Allan Kingston: The New & Privatized Century Housing Corporation

The Century Freeway Housing Corporation has been through some major changes since TPR's last interview with you in 1994. Describe the evolution from a state program to a privatized corporation and how, if at all, it has impacted the mission of the program. 

All parties recognized the successful record of the freeway programs and there was an excellent justification to keep an affordable housing program going. 

Therefore, the Century Housing Corporation has been successfully launched as the first privatized state program. If we are successful in what we hope to achieve, our experience can be an excellent model for other housing providers and lenders across the country. 

Elaborate on the Corporation's mission. And tell us about how the new organization will be governed. 

The organization is structured as a 501(c)(3) non-profit. Our mission will be to provide financing for affordable housing throughout the Los Angeles metropolitan area. 

Our new board is made up of some very well qualified people in the areas of affordable housing, real estate development and lending. It is now in the process of looking at several product opportunities. Most of these opportunities are the continuation of our multi-family lending program: the use of non-profit bonds; the refinancing of some of our existing mortgages; third party credit enhancement; and REO acquisition rehabilitation lending. 

Our concept is that we need to provide "More than Shelter." There should be significant social services provided alongside affordable housing. 

The Century Housing Corporation was created with the consent of the federal court's Judge Harry Pregerson, who has been involved in this effort for some time and also involved are the plaintiffs' counsel and the defendants in the case. 

Will other non-profit providers still apply to the Century Housing Corporation for assistance and support? How will this work? 

All of the details are not worked out yet. 

Presumably, in our new role, we will be dealing with many of the same non-profit community organizations and for-profit developers who are interested in taking advantage of working with us in cooperative ventures of all kinds. The major difference is that we will no longer be restricted by all of the government requirements. This means more opportunities for these organizations and Century. 

At the same time, we want to preserve the corporation in perpetuity as an affordable housing lender. We want to make sure we retain enough income to keep it going. 

One of the financing roles Century performed in the past was as one of the many component lenders of a non-profit's affordable housing financial structure. There have been many significant changes now in sources of funding in how they are allocated for affordable housing projects.

If you were advising non-profits on how to put their packages together, what would you advise them to do? What would you advise them to do with respect to looking to your new corporation for assistance?

As soon as we are ready to talk with non-profit and for profit developer, we will be encouraging them to continue to participate in the kind of leveraged deals that we have worked out in the past, even though they might take a slightly different form now. Our priority will be to focus on developments which provide essential social services to the community. 

In the past, we have worked with many lenders, both private entities and public agencies, to complete financing. We would like to continue to do that. We want to go forward with programs where we can participate with others. 

What did Judge Pregerson bless when he endorsed this conversion into a new entity? What is it that encouraged him to sanction privatization? 

The judge was recognizing the successful record of the Century Freeway Housing Program in providing financing for over 5,000 units of affordable housing. The court agreed to the preservation of the assets of this program in a way that would continue to provide financial assistance to affordable housing providers. We act as an intermediary more than anything else. 

The other element in our conversion is that the state of California recognized the liabilities of the program, as did the plaintiffs' lawyers in the case. The court and the parties also recognized that there were assets in the program that were there for use in metropolitan Los Angeles, and that they ought to be preserved for their use here. Otherwise, the available funds would end up going back into a general pool involving the entire state, Los Angeles would lose a critical resource—more affordable housing. 

What are the Century Housing Corporation's assets? 

The assets of the corporation include approximately $25 million worth of real estate which had previously been constructed and held by the program. There is also about $100 million in secondary notes receivable. 

Additionally, we have about $100 million in cash investments, some of which is already committed for previously-approved development. These are substantial assets which are going to be used for the L.A. community's benefit into the foreseeable future. 

Who are the people who make up your board of directors?

Judge Pregerson selected the board members through consultation with the parties. What he tried to do was balance the board with people that have experience and knowledge in related fields. 

That is why we have someone like Carl Covitz, Chairman of the Board, who is the former undersecretary of HUD. Our vice-chairman is Bill Robertson, who spent many years directing the AFL/CIO operation here in southern California. 

Other members include: Ronnie Thielen, who is a former director of the California Tax Allocation Credit Committee; Dan Lopez, former president of the California Community Reinvestment Corporation; Norman Emerson, initially very involved in implementing the consent decree, and now very involved in the local government scene; Carrie Hawkins, Board Member of the California Housing Finance Agency who has operated her own mortgage company for many years; Robert Norris Jr., the associate director of the San Diego Housing Authority; William Park, an attorney active in several local real estate transactions; Stephen McDonald, Managing Director of TCW, who brings great knowledge in the investment area; and myself.

When we interviewed you last in 1994, you said that the Kaufman & Broad's of the late l990's and into the 21st century are out there today but they may be non-profits the way the housing business is going. Is this still true and are you likely to be that Kaufman & Broad?

I see Century as more a financier or a lender than as a development entity. I see Kaufman & Broad as a developer. We would look to our role to be helpful and assisting allowing other affordable housing development entities to get done the job that needs to be done, whether they be non-profit or for profit. 

What instructive lessons would you offer to other non-profit affordable housing developers, given your experiences? 

First, non-profits have to learn the rules; the rules are constantly changing. Because of the number of people involved with financing, HUD and other government regulations are constantly changing, and you have to know what is going on. 

Second, non-profits have to make sure they have an economically-sound, viable deal. This can be a critical mistake. 

Third, many times non-profits get locked into a site too early in the process and, unfortunately, they are forced to follow through, even when the deal is no longer a viable venture, because they cannot move off of that particular site. 

Finally, persistence is still the name of the game. There are fewer and fewer sources of funding for affordable housing—a type of housing development that many people look at as a very mundane activity despite its fundamental and real importance. Non-profits developers and sponsors have to be constantly aware of this trend and should be pursuing available sources encouraging new sources and constantly. 

Lastly, with respect to evaluation, by what yardstick do you and Century want to be measured two years from now?

There is no question that the Board and all of us want to be measured by the quality of what we do. We want to be measured by the preservation of the idea that there is a "soul in sheller". We want to be known as an entity which has provided more than just the basic shelter, but an improved quality of life.