As California continues to battle high living costs, stubborn inflation and rising insurance expenses, providing sustainable and affordable housing solutions is proving very challenging.
“More funding for housing development and more subsidies for rent are desperately needed,” according to Kevin Grani, president of Sterling Asset Management Co., the property management arm of Community Housing Opportunities Corp.
Grani is responsible for overseeing CHOC’s affordable housing portfolio throughout California, and expanding the firm’s property management footprint across the state and into new affordable and market-rate communities.
With more than three decades of experience, Grani has lots of insights into the complicated realm of property management in California, one of the most supply-constrained housing markets in the country. Multi-Housing News asked him to talk about the most pressing challenges he’s facing today and the multifaceted dynamics of the affordable housing crisis in the state.
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While there is a nationwide shortage of affordable housing, California’s crisis is notorious. What unique challenges do affordable housing property managers in this state have today?
Grani: Property management in general comes with a unique set of challenges, and in affordable housing properties these challenges are not entirely new or unique. In fact, the challenge today is simply the lack of attainable affordable housing, given how long it takes to build. The common challenges we’ve seen for years have been people losing their jobs, not having an income that stacks up against housing costs and, of course, the lack of subsidies for the properties. We also often face the challenge when trying to find people to manage sites—due to budget restrictions—which are all driven by the rents that are controlled by California state agencies.
In your view, what can be done to alleviate the housing crisis besides building more? Can affordable housing managers help in any way?
Grani: There are so many different components to resolving this crisis but what it comes down to is supply and demand, and simply building more. It’s less of a management question and more about the development of housing and providing supportive services to residents, which is where management can help. Things like financial literacy, guidance with finding food and rental assistance. You start with basic needs and then move to financial literacy and, eventually, self-sufficiency.
Are there any programs that could be implemented to increase the availability of affordable housing across California?
Grani: There are things currently on the governor’s desk that could have a transformative impact. Our team at CHOC is also developing unique strategies, but overall, more funding for housing development and more subsidies for rent are desperately needed.
What’s your take on rent control and rent stabilization laws? How are the current regulations and policies governing affordable housing in California impacting your daily activity?
Grani: As an organization, CHOC, and by extension Sterling, supports rent control and rent stabilization laws because without them the number of people both experiencing and at risk of experiencing homelessness would increase. We manage multifamily affordable housing. As such, Sterling doesn’t interact with the rent control or rent stabilization process. Rent-controlled housing is different than totally affordable multifamily housing. The former is generally a private landlord who owns a building.
How can organizations such as CHOC and its property managers maintain affordable rental rates when costs rise, particularly in a market like California?
Grani: Frankly, it’s incredibly difficult. Many in our industry are of the mind that it’s not possible to keep rental rates lower as costs rise. As a property manager, CHOC does not set rental rates. The rates are set by state and federal agencies. Despite that, our hope is that we can develop more affordable housing to counteract this issue and, ideally, house as many people as we possibly can.
Could you share a couple of examples of affordable housing properties in California that have effectively navigated challenges, achieving positive outcomes for both residents and owners?
Grani: Our goal was to do just that with our soon to open property, Placita Dolores Huerta, which is located in the Coachella area of California. We took the property—which was older and in need of attention—demolished it, provided temporary housing for residents, and built a brand new property that will last for decades.
Another example is the work we completed at our Walnut Windmere community in Davis, Calif. We’d begun renovating the property’s 134 units just before the pandemic began, utilizing tax credit funding; we had a 2-year window to complete the work or we’d need to return these tax credits. As such, we worked efficiently to repair siding, replace windows and repair roofs for these units.
During the renovation process, we briefly relocated small groups of residents to on-site hoteling units for two weeks, completing this work, as well as light interior renovations. Once these particular units were completed, CHOC immediately moved residents back in, moving onto the next small group. This process enabled us to renovate the exterior of the building, as well as interiors, without the costly, en masse relocation of residents for a month or longer.
What are your short- and medium-term goals at Sterling?
Grani: Our short-term goals include the ongoing development and investment in our property management team, across our portfolio, maximizing efficiencies wherever possible. However, that’s only half the equation. Longer term, the resident experience is primary, so we’ll be seeking opportunities to bring high-value resident services, energy services, construction and solar to our base property management offering, from CHOC’s Community Impact, CHOC Energy and CES Integrated divisions, respectively.
How do you expect the state’s affordable housing crisis to evolve?
Grani: Unfortunately, as things stand, it will get worse before it gets better. It’s essential that the state develops permanent sources of funding, in order to help organizations like ours develop and sustain multifamily affordable housing for as many people as possible.
