Speaker 1and you are not taking out of your pro forma the cost of all the public infrastructure. You are literally leaving millions of dollars, millions, maybe even eight figures on the table.
Speaker 2Hey, what's going on, everybody? Welcome back to the Land Development Podcast. I am your host, Ryan Glick. I'm excited today to have joining me Dr. Mustafa Abdul-Jabbar. Mustafa is a land development and public finance attorney at Allen, Boone, Humphreys, and Robinson based out of the Dallas-Fort Worth market. Mustafa, thanks for joining me. Hey, thanks for having me, Ryan. Yeah, you know, we had a chance to connect before recording today. And so I got a little bit of your background and how you got into the land development industry. And it's a super interesting story. And I think, you know, I always start that way on all of my episodes where I have guests on. I want to find out how you got into land development. Yours isn't a conventional path to land development necessarily. So could you walk us through how you kind of where your path went and then how you ended up getting into the legal field where you're at today?
Speaker 1Yeah, no, absolutely. And I got into land development as soon as I could. It was, although it was a bit of a circuitous route, so I started out born and raised in Texas and Southeast Texas. And I actually began my first career in education. I was a teacher. I was a school administrator in Port Arthur, Texas. In that role, when I was teaching world geography and became a school administrator, it was in a formative time, I think, for me, where Hurricane Katrina had taken place. This was back in 2005 for the viewers. And we really all got into land development. And I think, you know, I've been there for a long time. And we really all got to see as a nation what happens when there is decimated public infrastructure, when we see levies fail. Many communities all around Louisiana, all around New Orleans get an influx of climate refugees. You've got fellow Americans escaping catastrophe. They're pouring into Southeast Texas at the time. And here I was, a school teacher and school administrator, trying to figure out how to integrate new community members who had literally been in the same place for a long time. And I think, you know, I got into land development and I think, you know, I got into land development and I think, you know, I got into land development on our doorstep in Southeast Texas, escaping catastrophe, and how to help them build community, how to help the students and their families make a new home in a place that they were, I guess, familiar with, but had never lived and had never called home. So that was sort of my educational background. I did that for roughly 10 years. Education sort of took me out of the state of Texas for a few years, just over about around six years or so. And I think, you know, I think, Went to the East Coast and then came back after living in Philadelphia and in the Boston area. Went to law school and came back to Dallas or to Texas, where I practiced as an oil and gas attorney. Started out at Vincent & Elkins. Did that for three and a half, going on four years. And I was also at Sidley Austin for four, maybe four and a half years, where I practiced commercial litigation. And really just got familiar when I was in energy, where energy litigation, oil and gas litigation, I got to see the infrastructure of that industry and how it informs civilization, how it informs our lives, how it informs the success of our communities. Literally things like just getting power into our communities. I mean, people take for granted turning on the lights, but if you know how do we get the lights turned on when they go out, those are questions that I would be able to answer. And then, you know, fast forward to where I am today. A unique opportunity came about a few years ago, and it was at Allen, Boone, Humphreys & Robinson, ABHR. They had probably about, they had only been in Dallas, I think, for about two and a half years, Ryan. And I jumped on the opportunity to work at this law firm because of the nature of the focus. And it was really, it presented for me a great opportunity that married the skill sets, where I was an educator. I was focused. I was focused on the public. I was focused on community building, community growth. And now I find myself dealing with public-private partnerships in the land development space, where we're actually building the communities and we're focusing on the needs of our citizens and community members. For me, I felt like the stars aligned. I was able to continue the focus on the public realm, but I was able to channel that into the practice of law and advocacy and making sure that we made housing affordable. So for people who aren't familiar
Speaker 2with ABHR and your company today, could you describe what the company does? I assume that there's different areas of expertise and everything, and you work in one of those areas. But as a whole, what does the company do?
Speaker 1Yeah, that's a great question. And what I would tell you is that that assumption is actually not right. It's a unique kind of boutique legal experience and law firm where we focus. Yeah. Every single law firm. Every single lawyer and attorney at the firm is focused on special districts or MUDs, as they may call them, the development of those and also serving as general counsel and bond counsel to those special districts. Every single attorney has that specialization and only that specialization when it comes to the services that we offer our clients. So what we do is, and I think this is actually unique to the state of Texas, where we. We have a municipal utility district, that's the acronym for MUD, or other special districts like municipal management districts, water control and improvement districts, fresh water supply districts, and there's just a lot of other acronyms that get created and function essentially as political subdivisions of the state of Texas. And these political subdivisions enable the public financing of public infrastructure to drive. To drive the development of high quality public infrastructure that serves our community. That's what every lawyer does here at ABHR.
