Odd Lots - Housing Is a Problem Even in a State With Declining Population

Episode Date: August 16, 2025

You can kind of understand why it's so hard to build housing in New York City. There isn't much available land. It's already pretty built up. And then, add in the fact that so many people want to live in New York, and you can understand why it's so expensive. But what's the deal with Alaska? There seems to be plenty of land. And population has actually been in a a general state of decline. And yet, housing remains strained, with many of the same affordability problems seen elsewhere in the country. So what are the specific challenging dynamics to be overcome? On this episode, we speak with Jimmy Ord, Daniel Delfino, and Stacy Barnes of the Alaska Housing Finance Corporation to understand the challenges they face, and the work they do to ease the strain. We get into both the specific logistical, political, and financial tools available to reduce pressure. Read more:NYC Approves Midtown Rezoning to Allow 9,500 New Housing Units More Estate Agents Are Reporting Falling House Prices, RICS Says Only http://Bloomberg.com subscribers can get the Odd Lots newsletter in their inbox each week, plus unlimited access to the site and app. Subscribe at  bloomberg.com/subscriptions/oddlotsSee omnystudio.com/listener for privacy information.

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Hello and welcome to another episode of the Odd Lots podcast. I'm Joe Wisenthall. And I'm Tracy Allaway. So Tracy, I get why like a city, like New York City, housing is really expensive, it's really difficult to build. I mean, there's not a lot of space, right, in New York City. Like, I don't really blame New York City for not building a lot of new housing. Like, where would you put it exactly?

Right. Manhattan is an island, seems somewhat limited. Plus it has a giant park taking up a good chunk of it. So there's that. It seems Nimbis are keeping it so that we can't develop on a central park. But yeah, like I sort of get why housing is really strained in New York City. I don't blame anyone really for it. But it always seems like in the more rural locations, especially where there's not a lot of population growth, it should be really easy to, you know, just build more houses or, you know, use the houses that people left when they moved. And yet, our impression is from past trips, et cetera, that, you know, just.

There's a lot of strain on rural housing as well. That's right. So we've done a few field trips to places like North Carolina. And we learned that even in an area that certainly is not as densely populated as Manhattan, there are housing issues. Yeah. And now we are up here in Alaska, which, you know, if there's one thing I know about Alaska, it's that it is big. It's big, yeah. Like twice the size of Texas.

Is that the stat that people use? Something like that. It's incredible. Something like that. There's got to be some empty space to build houses. You would think, right? And yet we're up here. And one of the things that people keep talking about over and over again is this idea of housing strains within Alaska in Anchorage, too, which is where we are right now. Yeah, totally. And we have heard that multiple times. And so whatever the issue is that sort of the story that we tell about Manhattan, there must be something more to it because it's not just a matter of no space because even places that are swimming in space have strains. And so I want to understand what that is. We've been up in Alaska.

listeners will remember our episode we did with Mary Daly and maybe some other ones that came out by the time this episode is coming out. But there's no way to understand a state without understanding its housing economy. Absolutely not. And also, just because it's Alaska, the other thing I'm really interested in, and I think you might be interested in it, too, as a relatively new homeowner is just the idea of maintenance on a house in Alaska. It must be insane, right? Like, imagine how often you're replacing a roof in a place that gets, like, you know, feet and feet. feet of snowfall every year. No, totally. All right. Well, we do, in fact, have the perfect guests. We are at the Alaska Housing Finance Corporation. We are going to be speaking with Jimmy Ord.

He is the Director of Research and Rural Development, as well as Daniel Delphino, Director of Planning and Program Development. So Jimmy and Daniel, thank you so much for coming on the odd lots. Oh, thank you. This is Daniel. It's nice to be here. We appreciate the invitation to chat with your highly sophisticated group. This is Jimmy. Happy to be here. Well, thank you both. for having us at your office. What are you just for listeners, tell us, what do you do and what is the Alaska Housing Finance Corporation? Lasca Housing Finance Corporation, this is Jimmy. We are an organization that addresses safe, quality, affordable housing in Alaska. That's our mission. In the early 90s, the state of Alaska, they took the different housing departments and the

housing finance agency, and they put them under one roof. So in many other states, you can have housing department, maybe in the Department of Commerce or under revenue or under some other function of the state where we get to walk across the hall and talk to our counterparts in the mortgage department or the finance department, public housing division. So we're an organization that is all things housing in the spade of Alaska. And that's really helped with collaboration and getting programs and services out the door. So Joe and I tried to do this in the intro a little bit, but why don't you contextualize for us? What are the actual housing issues in the state of Alaska? How would you describe some of the problems that you're trying to solve? So there are a lot.

