Hey there it's steve again and thank you for joining me for this month's podcast today. I'm going to discuss with you the affordable housing model. It's getting a lot of press a lot of discussion when we think about affordable housing. We think about people that are homeless people that are at near below the poverty line. That's the term that gets thrown around a lot. Well today I'm going to discuss with you and present to you the facts on why that model doesn't work today for the group groups that we're talking about. In fact the studies research shows that that model the affordable housing model fits for the groups that we're talking about today in zero counties in the United States today. In fact, I'm gonna walk you through the math that shows that that model barely fits For someone with a family of four bringing in an income or combined income of $100,000 a year. Let me give you some background. I used articles that referenced Harvard research and the U. S. Census Bureau and if you're interested you can reach out to me and I'll be glad to send you these articles. So the background. Well, first of all, there's three reasons why the model doesn't work. Number one, the cost to build number two, the income of the people that we just talked about homeless at risk near or below the poverty line. The poor. They're struggling to make ends meet we're gonna talk about their income fact based and the barriers for these people to even become eligible to get to the income level to afford it. So let's start with some background As some of you know, on average, there are about 550,000 people that are homeless on any given night in the United States of America. They can't afford affordable housing period. There are over 11 million people in this country That spend 50% of their paycheck for rent. Over 11 million people that I believe is the population of new york city and Chicago combined, interesting enough, There's over 11 million people in this country That are below the poverty line today. The poverty line is defined as just below $30,000 a year. It used to be About 22,000 a year, a handful of years ago. But costs have gone up, cost of living has gone up of that 11 million. There are 4.2 million single moms that are at risk Of being homeless. 4.2 million single moms, their Children. To a large extent the future of this country. According to the US Census Bureau in 2017, There were over 342,000 units That were slated for construction of those new units 14% or 1/7 were deemed as affordable. That's about 48,000 units. We're talking about a lot of people being affected. And right now the numbers show 48,000 units designated for affordable housing. So let's talk about the barriers. First you have development cost since 2009 Labour and materials have gone up over 23% in this country. That's post the 2008 financial crisis in san Francisco of note on the low end and I stated this in a previous blog. The cost per unit is on the low end, it's 600,000 per unit. So you've got labor and materials gone up over 23%. Now you've got fees, you've got developer fees, project management, design fees. Now you have the banks loan fees, financing fees, are banks in this country are for profit banks, how do they make a profit? They get a return on their investment, How do they factor in that to get that return? What do they use and to value and determine the size of the loan, projected rent vacancy rates increases. So they're looking at the operating income and you know, to generate a return. These projects have to show and demonstrate the ability to be profitable for a number of years. I mean, that's how the banks value the loans and decide whether or not and how much money they're gonna loan, whether it's to your business or mine or in this situation, developing these affordable housing projects. The good news I hope is that there was an affordable housing credit act passed this year in june, I don't have a lot of detail for you right now because there isn't a lot to provide. Its very early. So let's keep our fingers crossed on that that it could provide a market incentive for the developers to start to build more units and affordable units. We got to drive the cost down. So let's keep our fingers crossed on that. So market incentive has a lot to do with this. We live in a capitalistic society. Free enterprise, that's the name of the game. I looked at the new york study from a couple of years ago a few years ago That said that the cost of an average multi family unit, you know, you factor in construction costs and everything that I just outlined and the ongoing maintenance is about $2500 per month. That's $2500 per month for a multi family unit. So let's get into the numbers and affordability because the numbers don't lie. They say the studies show that a person in this country should spend No more than 30% of their paycheck on rent. We're talking about rent now, most people like over two thirds say they can't even become eligible and couldn't even possibly afford a home of their own. So if you're making 30 K. A year, that's right near the poverty line, the number $750 a month. Again, the poverty line is about 29 K. Not too long ago, it was at 22,000. So we've got development cost cost of living cost, they're on the rise. Give you an example here that I mentioned earlier, a person making 100,000 in income. The numbers should be no more than $2500 a month. That puts them right at the line. In terms of a multi family unit in new york city. Big homeless problem there. Big home homeless problem out here on the west coast cost her high out here in Los Angeles