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February 23, 2017
Specialty: Affordable housing for nonprofits and housing authorities
Management: Paul Purcell, president; Brian Lloyd, vice president; Cindy Proctor, vice president
Projects: Plaza Roberto Maestas, Beacon Hill; MarketFront senior housing, Pike Place Market
Paul Purcell, outgoing president of Beacon Development Group, discussed the challenges facing affordable housing developers and shared some of his post-retirement plans.
Q: Congratulations on your upcoming retirement. What’s next for you and for the company?
A: After I retire on March 31, I will remain as a part-time strategic advisor for the balance of 2017. After that, I am excited to join my wife, Barbara, in the ranks of the retired and spend more time with my grandchildren and do a lot more traveling. I have been asked to be on a couple of boards and committees, and I will evaluate those in the near future.
For the company, I am most excited that Cindy Proctor and Brian Lloyd have stepped into the positions of vice presidents, and together they will lead Beacon into the future. As we are now a subsidiary of Beacon Communities out of California, their work will grow to include developing new or existing communities in both Washington and California and continuing our consulting activities here in Washington. They will report to Ancel Romero, president of Beacon Communities.
Q: What are a few of the biggest challenges facing affordable housing developers?
A: The largest immediate threat is to the Low Income Housing Tax Credit program. That program currently is involved in funding over 90 percent of the affordable housing developed in the country today, and it is facing great uncertainty. Since the election, billions of dollars of LIHTC equity has disappeared from the market as users of the credit have no confidence as to what the future holds.
In spite of the healthy economy here in the state of Washington, we face the tremendous challenge of funding education and mental health as well as housing, so the dollars available for housing development face tremendous competition.
While in Seattle and a few other cities local resources have been helpful, the state has been a major component of funding for many projects. In most rural communities, the state is the only source of gap funding to allow a project, even with tax credits, to proceed.
A third challenge is the continuing rise in the cost of construction. With the private market as hot as it has been with large commercial and market residential, it is hard to get interest in smaller affordable projects, and the costs continue to rise.
Fourth, the cost of land anywhere near transit or services has skyrocketed and greatly increases the per-unit cost of affordable housing.
Finally, we are anticipating rising interest rates, which will add further to the total costs of these projects.
Q: What do you make of the city of Seattle’s proposals to encourage more affordable housing?
A: Seattle is doing a great job of trying to address housing affordability, but it is a very complex job which requires the multiple fronts that the city is attempting to attack the problem.
We need to get more affordability out of the assets and resources that the city has, such as zoning, infrastructure and transit, and not rely just on funding. Every decision of the city needs to be viewed from the lens of affordability. It cannot be isolated from all of these other decisions.
Q: Do you see any trends in the types of projects you’re developing?
A: We are striving to drive affordable development more to the transit hubs and communities of opportunity to ensure the long-term success of the residents in those communities. Unfortunately, this means more expensive land and competing with the market to acquire that land.
Mixed-use and mixed-income housing needs to be developed more as the market adjusts to these types of developments.
We need to look at modular construction and any other means we can pursue to drive down the cost of affordable housing and therefore increase the number of units we can get out of the limited resources available.
Q: Do you foresee any shift in your geographical focus? Where are needs the greatest?
A: There are great needs everywhere. We are working in counties up and down the I-5 corridor and in Eastern Washington. While the gross numbers are greater in the cities, the very real needs in our smaller communities are desperate and need attention.
With the growth of homelessness across the state and the demand that it is placing on our resources, it is clearly a problem that is greater than just housing availability. We need mental health support and wage support to allow more working people to afford reasonable housing.