Bureaucracy: the secret imperatives
Anyone who works in affordable housing finance periodically encounters the dreaded bureaucracy, whose secrets are forbidden for outsiders to know.
And they’re not all that’s secret
Since affordability implies financial complexity because of the cost-value gap, most but not all of these bureaucracies are governmental. People never exposed to such entities often find themselves groping for light amid the darkness, because even though the bureaucracy is often peopled from top to bottom with dedicated individuals, somehow the whole adds up to organizational responses that are much, much less than the individual parts.
If I could decode the genetic structure of a bureaucracy, I’d win the Nobel Prize
Many are the outsiders who, fired with zeal and belief in the rightness of their cause, hit the bureaucracy head on and bounce, painfully, backwards. That’s because they have not learned the absolutely fundamental, secret imperatives by which every bureaucracy — domestic or global, private or public — eventually comes to operate. So far, in my inglorious career, I’ve encountered the following rules:
1. “I read only my language, not yours.” Rare indeed is the bureaucracy that does not begin its existence by promulgating forms by which all information is to be submitted. Any submission not in the bureaucracy’s approved form is summarily rejected, often with a caustic or icy note questioning the intelligence of anyone who could fail to appreciate that there is a right way to present information, and that was not it.
You’re not presenting the right way here
(For one sample recent kafuffle, see Previous Participation Clearance, HUD.)
Useful principle for program participants: You can’t be too punctilious — use their materials exactly, no matter how counterintuitive.
2. “I do no work until you’ve done all your work.” Many is the applicant who, having moved heaven and earth to submit the twenty-page narrative, the dozen exhibits, and the multiple copies, all as specified by the applicable regulations, is told, ‘You have failed to include Form twenty-seven-b-stroke-six, the certification that all certifications have been submitted, and therefore your entire application has been pulped and used as landfill.
“Have you got a 27B/6? I’m a bit of a stickler for paperwork.”
Useful principle for program participants: have someone in your office carefully review any submission with evil intent — better your colleague should find it than the bureaucrat should.
Additional useful principle for program participants: Submit before the deadline, and ask for confirmation of receipt and completeness. You probably won’t get the latter, but it never hurts to ask.
3. “As among many parties, I always decide last.” Every bureaucracy wants to make its decision only after every other transaction participant has completed every other review, made every binding commitment, pledged every bit of capital or collateral, and signed every certification. This creates a particular challenge when multiple bureaucracies are involved, since each expects the others to defer to it.
Each of us has to be last
Useful principle for program participants: When multiple agencies are involved, encourage ‘approval-subject-to’ commitments, so that each agency can arrive at the closing simultaneously, each believing that it is making the last decision.
4. “Other agencies? What other agencies? My rules trump everyone else’s.” In general, bureaucracies are reactive creatures — they sit in their offices and the world comes to them, often because it needs either of government’s two products (laws or money). They thus tend to hear a continuous stream of litanies all asking for help, and pleading that their agency is the one, the only one, who can prevent this tragedy and save this transaction.
You’re mocking me because I’m a turtle.
As a result, bureaucrats would be less than human if they did not gain a healthy view of their self-importance. Meanwhile legislators, who create the laws and money that empower bureaucrats, when confronting a new problem, tend to envision it in isolated terms. Far be it from the tax-writing committees to take cognizance of HUD rules, for example, or for HUD to appreciate that a technical change it is making might imperil a million tax credit apartments.
Better fit within the convex triangle
As an example, I well remember a property my company acquired and managed, where the police department issued citations because our driveways allowed cars to shortcut across our property between two main thoroughfares, and thus formed a natural getaway rendezvous for drug dealing, and then the fire department cited us, after we put up a fence and barriers to prevent this, for violating the mandatory-egress requirements of the local fire code.
Useful principle for program participants: When in doubt, conform to all possible conflicting rules. This tends to mean that affordability is the ‘lower of’ all choices, and regulatory reporting requirements are ‘the most extensive of’ all conflicting programs.
5. “I expect my money to be as little as possible, and highly levered.” Akin to the self-importance that accretes to those who are always asked to write checks with other people’s money is the fierce protectiveness of that money, and the sense that one who comes to visit, hat in hand and palm outstretched, is simply grubbing for dollars.
I’m only in it for the Cheerios
Most agencies, therefore, adopt complex anti-profiteering or anti-oversubsidization [That’s not a word — Ed.; Tell it to the agencies! — Auth.] rules, whose twin purposes are (a) to squeeze profit down to the minimum level a bureaucrat thinks is justified (hint: that’s very small), and (b) to make sure that no property is ever too viable (meaning that some properties are, in fact, not viable from inception).
Useful principle for program participants: Whenever you present a sources and uses of funds, make sure to emphasize the tiny fraction being provided by your current funder and the vast proportions coming from elsewhere.
Your X is little and my Y is big!
6. “Rules are something I write and you follow.” In many ways, this one is my absolute favorite. Never having worked in a bureaucracy myself (I left my old firm when our head office got to 120 people, which was enough administrivia to start giving me the heebie-jeebies), I am constantly bemused by the zest with which bureaucrats apply their rules to outsiders, coupled with the horror they experience when a higher body imposes rules on them. (See, for instance, HUD rules over housing authorities.)
What do you mean, other people’s rules?!?
Useful principle for program participants: Never use phrases like ’sauce for the gander.’
7. “Do I contradict myself? Very well then, I contradict myself.” Particularly as a bureaucracy gets larger, its programs more varied, the risk of an internal contradiction between provisions or instructions asymptotically approaches certainty.
As Walt Whitman said, when confronted with such a contradiction, “I am large, I contain multitudes.”
For many people, discovery of a contradiction is a moment of triumph — ah, ha, I’ve got you, now what? But contradictory guidance is a way of life for large bureaucracies, especially in housing where there some guidance stretches back years and even decades that has never been updated or statutorily modified despite developments in the meantime.
Useful principle for program participants: Be aware that argument-by-logic is often optional.
8. “Our bureaucratic culture can expel the most energetic reformer.” Over more than two decades of watching bureaucracies at work, I have many times seen the phenomenon I think of as the parachuting reformer. A new administration takes over, and appoints an energetic, smart, capable and committed outsider as the agency’s head. The new person, fully charged up and committed to the cause, arrives in the building ready not only to make change but also to show the organization how it’s done.
Look, we were just trying out some new procedures!
Often the incoming head manifests an unconscious — or worse, even conscious — disdain for the people who have long labored inside the cubicle maze. Perhaps he or she expects to carry all by the force of intellect, or the power of job title. Possibly thinking himself or herself invulnerable, he or she fails to cultivate allies, fails to persuade, fails even to notice the organizational resistance — or, if noticing it, puts down that resistance to only ignoble motives.
But, as the Chinese learned two millennia ago, emperors come, emperors go, and the mandarins go on over. Potent indeed is the emperor who can defeat the internal opposition.
Useful principle for program participants: see Summers, Larry; or Wolfowitz, Paul.
A good motto for high-energy reformers
[This post inspired by but in no way reflective of the views of dedicated reader Mark Shelburne.]
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