Speaker 2Okay. Well, you're right. I did have the wrong assumption there. And, you know, I've had a few different conversations with lawyers who work in the, you know, in the land development space. And I feel like you are now the first one that works for a company that is more focused in this area, which is really cool. And I do want to dig into some of those special districts and everything as well, because I think that plays an important role. Yeah. It plays an important role in something I want to get into today. And, you know, as we think about the state of Texas, and we think about just other states in the country that are having some. A lot of growth, a lot of companies coming there, a lot of individuals moving there, residents moving in. You know, Texas is one of those top states that has a lot of inbound, you know, residents coming in, a lot of growth happening, a lot of businesses moving there. So it's a very pro-business and, you know, a popular destination for people. And I want to get into what some of those reasons are and not necessarily to be a. For this to be something that is a advertisement for people. Everybody needs to move to the state of Texas or anything like that. But I do think there's some really interesting things that Texas is doing that's leading to this. And one of those is the special districts. And maybe we can start there. Or if there's somewhere else that would make more sense to start to kind of paint the picture as to why this has been happening. And you can walk us through some of that.
Speaker 1Yeah. Yeah. No, for sure. And I will apologize because, you know, it is not intended to sound like an advertisement, even though it may come across like one. But it's definitely not. I would couch it like this for the viewers that, you know, just look at land development in Texas. And definitely the way that I'm approaching it is look at it as a case study. You know, let's talk about the context in which land development in Texas is happening and what informs us. It informs the drivers that are driving the demand for housing, immediate housing, and how those various mechanisms inform community building and growth in the state of Texas. I think that from that story, it doesn't matter where you are. It doesn't matter what state you're in. I think there's going to be some takeaway lessons that can inform land development practice in any state throughout the nation. That said, you know, MUDs and other special districts are really unique. To the state of Texas. And so I think in that sense, it talking about Texas and MUDs in particular and special districts in particular provides an opportunity to understand a unique case study that could inform land development in other states and the success. And so we can kind of, if you think about, and I'll just say, just mentioned briefly, sort of, again, with MUDs, these are these public private partnership models that incentivize private developers that when they build, they understand that they're going to recoup the costs of the public infrastructure in their development. And those costs are going to be, are not going to be passed on to the end user because you've saved them. And so when you talk about the concept of housing affordability or how do we make housing affordable, if you're able to say, look, when it comes to the cost of putting water lines, sewer lines, tension ponds and drainage, all that topography, you're able to say, look, when it comes to the cost of putting water lines, tension ponds and drainage, you're able to say, look, when it comes to the cost of putting water lines, tension ponds and drainage, recreational facilities. These are the public amenities that essentially the developer doesn't have to pay for. They may pay for it upfront. There's an initial cost, but they recoup those costs in these public-private partnerships that are built in Texas. And that actually lowers what the end user, the lessee, the commercial lessee, the mortgager, the homeowner is going to have to pay. So when I think about that Texas as a case study, there's this incredible narrative. There's an incredible growth story that I think is remarkable. You've got, of course, standing alone, Texas would be a nearly $3 trillion economy. So there is that. It is a large state and it has a large economic base. And most folks would kind of stop there and say, well, obviously, you know, if you have a big state and there's a lot of land, then it's going to be able to inform land development. But I think that there are some things to understand in terms of when we talk about special districts, when we talk about what our firm does, to understand the nature of the land development. And I think that's a big part of the process. And I think that's a big part of the challenges and opportunities that we face. So, for example, one little known fact that maybe if you're outside of Texas, and I quite frankly would say, if you're inside of Texas, you might not know that three out of every four Texans live in on only what's really less than 25 percent of the land in the state of Texas. You're talking about, and I've heard it referenced as the Texas triangle, where if you start with Dallas, Fort Worth, and North Texas, you go down to Houston and Southeast Texas, and then you swing west to San Antonio and Austin, you get this triangle that constitutes less than a quarter of the state's total land area. But again, 75 percent of the population resides on that land. And so there's this almost popcorn, popper kind of situation where it's an intense population zone as more people pour and businesses and capital and infrastructure pour into that triangle. And so I think that's a big part of the process. This concentration of the population is what's creating this enormous opportunity. It's what's creating the enormous demand. If you were to relate this to, say, other cities, regardless of where they are, other states, they're going to have similar kind of concentrations of population, similar demand drivers that I think you can kind of relate to from there. But this demand is going to create opportunity for housing to get all those