You said earlier, go into the details. The housing issues used to be a lot simpler when I started in 2008. It's kind of like the algebra problems that evolve, the more math you take. You solve for C, and you're only dealing with one unknown variable, and you're able to triangulate that and solve a pretty simply. And then it's like, okay, now you have two unknown variables and you use a substitution rule. And now you get up to three or four unknown variables. And now all of a sudden you have to start using linear equations and it just gets to this level of complexity where you need a computer. And that's kind of what we're dealing with in terms of the issues as they've kind of emerged over the state. We have some places that are dealing with population grain. We have some places that are

dealing with an aging contracting base where the people are retiring and there's no new people coming up behind them. We have other communities that are struggling with. The cost of housing development, I mean, you mentioned the cost of housing and the intro. There are a lot of things that drive housing costs and housing challenges, I'm guessing we'll get into here. But then you have the housing stock itself. When I started, it used to be you had apartments, you had houses, and you had hotels. Now all the three things are effectively linked. Thanks to the emergence of vacation rentals in a lot of our communities where the hospitality industry is, now inextricably linked to the housing industry because you have inventory that is taking a

multi-purpose nature throughout the year. So there are a lot of things moving all at once. And the old days of being able to focus on one or two issues and try and understand how it's affecting the housing market at large, those are largely gone. We're left in this layer of complexity that's very difficult to conceptualize and even harder to communicate to other people that don't live and breathe this stuff. And adding to that, Daniel, I just want to make sure folks understand the vastness of the state of Alaska. Please. Like you talked about there in the introduction, imagine a state where you can get on a plane and fly three hours west and still be in Alaska. Okay. So there's so much in this state that is going to be varied because of the location and the community.

And you have communities in rural Alaska that have several dozen people in them, and they still need housing and services. And the cost to make sure that they have safe quality, affordable housing is going to be extreme. So they have to ensure that the housing that they're building is appropriate for that space and climate. Now, if you were going to start in southeast Alaska and you wanted to travel to the north slope you're going to leave a wet rainforest marine climate and you're going to head to the north slope which is up in uctlyovic area and you're going to see extreme temperature changes from

50 60 below zero to you know to 50 60 degrees Fahrenheit above freezing you know so it's it's quite a state and when you're thinking of housing in that space it's not a magic silver bullet. One of the things that you'll find as you go on this journey from southeast Alaska up to Ucdjavik is if you flip a coin, probably about half of the merchants that you find online that you may take for granted on Amazon won't ship to you in Alaska. So when you talked about some of the housing challenges, people don't all do business in Alaska and those that do tend to charge us gouging prices to get things up here. Jimmy mentioned flying three hours to western Alaska to get to one of the communities. We did that last year for a board meeting.

And when you get to that place, when you go down the runway, you see a plane off to the side of the runway. And it's a plane that broke down, that just stayed there. There are things in that harbor that have rusted out because they don't come out and pick them up. I mean, there are certain things that people take for granted, like shipping services, that you're going to be able to get new parts in. You're going to be able to take things away that are dilapidated in your community that aren't a reality for a lot of the people that we work with in this state. A lot of our neighbors, especially in the places off the road system, which is the majority of our communities, don't have a lot of the things that most people take for granted. So never having been there, I can only imagine the sort of weirdness and difficulties of trying to, you know, commerce and housing, etc. in some of these extreme far-flung locations.

Let's just start, though, with like the relatively major urban centers. You know, we're in Anchorage right now, the biggest city in the state. Like, what's happened on the affordability front here and what's happened on the construction front here over the last several years? Sure. So I'll take a shot at this one. On affordability, I've seen a bifurcation in the market. The interest rates a couple of years ago were down on the twos for people that wanted to refinance. And the homeowner market was going gangbusters.

And the prices, when interest rates were low, reflected that. There was a huge price acceleration in the cost of homes. Fast forward to now, instead of a 2% interest rate, I think our rate that we publish for a first-time homebuyers on our website, I checked it this morning at 6.2%. So a couple of years ago, things were much cheaper. Same thing for renters, cheaper for renters. It's just the growth rates when I'm talking about the lines going up at different angles. Homeownership and Anchorage, the cost has gone up by over 60% in the last couple of years versus close to 30% for renters. So both have it bad.

It's just one, one has a much steeper curve. So what we're seeing is a lot of folks could not afford to buy their own home again at today's interest rates. And that's affecting their willingness to sell them because they can't afford to buy something new in another community or even within the same community at the interest rates that they charge. So you have folks that are maybe stuck or less mobile in homes that are really expensive now. You have renters that don't have people freeing up a home ownership sock. So it's getting a little bit more congested there. And a lot of things are moving. In terms of the development, the inflation chaos that we were seeing in the construction industry

where no one would do guaranteed maximum price contract anymore and it was all time of materials. Some of that craziness in terms of the escalations that we were seeing year of year like 20, 30 percent, that seems to have died down. It's still expensive. Don't get me wrong. But that's moderated a little bit. What hasn't changed is the availability of land. I mean, you look around and you see, wow, you're huge.

you see. We brag all the time. We're twice as big as Texas. Why can't you build housing everywhere? Well, the land here isn't the easiest to build on. Like, you can look at a hill and it will be considered a federal wetland because there will be a specific type of plant that's on the side of the hill. Or the hill is owned by the federal government or some other entities. So what you see versus what's available to develop, there can be a disconnect in some communities. And Anchorage is one of our older communities, so it's been built out with a lot of the easy and the good land taken first. There are other places to build outside of Anchorage. And we do see that sprawling a little bit more outside of the main community.

