I Live Here Westchester | Nick Khamsopa: The Real Housing Bottleneck Isn't Land

Westchester is short roughly 21,000 homes and rental vacancy sits under two percent. The usual explanation is land, money, and demand. This week's guest, developer Nick Khamsopa, makes a different case: the real bottleneck is people, specifically the shortage of developers who can hold a municipality, a pension fund, an environmental attorney, a lender, and an architect together long enough to break ground.

Nick started with a hammer, spending five years in a union carpentry apprenticeship before moving up through contracting into financing and community development. Today he runs Hudson Housing Lifestyle in Warwick, building on brownfield sites with union labor and long-term financing designed to keep working families where they already live. We get into the unglamorous, deal-by-deal work of actually assembling a project, and why that, not land, is where Westchester's housing math breaks down.

In This Episode
 (0:00) The headline housing story, and what it misses
 (1:30) Why the bottleneck is developers, not land or money
 (4:00) From union carpenter to community developer
 (8:00) Brownfields, union labor, and financing that keeps families in place
 (15:00) What it actually takes to break ground

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Transcript

SPEAKER_01 0:02

There's a version of the Westchester housing story you already know. Not enough land, not enough money, too much demand. The numbers are real. The county is about 21,000 homes, and rental vacancies is under 2%. That's the headline. And it's true as far as it goes. Today's guess is the headline of the actual bottleneck. The problem is that lands are money or demand. The shortage of developers get a municipality, a petrified, an environmental attorney, a lender, and an architect in one room all it together long enough to break ground. Nick Campos started with a hater, five years of making a carpenter apprenticeship, then up through contracting and to financing a community development. Today he runs Hudson Housing Lifestyle in Warwick, building on brown field sites with union labor and financing designed to keep working families where they already live. The crisis gets talked about consistently. The unglamorous work of actually assembling a project site by site gets talked about far less. And that's where we're going. Let's go. Nick, uh you started construction with your hands, whether it be tools or union halls or job sites. You know, walk me through what that actually looked like and what it taught you that you couldn't have learned any other way.

SPEAKER_00 1:17

Um you know, learning with your hand from the ground up from uh first thing is being a labor to assist the uh the mechanic or master carpenter working alongside them and see they actually how the the assemble of the construction truly works. To work with the professional in union in York City. Um being apprenticed, they pair you up to work with the elite. So these it's not just about w uh putting a piece of work together, it's about setting up coordination. So when you do, you know, big high-rise building or you do m a big project, you have to be in union for the purpose of safety. First thing to do is is is structure on the um you know, on all the sub to come in and coordination and to understand each trade, to respect each trade, to make sure all trades work alongside each other. So it's very 90% of it is coordination, have nothing to do with hammer and nails. Hammer and nails is like 10% of the actual work. Coordinating this thing is where I spent five years to being trained by Elite of Man Hand to understand. By the time I graduate, I'm like, oh my God, I didn't realize how much knowledge I had gained. So you give me a set of plans, I can build you, make a structure, bridge or highway, or high-rise building, or any type of building, because that's what you gain by the time you're done with it. So that allowed me to break away and to do construction on my own.

SPEAKER_01 2:43

So at some point you moved from building to financing and then developing. You know, what moment or what project was it that made you cross that line? And what did you find on the other side that surprised you through that transition?