individuals as more employers move into the area or are moving into the area. The cities are moving to the state. There's going to be a demand for the public infrastructure to service all of those incoming members. So that's one piece of it. The other piece, and I think we talked about this before we started recording, but I do think it's important to mention talked about the energy grid and to what extent it's independent or largely independent. And that's another piece of this that helps to inform at least this case study in the state of Texas and the example that it informs in terms of land development. You've got the ERCOT, which is the Electric Reliability Council of Texas, essentially serves about 90% of Texas' electric load. And what this means is that it's not synchronously connected to other regions of the United States. Not that it's all urban or it's all metropolitan. For the remainder of that large landmass, you have a lot of agricultural significance. And of course, the energy piece with hydrocarbons, yes, there's oil. Yes, there's natural gas. Yes, there's energy. But also, Texas is positioned, I think, as the number one state for wind power in the United States, so even getting into renewables. And so if you look at that and you see the drivers, what's driving movement in the Texas, if you were to talk to me about who are the top 10 wealthiest cities in the country, I have seen metrics that put three Texas cities in the top 10 wealthiest cities in the country. That would be Dallas, Houston, and Austin, sitting alongside cities like San Francisco. And so I think it's important to understand that there's a lot of Los Angeles, New York, Chicago, Miami. And when you compare the average cost of housing, the average cost of accessing a home, it's half in many instances. Not in every instance, there's always exceptions, but it's seriously competitive. There are two metrics that I would throw out that I think are important just to share, and then I know you have more questions for me. The employment growth in Texas. If you look at the unemployment growth in Texas, it's seriously competitive. Look at the United States that added earlier this year, maybe 531,000 jobs. Texas, almost 194,000 jobs. You see that from an employment growth perspective, Texas has accounted for 36.5% of job growth in the United States. So there's definitely demand when it comes to land development, housing affordability, companies who are moving here. 57 of the top Fortune 500 companies aren't just opening offices in Texas. They're literally opening offices in Texas. They're literally moving their headquarters here. It's the state with the most Fortune 500 companies in the country at this time. And that wasn't always the case. Even though Texas was always competitive, we see this shift. And it's not just theoretical. We're watching corporate America shift in this direction. And I think housing affordability has a lot to do with it. I'm in Dallas, Dallas, Fort Worth, North Texas area. And the DFW area alone is driving roughly 25% of positive United States industrial net absorption, meaning that as the leases expire and folks move out of certain industrial facilities, and some folks are moving out, some folks are moving in, the net positive rate will tell you, well, where's this occupation of industrial space happening across the United States, across US markets? And DFW by itself, discounting Houston, not counting Austin, San Antonio, just DFW. DFW accounts for 25% roughly of the US positive industrial net absorption. So the demand is here, the Fortune 500 is here, and the development community in this example has been faced with how do we house all this incoming population? And so I would say that's a huge context for this against the backdrop of the conversation that we're having today.
Speaker 2Thank you so much for joining us. We'll see you next time. They offer genuinely non-recourse loans, free of hidden provisions that could trigger personal guarantees. This structure ensures true alignment and shared success in delivering new home communities. From application to payoff, the process is straightforward, efficient, and designed to keep projects moving forward. Whether working with publicly traded or privately owned production builders, First Continental brings experience, clarity, and flexibility to every deal. To learn more about how they can support you, visit firstcontinental.com. support your next community, visit firstcontinental.com. All right, let's get back to the show. I've got several things here I want to dig into and what you talked about. The first one was only because I was interested, as you mentioned, that the wind power was interesting to me. So I just looked it up really quick. And so, I mean, of course, you're right that Texas is on top and on top by a lot. I mean, and I also wondered too, because I'm in the state of Iowa, and I knew Iowa was up there in the top five, but the amount of energy we produce from wind in the state of Iowa, is small compared to Texas. So Texas is just under 13,000. Well, actually, it's 12,964,000 megawatt hours. And then the next one is Oklahoma at 4,000. And then you have Iowa at 3,000. So we're a fraction of what Texas produces. So that's super interesting to see that. Another thing I was thinking of as you were talking through some of the special districts and the approach to that, you talked about the energy grid, and you talked about the businesses moving to the state of Iowa, and you talked about the energy grid, and you talked about the state of Texas. And I think it's easy to get caught up in the, like for people when they think about, well, of course, Texas is going to have success in some of these different areas because of their geographic location or things that other states can't necessarily change. But, you know, we talked about this before we pressed record. You know, California has a great geography, you know, it's a great state, but they're just not doing things the way that are being done in this type of growth. Why do you think that is? I mean, why do you think Texas is so focused on making it easy for this growth to happen?
