Builders Patch
This is the capstone project with Builders Patch(BP) as the client and a focus on a B2B solution to the affordable housing(AFH) crisis. The final deliverable “SiteMatch” is a tool that increases the efficiency of site selection for the affordable housing development projects of housing developers(real estate companies).
My Contributions
During the research phase, I recruited 8 participants and moderated 3 45-minute interviews, which helped the team to collect valuable insights that informed product development. During the prototyping phase, I was responsible for designing the majority of the interfaces, and the user experience design was highly appreciated by the client and housing developers.
Outcomes
The product was highly appreciated by our client Builders Patch(see blog post here) as well as the affordable housing developers participating in our research and development process. BP expressed a strong interest in continuing the project to make it an actual product integrated into their current portfolio.
Context
The U.S. has a shortage of affordable housing. Builders Patch, a B2B SaaS startup which has built cloud-based platform to manage multifamily housing development and aims to solve more problems on housing development, gave the team a challenge: how might we increase the supply of affordable housing?
With the insights they had about the industry and current housing landscape, they pointed us to some questions to begin with:
(1) How might we democratize the information needed by builders and developers so that affordable housing is easy for them?
(2) How does one make it easy for the small community developer to build housing that includes affordable housing units?
(3) What parameters do they need to know when evaluating sites for development?
EXPLORE
Domain Research: Affordable Housing Development Is Affected by Multiple Factors & LIHTC Is Key
As the team did not have background in the real estate industry, we began with a concept map to brainstorm everything we could think of that was related to housing, especially affordable housing. Through this practice, we identified a few domains we had little idea of and then did in-depth research on them.
Considering BP’s business and customer base, as well as the relationship and value flow of the stakeholders, we identified AFH developers as the key player and would create a ripple effect.
With the research, we realized there were multiple key factors AFH developers considered for the housing projects, such as zoning, due diligence, requirements for low-income housing tax credits(LIHTC) and so on. One key factor that makes AFH different from market-rate housing is that developers usually used LIHTC awarded by state agencies to cover most of their development cost. Whether a developer can obtain LIHTC is determined by Qualified Allocation Plan(QAP).
10 Interviews with AFH Developers & Other Stakeholders: Funding Is The Problem
I reached out to AFH developers via company websites and LinkedIn and recruited 8 participants. We in the end conducted 10 45-minute semi-constructive interviews with presidents and CEO of real estate companies focusing on AFH, as well as architect, consultant, city planner and staff of government agency. We also conducted field study - visited 2 offices to observe how they worked.
Many of the participants walked us through their entire process of planning and executing an AFH development project and discussed various challenges they have encountered. The projects were difficult to manage because there were a lot to track and the process was long. However, one prominent difficulty emphasized by all of the participants was funding.
What is the core issue under the big umbrella of “funding problem”? Where is the opportunity gap for the team and BP? Through secondary research and our conversations with participants, we realized the funding problem they talked about most, if not all of the time, involved LIHTC. There were two types of LIHTC: 4% tax credits and 9% tax credits. 4% tax credits was not competitive and most of time a project proposal would be granted. However, AFH developers still had to compete for 9% tax credits because it could cover 70% of their capital stack of a development project. In regions with limited resources, the competition could be intense. Government agencies used QAP to rate each project plan, and one with the highest score would win the competition and be granted with LIHTC.
We used the QAP of Pennsylvania as a case study. After breaking it down, we found that 58% of QAP scores were relevant to site selection. QAP varied slightly state by state, but regardless of the region, smart site selection was always a crucial first step for obtaining the LIHTC funding. Currently, there was not site selection tool targeting AFH development. AFH developers either relied on their own connections for information, or simply drove around the city to look for potential sites. If we could build a tool that makes the site selection smarter, it would save AFH developers’ time and money. In the long term, it would make the AFH development more efficient and thus increase the supply.
DEFINE
How might we help developers identify potential sites to maximize their chances of accumulating more points in the QAP selection criteria to obtain LIHTC?
IDEATION
3 Concept Posters: AFH Developers Desire Tool Catering to Different Priorities & Experience Levels
Concept 1: SiteMatch
A Zillow-like platform that allows AFH developers to set filters and find potential sites that match their preferences.