But for the communities that have been developing for 20 or 30 years, they're starting to reach the more mature stage where they're running into the harder things to develop, given what's left. Yeah. So what I hear you saying, Daniel, is that in many ways, Anchorage is somewhat similar to other larger communities throughout the country, where they're facing cost of construction, labor shortages. The lock-in effect. Yeah, but I still prefer to live here. Okay, one thing that I know is unusual about Alaska and Anchorage specifically is that you have a large turnover of the population, right?

You have a lot of people who are leaving every year and you have a lot of people who are coming in. And on the whole, you have seen, I think, a slight, maybe not for Anchorage per se. You'll have to correct me. But there's been an overall population decline in the state for sure. How does that turnover in the population? And the idea that, you know, for the most part, you have seen a decline in total numbers. How does that feed into the housing situation? Not the way that you might think.

Okay. So in 2010, surely after I started, we were talking about a housing plan here in Anchorage. And there were projections that Anchorage was going to grow as far as the eye could see. We were going to have all these people coming in. Six years later, the population peaked. And then it started falling. So it was like, okay, we peaked in 2016. and then we started going down to a base around 2020, 2021,

and then we started coming back up. So we have about 2,000 more people now in the last recorded population year than we did in 2016. Well, the vacancies have gone up. And it's when we see that people leave, you would expect, okay, the vacancy rate should go up, right? Yeah. That's not happening. So it's like some of the things when I talked earlier about, about you used to have one variable or two variables explaining things.

And now we have a sort of multi-purpose inventory. Why is that? Yeah, this is to me a huge question. Are people changing their living arrangements? Do we have housing stock? Because, I mean, if you go from the supply and demand, if you reduce the supply, you can get back to a tighter vacancy rate by doing that, even if the demand is falling. I don't know if that's happening.

We're trying to track the vacation rental data as best we can. We go through a company. I don't want to name a company in case I gets me into some commercial issue here. but we get proprietary reports where we track the growth in vacation rental listings across the state. And we see that those have gone up. They've almost doubled since I want to say 2017, 2018 when we started tracking them. Is that just the data set being completed or is that legitimate growth? I mean, these are questions that we're asking because these are new issues.

If it's legitimate growth and the vacation rental stock did actually double and now we're looking at 7,000 units that have come online across the state in the last couple of years, that's a big number. If that's just counting what the data set wasn't recording in the earlier years, then I don't know. So we're seeing a lot of these things that offer explanations, but there's still such new issues in the data and in housing in general that we're really reluctant to come out forward and say deterministically, yes is this, yes, it's that. But we do see things that don't make sense because usually housing is a function of people. If you have less people, you should probably mean less housing. And that's not what we're seeing in the data. And so, Joe, it's unironically our fault as some of the visitors coming to Anchorage. We stay in a hotel, though.

Yeah, okay. But we might go to an Airbnb later this weekend. That's true. I'm sorry, 739 for the state in a couple of years ago, and now we're at 741. Yeah. So 2,000 more people. I came to Alaska in the late 90s, and I feel that that was the number back then. It just hasn't really changed that much.

And so to your point, Tracy, where you have people moving to the state. They work for a period of time and then they move out. You know, they've kind of come. They've experienced the wildness of Alaska. And then they're moving on to do different things. Yeah, and we used to be a countercyclical state in that people would come up here when there was a downturn in the lower 48 as we refer to the rest of the country. We've probably heard the term lower 48 more in the last three or four days that I had. It's not a pejorative.

It's just a geographical distinction. No, I just forget the best where we are. Anyway, thank you. No one calls Alaska the like upper one, though. one, the 49th state. That would kind of sound elitist. Okay. So my other question in terms of housing stock in a place like Anchorage was just how much is lost through like sheer attrition, I guess, and like depreciation. Depreciation. And I could kind of, I could see arguing this both ways. So on the one hand, because construction costs are so high here, if you have a house, even if it's

aging and falling apart, you probably want to hold on to it, try to fix it up and keep it. But on the other hand, just looking at the environment here, just looking at the weather, you must have rapidly, rapidly depreciating housing stock. That's one of the biggest challenges that Anchorage housing faces is its resilience. Most of the housing and Anchorage was built during the 70s and 80s when Alaska, you may have heard of this thing called the Alaska Pipeline. Right? Yeah.

And a lot of the housing was thrown up with two by four construction based on construction techniques and practices that were appropriate for somewhere down south. How's that for not saying lower 48? And what that means is, I like we're in this other part of the United States here. I know. When we go back to New York. The housing's really not built appropriately for this climate. I mean, it was built where you don't have a consideration for the long-term sustainability and resilience of that housing. So we find ourselves in a situation where when people come in and they're a homeowner to a new house, they have to spend a lot of their resources improving that existing house. Because like Daniel said, we don't have that much land

to build in new places in the Anchorage area. So a lot of what we have to do is fix the current housing stock that we do have. So an investment in energy efficiency, insulation, making sure you have an appropriate heating system, making sure that the windows and doors are in the right place is what we focused our time. time and effort on to make sure that a housing is appropriate. Can we talk a little bit more about this essentially supply side? Like how many like active developers are there in terms of like companies that do housing development? And then the specific like supply chain constraints that the inherent nature of Alaska poses to construction and repair. Sure. So I'll take a shot at this.

