Homeport

Tim Fulton 00:14Ladies and gentlemen, welcome to the Confluence Cast, presented by Columbus Underground. We are a weekly Columbus-centric podcast focusing on the civics, lifestyle, entertainment, and people of our city. I'm your host, Tim Fulton. This week, I spoke with Bruce Luecke, the President and CEO of Central Ohio affordable housing nonprofit Homeport. We discussed low-income housing programs, how our population growth has affected the need for affordable housing in Columbus, working with communities on putting in affordable housing, and the contributing factors that hamper Columbus when it comes to affordable housing. You can get more information on what we've discussed today in the show notes for this episode at theconfluencecast.com. Also, the Confluence Cast is on Patreon. Find out how to support this podcast on our website, theconfluencecast.com, or at patreon.com/confluence. The Confluence Cast is sponsored this week by the Mid-Ohio Regional Planning Commission, or MORPC, featuring stories about our local and regional partners that envision and embrace innovative directions in economic prosperity, transportation, sustainability, and an inclusive Central Ohio. MORPC's transformative programming, innovative services, and public policy initiatives are designed to promote and support the vitality and growth in the region. For more information, please visit morpc.org. Enjoy the interview. Sitting down here virtually with the CEO of Homeport, Bruce Luecke. Bruce, how are you, sir?

Bruce Luecke 01:58I'm good, Tim.

Tim Fulton 02:00So at a high level, Homeport provides homes for folks with low to moderate income in Central Ohio, correct?

Bruce Luecke 02:10Yeah, correct. So we're 34 years old, we have 41 communities around Central Ohio. That's about 2,500, 2,600 units. We serve 6,500 people. And then we have another three to four in the works that will be coming within the next couple of months, if not a year or so. So we're growing quickly. And we not only provide housing, and yes, it's affordable housing. So typically, the client that we serve would make from $20,000 to $35,000, $40,000 per year. In fact, they would be rent-restricted, based upon the financing that we use.

Tim Fulton 02:56Okay. And then define "rent-restricted."

Bruce Luecke 03:00Meaning the actual level of rents are restricted by basically the covenants in the loan agreement, and the investor agreements that we serve. But we are meant to serve that population.

Tim Fulton 03:17Got it. And so is it all apartment communities? Is that how folks should think of it?

Bruce Luecke 03:23So we have today, of the 2,600 units or so, all but 500 are multifamily. There's 500 single-family homes, but they are lease-purchase homes. And again, based upon the financing, which is mostly made up of low-income housing tax credits, they have to remain as rental properties for 15 years, and then they're eligible to buy.

Tim Fulton 03:49Okay, and is there some credit that they're getting for those 15 years ahead of time? It's basically rent-to-own, is that a simple way of putting it?

Bruce Luecke 03:58Yeah, the way we treat it would be that for the number of years that they were there, we give them $1,000 per year in credit. And then on top of that, typically by year 15, homes usually need a makeover, a little bit of a makeover, right? So they typically get a new HVAC system, they get a new roof, etc. So we make it so individuals don't have to put a lot of their own money into the house to be able to buy.

Tim Fulton 04:27Okay, and the organization started in '87, correct? How do you identify — sorry, I want to be clear here. You guys own the units that you are providing to people?

Bruce Luecke 04:41In essence, yes. It would take a whole two hours to explain the low-income housing tax credit program, but most of our projects are financed through those tax credits. And to boil it all down, there's a couple different kinds of tax credit. So I'll talk about the 9% tax credit, which is very competitive, very difficult to get. In essence, it puts about 70% of the equity into a deal. And then the balance, that 30%, is made up of regular debt, in some cases other forms of what they call soft debt, which is really generally federal funds that flow through the city or the county or whatever. So because of those tax credits, those tax credits are awarded to us. And then we turn around and sell them to a syndicator, who has investors who buy them, who are typically banks and insurance companies.

Tim Fulton 05:48Okay. And so that's basically a low rate of return, but a pretty solid rate of return, dependable, if you will.

