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Karen Kepler
Partner, Sullivan & Worcester
Industry experience: 33 years
Karen Kepler helps developers cobble together funding sources for multifamily developments and ensures smooth transitions to operate them when they’re completed. A partner at Sullivan & Worcester, Kepler has arranged term and bridge financing for projects in all real estate sectors and leads the firm’s affordable housing and community economic development group. During her career, she’s been involved in developments using HUD and Fannie Mae financing and tax credits to generate affordable housing, and obtained land-use approvals for projects with income-restricted units under Massachusetts’ Chapter 40B comprehensive permit law.
Q: What changes are you seeing in construction loans because of supply chain disruption?
A: The challenges posed by the supply chain really translate to timing. If there’s a delay, it’s hard to get your commitments if you don’t have a solid construction budget. Contractors can only hold their prices for so long. That’s the challenge I’m seeing on almost every project. To put together six or seven sources of funds can be very time-consuming. Then the contractors aren’t able to hold the pricing any longer, and that’s a regular occurrence these days.
Q: Boston has sought to encourage more home ownership in projects’ affordable components. What’s the city’s role in making that happen?
A: The biggest piece in the city of Boston right now is coordinating the different agencies that might need to touch a project. Zoning is not the same as the [Boston Planning & Development Agency], which is not the same as the Building Department. In addition to financing, coming up with a process that can help streamline the approval process, especially for smaller projects. There are still a lot of points that one needs to go to independently within the city, and that’s not very efficient. Each piece operates independently, so they’re not sharing the same files. Why can’t you just upload one application and have that work for everything? It doesn’t right now, and that would be very helpful.
Q: How is the Housing Choice law starting to influence multifamily development patterns?
A: People are looking at it. I haven’t seen somebody actually start down the path to permit a project through that process, but I think 2022 is going to be a big year for Housing Choice. One of its greatest features is eliminating the supermajority rule for zoning changes necessary to develop a multifamily project, and that’s a great thing so I’m optimistic.
Q: What are some common mistakes and questions that need to be double-checked in due diligence for a multifamily development?
A: Making sure the timing and sequencing for permitting is understood well in advance. If you’re on the development team, it’s one of the most important things to be clear about: What do we need to get the project permitted? Depending upon the size and the complexity, that can be a straightforward process or it can be very challenging. There could be title issues, and arcane leftover railroad track issues, especially dealing with smart growth that often puts you near railroad tracks.
Q: What’s important to know about best practices in turning over control of the property to a condo association?
A: We represented a private developer who specializes in home ownership projects. This will be 40 home ownership units in a condominium building in Roxbury, and those are extremely challenging to do in terms of getting the financing, but also to make sure that you’re setting in place a system for turning the property over to the condo association and have residents running it. There’s a need for good training programs so that residents understand how the condo structure works and what they need to do when they are the trustees of the condo association. Even with a property manager who might prepare the budgets, the trustees still have to approve them. These are all things as a renter you don’t think about, and now this becomes your responsibility.
Kepler’s Five Favorite Non-Fiction Writers:
- Doris Kearns Goodwin
- Jane Mayer
- John McPhee
- Nathaniel Philbrick
- Isabel Wilkerson