Speaker 1You know, I think that that is the question that I have had as well. And again, I was, I practiced law and I was in a completely different industry for years, probably collectively going on 18 years before I moved into the land development space. I would say that one of the historic competitive advantages that I've seen, and just observing it from someone who is at least a bit objective coming from a different context into the land development space, there is a comparatively permissive development environment when you think about the laws, the regulations, and what it takes to develop in the state. And other states have this as well. And I think it's important to stress that there must be mechanisms for financing the public infrastructure that is absolutely necessary to support communities and to support growth in whatever state one may find him or herself. When I bought my home, I didn't necessarily think about the water, the wastewater, the detention pond. There's a pond that you can go and you can walk around and jog around. I didn't necessarily think about the water, the wastewater, the but you don't think, oh, that's a detention pond that if there's a flood event, this is going to capture that water and prevent it from coming into our home and coming into our housing. You don't think about that. It's just a beautiful body of water, right? The roads, the streets, you don't really think, but if something fails, if the street has an issue, if the toilet won't work, if the water, you turn it on and it won't come out and it's not potable or it's not clean, accessible water, there's going to be a foundational fundamental problem. For me, it's an exciting business to be in. Of course, Texas has the land, but that's not unlike other states. I think that this is now a point maybe in our conversation where we can talk about mods and special districts and the specific role that they play in making housing affordable. We did mention that if you look at Dallas or Houston or Austin, maybe the cost of a house might be $400,000, $500,000. In some areas, $300,000. In other areas, it might be $300,000. Compare that to if you were looking at a home in other cities that are in the top 10 wealthiest cities in the country, like Seattle, LA, Los Angeles, Miami, San Francisco, obviously New York City. I don't think you're going to get the four-bedroom, two-bath home for the $400,000. One of the significant mechanisms that are in place in Texas, which is why I'm calling it a case study, are the muds and are these special districts. It's the leveraging of the public and the private entities that are involved in the land development space to inform successful growth and land development. When you have a mud, a special district, it's legislatively created or maybe it's created by the Texas Commission on Environmental Quality. Maybe if it's a freshwater supply district, it gets created by a commissioner's court. That's a county court system that is in place that can have the authority to create one of these types of special districts. But once the special district is in place, then what happens? Well, you have a board, there's a governing board of five individuals who make decisions about that political subdivision. And this is actually tied to provisions in the state's constitution dating back to 1917. So it's not like this was invented yesterday. It has been around for over a century in terms of informing land development in the state of Texas. And it started at its inception with a focus on developing high quality public infrastructure and incentivizing that development and not placing the burden of public infrastructure that's going to serve public needs for centuries beyond the time frame that a private developing entity may have come in and built and built it. And it's about finding mechanisms like that to be able to make it more affordable. Again, if you're a private developer and you build a development, which can be a single family residential piece, it can be a master plan community, a multifamily commercial business parks. We've even seen industrial facilities, airports, baseball fields, anything that has water needs, wastewater needs, drainage needs, streets, roads, recreational facilities. You can find a way to make it more affordable. You can finance the public aspects of that, take that out of the pro forma that these private developers have to bear. And when you think about it from the vantage point of the end user, it's going to lower the cost that the end user, the commercial lessee, the homeowner, the mortgager, the one who's going into the apartment, they're going to have to pay less to be able to access that housing unit because the public costs were removed from the pro forma of the development itself.
Speaker 2Yeah. What's interesting too, as you talk through that, I think about it quite a bit about just different states and how they approach some of this. And I wonder why some states wouldn't do a similar type of approach or this public-private partnership and understanding that some of these developments would not be able to pencil and even be done if it wasn't for some of these special districts in the state of Texas and how they have to go about handling this. And I know there's plenty of other states that do have similar approaches to managing some of this. I mean, there's plenty of public-private partnerships that happen in other states and everything, but there are some states where it's not so builder-friendly or developer-friendly and they're putting a lot of that burden on the developers. Then you end up with really expensive housing, which doesn't meet the needs of people who are looking for housing in many cases. And I wonder, when we think about the state of Texas and doing these public-private partnerships, what do you think about that? I mean, I think it's a and it goes back, like you said, it goes back a long ways. I mean, this thought about this. Why do you think this public-private partnership approach works so well?
