in Los Angeles, very little family and workforce affordable housing is being built. Without significant capital, the low-income rents are just not high enough to justify the cost of construction. BUT….if we could offer a long-term rental subsidy for these units — even $300 to $500 per unit per month on top of a tenant’s rent — we could unleash the private market to develop more affordable housing. It’s quite attractive to build housing with federally-guaranteed rents, and I bet a variety of market-rate home builders would transition to the affordable space.
What are your “5 things I wish someone told me when I first started leading my company” and why? Please share a story or example for each.
Starting a company is hard. Starting a real estate company without a balance sheet is even harder. Starting an affordable housing development company in Los Angeles is super hard. Growing it during COVID is even harder. Basically things are hard, and no one is going to do the work for you, but if you tackle issues day by day, you’ll make it okay.
My business partner, Sonya, has a saying she adopted from her dad. He’s also in development, and is therefore a kindred spirit. Every day, a developer is going to be hit with a 2 by 4. It may hit you in the foot, or the chest, or even the back of the head. But no matter what, every day, you’re going to get hit. You just have to roll with the punches, be logical and deliberate with your choices, communicate with your team and partners, and everything will work out.
You are a person of enormous influence. If you could inspire a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. 🙂
Well I wouldn’t go that far, but I’m willing to entertain the question for the common good. I generally just wish we could be kinder to one another. Empathy is everything, and we’d be a better city and society if we took a moment to try and understand each other’s plight. The vast majority of Americans live paycheck to paycheck, and are one unexpected bill from eviction and homelessness. In fact, more people fell into homelessness in LA last year due to economic reasons. That being said, we often dehumanize our homeless population, and many of our residents complain about tents and affordable housing built in their community. In reality, we’re all safer, healthier, and wealthier when we house everyone, and can really take care of people. It’s cool to be empathetic and proactive, and I think we have it in us to make real change here soon.
Is there a person in the world, or in the US whom you would love to have a private breakfast or lunch with, and why? He or she might just see this, especially if we tag them. 🙂
Well, if you don’t mind and can set it up, I’d love to talk to Marcia Fudge, Secretary of HUD. There’s a lot we need to be doing to increase our supply of affordable housing, and while HUD has a massive budget, I think we can make a few small policy decisions to massively increase our capacity on the development side. The locked 4% credit rate is a great start, but there’s so much more…
How can our readers further follow your work online?
Our projects are posted on our website, Daylight.LA. As we move forward with our modular projects, we’ll be posting photos and videos of construction and lease up.
This was very meaningful, thank you so much, and we wish you only continued success.