SPEAKER_00 2:58

You know, it's that's a great question because uh, you know, I started my own construction at a young age. Before I finished an apprenticeship in units doing side jobs. So my fifth year, in my fifth year, by the time I graduated, I was in the process of graduating, I was making more money, a lot more money, and have like four or five guys working for me doing addition, renovation, and um, you know, some commercial work. So when I graduated, I I ramped up overnight to become a multi-million dollar construction company, and then became the Northeast um regional for daycare general contractor. So two the time during that time was big. Two-to-time garden school and kindergare was big. And what happened was that there was a guy that came to me, he said, would you uh, you know, I know you built two-the time, would you do garden school for me? I'm like, oh yeah, absolutely. I gave him this outrageous price. I said it's like a close to a million dollars. I'm like, I can I can finish this in nine months. I was counting my profit by three, 350,000. I'm like, wow, you know, and the as I was building this thing, uh, he was using me to do the work, but then what happened? The actual budget was actually over 1.4 million, but he was selling the contract to me for about 900,000. So he was making additional 500,000, not picking up a hammer, not showing up for work by being a developer. And then halfway through, um, he had a bank that's standing by. The minute he said he was 90% completed, the bank was refinancing him, giving me variation of 3.5 million. And I thought I was making all the money in the world. I'm like, wait, I'm making 300,000, right? Took me nine months to build this building, and this guy is only paying me a million dollars, and then and then the bank's giving him another 2.5 million in equity. I'm like, how? That's a question, how? I said, Well, I'm in the wrong business. Construction knowledge is great, but what if you take couple of construction into development? What if I own the building and then I hired my construction company to GC to work to turn key? Because the thing with that construction is the meat and potato, um, you know, brick and mortar. So your house is your house. You you pay for X and the value at X. But in commercial, if you have a building that you pay a million dollars for get it built, but you have a 15-year lease and 15-year lease from two-the time of fortune find company, that building, that million-dollar building is worth 4x. You know what I mean? So it's that's when I say, wait a minute I need to get into something that generates income that's actually a tangible asset of meat and meat and potato or brick and mortar.

SPEAKER_01 5:39

But there's also risk involved. So, you know, let maybe we take a step back for half a second. What is the role of a developer? Right? You know, everybody thinks they know, but what is what is the job of a developer?

SPEAKER_00 5:50

That's an excellent question. Most people think a developer is someone that uh makes a lot of money and someone who actually uh owns a building. Your developer, you have to have background in finance to understand. To develop a peace property, you have to have the intelligence to understand what you're developing. You might have a piece of land, you might not know what to do, but being a developer, you have to understand the best usage of that land, maximize the uh, you know, the square feet that you're going to create. And also being a developer, you have understanding finance, meaning that if you're going to build something, is it gonna generate income? That becomes a liability. If it's not generate income, then the value of the asset the bank cannot or will not finance you because then banks' interest to finance something with a long-term lease, and that long-term lease is the more valuable the asset is basing on the tenant that rented from you for long-term or short term.

SPEAKER_01 6:45

So everybody understands the rewards, right? You know, uh that that's that's easy to understand. But what are the risks as a developer that you undertake, you know, personally and your or your company undertakes?

SPEAKER_00 7:00

The the risk under development is the entitlement process, right? If you don't have the relationship and you buy a piece of property outside of most developer local, uh, there's no outside people coming in trying to come into your town, your village, because there's a prejudice of the municipality thinking that developer is this um Medusa with a neck snake coming out of their head, and that they don't trust developer because they think developer is going to come in cows and destroy the property. Developer is local community development. The biggest developer in the United States does about 60 billion in revenue, which is related. Related, name related, not because they're developer, the related, take that structure part of a local developer. That's why they call it related. And they hang that um uh you know. I might get an idea to wanting to build um, you know, uh a water park. But however, I took that process and spent eight to ten years to get approval. I don't have a financial capability, so related come in and say, oh, you know, you know, six flags and assign a lease for you to manage this uh asset, so therefore you own the property, you own the land. That's when developers come in to co-develop with you to develop to turn to the project. But the hardest thing or the risk for developer is getting their approval, access to water and sewer, egress, and impact study and the birds and the bee and the environmental. And sometimes what happened is, you know, uh I did development on um energy um uh we did windmill uh out in the Pennsylvania. We spent three years on on feedback study, and then what happened was they found a bat. So there was a cup bat couple that was uh, you know, uh it wasn't visiting it, they were living there. So we did this bat, we tagged the bat, the bat was having a baby, and that three million dollars, that three years of our time is I believe is three hundred and fifty thousand of our um um environment impact study coupled with close to seven hundred and fifty thousand of my money just went up in smoke because we can't impact the bat. That's the that's the big question, no.

SPEAKER_01 9:12

Yeah, I I always I always thought earthworms were the big issue with uh windmills. Right. For some reason.