Speaker 1Well, I think that whenever you make housing more affordable, I think that people are going to vote with their feet. I mean, especially in a time when we're talking about inflation, rising prices in other contexts, being able to lower the price of one of the largest liabilities that a family can take on or that a business can take on, which is the infrastructure, which is the home or the office building or whatever that structure is that they're accessing. Being able to lower that cost is going to make it competitive. There are some other pieces to this too that I think, you know, it is what it is. If you have a headquarters in the center of the country, you're able to access just within a few hours, either coast-to-coast, or you're able to access just within a few hours, either coast-to-coast, within the country, that is also a piece of this that can't be discounted. But I want to focus on the affordability piece because it's what I'm doing in terms of the service that we're focused on. I think that it's largely successful because of the affordability and also because of the risk and where that risk gets allocated may be the best way to explain that. So there are other states who have districts that are similar to these public-private partnerships, and they are public-private partnerships in their own right. I know Colorado has some. I know California has some. I know Florida has some. And I don't know all the details because we primarily, if not exclusively, we practice in the state of Texas with respect to these Texas special districts. But other states have them too. And my understanding of how we practice in the state of Texas is that we practice the way they differ, if there is a distinction to be drawn, is it works almost like an assessment. If you were to have a homeowners association that wants to put in a new swimming pool or wants to revamp a swimming pool, it may have to assess. Let's say you've got 1,000 homes in that homeowners association, and the swimming pool is going to cost us $100,000. Then we're going to divide it out. Then we're going to say every home is going to have this particular financial burden to pay for that renovation. Then we're going to say every home is going that installation, that development. It's an assessment model. What we've run into, though, with these assessment models is if you build it, the assessment gets assessed on the front end. Bonds may get issued on the front end. And what happens if there is an economic disruption? What happens if all of a sudden, like what happened with COVID, where you get to 2020 or 2021, and the housing prices, or the cost of real estate is completely disrupted? We saw housing prices increase by what? Almost, not quite double, but significant increases in the price of a home, which is good in one sense. But in another sense, if we're saying we have higher costs for our development, we have a fixed assessment. We can't really go back and change that fixed assessment. And so with these public-private arrangements due in the state of Texas, where it differs is it's not 100% assessment-based, but it does involve the issuance of bonds and ad valorem taxes that are able to cope with change over time in terms of the valuation of the underlying assets.
Speaker 2Do you see a lot of pushback from residents related to this approach at all? And the reason I ask is, as we're talking through this, I was just kind of thinking that throughout the country, you have a certain percentage of nimbyism, right, with trying to stop different development happening in their communities. And when you think about how something like this could be perceived from someone that doesn't necessarily understand the inner workings of how the dollars are used and how it's put to use and everything, you could see somebody looking at this from the outside in and saying, it feels almost like corporate welfare or something where you're giving this money to this big, greedy developer to do some of this infrastructure work that that developer should have to pay for him or herself. Do you see any of that down there, or is it pretty well understood from residents that this is mutually beneficial between the community and the developers in order to develop some of these projects that otherwise wouldn't
Speaker 1happen? That's a great question. And that actually highlights another reason that I've been very excited to be in this industry. There's a lot, there's a large need for education to inform the public. And inform people, you know, what do these special districts do? How do they operate? And help people to understand them. But I would say that, you know, really, if I were in another state, it may function as a giving of money because it's all front end. Remember when I said that when it comes to an assessment, there's usually a fixed assessment. It comes on the front end. The developer gets a, a large amount of money. There are bonds and they can't change the money. They can't change those fixed assessments in other states. However, in the state of Texas, the developer takes all of the initial risk. They have to pay for the development. It has to go vertical. If it does not get built, if it does not get developed, if it does not get, if it does not go vertical, there's not going to be any public reimbursement whatsoever. And so that's one important distinction that, that I would stress, which is in terms of who bears the risk, it's on the private developer and who bears the benefit at the end. It's going to be, of course, if you can lower someone's development costs, that's going to be a, that's going to be a win-win. And that's what public-private partnership models are based on, win-win. And I think what's one of the assumptions that's kind of built into your question is that there's going to be a loser and maybe it's the public saying, Hey, the private developers should be the ones who pay for this. But what's happening is it's a partnership. A public-private partnership where for those high quality public amenities that get built, high quality water, high quality sewage, high quality drainage, roads, parks, and recreational facilities, the public has a vested interest that those facilities be of high quality and long lasting and essentially are affordable when it comes to accessing them via your home or your commercial lease or whatever it may be, the industrial facility or recreational facility. And so yes, there is a definitely a need to continue educating about these distinctions. And I think that from a case study standpoint, that's where other states stand to benefit. Because if I were to, you know, to put a pitch to other states, I would shift away from this kind of HOA assessment model where the developer takes all of the cookies at the very beginning of the development. They haven't built anything. And it's the hope that they're going to be successful, notwithstanding a potential economic disruption. Who bears the risk if something fails, if the development doesn't come to fruition? It's going to be the public who said, look, we've got these assessments and you didn't succeed with your development. I don't, I agree with you that that criticism that you were highlighting and underscoring, I would agree that it would gain traction in those contexts. I think that what, and look, back in the 1980s, the muds and special district industry in a reimbursement model. And so back in the 1980s are from 1917 up to 1980s, these muds, MMDs, water control and improvement districts, which are all very similar, but they have their distinct differences. Back up to the 1980s, they were all assessment based. It was only, and again, these special districts started essentially in the Houston area. So they were very sensitive historically to energy prices, you know, without getting into what was happening in the, in the energy oil and gas industry and talking about what was happening in the middle East, but was affecting prices and home prices in the state of Texas. And actually throughout the United States, a city like Houston, that's very oil and gas centric. It's very energy focused. If that industry gets disrupted, which it did in the 1980s, you can see all of a sudden this development that we had planned, it's not going to get built. And there may be some economic defaults and that's not good. When you're a bond holder and you're saying, I'm expecting some return on my investment. And so after the 1980s, after that particular disruption there in the industry was completely revamped and it was based on now, you know, a very hyper regulated to the, to the Texas commission on environment or an environmental quality. It was very hyper regulated. The legislature is creating and the developers only going to get reimbursed after they build it. So now we shift the risk from the public. So the private, do you have,
Speaker 2I like to ask a question when I have developers on here, I usually ask this question of saying, Hey, do you have a favorite project that you've done over the years, a favorite development or anything, but from your standpoint and where you come to the table at, do you have a favorite, I guess it would be the same question. I mean, do you have a favorite project that you've worked on over the years, whether it's related to a special district that, you know, special district creation or something, or any project in general that you could talk about at all? That is a great question.
