These often-conflicting qualities lead to internal tensions in HFAs and generate friction between the agencies and other housing stakeholders with which they must cooperate in order to develop affordable housing. In its 2006 annual report, the Illinois Housing Development Authority (IHDA) aptly describes the balancing act HFAs must perform: “The Illinois Housing Development Authority functions in two different worlds. IHDA is a social purpose government entity responsible for executing the Governor’s leadership on affordable issues and responsive to the housing needs of Illinois. IHDA is also a self-supporting financial institution that must remain fiscally sound and under the scrutiny of private investors so that we can leverage private capital to invest in our social purpose work.” HFAs wrestle with a double bottom-line similar to the one nonprofit developers face: remaining fiscally solvent while maximizing social goals. For, HFAs, however, the stakes are numerically much higher. As detailed in Table 1 above, HFAs are characteristically more averse to taking risks than their partners, except for lenders that share a similar level of aversion. For example, developers may judge risks differently than HFAs, and be willing to speculate based on their more intimate knowledge of local housing market conditions. Some observers believe an overemphasis on risk makes HFAs too conservative, causing them to miss strategic opportunities to address state housing needs. According to Ben Applegate of Applegate & Thorne-Thomsen, an attorney who represents housing developers: “Their [staff] inclinations are toward risk avoidance at all cost, even if it means transactions are more expensive for them to do, take longer for them to do, maybe even result in some deals not getting done.” On the other hand, as Joyce Probst MacAlpine, former senior policy development adviser on housing to Illinois Gov. Rod Blagojevich, says, the policy-making role housing finance agencies are being asked to play can conflict with their need “to respond to the bond-rating agencies who will look at the…entire book of business when they are rating the authority. I think that does shape their decision-making on policies about investing in projects and the amount of risk they are willing to take.” Another source of conflict is an HFA’s production-oriented nature. While developers are obviously more focused on production than HFAs, advocates may be more concerned about the types of units or the types of people being served by a given project. Advocates may also have a greater interest in preserving the affordability of existing units through refinancing, which does not result in a net increase in units. According to Diane Sterner, executive director of the Housing and Community Development Network of New Jersey, “Preservation is not very sexy, because there’s nothing new to show for it. A lot of the state [including New Jersey Housing and Mortgage Finance Agency (NJHMFA)] programs make it difficult to do preservation, although recently they’ve been focusing on it more. Resources are just plain scarce now, but it seems that support for preservation is growing as opportunities for new development dry up.” Lenders, on the other hand, are typically more interested in money matters than how many units are built or preserved. Politically, HFAs are uniquely situated, along with other state finance authorities. While most (75 percent) are in but not of state government — governed by an independent board, rather than the legislature — this board is often composed of ex-officio members and those appointed by the governor. Similarly, while the executive director is hired by the board, the position is often filled by the governor’s suggested candidate. Finally, HFAs were established by state legislatures to fulfill a social purpose: supporting housing development, especially for low- and moderate-income citizens. Lenders and for-profit developers tend to have weaker missions or mandates for such affordable housing, with the exception of those chartered for that purpose (e.g., community development financial institutions). Instead, they are primarily motivated by the financial returns on their investments. Nonprofit developers and housing advocates, on the other hand, have a much stronger sense of mission than HFAs, coupled with the purposeful lack of a profit motive. Advocacy groups are usually formed based entirely on mission.