The development community, it's a very dangerous thing for a person like me that works in us or a quasi a government agency to try and speculate about the true population of developers, because there are all kinds of people that I don't talk to that do very important things in the state. We operate about 10 different housing programs that build or buy things that people will live in that's consistent with their mission across the state. We have roughly 70 partners that we work with across the state that are various nonprofits will have maybe 30 or 40 different developments going on at a given time across the state. So, I mean, is it 10? Is it 20? It depends on the year. And what are we talking about? Are we talking about people that work with government money like the loan-income housing tax credit program or grants? Or are we talking about individual home builders? Is it a person who's building a multiplex? Is it a person who's building a duplex? So who's a developer? It's sort of a loaded question. Sort of like when people ask us, how much does it cost to develop per door? When we're reporting what we're doing on the public side with building housing units, we're looking at a complete budget. So when we say it costs $350,000 a door to deliver new housing to a community in the state, we're talking about the cost of acquisition, the cost of construction, paying an

architect, picking a developer fee, all these other things. If you're talking to a contractor who might also consider themselves a developer, they might just be reporting the vertical construction costs and they're keeping things off. So the language when we define these terms really affects the answer. So the developers that we work with, I'd say about 10 to 20, work with our agency to develop multifamily housing through our grant programs. There are a ton of people that build housing all across the state that I think would equally be called developers by other people, including their banks and their community partners. So it really depends on who you talk to. So just on this note, I take the point about permitting and where you're building in a place like

Anchorage, but talk a little bit more about what the constraints actually are on new construction. So there's the high cost of materials. I imagine there's probably labor. And in many respects, you know, if you're building residential in a place like Anchorage, you might be competing for contractors with, I don't know, an oil and gas company that's probably paying more money for them to build something else. So what exactly are the exact constraints, you know, whether it's materials, construction, labor, permitting, land availability, finance.

How would you describe those? Sure. So there's a, you said to get technical. So Cobb Douglas, you remember the production function of economics class where like what you can do is a function of labor and capital, right? There's also something that involves technology that transforms that curve. So there are labor inputs. There are capital inputs in terms of money, but it's also what you do with technology and the system behind it. So your question about development constraints, it is part labor, it is part capital, it is part logistics, because these are huge issues.

but with the aging sort of group of people that we have that are starting to retire and the people that are spread out all across the different arplung reaches of Alaska, the capacity is as much of a constraint for a lot of these folks. And this is something I think Jimmy's team works with our partners a lot on as well. The capacity is as much of an issue to some of them as funding or construction materials because we can put money out there. There can be resources to build housing, but if no one knows how to do anything with it, that can stop a community from actually developing housing. So that's one of the things that we've been doing with some of our development initiatives

is not just coming forward with some of the needed things like money or some of the other like federal resources, but saying, hey, we know some of the things that maybe your community doesn't. Because in addition to being spread out community-wise, our skill base as a state is also spread out. We have people all over the state who understand things. There are people who are great at procurement that are located off the road system that don't have running water. There are people that understand finance. You'll find Stanford grads in some of these communities.

But you need to put together a team of people that understand a lot of things to make housing happen. So when we see that they have three of the five things that they need to make a housing development, move forward, there may be the missing two things that we have that we need to bring into the community. That's as much a part of the development equation as capital is. Yeah, Daniel, I think that speaks to Alaska Housing Finance Corporation's partnerships with a lot of entities in the state. You know, I think of the Alaska Association of the Housing Authorities. It's a 14 member organization of different regional housing authorities in the state and, you know, how we're able to communicate with them and bring additional resources to bear so that we can be in this together, right? because like I said earlier, there's no magic bolt, there's no one size fits all. And to be

effective, you have to provide that assistance as a team member. I think there's just like a really interesting idea that like, you know, in a place like New York City, like of course, any new housing development is going to take lots of people with lots of different skills, whether it's the person who knows how to put in plumbing, the electrical, knows how to deal with permitting. And, you know, I'm sure many of the big developers in New York City are like one-stop shops or maybe just a two-stop shop or whatever. And the idea that in Alaska, like all that knowledge is there, but it's just so spread out so you don't have that sort of like knowledge density or those network effects, which we don't really think of, I think, a lot when it comes to housing. But it's very

intuitive when you talk about it in this context. And think about right, back to the population of the state, we still have to do all the same things. Yeah. There's still all the same jobs. There's just over 700,000 people, right? But if you're in a place like New York, there's millions of people to do the jobs, right? So there's much greater opportunity here in the state for individuals to step into a role and learn new things. But there's not as many of us to do the things that need to get done. That's, I think, one of our strengths, because there are a lot of things that are challenging about building housing in Alaska, but I'm trying to make it sound like it's all doom and gloom. We have a lot of things that do go for us as well. It's just in a fairly

small community, it's a hub off the road system. And the mayor was on a job site with us. And one of the carpenters referred her to her affectionately in a way that probably HR wouldn't like. But they're very jovial. And this elected leader runs a gift shop in town. And she's on a first name basis with the contractor. She punched the utilities director in the arm when he got out of the truck. I mean, they know each other. When we go in with this sort of connection, were their neighbors and these are people that live right next to each other, they're willing to help each other in a way that I don't know if Mayor Adams has that relationship with Carpenters in New York City.

