Assessing Capacity
You do not have to be an expert, or the only organization involved in each step of the affordable housing development process. In fact, more often than not, one organization takes the lead and partners with others to carry out certain parts of the framework.
It is relatively common for developers to work and learn together on affordable housing projects, and it is a great way to build capacity and a deeper understanding of the process. Regardless of your approach to filling capacity gaps, working with developers can ultimately give you and your team the time and space required for individual and organizational learning to take place.
Starting to Assess Internal Capacity
The goal of assessing internal capacity is to determine where developing multifamily housing fits into larger organizational goals and what capacity already exists or is needed to be successful. Through identifying skills and gaps of employees, you can begin to assign roles and responsibilities and outline a plan for bringing in partners for additional support. In fact, many grant applications require organizational capacity assessments as a part of the submission package.
When assessing internal capacity, start by identifying what capacity you already have in-house:
What does our organization do well?
What does our staff enjoy doing?
What do we have the capacity to do effectively?
What should we build our capacity to do?
What do we have the resources to do?
From there, you can use the multifamily housing development checklist below to identify gaps in capacity that a partner could fill. Start by asking yourself these questions:
Who is doing this work already in our community?
Who have we partnered with in the past?
Who are new potential partners to consider?
Assessing Capacity
What Capacities Will You Need For Development?
The specific capacities needed for multifamily development are going to vary, depending on size of development, location, and prior experience, but there are some general capacities that apply regardless. The chart below outlines general capacities and skills for your team.
-
Program staff
-
project management
-
contractor management
-
grant management compliance
-
-
Operational support
-
human resources
-
IT staff, accounting,
-
-
Board Support
-
real estate experience
-
financing and accounting
-
community experience
-
capacity assessment and alignment
-
In addition to these key skills for different levels of staff, there are some core competencies that are helpful for at least some staff to have experience with or knowledge about:
Does your organization have experience with key parts of the development process? This experience is a critical part of being able to realize your development process. Some knowledge areas that are necessary during the development process include:
-
Existing regulations (leasehold, land use/building, approval processes)
-
Decision-making norms and structures
-
Community and stakeholder relationships, including the ability to build them
-
Project management
-
Site selection factors
-
Real-estate finance, including familiarity with private-sector financing and public-sector and housing programs
-
Contract and real estate law
-
Construction processes and management
-
Property management, operations, and maintenance (marketing, lease-up, regulatory compliance requirements, service delivery)
Even though housing development requires a deep well of knowledge and experience, you do not need to possess all the knowledge areas listed above within your organization. It will be important to understand where knowledge and experience exists within your staff, including opportunities to build it through your proposed project, and where you will invite additional knowledge and experience through more training of your existing staff; partnerships with other organizations; contractors; and your organization’s board (when one exists).
Many public-sector agencies require developers to apply for public-sector resources (including those available from the federal government, such as CDBG, HOME programs, and LIHTC) through a competitive application process. Having experienced staff or contractors who have prepared funding or grant applications can help with securing financing upfront.
Receiving public resources often requires consistent monitoring and reporting. As part of examining your capacity for funding administration prior to starting development, consider what systems you have in place to track and use financial resources. For instance, do you have adequate internal control and procedures for financial management? Are your systems designed to easily capture key program information for reporting purposes? Are multiple systems in use that would make it time-consuming or difficult to provide consistent reporting?
Does your organization have the operational support to undertake development? Building on administrative capacity for development, you will need to understand the impact of your project on your organization’s operations and support staff. Staffing impacts to consider are:
-
Human Resources to support hiring new staff or doing professional development of existing staff.
-
Information technology (IT) to assist with purchasing new software systems to track a complex project or assist with property management. They may also be able to provide expertise about IT components of your project, if you aim to incorporate Internet access or computer facilities onsite.
-
Accounting and finance to help you understand the financial impact to your organization when undertaking your proposed project and if your organization’s balance sheet can meet public- and private-sector funder requirements. These roles are in addition to the administrative capacity for funding discussed above.
-
Property Management to support the day-to-day operation of the property including resident case management, maintenance, and marketing for lease-up.
Capacity to Manage Funding
Being able to leverage more funding programs enables more resources for a development project. However, more grants create a complementary challenge: the ability to effectively administer them. Many organizations reported not seeking funding due to the administration burden associated with regulations, compliance, and reporting. At the same time, many organizations have pursued solutions to help reduce their administrative costs:
-
Dedicated program staff – While dedicated staff may not be an option for smaller groups, having staff assigned to manage specific funding sources or programs provides continuity and builds internal capacity for funding administration.
-
Cross-training staff – You can also add or reduce the administrative costs associated with different funding sources by cross-training existing staff on different programs and systems. This cross-training enables you to draw on staff as needed or increase your capacity for administration during busier times, such as during annual reporting timeframes or at the end of fiscal years, without having to hire additional staff.
-
Creation of additional entities – Some groups have formed separate nonprofit organizations or LLCs to serve as a housing developer. A separate legal entity enables you to protect liabilities in the case of an LLC and to create and sustain partnerships with other nonprofits and receive tax-free gifts in the case of a 501c3. Strong institutional support either through an executive director of a nonprofit, or other leaders can assist with pursuing leverage and addressing the administrative challenges that accompany administering financing among some developers.
-
Use of consultants – Small staffs can be supplemented with knowledgeable consultants, especially those with experience with common sources of funding used to develop housing.
-
Use of TA – There are national nonprofits and CDFIs dedicated to supporting housing development. In some cases, regional or government entities sponsor or cover some technical assistance, depending on the target population of the project. The Nevada Housing Division provides some technical assistance as related to applying for tax credits.
All of this will be discussed in more detail in the Planning and Predevelopment Phase under Assembling Your Project Team.