Speaker 1And there is no specific project that comes to mind that I'm going to just, that I would say, Hey, look, let's look at this project and look, look at what we did just because of attorney clients sort of privilege. But in terms of the takeaways from all the projects that I've worked on, I would say every single one of them is different. It doesn't matter. I've done freshwater supply districts. I've done water control and improvement districts. I've done municipal utility districts. I've done municipal management districts, just example after example of these public private partnership arrangements that are really tailored to, and they're curated to provide a solution that can make the math work and can make a deal pencil for a developer. I mean, we're, we're living in a time where economically, you know, we really, it's really for some developers, it can be challenging to get a deal to pencil. And if you tell them, well, if you put a special district over the acreage that you're looking at developing, we could take the cost for the end user per lot, per home, per structure down $200,000. That is a, that is a material advantage. You know, it's, it's all, it's actually been, you know, kind of interesting when I've had conversations with developers, because, you know, for those who don't know about special districts, you know, you'll tell them, look, we're engaged in development and you are not taking out of your pro forma, the cost of all the public infrastructure. I mean, if you take the cost of, you know, a thousand lots, a thousand homes, 2000 multifamily, an airport, whatever it is, and you can take out of your development costs, water, sewage, drainage roads, the public aspect. That the public would have an interest in ensuring high quality public infrastructure for decades and, you know, as long as they, as they can. It's under those circumstances that I would say that, you know, if you can figure out how to bring the end user lower cost facilities, that's going to be a win, win, win. It's going to be a win for the state. It's going to be a win for the end user, the, again, the lessee or the mortgager. And quite frankly, it's going to be a win for the developer. A partnership benefits all partners, not one at the expense of the other.
Speaker 2Well, before we get into the last segment, the lightning round, I do want to talk about one other thing, and that's how we got connected. So, you know, we, we got connected through a relatively new organization called Dudes in Development. And I'm sure some of you listening in have probably heard of it or have seen a post about it on LinkedIn and everything. But I did want to get your perspective since you're, you're involved in it down there in the Dallas area. Could you talk about your involvement with Dudes in Development? Involvement in the organization and what it's looked like so far?
Speaker 1Yes. So through my role at ABHR, I got to learn about another related organization called Ladies in Land. And Ladies in Land, for those who don't know, preceded Dudes in Development. It was built around the idea that maybe perhaps there weren't as many women involved in the development, land development space and industry as, as there were men. And so there was this Ladies in Land project and I got to learn a little bit more about it. And then I got to learn more about it as well. And so I got to learn a little bit more about it as well. And then I got to learn a little bit more about it. That offers education that offers professional development that offers continuing education credits. If you're a professional, like an engineer or developer, and quite frankly, even if you're an attorney, you have continuing legal education credits that some of these lunch and learns that, that, that we have month after month can, can be satisfied by attending them and also extending how many continuing education credits that you can get towards renewing your service. And so I got to learn a little bit more about it. And so I got to learn a little So it started with Ladies on Land. And I am now the chapter lead for the city of Dallas for Dudes in Development. It's an excellent organization. I would say it came to Dallas probably just a few months ago, maybe three months, Ryan. And it's just been like drinking from a fire hose since it got created. So Dudes in Development, again, is dudes, guys in development. And we are already talking about many partnership opportunities with our sister organization, Ladies in Land, Dudes in Development, doing a shared Christmas happy hour and gathering together. But I love it because from day one, we've had an amazing level of participation, of interest in getting involved in the organization. It brings together developers. It brings together those who are in the real estate industry, those who are home builders, those who are in finance. Those who are attorneys, it's amazing the diversity of the professional that's in the room who's engaged in not just professional networking, but an opportunity to learn in an in-depth fashion about what a company may be involved in in our space. You know, historically, I've been able to go to happy hours and I'll bump into someone that I've met on a gig or on a job, on a deal. And I'm like, hey, it's great to see you. Who do you know? Right. But when you meet month after month after month with this particular group that's self-selected into, we are focused on land development in this space, in this region, exciting things can happen. Yeah.