I'm sure he would say he did. He has some relationship with Carpenter's. What the nature of it is we don't exactly know. But they care and they're a lot more predisposed to work with each other because they live in a way that's probably difficult for people in major cities with hundreds of thousands of people to understand the relationships between the elected leaders that we may work with and the people on the ground that are actually going to be able to do the work. And that's what's made some of the initiatives that we've been doing recently actually work

because these are people that actually know their neighbors. And they have a really vested, a joint vested interest as a community in making something happen. So that is one of the things that we have a lot of challenges. But that's one of our greatest strengths when we go into the communities is being able to leverage those relationships. Just to hone in on this point, can you give us an example of, you know, a project that you did in, I don't know, like a sitka or something like that. that, you know, where you were trying to bring in the requisite skills or the requisite construction workers and expertise in order to get something off the ground. And like, in excruciating detail, walk us through what that process actually looks like.

Okay. So there are a lot of places in Alaska where housing is such a challenge that local employers have resorted to actually building housing for their employees. State workers don't really have that option. because the state doesn't have deep pockets like some of the big health clinics do to do all these other things are like banks. So what we started seeing was our executive director, Brian Butcher, was reaching out to some of the other commissioners in the state, and they had positions that had been vacant for a long time. And they were in danger of losing the positions because they had been vacant for so long because there was nowhere for these people to live. And so if you go out to any of these communities, the person who takes care of the runway in the winter, which is your main source of transfer for logistics, might not be able to find housing. Like this is a really, this is a life and death issue for some of these communities.

So we're like, well, why aren't we, we have programs? Why aren't these communities utilizing our programs to develop housing? Well, we decided to get a little bit more direct. We're like, well, we're their local governments. We're a quasi-state agency. We can work with them on a government-to-government basis and say, what is it going to take to get housing developed in your community? Because this is like a critical issue for community and we need to come together and figure out a way to solve it.

So we developed something that we came up with. We called it the last rentier housing initiative after our state's motto. And we approached local governments with about $5 million each, just a couple of them, and said, we want X number of housing units to go up in your communities, some professional workers, some affordable housing. We tried to make it big enough so that it would be a big enough dollar amount that would be attractive for the community and generate some interest. But that's what we did.

We didn't come and say it has to be a two-bedroom, it has to be this, X, Y, or Z. we allowed the ask to the community to come from a place where we could be responsive to what they wanted to do. Some of them wanted to help out municipal people. We didn't know what kind of land they'd have, what kind of capacity they'd have. And all the conversations with the five partners that we approached were extremely different. One community was down 20 people, and this is a small community. So down 20 people for a municipal staff is big. They didn't even have a city attorney.

They were like, we basically need you to do almost everything. for us. We'll be on a review committee for you, but that's about all we can do. Another community, they had land, and they're like, yeah, we have a procurement department. It's great. We have land. We don't know how any of this stuff works with your program. So we flew down there and we did training with them and also other stuff. Another community, they didn't understand a lot of it. We had to go up there and it was like an episode of Shark Tank, sitting there for a couple of hours while everyone from the community started asking questions about the resource. Because a lot of these people are sold a bill of goods from folks that fly in and offer probably well-intentioned help saying,

oh, Alaska, we'll show you the way. Let us lead you out of the wilderness. And to jump in there. That is what Alaskans do not want to hear. Somebody from the Lower 48 coming here telling us what we need or how to do something. We're from New York and we're here to help. Yeah, because that conversation does not go over well. I mean, we're flying into the community of maybe a thousand people and a bunch of the community elders are at the table. We're the guests in the community. So it's like, here's our resource. We want to help you. And that's pretty much just letting the conversation play out. So the approaches were very different based on what the community wanted from us. But the thing that underpinned all of it was we were coming to them with a resource and a promise of support that we would stand behind.

And everything else beyond that was the community's decision as to what they wanted to do. Did they want to take a more active role? Did they not want to? Like some of them were dealing with city managers who are dealing with sewer lines, things like this, any number of of issues. They don't know how to negotiate with the contractor. They have no idea if a contractor asking for this payment request is reasonable based on the facts and circumstances. So for some of them, we were just a lifeline saying we have lots of developments and we, any given point in time, we have hundreds of millions of dollars in developments that are going on across the state. So this is second nature for us. And we can provide that technical expertise from a place that they

trust because they've worked with us for a number of years. This isn't the first conversation that we've had with a lot of the communities. They know that the agency that we represent doesn't have a history of burning them. So when they call and say, is this reasonable? And we say, well, have you thought about this? Have you thought about this? Have you thought about this? They're having a conversation that anyone else could have with them, but they trust us to provide them the truthful answer. And we were able to do a lot with that one. Since you mentioned the hundreds of millions in development, let's actually talk about the finance part of finance. And we're very interested in various financing models for housing and other way, give it,

especially given where interest rates are, et cetera, and who bears the burden? What do you talk to us about, like, how you finance yourself, whether you use the municipal bond market, and our, you know, creative ways of financing the construction of housing in Alaska that are not, that maybe those of us in the lower 48 don't appreciate. So I'm not the CFO and our CFO hockey player that he is. I would probably come down here very aggressively if I try to explain what he did. We're a self-sist supporting corporation. So we have a mortgage department that provides mortgage financing.

