Allen Féliz of MRI Software: 5 Questions

At midnight last Friday, the 21st Century ROAD to Housing Act became law despite President Donald Trump announcing that he would not sign the bipartisan legislation.

The law was enacted after the constitutionally mandated 10-day waiting period for the president’s signature, after which it automatically became law.

U.S. real estate could be greatly impacted by the law, which promises to also significantly affect proptech, said Allen Féliz, vice president of innovation for affordable and public housing at tech giant MRI Software.

With more than 20 years experience in housing finance, asset management, consulting and technology, Féliz spoke with Commercial Observer last Thursday about how the act aims to increase housing supply by removing regulatory barriers and modernizing housing programs, leading to more public-private partnerships and increased operational demands. In turn, Féliz said those demands will benefit proptech companies servicing compliance management, workflow automation, asset management and data visibility.

This interview has been edited for length and clarity.

Commercial Observer: You have strong opinions on the ROAD Act. What does it mean for real estate, specifically for proptech?

Allen Féliz: I’m pretty excited because it will allow us to, in some ways, remove regulatory barriers from increasing the supply of housing. It will help to modernize housing programs, and it will be another positive step in terms of unlocking opportunities for increasing the housing supply. 

For affordable and public housing operations and technology, the operational impact of the bill is likely to be significant because the bill aims to increase housing supply, modernize housing policy, and improve program administration. This means that the housing authorities will receive new flexibility or funding tied to preservation. And all these housing teams will have to update policies, track resident notices, coordinate inspections and document decisions. 

The organizations with strong systems, clean data, and connected workflows will really be in the best position to respond to this. And, being one of the largest proptech providers, we’re very excited to play a critical role in helping teams stay compliant, document decisions, manage resident and applicant activity, and help them manage risks earlier.

That sounds good in theory, but isn’t it another layer of bureaucratic compliance that will be difficult for companies, particularly startups, to deal with?

Part of what the ROAD Act seeks to do is to remove certain barriers. Let me give you two examples. 

Public housing authorities (PBAs) today need more flexibility in terms of how they’re modernizing their portfolios, and one of the best and most flexible options they have, really the best option they have, is to modernize their portfolio — to be able to go through the Rental Assistance Demonstration (RAD) program. Because it’s a demonstration, PBAs have been limited in terms of how many units they can put through that process, which allows them to basically take their voucher funding, turn that into a long-term Section 8 contract, and leverage that to go to the private market and get other sources of funding to redevelop their projects. Under this act, 100,000 new units will be allowed in the RAD program, and more agencies will also be able to enter the Moving to Work program, which allows them to have more flexibility in terms of how they use their funding.

So this act actually seeks to reduce regulatory barriers in a number of ways for housing providers. But, because we’re looking at an increase in the housing supply, ultimately it means that in affordable and public housing there’s more units, bigger portfolios, more applicants, and therefore more paperwork and more data to manage. 

Because of all of that, it means there’s more work for people on the operational side, and for the systems providers, the proptech providers.

How does it affect private sector housing development and its interaction with technology?

Great question. These projects will essentially move from being completely managed by housing authorities to a framework in which housing authorities will look to partner with private entities. It may be a co-developer that’s private or a nonprofit partner, and, for a lot of these projects, you seek private investors who provide equity or debt to redevelop these properties. Essentially, you’re taking a lot of units from the wholly owned public side to more public-private partnerships managing and operating these properties.

Many of these properties become Low-Income Housing Tax Credit projects that are co-owned by housing authorities and private nonprofit developers. So, just a lot more involvement from the private sector. And, in turn, that means a greater need for systems for the private sector. We do work with a lot of those organizations through our affordable housing compliance technology and property management technology. And a lot of those private owners are also owners that own conventional multifamily units. They have mixed portfolios, affordable units and conventional units.

A lot more of those organizations are going to be partnering with housing authorities to redevelop their assets.

Do you see any particular part of proptech benefiting the most from this legislation?

Looking at our area, there are three major areas where we will see more activity: compliance management, workflow automation, and asset management. So, the overall investment management of the portfolios, as well as data visibility — having more insights about how these properties perform. 

Affordable housing organizations already manage a host of complex requirements. If the ROAD Act increases development and preservation, the tech has to absorb all that work that they’re doing. It shouldn’t create more manual effort.

When will we see the effects of the law?

It’s a question that our leaders at MRI are asking us, because we have to plan. 

Right now, the ROAD Act notwithstanding, we’re dealing with some regulatory changes as an industry. For instance, we have this new regulation — the Housing Opportunity Through Modernization Act —— that we’re working to implement in our software. It includes updates into how we determine income eligibility and household compliance for these units. We’re really focused on that this year. I think it’s going to take at least a year to see where this is going. 

Obviously, everything starts on the front end because a lot of the provisions here are really about development, preservation, housing finance. We’re going to have to build those pipelines, get these deals through development and redevelopment before we’re feeling the operational impact. A lot of these deals have to close. We don’t want to wait until all of that has happened. We want to be able to look ahead as the pipelines are building and set up the systems correctly to be able to deal with it. 

But you won’t feel a direct impact, I think, for at least a year. Although we haven’t seen anything like this law in a long time, it’s not a silver bullet. We’re going to have to do more in our industry to increase the housing supply, but it’s a really strong step in the right direction.

Philip Russo can be reached at prusso@commercialobserver.com.