Bruce Luecke 05:57Yeah, that's right. And so what happens is, they usually buy in for, at least today, 92-ish, 93 cents on the dollar that goes into the project as equity. But the investor, literally for the first 15 years, takes 99.9% of the ownership of the property. Although we are the managing member, so we manage everything, we manage the properties, but that allows them to take not only the tax credits, but any losses, like depreciation and things that it would spin off. So that helps to increase the yield for them a little bit.

Tim Fulton 06:33Got it. It's a limited partner model, really. Think of it in terms of like how a startup is financed. It's very definitely a limited partner model. Got it, makes sense. And then do you tend to build from the ground up? Are you acquiring properties? How does that process work?

Bruce Luecke 06:51So we've tended to build from the ground up. Having said that, we are starting now to look at acquiring properties. In the Columbus marketplace, real estate prices have gone up quite a bit over the last couple of years. And so being able to buy and keep something affordable is becoming more and more of a challenge. And we can talk about that, but generally speaking, we were a developer, so we would build from the ground up. And that's what most of our properties are.

Tim Fulton 07:28Okay. And you guys operate right now, according to your website, with roughly a $4.8 million annual budget?

Bruce Luecke 07:39Yeah, again, I don't want to get overly complicated. I mean, it's probably more like a $17 million budget. The difference is what properties are still being held by investors and what properties are wholly owned by us. So at the end of 15 years with those tax credit properties, for example, we would typically buy out the limited partner interest, we buy it back from the investor, and then we would own both the GP and the LP interest, so we own the whole thing. Got it.

Tim Fulton 08:05And that's general partner and limited partner, just for the folks that don't know. So I'm thinking about you guys in terms of structure, like who are your stakeholders? Your stakeholders are, I would say, the government institutions that are providing the credits and the grants and the loans, the investors who are looking for that promised rate of return on their investment, which tend to be institutions, as you said, and then the third part of it that I would hope folks care about the most are the folks who are benefiting from having affordable housing.

Bruce Luecke 08:42Yeah, that's exactly right, you hit it right on the head. So if you think about it this way, the two primary strategic priorities of ours are, number one, being able to develop affordable housing and to attempt to keep up with the market, although that's getting a little bit harder and harder these days. And then secondly, and we feel very strongly about this, and it is an equal strategic priority — we have a laser focus on the clients that we serve. So if you think about the incomes that they have, they're living paycheck to paycheck, they do run into issues at times, they don't necessarily have the same access to resources that you and I would typically have, right? So we spend a lot of time working with them on making sure, number one, that the properties are in great shape, they're a great place to live, we'd all be proud to live there. Number two, we want to keep them housed, which over the last 20 months has been a little bit more interesting than ever before. But we help them not only through monetary means, we also provide financial education services, as well as resident services to them. So I'll give you an example. Something happens and an individual needs their car for work, the car breaks down, it's a large expense. And they literally make a decision to say, "Do I pay for my car so I can get to work? Or do I pay the rent?" And it's a very logical question. I mean, they're trying to do the right thing, right? So we would step in and help people that way, not only just with money, but then we would also want to have them engaged in our financial education classes, so they're better prepared the next time if that happens. And then the third element of that resident services would be linkages to services. So we're not a social services organization per se. There's many great social services organizations around the Central Ohio area, whether it's education or health care or you name it, right? So we have social workers on our staff who work directly with our individuals, with our clients, our residents, understand what the issue is, get them to the best place for them, and then follow back around with them to make sure they're being taken care of.

Tim Fulton 11:21Okay, so let's walk through a resident's experience. They aren't making enough money to be able to afford an apartment in Columbus. Would they need to qualify in order to rent from you guys?

Bruce Luecke 11:35They would need to income-qualify, and that's on the bottom end and the top end. So they do need to have income to qualify, but then they also can't make, generally speaking, more than 60% of the area median income. And that's a number that's based on the size of your family, etc. So they would qualify that way to get in for the first time. Once they're in, they don't have to qualify in that way every year.

Tim Fulton 12:11Right, they're gonna wait people out. Right, they start making $10,000 more, you're not gonna say, "Okay, it's time to go now, this isn't for you anymore."