SPEAKER_00 9:18

Yeah, windmill is very dangerous because you're putting a windmill in the wind tunnel, and the wind tunnel is usually up in the mountain range and uh that that cultivate and channel the wind. But however, you have to worry you have to worry about environmental, and it's important as a developer, you have to have that passion to make sure you don't you don't impact the birds and the bees and other species you know destroying their environment. That is a major risk.

SPEAKER_01 9:46

Now your central argument is that the housing crisis today isn't really about land or money. It's about too few developers who can sit with municipalities and unions and lenders and architects and get a project over the line. You know, can you make that case? You know, why is developer capacity the bottleneck rather than zoning or financing or political will for that matter?

SPEAKER_00 10:08

Well, uh what makes us unique is two different divisions, right? My wife is um she runs a construction manager. We've been married for 21 years. So she took over the construction and um became construction management and certified herself as woman, um, federal register and New York State Register woman owned. Understanding that, most people don't understand what they mean. To be able to process the application is all about um, you know, understanding the guideline and the application. So when you do uh application for me to the municipality to develop something, it's all for understanding how to stay within that guideline and understand how to process it. So when you go into pre-development, you acquire the property to walk into municipality, you have to have the intelligence to understand the guideline or the needed utilizing that. So I secured the property hand the uh pre-development for my uh uh wife, whose woman owned construction management, to process with the municipality, and she had the relationship because we run we own the construction company in in the area, and then she worked with the architect, a local engineer, and I worked with the IDA to make sure that this project is all wants or needed. So the fee spill study on from my side is that before I even engage is that third party or site visit, understanding demographic, understanding the um the equation and in-quest before we engage into acquiring it. If we do acquire it, then you have to have the intelligence. So if you never develop land, you never build a single house or build a single building, you can't turn around and say, I want to become a developer. So the difference between this and people who buy a fix and flip is day and night, right? A fix and flip is someone who's taking a toxic property, they slap a coal paint at windows, door, mechanical, and then sell. This here is taking a uh all-abandoned dilapidated warehouse on the land bank of New York State that we can convert this um uh all building into a modern mixed use. I mean we're not we're not some of them are we're taking it, we're leveling to the ground and going after that. So she the mission statement of this affordable is that take what's existing, don't go outside the town and cut the tree to destroy the birds and the bee and the environment. So we have plenty property throughout the United States that we can rezone, reuse, and redesign for this type of facility without impacting the uh environment to begin with.

SPEAKER_01 13:03

You know, you you said the word zone rezone, and I think that's interesting because in Westchester, you know, advocates and researchers tend to point at local zoning and municipal approvals as the core obstacle. And the argument is that even good developers can't build if the municipality won't let them. You know, where does your thesis interact with that one and and where do they diverge?

SPEAKER_00 13:24

You know what? That's a great question because if the governor or mission statement to develop 800, you know, this 800,000 unit affordable housing, beyond that is I always call it national security, meaning that if we don't create the housing that's affordability for our kids, well, we're gonna lose the talent. The kid graduating from uh you know college or the talent, that that talent is gonna jump ship. They're gonna go to the Carolina, to Florida, to Alabama or Texas. And if New York wants to keep this, the first thing they do is have to create the affordability. And if you don't have that workforce housing, how are you gonna bid economically for the new technology or no business to come into your your state? Especially New York right now, our biggest problem is affordability. And if you can create this, then there's the first stepping stone of how we can start working with the uh, you know, with with the municipality and explain to them and then turn around and say, okay, with this thing in place, and I'm going to subsidize the um the cost of construction. So this way as a developer I can charge, you know, average average medium income for that county. So Westchester is $2,700 average for the uh two-bedroom. Orange County is $2,400 for two-bedroom. Without a subsidy, uh Westchester would be $8,000, $7,000 to $8,000 on rent, right? Because we can't afford no one can afford that rent role, uh, pay that kind of rent. So therefore, to make it affordability subsidy, and then the next step she does is implement a plan of action passing legislation and law mandating this municipality to change with the up zone. So through Small Town America Act grant that a lot of this city for the past 15 years have been securing the subsidy from the state for the curve cut for their walkway, for their water, for their sewer, for their school. In that fine line, she said that if I come in with housing, you have to support me. So the municipality have no choice because they took some of this capital to, you know, do faces on fixing small town America. Part of that is a momentum fund. Now in EFSCO, she um now so you can look at New York Housing Authority, she secured $25 billion. Wow.