Our finance department is active in the bond market, making sure that our programs have capital. A lot of the programs that Jimmy and I operate are funded from HFC's earnings. We're under the Executive Budget Act. So our budget goes to Juneau every year, and it's allocated. And usually there's a recommendation of what to do with the earnings from the corporation for some of our programs. So like our department and the planning department, we manage roughly 20, programs and it's a combination of state, federal, and foundation grants and tax credits from treasury.

And then Jimmy has other funding sources from a bunch of different places. So it's a self-supporting corporation. Sometimes there are foundations that come in and match other things like that. There are financial tools that we use in housing. Some of them are more relevant than others. When you're looking at development that costs, say, I don't know, $500,000 to develop a unit off-the-road system, going from a 6% interest rate down to a 5 and 3 eighths doesn't really make that $500,000 a door something less prohibitive. So what we tend to see in terms of the things that are driving housing in the mission spaces that Jimmy and I think work in a lot,

it's not usually these things like people throw out terms like mezzanine financing or these other weird types of debt products. Those don't usually move the market for the multifamily stuff in the space that I see at the corporation. But there's an entire world of homeownership and lending and the relationships with the banks that we don't really touch that I don't want to speak to because that's probably really out of our area of expertise. Yeah, I would say that's true. Okay, well, sort of a related question, but I imagine no matter what's going on with your finances, you are limited in some way and what you can do. And you have housing needs in relatively large urban centers within Alaska. so whether it's Fairbanks or Anchorage or whatever, and then you have lots of housing needs in lots of different rural communities. How do you decide where you need to intervene and how you actually

prioritize a project? As Daniel mentioned, Lasca Housing Finance Corporation is a quasi-state governmental entity. So we take our direction from the legislature and the governor's office essentially, right? So there's a lot of the initiatives that we work on are coming with that direction and that intent. For example, one of the areas that I work on and we work on on our team is improving the housing stock in rural communities through weatherization and making sure that individuals in those communities, again, have housing that is appropriate for their climate because, you know, they, you know, the people that have lived in Alaska. for long durations and over the generations. You know, they've always had this can-do attitude, and I'm going to put some sweat equity into something that really shines through in their lifestyle and their community.

But oftentimes, they don't necessarily have the resources to do that. And Daniel was talking about the last Frontier Housing Initiative program. And I think that's a wonderful way to help the community is providing those resources. So when we go into a community with our weatherization program, we're not just going in to do one house. We're going to come in and we're going to do the community because we need to take advantage of economies of scale. We need to make sure that if we're going to put materials,

insulation, windows and doors, things of this nature, on a barge to then ship them up to the Norton Sound and maybe up a river to get to the community so that we can do an overall weatherization. project in that whole community and impact 70, 80% of the housing units there. So I think having the ability to take advantage of economies to scale and then work with the community to make that housing more resilient is very appropriate. Yeah.

So on the subject of prioritizing, we're a stayweight agency. So it's kind of like asking a parent to choose their favorite child. We try and make sure that our resources are allocated in a way that responds to the in Steyer State in a way that's relevant. So one of the things that we do is that we operate a lot of programs. Over 20 in our department alone, we get a lot of information from the operations of these programs of how much homeless housing interventions cost, how much developments costs, operating cost trends, things like this.

And then we also commissioned primary data on the rental market, and then we do a quarterly survey of lenders to try and understand what is the market doing on its own that we don't need to do because it's already taken care of it. So we try and make sure that we're not being redundant to what's already happening. And we're actually serving an unmet need in our state with the housing resources. So that's a big part of it. But then the other thing, and one of the things that makes the last run-to-your-housing initiative work and some of our COVID responses, we talk to our partners.

We have 70 different partners all across the state, and we engage with them on a fairly regular basis. And we just ask questions like, what's going on in your community? I mean, technology has been able to do a lot about expanding access to programs. programs and things like that. But the old school way of actually connecting and engaging with partners face to face going out to their communities like what we've been doing over the summer, that is really where we learn a lot of what we need to do to reposition our programs, because especially with our state programs, these are on Word documents that we can change upstairs if Brian gives us the go ahead or tells us that we need to change direction. A lot of our homeless

response initiatives from COVID were developed based on feedback that we'd heard from our homelessness and supportive housing partners over the last decade. The last rentier housing initiative, the same thing. When we're going through revisions to some of our rating programs, we actually call people and say, well, how do you make a decision on when it's time to renovate your project? Or when you're looking at a development, what do you actually, like, walk us through the process? We try and understand things from them. So it's not so much us making a decision from our low, forestry building here in Anchorage for the entire state. We really do try and inform that based on the data that we get from our programs and the conversations from our community partners.

