Looking to the Future: Insights from 35 Years in Community Development

By Mike Novogradac

On an unseasonably warm October day 35 years ago, Oct. 17, 1989, Novogradac was born in San Francisco–beginning a community development journey that has taught us much.?

Novogradac’s 35th anniversary is an opportunity to reflect on what we’ve learned, particularly concepts to help community development practitioners address challenges, identify opportunities and achieve greater success over the next 35 years and beyond.

Today, we live in a vastly different community development world than 1989: At that point, the historic tax credit (HTC) was 11 years old, the low-income housing tax credit (LIHTC) was temporary and clean energy tax incentives were in their infancy. The new markets tax credit (NMTC) and the opportunity zones (OZ) incentive were yet to be born.?

Upon reflection, we identified five major concepts: dream, play the long game, grow, advocate and always remember the purpose.

Dream

Don’t be limited by what exists, take a step back and heed the words of Bobby Kennedy, who was fond of saying, “Some men see things as they are and ask why. I dream of things that never were and ask why not.”

When the LIHTC was enacted in 1986, few would have predicted that an incentive buried in the tax code would become the primary driver of affordable rental housing construction and renovation in America. A handful of practitioners–and I am proud to say I was one–helped build out a tax incentive to effectively and efficiently connect affordable housing developers with investors to build and renovate millions of homes for low-income Americans. The innovative designers of the provision dreamed of something that never was and made it happen.

The same can be said for the designers and early adopters of the HTC, NMTC and OZ incentives, as well as the expanding breadth of clean energy tax incentives. Thanks to their efforts and the perseverance of thousands of others, billions of dollars of tax equity invested annually is leading the way in reshaping communities across America.

Dream big and dream small too. In your day-to-day work, don’t limit yourself to the “same as last year” (SALY) approach. SALY when it is best, but don’t when a new approach would be better. Make habit your friend, but not your ruler.?

Play the Long Game

Converting dreams to reality usually takes time, sometimes a long time. This necessitates playing the long game. And like every journey turning a dream into reality, playing the long game starts by putting one foot forward. As Lao Tzu is alleged to have said, “A journey of a thousand miles begins with a single step.”?

In playing the long game…

Capitalize on the power of compounding. A small amount of consistent improvement over time becomes massive. An investment with an annual 8% return will double in nine years and quadruple in 18. Regular, incremental, personal improvement pays big dividends over time. Invest in the future each year–more capital, more education or deeper involvement.?

Ride the cycles. The economy is cyclical and community development is no different. There are times when funding and opportunity are expanding and times when the opposite is true. Don’t interpret a slowdown or plateau as a looming end. Make hay in the sunshine but create stores to survive dry seasons.?

Learn from mistakes. You will have missteps–failing to anticipate an adverse possibility, making an incorrect assumption or just being unlucky. Try to “fail forward” by learning lessons that only come through difficulties.

Expose yourself to new ideas. Go to conferences and hear the experiences of others. Read articles and books about the area in which you work. Listen to podcasts. Even if the subject matter doesn’t directly apply to your current activities, it could be the kernel that grows into a solution or breakthrough. In exposing yourself to new ideas, you are tapping into the wisdom of crowds. Groups always know more than any one individual. And continuously search out a diversity of opinions.

Show Up

Winston Churchill was quoted as saying, “Continuous effort–not strength or intelligence–is the key to unlocking our potential.” That continuous effort often is displayed by continually “showing up” to make a difference in community development. Making a long-term difference requires a long-term presence.?

Sometimes showing up means being persistent. In Novogradac’s community development history, we’ve endured challenges: The LIHTC was threatened in the late 1990s, the HTC was on the chopping block in 2017, the NMTC and the renewable energy investment tax credit and production tax credit expired and were reinstated (and the NMTC and OZs are currently set to expire). We survived the Dot-Com recession, the Great Recession and the COVID-19 pandemic.

But just showing up isn’t enough because there’s no substitute for hard work. Inspiration may start the journey, but perspiration is a mandatory ingredient in community development. Good luck is helpful, but you’ll find the harder you work, the luckier you get.

Grow

We face a choice between growth and decline and since there’s no long-term homeostasis in community development, choose growth.

Growth means doing more every year. Not necessarily through more labor or more capital, but often through being more effective. You may even find you are achieving more by doing less.

Growth in community development financing often means tapping into new funding sources. The LIHTC was new when I was a young accountant at one of what then were called the Big Eight accounting firms. The new incentive gave me an opportunity to bring a new funding source to my clients. Tapping into the opportunity and being persistent paid off. That approach isn’t an anomaly; the LIHTC was followed by the NMTC and OZ, and many other funding sources.?

Growth in community development financing often also means mixing and matching incentives in ways not done before. Think combined 9% and 4% LIHTC private activity bond-financed properties, twinning HTC and NMTC, and more.

In focusing on growth, though, be mindful that change is inevitable–but survival isn’t. Grow, but monitor risk.

As Charles Darwin wrote, “It’s not the strongest of the species that survives, [and it’s] not the most intelligent that survives. It is the one that is most adaptable to change.”

Advocate

We have many community development advocates, but we need more.

This means encouraging colleagues to continue to grow (workshops, webinars and networking are great options). It also means working with legislators and regulators to advance the areas in which you work. No community development tax incentive is perfect at introduction–or ever. Legislators change every election and regulators reflect the policies of elected officials, so there is always a need to educate decision-makers.?

Today, be the best advocate for what you do. Tomorrow, be better.?

Remember the Purpose

The community development field is made of practitioners seeking to help families and workers access living-wage jobs, housing, health care, healthy food, clean energy and so much more.

In practicing in the field, always remember the purpose The goal is the destination, not the path. Take a new route, if needed to reach your destination.?

Thirty-five years has taught us the pursuit of community development is rewarding and well worth the commitment, persistent and–often–struggle. Keep dreaming, play the long game, grow, show up, advocate–and remember the purpose.?