With an active multifamily year coming to a close, Multifamily Monitor goes one-on-one with Jonathan Kempner focusing on his views about 1997 and this year.
With the National Multi Housing Council's annual meeting being held in Boca Raton, Fla., on Jan. 13-16, Multifamily Monitor requested to have a chat with one of the key people in the multifamily industry.
Jonathan Kempner has been president of the NMHC since 1987 and, in an active decade of service, he has witnessed the decisions and successes within this ever-changing and growing industry.
MM: How do you feel the state of the industry is presently with all the REIT action on Wall Street and the wave of consolidation among corporations?
Kempner: I think generally speaking, the apartment industry is very healthy. We're in general equilibrium. If you look at the nation as a whole, the numbers are very positive, occupancy is up and I don't think, overall for the nation there's a substantial overbuilding that's at all noteworthy. To be sure, there are some markets that are overbuilt, but when you have a country with so many metropolitan areas that is inevitable.
MM: So you don't think Wall Street, with all the unleveraged money, the situations with REITs and consolidation, can produce an overbuilt cycle and pump up the development side?
Kempner: It can happen. There can be some overbuilding, and it tends to be an isolated geographic area. As far as a national trend, I think there are a lot of safeguards in place today that were not in place in the late 1980s. This makes it much more unlikely that we would have problems and, if we do have overbuilding, it would not be as severe as we saw in the 1980s.
MM: What are your long-term goals at NMHC?
Kempner: Our goal, is as we have grown -- we're about up to 765 members -- we have tried in a very measured way to expand the member services we provide. As our financial resources have grown, we've tried in a very prudent way to use them for our members. And therefore, as we move forward to provide a greater number of member services and to elaborate, I would like to see us even more aggressive in our representation of the industry before the U.S. Congress and the regulatory agencies. We have made it a long-term goal to be more active in research on issues of importance to the industry. Also, people do look at us as the key source in the country on apartment information, and we see there is a lot of added value that we can continue to give in that realm.
MM: What would you like to see implemented, regarding regulation and legislation of the industry, that would benefit the industry today?
Kempner: Next year there will be a tremendous amount of conversation nationally in the Congress about major tax reform. We want to make sure we are a key player in that whole discussion. Major tax reform might be a year or two away, but the course of the debate will be framed starting next year. Generally speaking, we have been very active in seniors housing, tax issues, environmental issues, fair housing, housing accessibility, zoning codes and rent control.
MM: If there is one thing you would change in the industry, what would it be, and how would you get it done?
Kempner: One thing I would change in the industry is an even greater dissemination of information. We found that the more information -- accurate good information -- that is out there, the more efficient the market is. That is why we've put more stress on our research effort, so the change is more of an enhancement. I think the market needs it, and we very much welcome it.
MM: Please comment on the affordable housing issues presently in Congress. How do you feel about affordable housing in general?
Kempner: Affordable housing is a critical issue with us and for the industry. Many of our members are focused on the luxury end; many of them are concerned and working in the affordable housing area. The major government program enhancement, of course, is the Low Income Housing Tax Credit (LIHTC), and we were very pleased there were not any cutbacks in that program. And indeed now, we are participating with other organizations to expand the quantity of the LIHTC program. The $1.75 tax-credit issue has been introduced to both the Senate and the House of Representatives, and that is something we hope will be debated and resolved in the next session of Congress.
MM: Who should be helping right now that is not, if it's the government or the private sector?
Kempner: Well, I think the government has to be more aggressive with some of its tax policies. An example is the restructuring of the Section 8 program that there has to be some tax concessions, tax solutions that we have been advancing with other organizations. We understand that Congress will give that a serious hearing, and that has to be done for these things to work. The Congress is just passing legislation which helps mitigate some of the tax pain involved in these solutions.
MM: What do you predict will be the biggest change in the industry during 1998?
Kempner: There will be a continuing of the consolidation movement, and there has been a lot said about that, but it is a distinct trend. Also, I think you will see more and more technological advances that will have an impact on our industry. In consolidation, Wall Street and large firms are merging together acquiring other firms, both public and private companies.
MM: What are you going to do to look at seniors housing directly and its building regulations for developers?
Kempner: We've been the most active group on building codes and other barriers in building seniors housing. That is something that is very important to us. There's a new international building code being implemented, and we're right in the middle of that drafting -- we're the key multifamily party in that activity. Many of the seniors housing communities do have a campus atmosphere which have the different gradations of care. The closer you get to the nursing home model, the closer we would look at an issue, we have the American Seniors Housing Association for that, and they do a great job.