SPEAKER_01 15:57

Can you describe for the listeners what the uh the term uh of a brown field site is?

SPEAKER_00 16:04

Yeah, brownfield site. The thing with the Northeast where we live is that one time during the industrial age, a lot of this uh mill was built on top of a water or stream. So they have no extracity, so they would use the um the the water to turn the uh the the mill into a factory or um you know an industrial um type of business. With that mill next to the water stream, now the the steroid would settle around this uh this abandoned building. But a lot of this abandoned building was uh one time was like you know uh a we call brownfield or um toxic uh land because they were dumping uh bleached chemical or uh solvent that were cleaning the steel mill into the ground. Years later, you know, 100 years later, that ground is absorbing and filtering all this chemical toxic. But however, fast forward to now, the village is built around this expanded warehouse. However, no one wants to go near, so the they have a federal and state program that can help with the can uh with the can capital to clean up this brownfield and convert it into the housing. But majority is already been uh, you know, in implementing for years, and a lot of the developers who buy this and picking up the property for nothing, and then they already got paid to clean this up. So we're looking for property that is way ahead. We're not looking to take on the property, wait a four years to um get mediation on, you know, site preparation before we start building these houses.

SPEAKER_01 17:51

Yeah, and and it it's interesting because brownfield development seems very controversial, right? You know, it's on one hand, it gets rid of a decaying or contaminated site, it improves the environment. But you know, on the other side, critics say it's slow, it's expensive, and that the tax credits sometimes end up subsidizing projects that would have happened anyway, or ultimately, you know, price out the families that were meant to serve. So, you know, do do you feel this brownfield development is is positive for for municipalities to be, you know, in continuing to invest it?

SPEAKER_00 18:29

Well, brownfield development is is the federal uh EPA, right? So, like I said, a lot of this property is tax acquired by the the village or the town. Other developers understood this, they picked this property up and they already spent years cleaning it. They already got paid for it. Now they're understanding around the property, selling it uh, you know, at you know, three to four million dollars. So another of these properties I'm picking up are brownfield is contaminated. Matter of fact, you know, most people don't understand that it's very vital that if you have a toxic property or brownfield property next to you in your town or village, it's important to get it cleaned up because to do this right, you actually dig up the dirt and send it to Canada and bake this dirt before they discharge the dirt to make sure the soil is clean. And you have to bring enough fresh soil and let it sit for 12 months before you can turn around and do anything with that property. That uh implementation takes four to five years to clean. So, however, we're not looking for that type of property. We're looking for properties that's already been or have, right? But some of those properties could be for long term. Uh we that we're implementing this housing. By 2030, we need to build this 800,000 unit, right? 800,000 average to a 0.5 um, you know, per per location. We're talking about additional two between two to two and a half million uh affordability uh unit for New York State, not just in New York City, but from New York City all the way up to Rochester to uh you know Albany's throughout the state to assist this development for all the small town because Hudson Valley especially is the third fastest going um economy for technology, and how are we gonna uh attract the technology and keep the youth and create jobs in the Hudson Valley if we have no head count?

SPEAKER_01 20:29

Now, now there's a lot of uh headwinds for development um despite the growing demand. I mean, obviously, uh right now we're at a point where energy costs have been tremendous. Um tariffs have imposed a lot of um, you know, uh price increases on supplies and whatnot. But thinking also union labor is also you know central to your model, you know, is and there could be a genuine tension there, you know, whether it be prevailing wage requirements, uh, you know, raising raising construction costs, which ultimately reduce the number of affordable units a project can produce. Um, you know, how do you hold both those things at once? And where does that tension actually land on a real project?

