Robert Nielsen, the 2011 chairman of the NAHB, has spent more than a generation building homes, during which he’s been a tireless advocate for affordable housing. Since 1988 his Reno, Nev.–based company, Shelter Properties, has focused on developing rental projects under HUD’s Section 42 low-income tax credit program. Shelter hopes to double the number of senior housing units it builds to 88 in 2011. Nielsen also was instrumental in the creation of Nevada’s Low Income Housing Trust Fund.
His resume includes more than 15 years as a member of the NAHB’s Federal Government Affairs Committee. He has served on the boards of the San Francisco Home Loan Bank and the Fannie Mae National Advisory Council. In his pre-builder days, Nielsen taught high school English and speech, and has coached various youth sports for 20 years.
Q. What got you interested in affordable housing?
A. A friend, Jeff Lewis, developed the first bank-financed senior housing project in the state of Nevada. He called me and said he thought this could be a good business model, and we got together to put together a plan to build apartments under HUD’s 222(d)(4) program [which facilitates new construction or substantial rehabilitation of multifamily rental or cooperative housing for moderate-income families, the elderly, and the handicapped].
It was exciting to go through the process and to watch properties lease up and have people living in very good housing. It gave me tremendous satisfaction.
Has being a teacher helped you as a builder?
I’ve taught at a couple of high schools and was a debate coach. I’ve also always been interested in government and the advocacy of dealing with senators and congressmen. There are ways to motivate folks—and it’s more teaching than advocacy—to move people where you want them to go, whether you’re dealing with a politician or a developer. So my background has been extremely important to my success as a builder.
How do you see the housing market right now?
Let me say first that owning a house has never been more affordable than it is today, from a purchasing or a financing standpoint. The catch is qualifying for the mortgage loan; that’s still a tremendous hurdle as banks continue to tighten their lending practices.
As builders, our No. 1 issue is AD&C loans at this point, because until builders have the capital to produce, nothing else matters. However, [construction and development financing] is not a piece of business that banks are particularly going after right now. The backlash from regulators that will punish you for having a concentration of real estate beyond their limits in your portfolio has kept community banks from doing this business.
Until we get building going again, it’s going to be a tough time pulling out of this recession. Plus, we have huge pent-up demand. But all of this depends on appraisals, lending, and a strong secondary market.
Why do you think the tax deduction for mortgage interest is under fire again?
I think it’s gaining more steam in the media than in Congress. But we’re going to have a major discussion on the mortgage interest deduction. We know that we have a target on our backs, but the country needs to decide how it wants to go forward. Our research shows that people absolutely want this deduction, and we are prepared to make the kind of noise that’s needed [to defend it]. Our new website, www.savemymortgageinterestdeduction.com, is just one of the pieces. We also have partners like the Realtors that we can form coalitions with.
The deduction is extremely important to the buying process. If it were eliminated, our estimate is that home values would be reduced by 10 percent. Consider how many households are already underwater and then have values fall even more.
As part of the NAHB’s team, what have been your most important accomplishments?
The two rounds of [home buyer] tax credits were huge wins for the home building industry. We were able to get reversed a part of the new health-care bill that was onerous to builders. And then there are regulatory issues: stormwater, EPA, endangered species. We have a document with 96 pages of issues, and that’s where we’re winning every day.
What’s your agenda as NAHB chairman?
To make sure that when the industry returns to health that builders are able to build what they want and where they want. What I’m most concerned about, though, is the availability of capital and the ability to build in communities. Other than that, I don’t have a grand design for the association.
Membership continues to be an issue for every local HBA. But I believe our membership has stabilized, and our retention rate is higher than it has been in the past.
Your company operates in one of the weakest housing states. What’s your prognosis for Nevada?
We’re at the epicenter of the problem because our two largest job creators, housing and gaming, are suffering. Business is as bad for housing as it can be, but we’ve continued to build because we’re in that affordable niche. Reno depends on what happens in California, but if we can get a small piece of that we’ll be in better shape because Reno is still a great place to live.
Committed to Affordability: Reno’s Shelter Properties fills a need for workforce and seniors housing in Nevada.
When he’s not helping to set the course for the NAHB, Robert Nielsen runs Shelter Properties in Reno, Nev. Since it opened in 1979, Shelter has developed more than 45 communities in Reno and Las Vegas. For more than two decades, Shelter has dedicated itself to providing affordable rental housing to families and seniors.
“Senior housing is the ticket right now, and that’s pretty much all we’ve been doing for the past six or seven years,” says Ken Palmer, Shelter’s controller and a 15-year company veteran.
In December, Shelter completed a 42-unit seniors housing project in Sparks, Nev., and is currently working on a 55-unit building in Reno that will rent to seniors, too, and is scheduled for completion this July. The company recently closed on land for a 70-unit seniors housing project in Reno whose construction might get started in the spring of 2012.
Shelter’s management company Manage Inc. currently oversees about 20 properties, the largest of which is 268 units, though quite a few are under 50 units, says Palmer.
Tax credits are Shelter’s main source of development capital. States sell tax credits they receive from the federal government to syndicators that provide equity to developers of low-income properties. In recent years, Shelter has been borrowing through National Equity Fund in Chicago.
Shelter also benefits from HOME Funds, provided by HUD to states and localities. Tax credit financing and HOME Funds allow Shelter to borrow inexpensively. In exchange, it confines its renters to certain income groups and agrees to keep its rents low. Palmer says that rents for a one-bedroom apartment in Shelter’s properties range from $500 to $600 per month; a two bedroom between $550 and $750; and a three bedroom between $700 and $850.
Nevada’s weak economy has narrowed that gap between Shelter’s rents and market-rate units. But Palmer is still confident that Shelter Properties is well-positioned to capitalize on market conditions, especially if, as projected by the website Apartment Ratings, Reno’s rents rebound in 2011, to where a market-rate two-bedroom two-bathroom apartment averages $1,148 per month versus $875 in 2010.
Learn more about markets featured in this article: Washington, DC, Reno, NV.
