Company Report: Michaels Development Company
Michaels Development Company Michaels Development Company does one thing, and one thing only - build the best affordable housing

Hurricane Katrina was most harsh on those with the least.

In New Orleans, as in all American cities, the line between low income and everything else is clearly delineated, either by the tracks (i.e. the right or wrong side), neighborhoods, or in the case of New Orleans, one of the city's wards.

When Katrina struck in early 2006, it hit everything and everybody hard, but the storm and associated flooding nearly obliterated the Ninth Ward.

In one of many examples of loss, the Michaels Development Company had nearly finished the third and final phase of an affordable housing project in the Lower Ninth ward.

"All of it was lost, it was all gone after the storm," says Robert Greer, president of Michaels Development Company.

After the storm, recovery efforts lagged. Even as recently as this past January, getting the company's affordable housing project back on track was slowed by insurance issues, bureaucratic hurdles, and the complexities of working in the heart of a major disaster area.

In a January 4th interview for Multi-Housing News, Greer said, "It's chaotic. Little progress is being made. There's a lot of planning; a lot of people are talking and proposing, but little or nothing is being done. There has been no affordable housing development since Katrina."

However, things are changing.

"In fact, I am right now on my way to New Orleans where we are going to mark, with Mayor Ray Nagin, the secretary for HUD Alphonso Jackson, and some other officials, the completion of the first affordable housing development to take place since Hurricane Katrina Struck," says Greer. "We are celebrating the rebuilding and occupancy of the first of two phases of our HOPE VI program and expect to begin rebuilding the third phase of construction later this fall."

In many ways, the work the company was doing before the storm, and now in its wake, is emblematic of the company's mission to provide housing for those least able to afford it.

"Michaels Development Company is in business to do one thing and one thing only - build the best affordable residential housing in the country," says Greer. "We are working in 28 states and the District of Columbia as well as the U.S. Virgin Islands, and we have more than 4,000 units in construction at this time.

"In particular, we target working families on the lower end of the economic spectrum, people who are searching for decent, safe, sanitary and affordable housing so they can provide a good home for their children and themselves," Greer says.

The company was founded in Marlton, N.J., in 1973 by Michael J. Levitt in order to produce federally subsidized rental housing. Concurrently, Levitt also founded the Interstate Realty Management Company to manage properties for private investors and public agencies on a fee basis.

According to the company's website, other affiliated companies include Continental Mortgage Corp., an in-house Federal Housing Authority (FHA) approved mortgage lender/servicer; Affordable Housing Equity Partners, LLC, which seeks tax-saving opportunities for investors through syndication; and the Michaels Building Corp., which monitors new construction and property rehabilitation for many of the properties developed, owned or managed by the Michaels organization.

To this day, the company's focus is on fitting resources together to provide financing for affordable and mixed-income communities.

"In the development of affordable housing, there is no one federal program to fund the development of affordable housing, so we have to use many funding tools in order to make these projects financially feasible so the rents are affordable," says Greer. "To do this - to finance these projects - you just can't go to a bank and receive enough money to make it possible.

"Therefore, we have to go to state agencies in the various states we work in for low income tax credits, which, because there are so many more projects seeking funding than there is money for, are very competitive to receive. If we win these credits, we then sell them to investors, which provide us with some of the money to construct these communities.

"But that's not enough," Greer says. "We also have to apply for money in soft loan programs. These would include going to the city government in a city we want to work in, and applying for city funds such as CDBG [Community Development Block Grants] and to the [HOME Investment Partnerships Program overseen by HUD] programs, where the federal government provides funds to cities for affordable housing. And we also apply to the appropriate Federal Home Loan Bank.

"When all of these sources come together we consider the feasibility of the project to be established," Greer says.

There is also the HOPE VI program, which is the public/private partnership underway in the Ninth Ward. This is something akin to the urban renewal projects of the 1960s and 1970s, where older and blighted neighborhoods are torn down and the land cleared for affordable housing development.

At the New Orleans site, Greer says the company is building a mix of affordable housing options with a mix of financing resources.

"When we take on these kinds of projects we are completely transforming a blighted neighborhood into a new and vibrant community where people want to live, and families can afford to live," he says. "It's a wonderful thing to see."

While all of the above may qualify as distinguishing characteristics for Michaels Development Company, Greer cites two areas where he believes his company outshines his competitors.

"The first," he says, "is that we work all over the country, so we are able to turn to many more opportunities than other developers have access to."

The second strikes to the heart of the company's commitment to improving the lives of its core constituency. As part of its role as property manager, the Interstate Realty Management Company, an affiliated company, provides a number of family support services and training programs to the residents of Michaels Development Company communities.

These include educational, employment, recreational, and healthcare.

In speaking with Greer it becomes readily apparent that he takes great pride in all of these programs, but in particular he notes the success of the educational support his company provides. This includes after school and summer programs, as well as scholarships for residents for college, university, or professional schools

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