SPEAKER_00 21:11

Um Well, first I want to address the energy cost. The absolute correct. The old building, the new building code for New York State is like massive, right? So if you will build this today, the energy code for today is actually use less energy than a single uh the existing building, what it was. Everything spray form, because the R value has to be proficient, the energy codes for the windows and uh everything else, even the mechanical and rectangle. Um I, you know, I built this new house, we have 140 something hi-hat. All the hi-hat is using a lot less energy than the uh than the old hi-hat that most buildings had even five, six, ten years ago, right? So even though you build this building, it will use less energy. And uh the second thing with the uh answering question with the union because I was a diehard union guy and trained by the best of the best. Um when I you know break away to do non-union, I saw the difference. Coming from a skilled labor and most people don't stand that New York State is one of the hardest uh business for construction. Not because the construction is hard because it's impossible to get insurance. We cover the insurance that we require for New York uh contractor to have for us to do the work to bid the work is impossible because you have so many non-union out there that doesn't carry the proper insurance and some guy getting hurt and he's on disability, guess what? Then it comes to people like us who pay for the real expense and overhead. So you bring down uh you know the construction uh mayhem to the labor force but yeah cost of the insurance is skyrocking because no one does it right. For me, like I say, you know construction, 10% of it is a hammer and nail. The other 9% is are setting up logistics. When I'm talking about logistics is safety. You know when we have hard hat, you set up saw horses, you have egress, you have safety coordinator, you go on a big construction construction site, like turn the construction, they have their own internal men for safety coordination. So everyone goes home safe. When you got non-union guys out there in New York City, they're doing left and right you got a crane that's falling down, you got building and when you talk about oh yeah the the crane collapse, it's very important to understand, you know, why does it collapse? Because if you've done it done this all most of your life and you have experience, you have safety coordination and everything else, you're not going to have that major issue. So on top of it, we built this affordable housing 100 unit our development is 100 unit prototypical. Our development is actually between minimum 50 million to 75 million dollar location to build, right? When you build it, you need a mortgage. I went to my union colleague AFL CIO say listen, if I build this will you buy the mortgage? So they have a division called Housing Investment Trust utilizing union pension fund that's standing by to purchase this 40-year mortgage. So it's union pension fund purchasing the mortgage and then we I'm getting massive subsidy from the state and local why would I want to cheat trying to save a couple dollars and put in my pocket why don't I put it back in community hire local union guy for a high paying job and guarantee my safety of the workforce and the safety of my lawsuit issues to make sure that we have an on-time, on budget, construction budget. So I didn't know anyone else out there, like for instance the $340 million project being built in Westchester in a partnership with uh Pike Construction, which is the same company we're retaining to do most of the Hudson Valley project, is because the $340 million they're part of the Turner construction. Turner is a big big out of Manhattan. This is the type of project we do. We're not talking about some mom and pop doing fix and flip of four family or 10 family uh you know uh brownfield building this is a massive scale hundred per unit our goal is to build you know 50 location to assist the governor mission statement of 5,000 units in the Hudson Valley. And that's nothing compared to her 8000 mission statement.

SPEAKER_01 25:30

I I'm just curious Nick you know uh over the last say 18 months maybe two years uh for the first time in I can remember and you know uh uh 54 years old uh we're seeing more seismic activity uh or at least feeling more seismic activity is New York State making any changes in terms of building codes to take into consideration the increase in recent seismic activity?

SPEAKER_00 25:55

New York State always does engineering right so on doing the pre-development this engineer and architect once again is all this building even you go with George W Bridge if you understand like I said was trained you stand on a bridge on a traffic day right you can f you can feel that thank jump up and down with like six inches of sideway. All the building you build is engineered for earthquake. Not necessarily that it's gonna guarantee earthquake proof but understand construction something uh at this level you know as being a developer from the ground uh up to where I am today that's why we hire Labella they have 2,400 employees the number one rated in New York State for engineer and architect so we go to Labella my wife works with architect and engineer out of Bella for structure and design and um the local municipality we work with the local um engineer for a horizontal and the uh the vertical go to the best of the best in New York state to get this job done.

