Navigating the Amazon Effect: Phuc Tran’s Analysis of the Amazon Housing Equity Fund’s Impact on Affordable Housing
Jair Lynch’s Vice President of Asset Management, Phuc Tran, recently spoke on two panels for the District of Columbia Building Industry Association (DCBIA) and the American Bar Association (ABA)’s 35th Annual RPTE National CLE Conference in April and May, respectively. The panels explored the Amazon Housing Equity Fund’s (Amazon) involvement in the region, the different ways mega-corporations like Amazon can impact the preservation and availability of affordable housing, and how public sector programs such as tax credits, real estate tax abatements/PILOTS, grant programs, housing choice vouchers, and Housing Trust Funds can be used as tools to preserve affordability.
During the panels, Phuc shared insights on the challenges of securing capital for affordable housing. He highlighted how Amazon Housing Equity Fund’s affordable housing program works hand in hand with developers like Jair Lynch to preserve affordable housing in the Amazon-adjacent communities, expanding the use of atypical and nontraditional forms of funding.
“We’re continuing to experiment with different financing mechanisms that we can use to preserve housing and will help us renovate and preserve both the affordability and the quality of the assets for the long term.”
Phuc Tran
Phuc also emphasized the importance of flexibility that corporations like Amazon can bring to the region in terms of investment that helps to secure affordable housing. In his discussion on the panels, Phuc highlighted the funding vehicles, such as tax credits and vouchers, that have played in development most recently and spoke to the nearly $1 billion in loans and grants to private developers and nonprofits that Amazon has provided.
Although Amazon is nearing the end of its fund, Phuc believes there are important lessons for traditional affordable gap lenders, like cities and states. The chief lesson is the need to be flexible enough to meet the needs of the project. While Amazon typically provides gap financing in the form of loans, they have also provided acquisition financing, grants, and programmatic support, and have been consistently open to new ideas. While government agencies and philanthropic organizations may never be able to move as quickly as Amazon due to necessary public oversight and program restrictions, building flexibility into affordable programs may ultimately lead to more production and preservation of affordable housing.
The DCBIA panel entitled “The Amazon Effect on Affordable Housing in DC and Region” was held on April 11 and featured expert panelists from both the public and private sectors in collaboration to address affordable housing challenges in DC and beyond. Jubilee Housing, a nonprofit developer in the region, was among the groups in attendance who spoke alongside development leaders at the panel.
The full list of panelists from the DCBIA panel included:
- Jim Knight, President & Chief Executive Officer, Jubilee Housing
- Corey Powell, Chief Operating Officer, Dantes Partners
- Winell Belfonte, CPA, Partner, Cohn Reznick
- Senthil Sankaran, Principal, Housing Equity Fund, Amazon
- Phuc Tran, Vice President, Jair Lynch Real Estate Partners
The ABA panel, “The Amazon Effect: Amazon HQ2’s Effect on Real Estate and Housing in the D.C. Metro,” took place on May 12 and featured a variety of different perspectives on the issue, including speakers from Amazon, regional leaders, non-profits, and developers including Jair Lynch.
The full list of speakers from the ABA panel included:
- Priya Jayachandran, National Housing Trust
- Liz Price, Washington Metropolitan Area Transit Authority
- Senthil Sankaran, Amazon
- Phuc Tran, Jair Lynch
- Anne Venezia, Arlington County
Did you know? Jair Lynch is one of Amazon’s largest development collaborators in the region, having received over $200 MM in funding for multiple projects in the region.
The Takeaways
The Amazon Housing Equity Fund serves as a successful example of how public-private partnerships, corporate investment, and the exploration of nontraditional financing methods can make a significant impact in the pursuit of creating and preserving affordable housing in regions that need it. The keys to remember are:
- Flexibility in Funding: The Amazon Housing Equity Fund offers a flexible approach to funding, going beyond traditional methods like loans and grants. This allows for innovative financing mechanisms to be employed in the preservation of affordable housing. While state and local governments may not be able to replicate the speed of the Amazon Housing Equity Fund deployment, they can adopt the flexible mindset that Amazon has demonstrated.
- Corporate Investment: Government alone won’t be able to solve the affordable crisis in our country. The ability to secure substantial corporate investment, as exemplified by Amazon, is crucial in supporting affordable housing initiatives. This demonstrates the potential for corporations to play a significant role in addressing housing affordability challenges. The lessons from the Amazon experiment need to be shared so that other corporate interests can pursue similar investment strategies in their communities.
- Public-Private Partnership Potential: The Amazon Housing Equity Fund highlights the potential for collaboration between mega-corporations, the public sector, and the private sector to address affordable housing needs. By leveraging the resources and expertise of multiple stakeholders, innovative financing mechanisms can be implemented to preserve and expand affordable housing options.
- Nontraditional Financing Methods: The example of the Amazon Housing Equity Fund encourages the use of atypical and nontraditional forms of financing, which can include partnerships with corporations, impact investments, tax credits, grant programs, housing choice vouchers, Housing Trust Funds, and other creative funding solutions. These alternative methods increase the availability of capital for affordable housing preservation.