Let me ask a related question. How do you judge the success of one of your programs? Because, again, I imagine in a rural area like an Anchorage, maybe you could measure it in sort of, you know, traditional ways. So we built a bunch of housing and then we saw a bunch of people move in and we saw economic growth increased by whatever basis point or percent or whatever. But if you're talking about a remote community where, you know, maybe a large chunk of the population is basically subsistence living. How do you actually measure the difference that your housing initiatives have made for that particular community? Quantitatively, it's very difficult to come up with a benchmark that doesn't basically redline communities. Because if you look at it on a

quantitative standpoint, say it has to be this growth rate or this unit thing, you're going to disadvantage one community or not. I'd say over the 17 so years that I've been here, what I come to view success from in terms of our initiatives is we do a lot of benchmarking when we design these things and whether or not the outcome delivered more than I thought. That's usually what I see a success. Was there something that we didn't account for that we captured in the process that drove the outcome further than we thought it would? The last Renteer Housing Initiative, we thought we were going to get 53 units.

We got over 60. So our leverage rates for the units were in excess of what I did or what we were modeling when we set that up. We were able to get broad-based support that led to other new programs. So we got more than we thought we were going to, and people seemed happy with it. That tends to breed success that has support for our programs going forward in the future. So it's kind of a fuzzy thing in a quantitative world, but it's really more of a qualitative thing that drives whether or not what we did works, at least from my perspective. And I'm going to take a little different approach in thinking some of the space that my team and I operate in,

and that's focusing on the existing housing stock. And I talked a little bit about the weatherization aspect. So what we've done in Alaska housing since the early 90s is developed an energy modeling software, which is unique to the state of Alaska. We call it ACWRM, AKWRM. And what this tool allows you to do is assess the building's energy efficiency level from a performance standpoint.

So if we're going to go into a community and weatherize it, like I talked about earlier, you know, we do an energy modeling of that home to determine and benchmark its performance. So if we're going to then do insulation and air sealing and some other aspects to improve its resilience, we can then measure that on the back end. Thinking back to 2008-2009, the state of Alaska made a very large investment in weatherization. I mean, two big programs. One was targeted more toward the low-income residents.

It was weatherization services provided by many of our partners throughout the state at no cost to the participant. And the other one was a rebate of up to $10,000 for homeowners making improvements to the house. And what this allowed us to do was create a database of more than 100,000 housing units throughout the state. And there's, what is it, correct if I'm wrong, Daniel, but in the neighborhood of like 260,000 occupied housing units. Somewhere in that neighborhood. I try to never do math in public, but that sounds right. Yeah, and at least owner-occupied. And, you know, so you think about having a database of over 100,000 of these buildings in one centralized location.

And you have information on how much insulations in there, the square footage, the location, the building performance. I mean, that's an incredible wealth of information that you then can use to make decisions. One of the things that we've heard is that Alaska has particularly high quality public data in part due to the dividend that people get from the permanent income fund and the people are willing to hand over some data in order to get that check. So it sounds like you guys have it pretty hand better than many in terms of having sort of some visibility into your own state. I want to ask about one of the things in New York City is that there's a fair amount of public housing, but there's a pretty much. reception that is not kept up well, that it's in disrepair, that elevators go and fix, et cetera. Public housing is under your purview here at the Housing Finance Corporation.

Talk about your, how that works. And also, maybe we could use some lessons or what you've learned about, like, how to keep the housing stock they're good. Yeah. So the public housing is a different department than what Jimmy and I manage. Yeah. What I can say is that the units that we operate that HFC owns are do tend to be kept up better than a lot of the other folks. So the stories that you may have heard or read about in other cities, I think our units tend to be kept up very well.

It's one of the benefits of being the type of agency that we are. If there's an issue with one of the units, it's very easy to get through to someone in HFC to connect with it. And I don't know the relationship that other housing authorities have and other stuff. States, I'm guessing they have a different reporting structure than what we have here at HFC, where Brian has a very close relationship with the folks in the elected government and these other things. So it's they tend to look nice relative to the other ones. We read the same stories that you do about other places.

It's like that wouldn't happen here. But maintenance is an issue in Alaska. Sorry. Did you want to say something? Yeah. So in the room here, we also have Stacey Barnes, Director of Government Relations and Public Affairs here at the Highlands. Housing Finance Corporation. Come in, come into the conversation. Well, thank you. So you've had some

really great dialogue. And a couple of things that I was thinking about as you were talking about is as it relates to public housing and the work that we do statewide. You know, we're one of 39 of the original Moving to Work agencies, which is a designation. Moving to Work. It was a designation that was authorized by Congress for us when Senator Stevens was still in the U.S. Senate. And that gave us great flexibility to accommodate many of the needs that we see across the state. So as a result of this designation, we've been able to provide a lot of flexibility and meet the needs of Alaskans where they're at. So we have public housing in 16 communities across the state. We own and manage more than 2,000 properties or so. And we also work really closely with

landlords across the state. And on the question of funding, of course, there's never enough HUD funding to meet all of the needs in New York or elsewhere. Our state augments the funding that comes in because of the success that our mortgage and our finance business have. And as a result, we pay a dividend to the state of Alaska. Jimmy mentioned being under the Executive Budget Act. That means that we get authority to spend some of the dividend toward our public housing maintenance. And that has been really successful in helping us to maintain the units. All right. So as we're wrapping up this conversation, I guess one thing I would be really interested in hearing from you is what do you think is like the big takeaway from the

Alaska experience that could pertain to the lower 48? What should people know about the housing market here and your housing initiatives that could possibly have some insights for, you know, housing bottlenecks elsewhere in America? I thought a little bit about this question as we've been talking over the last hour or so. And I take a lot of what Daniel talked about with regard to how we are working with our partners in specific communities and meeting the needs of those community members where they're at. You cannot have one big magic policy to fit every situation throughout the state. And I honestly think that other places throughout the country can take that to heart, that you have to recognize that giving the power to the people

to make the decisions and giving them the resources to determine the path forward for their situations is a best approach and a best practice that we've taken here in Alaska. And I think that's something that others can take away from this conversation. Yeah. I guess from the lessons I think I've learned from our implementation of some of the COVID initiatives and what we did with the last turn to your housing initiative and say that there's a change in terms of how we do work as housing professionals. that feels like it's happening at different speeds all across the country.

