Scott Kline (President & CEO)
The HAND network is hard at work to address the growing housing affordability challenge across the Capital Region. Five Minutes With is a series highlighting these members and other stakeholders. This informal conversation delves into their recent projects, the affordable housing industry, and more. In the latest edition, we have a conversation with Stratis’ Scott Kline (President & CEO). Kline chatted with us about his extensive work experience in the housing and community development industry. He also highlighted the challenges he foresees for himself as he begins a new chapter of his career. Check out our dialogue below:
HAND: You have extensive experience in the housing/community development industry – can you tell us about your journey to this point?
SK: Sure! My dad was a small developer down in southern Virginia. Growing up I frequently worked for him on weekends and over summers. I really enjoyed the real estate development process – starting with nothing (new construction) or a mess (renovation) and transforming it into something new and beautiful. With the combination of so many disciplines: architecture, construction, law, finance, asset management – it never got boring. And the smell of construction!!! When I graduated from college, I knew I wanted to work in the development business in the DC metropolitan area, which proved more difficult than expected. I started working for a builder of new homes as an accountant, in hopes that I would be able to progress into actual development. After two years, I realized that was a dead end. From there I worked as an investment analyst for another large developer, until the Tax Reform Act of 1986 put them out of business and I was without a job. It was then that I saw an advertisement for a position with responsibilities that included: negotiating for the acquisition of projects, developing scopes of work and financing plans, and project management. It was for a “nonprofit” organization called AHC formally known as Arlington Housing Corporation. Candidly, I didn’t know what a nonprofit developer was, but the job sounded perfect. The rest is history as they say. I was hired by John Spencer, the founder of HAND, and I fell in love with mission-oriented real estate development. I traveled to meetings with John when HAND was first established. At that time, there was no annual meeting. We met up with 5 or 6 nonprofits every few months, ate our brown bag lunches, and had informal discussions about the industry and our challenges. HAND grew from there. Eventually, when HAND achieved sufficient mass that an Executive Director was hired, I joined the Board and ultimately became the first President that was not John Spencer. It was a tremendous experience. When John left AHC, I became the Director of Multifamily and coordinated all facets of real estate development, and oversaw asset management.
After eight years at AHC, I joined the National Housing Trust as Vice President. NHT was comprised of three of us at the time, and when I left after more than 23 years, there were 30 employees. Initially, I worked on policy, development consulting, and assisted with running the organization. In the year 2000, we started a separate affiliated 501(c)(3) corporation to develop and preserve affordable housing – NHT Communities formally known as NHT Enterprise Preservation Corporation. Added to my responsibilities was establishing and running NHT Communities. The work was similar to what I had done at AHC. I gained the experience of developing affordable housing all over the country working with a variety of state and local governments. I’m proud of the accomplishments while I was there which included the preservation of more than 8,500 affordable units and incorporated $1 billion of financing.
Also at NHT, I established a separate affiliate energy company that focused on providing sustainable retrofits to existing affordable housing. Most notably, we developed solar arrays which in total created 11,500 KW of electricity with financial benefits accruing to households of low- and moderate-income families and seniors.
HAND: Tell us about your newest chapter with Stratis. What excites you about your new firm? Do you foresee any challenges?
SK: For the first time in a long time, I’m not responsible for managing the organization, making payroll, and setting office policies that impact the lives of so many. That’s a relief. I’m excited about channeling that energy into more project work. I’m also excited about sharing my knowledge and ideas with others. I’ve always enjoyed teaching. At the same time, I’m still learning. There is nothing “cookie-cutter” about affordable housing development. Every project is different and every developer has their own means, methods, and decision-making processes. I’m finding it fascinating to learn about new ways of approaching projects, different financing schemes, and different ways to run a development organization.
I do foresee challenges. Mostly, I’m used to being the decision-maker. As a consultant, I advise, providing the best counsel that I can. But ultimately, decisions are made by my clients. That takes some getting used to.
One thing I miss is the residents. At AHC and NHT, I had a fair share of interactions with tenants. That was informative and rewarding. I don’t foresee having those kinds of relationships as a consultant.
HAND: What factor separates Stratis from other similar consulting firms?
SK: Me. I have experience with a variety of financial executions. In addition to low-income housing tax credits, tax-exempt bonds, multiple credit enhancements, and soft financing from state and local entities, I’ve worked on equity structures that do not involve tax credits, and utilized several HUD programs, some of which allow for significant changes in rents. Additionally, I’ve run an affordable housing development organization, so I’m familiar with the types of considerations and issues with which real estate developers are concerned. In running that organization, I was responsible for all facets of the development, operations, and organizational management. So regardless of my consulting assignment, I’m not approaching projects simply from the perspective of finance, and getting to a closing. I’m conscious of other organizational considerations like predevelopment risk, sustainability, asset management, and resident services.
HAND: What is one thing you wish you would have known at the beginning of your career?
SK: The business of creating affordable housing lacks the structure that is incorporated in some other careers. For example, accountants receive ongoing training regarding their trade and to some extent, they do task A, then B, then C depending on the engagement. While the complexity of the work certainly varies, there is some level of structure and predictable progression of the work. Affordable housing development is anything but. I’ve worked on projects that take 3 years from start to finish. I’ve worked on projects that take 12 years from start to finish. Some involve intense local government participation, some involve virtually none. Some involve intense resident participation, some involve none. Some involve zoning issues and related processes which vary from one jurisdiction to another. There isn’t a model or a template. There isn’t a real estate development checklist that applies to every project. I wish I had known at the beginning of my career that I would be teaching myself a process and that it would vary greatly from one project to another. And further, that there is no one right way to do it. If you provide the housing and turn a profit, you did it one of the right ways, and hopefully, you learn what you might have done differently that would have enhanced the outcome and maybe, just maybe, that knowledge will be beneficial on another project.
HAND: What do you think is the largest hurdle when it comes to creating and preserving affordable housing across our region?
SK: Besides money? More money.
HAND: What is your “why”? What keeps you motivated to continue your work in this space?
SK: The people we serve. As noted above, I’ve had a fair amount of interaction over the years with the residents our industry serves — families, elderly, supportive service recipients, homeless. Their incomes have ranged from zero to low income to moderate-income to market rate. I remember so many faces of low and very low-income residents as we celebrated their new homes. The work is hard but at the end of the day, I’ve contributed to improving the quality of life for some individuals, and maybe even given them a platform to move up and create some wealth.
HAND: Do you believe there is a “secret sauce” to addressing housing affordability? If so, what do you think that is?
SK:Absolutely not. As noted above, there’s not cookie cutter approach to this work. Every project is different and there’s not one single model for developing and presering affordable housing.
HAND: If you weren’t working in this space, what might you be doing?
SK: Honestly I have no idea. It’s a question that I’ve pondered. But I really can’t picture myself doing anything else but this.