Bruce Luecke 12:20Yeah, we wouldn't do that. But, you know, again, we would hope and work with our residents to see what other opportunities they might have. We might link them to job training programs or things like that, so they might move up and out. But the interesting thing about our residents is the average tenure in our apartments is six to six and a half years. If you compare that to a market rate apartment, market rate apartment tenure is about a year and a half. So that tells you a little bit — on one end, it's great, we keep them stable, it's what they can afford, so it's a good thing, having that kind of tenure. Having said that, though, I would also tell you, sometimes I don't know if that is good, because are there enough programs to help them get up and out? And are they taking advantage of the ability to do that? Or do they have the opportunity to take advantage of other programs to do that?

Tim Fulton 13:20Yeah. So are you — and this is something that I am not super familiar with. Obviously, I understand that there's a need for affordable housing, specifically in Columbus. What other organizations, either governmental or non-governmental, like yourselves, are doing this work?

Bruce Luecke 13:39Sure. Well, so first of all, we're not a government organization. We happen to be a 501(c)(3), we're a nonprofit organization. Columbus actually kind of has strong players in this field, both on the local as well as the national level. To concentrate on Central Ohio, we're probably the largest locally focused organization, but there are great organizations like National Church Residences, which is located here, which is across the country. Woda Development is here. Wallick is here. And so there are a number of good organizations, and because Central Ohio has seen such population growth, organizations outside of Columbus are coming in to also be developers here. So there's a lot of activity, and I would call it competition, but it's really not. I mean, there's more than enough business to go around. And in fact, many of our partners like Wallick handle property management for the majority of our residences. National Church Residences, who concentrates on the senior population, they provide resident services for seniors. We have six independent senior affordable housing communities, and they do the resident services for those because that's what they're really good at. So we work together with them.

Tim Fulton 15:05Okay, from an economics — not economy, but economic standpoint — where are the shortages? Is it we constantly need more affordable housing? How are you connecting with folks who can't afford a market rate apartment? What do you struggle with?

Bruce Luecke 15:25So you're gonna hear a couple different numbers in the video, right? The one that's most quoted is that there's 54,000 households in Central Ohio who pay at least 50% or more for their housing.

Tim Fulton 15:41Okay, 50% or more of their income? Correct? Got it.

Bruce Luecke 15:45So think about what they can't buy when there's plenty. So that 54,000 have housing, it's just that they're paying more than they probably can afford at home. All right, so that's one population that we think about. And then, you know, just in the last census, Central Ohio grew by over 15%. So we're continually getting more people in the market who need housing, and there isn't available housing. So you really kind of have to look at both serving the clients that are already here, but then serving the clients who are moving here. And that's been a big issue for Central Ohio — not just affordable, it's across the board on market rate housing too. We just don't have enough housing to match the growth in Central Ohio.

Tim Fulton 16:39Let me ask you, and I'm sure this is maybe a KPI, key performance indicator, that you guys look at, or at least your board wants to know — what's your occupancy rate of your units?

Bruce Luecke 16:53Effectively, it's 100%. You know, it might be 98%, because we might be turning a unit here or there or whatever, but effectively, it's 100%. And we have a waiting list.

Tim Fulton 17:04Got it. And that was actually going to be my follow-up question: how long is the wait for someone who qualifies? And I assume it's a binary state, right? Like they either qualify or they don't, it's not "this person is in more need than another," correct?

Bruce Luecke 17:21Yeah, that's generally true. It could depend upon the community that they're moving into. When we structure these tax credit deals, typically a percentage of the rents are at varying percentages. So we might have X number at 60%, Y number at 50%, Z number at 30%. So it depends what we need to fill and what's available. And so it could be that someone earning 60% of the area median income wouldn't necessarily be able to get an apartment because we have to fill that 30% unit.

Tim Fulton 18:04Gotcha. And that's a guarantee that you're making when you're structuring the deal up front.

Bruce Luecke 18:10Yeah, it's a deed restriction. I mean, it's a part of the financing.