Through the pandemic, we were able to develop systems that really connected us to our partners, and we used a shared space. And through the last frontier housing initiative, we're connecting partners to our institutional infrastructure here at Alaska Housing. And people are able to, in other communities, do things that used to take self-contained agencies with the staff and a finance department and all these other things, because they're able to connect with our resources. So they're able to do more in a sort of cohesive community framework now than they could a couple of years ago.

When you think about vacation rentals, we talked about that earlier, people have owned houses for a long time that they could have rented out. But now with platforms online, they can connect to some corporate infrastructure and someone traveling here from Japan can find their house in the Kenai Peninsula and rented for the weekend that they're in Alaska. So the people on the Cayman Peninsula that are doing that are able to leverage some corporate infrastructure that exists somewhere else to have market opportunities for them and their community. These sorts of connections can apply to some of the housing programs. And we're starting to see that happen where we're connecting communities that are off the road system with communities that are on the road system within our state. So Alaskans in Juneau are helping Alaskans in Nome operate some of our programs. And these barriers that have historically been there through technology for any number of reasons are starting to come down.

And technology is really helping us expand access to some of our programs to people and communities that may not have had all of the necessary tools to utilize them in the way. And that's a really exciting thing. It's bringing a lot of people together and doing more for our state than we could have a decade ago. And I just probably closed by saying that, you know, our bonds are rated AA plus and higher on Wall Street. we had more than $600 million in single family mortgage activity last year, and the delinquency rate on our loans is less than one-third of one percent. We are doing exceptionally well there.

So you heard Daniel and Jimmy talk a lot about partnership, but we heard Mary Daily talk a lot about resilience as well. And the people of Alaska are very resilient, and we're very optimistic as well as we work together in the smallest and most remote communities to attempt to tackle these many challenges. I think for me listening to you, it's like one of these things is By necessity, you have to have a lot of collaboration, which is word everyone uses all the time, but you're literally, you know, so many different sort of entities and vehicles under one roof and that seems like a sort of necessity. But it also seems like the type of structure that, you know, in other states or like New York City where a lot of authorities extremely balkanized or other fights about who has authority, like maybe merge some departments and actually put them under one roof could be a pretty useful takeaway. Anyway, Jimmy, Daniel, and Stacey, I'm glad you also joined us. Thank you so much for coming on Atlas.

That was really fascinating and really educated. Thanks for allowing me to pop in. Yeah, happy to be here. Thanks so much. Tracy, I love that conversation. I love the detail. I love, you know, in our conversation we talked with Mary Daly, and she talked about Alaska's economies.

And listening to housing is, like, very clear what that means. That this is just a very diverse state in terms of the challenges and the nature of living arrangements. You definitely get a sense of it from that conversation. The other thing I was thinking about was in terms of like the usefulness of this type of program, I can imagine having dealt with a bunch of contractors that just being able to call someone up a government agency or quasi agency and ask like, I just got a quote for the following activity. Does this sound reasonable to you as someone who has, you know, been involved in many, many of these projects? That would be a huge helping point just when you're getting started. I think another takeaway from me from this conversation and others is that like

infrastructure bottlenecks or choke points in the lower 48, everyone started paying attention to them in the second half of 2020 and that they feel like endemic to the nature of living in Alaska. The idea that if the person who clears the runway can't find a house right then, that that is an open position. And then that is the threatens the lifeline of an entire community. That is not like a 2022 two story. That's a story that's like endemic to how Alaska operates. And so it feels like all these things that we've just sort of like woken up to are like the core like challenges of, you know, operating the economy here. Alaska is truly an odd thoughts theme state. Yeah, it really is. All right. Shall we leave it there? Let's leave it there. This has been another episode of the

Odd Thoughts podcast. I'm Tracy Alloway. You can follow me at Tracy Alloway. And I'm Joe Wisenthal. You can follow me at the stalwart. Check out the Alaska Housing Finance Corporation, maybe some lessons to be learned in your state. Follow our producers, Carmen Rodriguez, at Carmen Armin, Dashobin at Dashpot and Kail Brooks at Kail Brooks. For more Oddlots content, go to Bloomberg.com slash oddlots, where we have the daily newsletter and all of our episodes. You can chat about these topics 24-7 in our Discord, discord.g.g. slash oddlots. And if you enjoy Oddlots, if you like it when we travel to Alaska to learn more about its various economies, then please leave us a positive review on your favorite podcast platform. And remember, if you are a Bloomberg subscriber, you can listen to all of our

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