Speaker 2And it looks like, so dudesindevelopment.com for any of you out there who are interested in seeing if there's a chapter in your area or even reaching out to maybe start a chapter in your city if there's not already one there. So I appreciate you talking about that. And with that said, based on where we're at right now, a little over 40 minutes, let's go ahead and shift into the lightning. So I've got five questions for you. And some of these, it always turns out this way, just because you never know where the conversation is going to go. But some of these, there might be a little overlap of what we already covered. But first one for you, what's the most misunderstood public financing tool in Texas?
Speaker 1You know, I would actually say that it is the MUD or any of the special districts that we create at ABHR. We've run into a lot of focus on PIDs. Our public improvement districts, because particularly I think in North Texas, there was a prevalence of PIDs, public improvement districts, that really operated along the assessment model that we were discussing earlier. And it's been, it's something that when you think about, well, what is a PID and how does it get created? Those are created by cities or counties. And because they are not, it's not so much under the influence of this. There's no sort of partnership to the extent that a MUD or an MMD or a special district might offer. So for example, if you're doing assessments, as we already discussed, there's going to be greater risk that the market or anyone who invests in PID bonds, they're going to get paid back from development that may not get built if there is some sort of an economic disruption, which we discussed. So there's going to be a greater demand for reserves being held in association with that project. And the market expects a reserve fund. And when it comes to any types of PID bonds, but there are, you know, much fewer reserves when it comes to the special districts like MUDs and municipal management districts that get created. There's more project flexibility with the MUDs and special districts that we do, you know, versus the PIDs. There are more restrictive benefits. They're really hoping that the development gets built. It may, it may not. There's greater political risk. We've seen cities who have a city council may turn over and they're like, look, we're just not going to issue those bonds. We're just not going to do it. And all of a sudden, all of the risk that the bondholders face really sort of comes to bear immediately. And, and the development is ultimately not successful. And so we feel, you know, for folks who are sort of, they're, they're more familiar with maybe say a preexisting framework. There's a huge educational component to help clear up misunderstanding. These are not PIDs. Here's how they're distinct. Here's why they're different. And, and, and I'm not going to say that PIDs. Aren't a good fit for specific projects because there are some where I think that they actually could be superior to a mud or a special district. And that usually deals with maybe a smaller project, not one that's going to be coming to scale. But outside of that, I think the special district models that we have, the muds, the MMDs, the wickets, the, the FWSDs, freshwater supply districts, those are going to be superior.
Speaker 2All right. Second one. What's one infrastructure cost developers tend to underestimate?
Speaker 1An infrastructure cost that developers. Tend to underestimate would probably be their public infrastructure, which is what we're focused on. So you've got obviously the water, the sewage, the drainage and the roads and the parks and recreational facilities, a lot of that gets dealt with, with, with respect to the lot being developed before you put a structure, you go vertical, you absolutely have to attend to the political negotiations for water, for wastewater, a detention pond drainage. Systems and regional drainage systems, regional water authorities, and then these massive road, road related systems and road traded systems. And that's not an inexpensive cost. And I would say on top of that, knowing and understanding how taking those costs out of the cost of the development is going to, uh, essentially bring on the kind of savings that we were talking about earlier in the podcast, uh, that ultimately will inform the success of that development and the ability to. To populate the homes, the facilities or the residences that, that you're building. One of the models that we have, and this is from the Texas, uh, house of representatives land or resource, uh, management committee, uh, one particular metric is if you have a lot, then the action, if you have the cost of your home is going to be the cost of the lot four times four. And so if you're able to remove, let's just say $50,000 of these public amenities out of the cost per lot, if you have a thousand lots, that's fine. $50 million. That you would have moved out of the cost of the development project and essentially saving the end user. And I will, I will close on this particular question, Ryan, by saying that when you compare the cost of living in a mud or a special district versus not having those costs savings, you're going to get again, hundreds of thousands of dollars more in expense. That's going to be subject to a higher interest rate when it comes to paying. Your mortgage and your mortgage interest over 30 year mortgages. And, you know, some, I've even heard people talk about a 50 year mortgage. Can you imagine 50 years of a high mortgage interest versus a bond that gets issued? That's tax exempt at a much lower interest rate for 25 years. And it's done at the 25 years. Muzz in the end, special districts at the end, just save everyone from my vantage point, the public and the private benefit.
