Affordable Housing Finance
by Christine Serlin
This year’s AHF Hall of Fame inductees have one thing in common — their commitment to providing safe and affordable housing for low-income Americans across the nation.
Our four 2017 honorees have become groundbreakers in their own respective careers. Michael Costa, president and CEO of Highridge Costa Companies, and Chickie Grayson, president and CEO of Enterprise Homes, have built thousands of affordable rental homes; Mark McDaniel, president and CEO of Cinnaire, has provided an array of financing to create needed housing; and Barry Zigas, director of housing policy for the Consumer Federation of America, has advocated for policies and federal programs that have been key to housing production over the past several decades.
Turn the page to learn more about the honorees, who will be inducted into the Hall during AHF Live, Nov. 14–16, in Chicago.
Michael Costa’s career could have been drastically different. With three offers to play professional baseball coming out of high school, he instead opted to go to college and get a full education.
That may be baseball’s loss, but it’s very fortunate for the thousands of low and moderate income families and seniors he’s helped house.
Costa, president and CEO of Gardena, Calif. based Highridge Costa Companies (comprising Highridge Costa Housing Partners and Highridge Costa Investors) has been involved in the development of over 40,000 units of housing throughout his nearly 40-year career.
"Mike is not only an influential advocate, practitioner, and pillar of the industry, but he’s utilized his knowledge and expertise to finance, construct, and operate tens of thousands of affordable rental housing units throughout the country, making a quantifiable difference in the lives of hundreds of thousands of people in need," says Thomas Erickson, senior vice president at Highridge Costa Companies.
Costa got his start in the real estate industry fresh out of California Polytechnic State University with Calmark.
He began to focus on affordable independent seniors housing in the early 1980s and helped create 10,000 units of senior housing under the firm’s Heritage Park program. For eight years he was president of Calmark Multi-Homes, helping the company become one of the nation’s largest builders of independent senior apartments.
In 1994, Costa was asked to create and lead Kaufman & Broad’s new multifamily company, the first chapter of several that would lead Costa to where he is today. There, he learned the syndication business and started to sell its low-income housing tax credits directly.
"We were the first developer in this game to sell our own tax credits, in 1996," he says. "It became a really unique company. We had in-house syndication, in-house asset management, in-house construction, and a couple of bankers to run our financing. It was a one-stop shop in this tax credit business."
The company then went through many iterations, but Costa was the one constant remaining at the helm.
In 2000, apartment developer Don Simpson bought the company and renamed it Simpson Housing Solutions. Eight years later, Costa formed a partnership with MacFarlane Partners to acquire the Simpson affordable housing portfolio; however, the economic downturn derailed that plan. Citi Community Capital, which had provided a loan to buy the Simpson portfolio, began a "negotiated foreclosure" that gave Costa the right to buy and hold on to the properties.
In 2010, Costa partnered with John Long of Highridge Partners and Citi to preserve the properties that he and his team had developed since 1994. Under the company’s various identities, Costa helped develop a portfolio of over 27,000 affordable housing units throughout the United States and Puerto Rico.
"Mike was one of the first private developers to build quality affordable housing in California on a large scale, even before there were widespread public assistance programs," says Frank Cardone, president of Related California Affordable, who got his start in the affordable housing industry at Calmark from Costa. "He’s provided, and continues to provide, strong leadership in the industry and has been a mentor to many who have themselves gone on to make significant contributions to the affordable housing industry."
For Costa, it’s rewarding to hear what stable affordable housing means to residents. "Where else can you get that genuine thanks for what you do?" he says. "That drives me a lot."
He also likes the challenge of creating affordable housing. "When you look at developing market rate, it’s a lot simpler. It’s about focusing on what’s existing in the market and how you can position yourself versus the approval process and the financing. [In affordable housing], we still have to focus on positioning communities in the right locations and making sure we have the right amenities, plus the tremendous effort to get approvals and multiple layers of financing. It’s incredibly challenging but very rewarding to make that work."
download Michael Costa AHF October 2017.pdf
Costa, 61, didn’t totally retire his glove and bat. He still competes in national softball tournaments. He also enjoys spending time with his three children and playing golf.