Hello and welcome to another episode of the OddLotss podcast. I'm Joe Weisenthal

and I'm Tracy Aloway.

So Tracy, I get why like a city like New York City, it's 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.

And it seems nimbies are keeping it so that we can't develop on 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, etc., that 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. 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

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 uh 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 like that gets like you know feet and feet and 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 Or. He is the director of research and rural development as well as Daniel Delfino, director of planning and program development. So, uh Jimmy and Daniel, thank you so much for uh coming on OddLots.

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 do you just for listeners tell us what do you do and what is the Alaska Housing Finance Corporation?

Alaska and Finance Corporation. This is Jimmy. We are an organization that addresses safe quality affordable housing in Alaska. That's 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 a 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 state 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 uh 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 it pretty simply. And then it's like, okay, now you have two unknown variables and you use the substitution rule. And now you get up to three or four unknown variables and all of a sudden you have to start using linear equations. And it's 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 the issues as they they've kind of emerged over the state. We have some places that are dealing with population drain. 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 in the intro. It's um 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 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 the housing industry because you have inventory that is taking a multi-purpose nature uh 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 and we're 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. Like you talked about there in the introduction, imagine a state where you can get on a plane and fly 3 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 Ukavic area, and you're going to see extreme temperature changes from 50 below zero to, you know, to 50 60° Fahrenheit above of 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 Ukyavic 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 uh 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 they don't come out and pick them up. I mean, there are certain things that people take for granted like uh shipping services that you're going to be able to get new parts in. and you're going to be able to take things away that are dilapitated 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 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, we've seen a a bifurcation in the market. The interest rates a couple of years ago were down in the twos for people that wanted to refinance and the homeowner market was going gang busters and the prices when interest rates were low reflected that there was a huge price acceleration in the cost of homes. Uh fast forward to now instead of a 2% interest rate I think our rate that we published for first-time home buyers on our website 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, homeowners in 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 uh 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-over-year like 20 30%. 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 entity. 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, uh, 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'd 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, shortly after I started, we were um talking about a housing plan here in Anchorage. And there were projections that Anchorage was going to grow as far as the I could see. We were going to have all these people coming in. 6 years later, the population peaked and then it started falling. So I 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 uh 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 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 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 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 that 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 uh they've almost doubled uh 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, it's 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 need 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. So

that's true.

I'm sorry. It was 739 uh for the state in a couple years ago and now we're at 741.

Yeah. So

So 2,000 more people.

I I came to Alaska in the late 90s and I I feel that that was the number back then. It just 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 and then they move out. you know, they they've kind of come, they've experienced the wildness of Alaska and then they're moving on to doing different things.

Yeah. And we used to be a counteryclical state in that uh 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 than I had.

It's not a pjorative. It's just a geographical distinction.

Forget that. That's where we are. Anyway, keep going.

No one calls Alaska the like upper one though.

The upper one. The 49th state.

That would kind of sound elitist. Yeah.

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 and 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 in Anchorage was built during the 70s and 80s when Alaska, you may have heard of this thing called the Alaska pipeline, heard of it. Yeah. And a lot of the housing was thrown up with 2x4 construction based on construction techniques and practices that were appropriate for somewhere down south. How's that for not saying lower 48?

And and what that means is

I like we're in the southern part of the United States here when we when we go back to New York.

The the housing is 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 are in the right place is what we focus our time and effort on to make sure that our 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 it's a very dangerous thing for a person like me that works in a US or a quasi 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 our mission across the state. We have uh roughly 70 partners that we work with across the state that are various nonprofits. uh we'll have maybe 30 or 40 different developments going on at any given time across the state. So I mean is it 10? Is it 20? It depends on the the year. And what are we talking about? Are we talking about people that work with government money like the low-inccome housing tax credit program or grants? Or are we talking about individual homebuilders? Is it a person who's building a multiplex downtown that's going to be an 8 figureure development or more? Or is it a person who's building a duplex? So who's a developer? It's sort of a loaded question. And 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 cost $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, paying 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 uh you said to get technical. So um Cobb Douglas, you remember the production function from 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 far-flung 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 I think that speaks to Alaska 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, it's there's no magic bullet. there's no one-sizefits-all and and you know to be effective you have to provide that assistance as a a team member.

I think that'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 it's a twostop 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 and think about right back to the population of the state we still have to do all the same things

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 so there's much greater opportunity here in the state for individuals to step into a role and learn new things But there's 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 not to make it sound like it's all doom and gloom. We have a lot of things that do go for us well. I was just in a a fairly small community. It's a a hub off the road system. And the mayor was on a job site with us and uh one of the carpenters referred to her affectionately in a way that probably HR wouldn't like, but they're very jovial. And this uh this elected leader runs a gift shop in town and she's on a firstname basis with the contractor. She punched the uh 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, we're 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 has some relationship with carpenters. What the nature of it is, we don't exactly know. But

oh, you've heard of our mayor. You've heard

but but they care and they're 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 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 I think 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 uh 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 clients do to do all these other things or 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.

Wow.

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 transport 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 they're 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 frontier housing initiative after our state's motto. And we approached local governments with about $5 million each, just a couple of them, and said, uh, we want x number of housing units to go up into 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 have 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 a 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're 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, "Uh, 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, uh, training with them and all this 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 uh 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 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 is 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. cuz that conversation does not go over well. I mean, we're flying into a community of maybe a thousand people and a bunch of the community elders are at the table. We're the guest in the community. So, it's like here's our resource. We want to help you. And that's it'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 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 are there way given especially given where interest rates are etc. and who bears the burden. Why don't you talk to us about like how you finance yourself, whether you use the municipal bond market and are 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 uh appreciate.

So I'm not the CFO and our CFO hockey player that he is would probably come down here very aggressively if I tried to explain what he did. Um we're a self-supporting corporation. So we we have a mortgage department that provides mortgage financing. Our finance department is active in the bond market making sure that our uh programs have capital. A lot of the programs that Jimmy and I operate are funded from AHFC's earnings. Uh we're under the executive budget act. Uh so our budget goes to Juno 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 uh our department and the planning department we manage roughly 20 programs and it's a combination of state federal and foundation grants and uh 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 a I don't know $500,000 to develop a unit off the road system, going from a 6% interest rate down to a five and 38 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 I think work in a lot, it's not usually the 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 home ownership 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 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, you know, limited in some way in 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, Lost 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 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 in on our team is improving the housing stock in rural communities through weatherization and making sure that the 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 is really shines through in their lifestyle and their community. But often times they, you know, they don't necessarily have the resources to do that. And and Daniel was talking about the last frontier housing initiative program. And I think that's a 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, you know. So I I think having the ability to take advantage economies of 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 entire state in a way that's relevant. So one of the things that we do like I said 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 uh how much homeless housing interventions cost, how much developments cost, operating cost trends, things like this. Then we also commission primary data on the rental market and then we uh 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 frontier 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 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-ahad 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 homeless and supportive housing partners over the last decade. The last frontier 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 little fourstory 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.