Concept 2: SITEgpt
A ChatGPT-like tool that allows AFH developers to begin with questions, achieve better understanding of potential sites and find sites that best match their interests.
Concept 3: SiteScope
A Chrome extension that allows AFH developers to include any information they find through their own research in their site evaluation.
By brainstorming with Crazy 8 and Build-A-Thon, we as a team came up with three concepts that matched the solution essentials: SiteMatch, SITEgpt and SiteScope. We made three concept posters and presented them to the participants to ask for their feedback and thoughts. All of the AFH developers thought SiteMatch would be a ground-breaking tool for them to find potential sites much more easily and efficiently. However, at the same time, many of them thought SITEgpt and SiteScope were also valuable. One of the developers summarized that “SITEgpt would be useful for new developers because they can learn to know where to begin. SiteScope on the other hand would be valuable for experienced folk because they already know where to find information and they just need a tool to evaluate it more easily.”
At the same time, many of them were concern about the feasibility of the concepts, especially for SITEgpt. A vice president of a AFH development company said “As an old guy, these seem like magic to me. I’m not sure if this is feasible and if the information presented is actually accurate. I will probably not adopt it if I don’t trust this tool…”
5 Co-Design Sessions: AFH Developers Prioritized Zoning, Median Income & Possible Units as Parameters for Site Evaluation
We conducted 5 co-design sessions to get more in-depth understanding of the parameters and functions they prioritize for site selection and evaluation. We found that zoning, median income and possible units to construct were the parameters they cared about most because it helped them to better estimate the restriction, probability of getting project approval and obtaining return. Potential QAP score would definitely be something they wanted to know, but they also doubted the accuracy of the estimation.
REALIZATION
SiteMatch: Smart Site Selection & Evaluation
Catering to Different Interests
SiteMatch provides primary and secondary filters to identify potential sites based on specific characteristics. Primary filters include essential factors such as zoning, medium income, and possible number of units. Secondary filters allow for further refinement based on the developer's preferences
Easy Site Discovery & Evaluation
A narrow-down list of sites with key parameters (median income, possible units and estimated QAP) displayed is generated under refined search. Developers can save several candidate sites from the list generated for further and future investigation.
Easy Site Comparison
AFH Developers values guidance, especially in site comparison since it speeds up the decision-making process in evaluating potential development sites. Developers can compare several potential sites and further compare each parameter for better decision-making.
Digital Consultant
New affordable housing developers and experienced developers with the goal to expand to new regions appreciates guidance and validation in their decision making process. The chatbot provides developers with valuable information, guidance, and recommendations in the form of conversation.
Extension
The Chrome extension allows developers to add information from their own research and connections to refine their evaluation, achieve more accurate estimation and better decision making.
Profile Setup
Developers are encouraged to complete their profile that covers team construction and past projects. The more complete the profile is, the more accurate the QAP score estimation will be.
Generated Report
AFH developers can choose to generate report of the sites they find very likely to be the site for their next AFH project and want to get more details about. This report contains comprehensive information about the site, such as the landowner's contact details, to assist developers in conducting further research or consultation. It provides a detailed breakdown and analysis of the estimated QAP scores for each component, the rationale behind the score, and suggest areas for improvement.
Reflection
Working on the extremely niched and complicated problem of affordable housing in the U.S. was a challenge as well as an amazing experience for me. I had little knowledge about affordable housing - nor did my teammates. Nevertheless, this allowed us to see the power of getting the emic perspective from the users. One thing that made site selection for affordable housing so complex and time-consuming is that there are too many parameters involved. The interviews and co-design sessions helped us understand which parameters should be at higher priority, which then created a streamline process that made site selection easier.
Something even more amazing was that some of the participants and our client BP told us that our outsider perspective helped with breaking down the problem and looking at it from a different perspective, which eventually led to a cutting edge solution.
We hope product can be implemented and make affordable housing development easier for both new and experienced developers, which can then gradually lead to increase of AFH supply in the U.S.. Ultimately, the AFH developers, BP, we and all the people are working towards the same goal that motivates us along the way: EVERYONE DESERVES A PLACE TO CALL “HOME”.