san Francisco to name a couple of cities out here out west. So you gotta make 100 K. In a major city to afford this over 11 million or below the poverty line today, making less than 30 K. A year. So let's keep moving along point number three. The barriers take you through some more math here and who's eligible. How do you even become eligible to become eligible to afford housing if you follow me? So what do I mean by that? I mentioned this before, disability in this country. If you're eligible for disability, it's $800 per month, roughly. If there's a history of substance abuse, you may not be eligible. We've got a lot of people out there with an untreated substance abuse problem and mental health challenges, which I've talked about previously, that's only $800 a month assuming you're eligible. This is where it gets tricky with these programs when you get in the devil's in the detail into the eligibility. So one program I looked into in particular in the state of California is food stamps, Food stamps has been around since actually post the Great Depression, it became eligible available in all states in the 1970s. So it's been around for a while. Let me give you some more numbers. If you're single, you if you qualify and I'll get into that, you can receive up to $193 per month, family of four if you're eligible up to $640 per month. Now let's get into the eligibility and let's talk about the state. I live in California. What's required in most cases, you have to demonstrate if you're single You make less than $15.6,000 per year. A family of four, less than $31.9,000 per year. You're already poor you're either at or below well below the poverty line. How is housing gonna factor into that? You're just trying to become eligible for food stamps to eat. You also have to show that you're receiving some other form of government aid like welfare, you're already in that 11 million plus bucket. If you're homeless, you have to show proof of I. D. We have to show it anyways, proof of I. D. Social birth certificate. I understand that if you're homeless, what happens when they run a sweep? They conduct a sweep and everything's taken away including those items. You gotta go through that entire process. Just to try and get a meeting and interview to see if you're eligible. If you can prove you're eligible and if you're in school higher ed, you're not eligible. So you're making after tax with these numbers, you know, $9,000 roughly. And you're supposed to be able to afford a 750 dollar rent. The math doesn't add up. And there aren't any affordable housing units that are in the $750 range. To my knowledge, the average cost again is running around $2500 per month. Zero counties in the U. S. Can fit this affordable housing model. And going back to the food stamps for a second. Again it's been available and a number of states post Great Depression, all states since the 19 seventies in California, we have the largest problem in dealing with the homeless out here in cities like L. A. San Francisco san Diego In California of the top states that have people receiving food stamps, the benefits from the food stamps program, California is not even in the top 15. And we have the biggest problem when I was volunteering in Los Angeles mission on Skid row and working with those students. I learned a lot about this stuff and how difficult it was for them to become eligible. Then you gotta factor in transportation to get to, you got to show that you've got an application that you've turned in for a job interview, you've gotta work out transportation, you've got to set up these interviews and in a number of cases, you've got to go to training classes and other education, pursue other education to become eligible for food stamps. We're talking about food to eat, this came off the site. So, you know, these people are trying to provide for their families, take care of themselves and you know, again, you have some people out there that are just uneducated and say, you know, they want to remain on the streets in some cases, that's true. In some cases there are waiting lists for these affordable housing units up for up to two years. That's unbelievable. They're looking for their next meal and they figure why bother all these hoops. They have to jump through everything they have to try and coordinate to try and get help. The model that needs to be talked about these days and where the investments just aren't going to is a supportive housing model with long term care to rehabilitate these people that involves counseling education, rehabilitation, treatment for mental illness and addiction if necessary. Not everybody that's homeless struggles with addiction and mental health. Many women choose to be homeless because they want to get out of toxic relationships where they're being physically and sexually abused and they take their Children and feel they're better off in the streets than being at home and just being abused, There's a lot that goes into this and the focus is just not there. The affordable housing model does not work, it's cost prohibitive, the people don't have the income and the barriers have been in place for decades now. It is very difficult. And yes, there are some people that choose to remain on these streets. That's it for now. That was a mouthful. I appreciate you listening as always. And I want to wish you a very safe and happy thanksgiving holiday. There's plenty to be grateful for. Of course, as many of us are doing well in this great country and I hope this was useful and I'll be back in touch with you before christmas, Take care and God bless.