Speaker 2All right. Last three here. We're going to get into our going to, we're going to. Mix it up just a little bit. So third one, what's one thing you learned during your teaching days that you still use today? Oh my gosh. Uh, that is, that is, uh,
Speaker 1definitely a curve ball, but education is everywhere. Learning is everywhere. I know I've been able to see firsthand that most people, let's just say you go all the way through college, 22 years old. You graduate from a university and now you're in the workplace 24, seven discounting weekends for the rest of your life. You retire. That's. Let's just say 65. So from 22 to 65, most of the learning that happens in our society is going to be taking place in our communities and in our careers and during our jobs. And so there is a huge need for increased education and learning, teaching and learning and professional development mechanisms while we're in our working years. And not just, I know we, we upfront are, we, we, we loaded upfront. We're from zero to 22, but you know, the majority of our lives where we've, we spend learning, teaching and learning on our jobs in our working years. And so I, you know, one of, I almost look at my educational background as kind of a built-in superpower that I have because it, it, you know, I don't take for granted the fact that people are always seeking to understand and maybe they don't always understand. And there are ways to promote understanding of new ideas, new concepts. And when we talk about innovation. And I think. One thing that is, of course, through our entire conversation today is definitely innovation in the land development industry. I would say that, you know, how do we learn how to continue despite the demands and despite the challenges to remain innovative in the face of the 21st century land development space that we find ourselves in?
Speaker 2All right. Fourth one, what's a daily habit that you've built over the years that's helped you in your professional career?
Speaker 1Yeah. Well, I. Would say that I, uh, I definitely meditate quite a lot. That's important. Uh, just kind of finding your, your center, but I also think that being healthy is important. Ever since I came to ABHR, uh, Steve Robinson, uh, who is one of the founding partners with the firm talks about green smoothies every morning and something as simple as saying, Hey, let's make sure that we start the day with a protein shake and, and, and green vegetables, believe it or not, does keep you focused on health. And when you talk about how you're in the community space and you're talking about health of our communities, focus on health. Focusing on your physical health, focusing on your mental health, focusing on your health, it helps you to be a better agent of the kind of positive change that we want to see in our society.
Speaker 2All right, last one. What's the best piece of career advice you've ever received?
Speaker 1The best piece of career advice I've ever received is that, so I'm, I mean, I, God, I'm 44 to share, you know, my particular vintage and the best career advice I've ever received is that, you know, it's okay to shift careers again and again and again. And really, I mean, I'm a guy who started out in education and, you know, lived in multiple states. Came back to Texas, got, got into law, did litigation, you know, for years, almost a decade before coming into the land development space. And I feel like, you know, I didn't lose any of the expertise or any of the knowledge that I gained throughout my travels, throughout my study, throughout my experiences, throughout my professional encounters. It, it only, it was all growthful and accretive to, to what I do today. And. I think that ultimately the best advice is be comfortable with no matter what happens, no matter how things change, no matter what, it's almost like a SWOT analysis, right? Like strengths, weaknesses, opportunities, and threats, right? Like, how do we, how do we cope with change? Just being comfortable riding the wave of change, being willing to continue to stay positive with, with all that happens and, and to always be focused on making the difference.
Speaker 2Awesome. Well, what's the best way for people listening? In to connect with you and to also learn more about your company?
Speaker 1Well, absolutely. I think one of the best ways is, uh, you can reach me on social media, Dr. Mustafa Abdul-Jabbar on LinkedIn, got folks who send me messages there. Uh, you can also look me up at abhr.com on our professional website and look me up. And I'm always happy to have a conversation with anyone who, who has a question.
Speaker 2All right, guys. If you look down in the description for this episode, you'll see a link there to the show notes page on the show notes page will be the link to. Um, we stopped. Mustafa's LinkedIn, but also to the, uh, website for ABHR, Mustafa, really appreciate you hopping on here and, uh, sharing a lot of your experience with all of us. Uh, really interesting stuff.
Speaker 1Thank you, Ryan. It's a pleasure. Thanks for having me on.
Speaker 2You bet. All right, guys, that's all for this episode. If you're not already subscribed to please click that button. We'd love to have you back for the next one. Otherwise we will talk to you all next week. Bye. Bye. Bye. Bye.
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