SPEAKER_01 27:04

So like once again this is not at the level of um you know um five to ten unit mom and pop this is dealing with institution so we have to have the best of the best to design this because then they we try to fast track to assist the um the needle of the affordable housing so Westchester housing market it's its own beast uh medium home prices are around 75000 vacancy near 2% uh turnover in terms of of of housing very very low 43 municipal 43 municipalities with each with their own zoning so what specifically does Westchester need that is isn't getting right right now from the development developers perspective well you you talk about meaning um you know that's household right and we'll talk about the young generation the rent I believe the Westchester is short twenty three thousand units right now for rental so if we were to build you know 200 units it will be fulfilled obligation tomorrow so if you look at the whole New York state as a whole that's why she implemented 800,000 units right she wanted one million but she only passed 800,000 to legislation out of the 8000 16000 is built.

SPEAKER_00 28:26

So when you talk about Hudson Yard right in Brooklyn believe it or not uh massive of that percentage of that um development is affordable housing so you're gonna see the next three to four months that uh commercial market is gonna go into default and a lot of developers coming into New York City even Blackstone is acquiring uh buying back that debt of commercial building and they can convert it into affordable housing and this fund is already in place we're talking about seven to eight hundred billion dollars in the pipeline. So this is the beginning New York State is a prototypical to be national because President Trump extended Ligtech financing. Lig tech financing I'm not going to HUD to get the funding I'm going to Lig, Litech is tax credit, which give 45% of it and then just tax the Lig to capital with the Momentum fund ID and local uh municipality joint venture with you for um tax credit, you can get up to 80 or 85% of the capital because it's a mission statement to help America for affordability. So when I'm talking about affordability this is I'm not doing this because oh yeah I'm gonna make a quick buck. No, this is a long term mission statement is the main reason why my wife and I came back from Florida to reside in New York State to have the address and control the Hudson Valley for our 5,000 unit mission statement.

SPEAKER_01 29:54

So final question for you um you know for a working family in Westchester who's renting they're stretched and they and they want to stay here what does a realistic version of debtor actually look like and and how far away is that yeah you know I'm glad uh you mentioned that because first of all it's impossible if you go to Westchester and do this because the big boy's already doing it right like I said um I I know there's like three four locations right now being constructed close to uh if you look at her um website how much capital had been deployed for Westchester developer.

SPEAKER_00 30:33

So I I'm developing from north Westchester Albany because if that is a void no one wants to come in because I'm not a big boy like those guys who have deep pocket or Mandani uh you know doom 5000 unit from with President Trump's son-in-law. So I'm only picking up a scrap of you know 100 units throughout the village that is in demand because you know when something like this implement Westchester, Bronx Brooklyn, Staten Island and Long Island get eat up first, then the suburb where it's haunted. So we're trying to um assess the the the pocket that's not have the ability to do because when you come into north of Westchester it's very hard to find true developer. So I'm trying to put this program this structure in place and hopefully making a noise with related to come in to collaborate with us to bring in from 5,000 to 10,000 units overnight. Even 10,000 once again is nothing compared to 8000 that passed the law. It's amazing.

SPEAKER_01 31:40

Well Nick I want to thank you this was illuminating you know living in a county where you know we're surrounded by construction every day and yet still an argument and the need for affordability this was illuminating.

SPEAKER_00 31:52

So thank you so much for your time today Nick it's coming the affordability is coming as gonna be national soon you know as the big banks already queued it up the uh federal government already passed a law we have to help average American audit country with collapse I want to thank Nick for this conversation the thing I'll take from this conversation is a reframe that what it looks like a politic problem or a financing problem is at its core also capacity problem.

SPEAKER_01 32:24

The people who know how to hold around together across institutional relationships are rare and that's their real consequence for real families. That's not a detail that's the story if you want to go deeper into the stories behind how this county actually works we've got you watched reset Monday through Thursday whenever we listen to your podcast our project public one day for a deep dive into what the numbers are telling us about life here. If you want to understand what the headlines that's the one follow us on Instagram at everything at ILiveHearmedia.com because I live herewest I'm Jim I live here