Tim Fulton 18:13Got it. And so you're limited by that. It's not that you're a bad guy, it's literally like this is what this was built for. That's exactly right. Gotcha. And so could you say, on average, how long someone may have to wait upon qualifying, upon applying, to get an affordable housing unit?

Bruce Luecke 18:34I probably don't have an exact number for you. With some people, it's six months to a year and maybe even more. I mean, over the last 20 months, we've virtually had nobody move out. And so it's been really difficult through the pandemic.

Tim Fulton 18:51Okay, can you talk about some of the challenges that you guys faced during that?

Bruce Luecke 18:56Sure. So with the pandemic, with the focus we have on our residents, many of them had jobs that were very vulnerable. They either lost their job, or in many cases individuals were hourly workers and their hours were significantly cut back. So think about that for a second, right? If your hours get cut back to 30 or 20% of what they were, while you still have to support a family and all the things you have, but you can't file for unemployment. So typically, pre-pandemic, we usually help on average about 60 households per year avoid emergency eviction. Well, the reason that in 2020 was about 280, and this year it'll be more than that. So last year we paid out about $475,000 in rental assistance to help people stay in their homes. This year, that number is going to look more like $600,000 to help keep people stay in their homes. And those are dollars that have come from two sources. They've either come through the federal government, the subsidy monies — that's where most of the dollars have come through, and we've partnered with IMPACT Community Action, they are the provider of those dollars in working with the government. Or, immediately once the pandemic started, we actually set aside $100,000 of our own money, and then had it matched by a number of organizations like the Columbus Foundation and a couple banks and United Way, etc. And so we have our own fund too. If they don't quite qualify for the subsidy money, then they probably qualify for the dollars that we have set aside, because we want to keep them housed. We have a focus on keeping them housed and stable.

Tim Fulton 21:16Right. And I just want to make sure that I'm clear here, they're paying their rent to you as well, right? That's right. So basically you're correcting the books for them.

Bruce Luecke 21:27Yeah, but it's keeping them out of eviction court and all the things that go along with that. We're keeping them stable.

Tim Fulton 21:34Absolutely. It feels very similar to the Paycheck Protection Program that happened towards the beginning of the pandemic, where you're basically allowing things to remain the same because the situation is very, very different than it was before. Correct. Gotcha. There's a lot of conversation that happens around affordable housing, and specifically NIMBYism, not in my backyard. How do you guys identify where you should put affordable housing units? And how do you address the surrounding communities if there's pushback from that?

Bruce Luecke 22:10Sure. All right, so that's two different questions. And actually the first, about how do we identify, is actually kind of interesting too. So in the ideal world, just like any developer, you would go to where the most need would be, right? The thing though that we have to factor on top of that is, remember, I said that we finance with low-income housing tax credits. So the 9% tax credits, which provide the 70%, they are very competitive, and they're awarded by the Ohio Housing Finance Agency. And they have a plan, it's called a QAP, or a Qualified Allocation Plan. It's almost like scoring points, like you've got to meet certain things to be able to qualify. A property could be near transportation, or there's just all kinds of different types of items. In many cases, what that does is change where we need to go, to where we can score the best, right? Because last year, just to give you an example, probably throughout the state there were at least 90 applications that went in for credits. I would bet 35 were awarded. So it's very competitive.

Tim Fulton 23:44And it's a fixed amount of money every year, right?

Bruce Luecke 23:47It's not always a fixed amount of money. I mean, once the credits are awarded, it is, but not all credits are the same, depending on the size of the project, etc. They are capped, though. It's something that it's a way of life with, if you're going to finance with tax credits, because you have to find a place where you're going to qualify. Whether it's in Central Ohio, because it's growing so quickly, doesn't necessarily qualify as well as like Cincinnati or Cleveland, particularly Cleveland, for a couple different things. Some of it has to do with the percentage of need, some of it has to do with the transit score — how close are you to transit, etc. Well, if you compare a more mature city like Cleveland, they have more areas that would be able to garner points than a growing city like Columbus. So for example, we had an application in to build in the city of Delaware, and the last tax credit cycle it just didn't score well, because there's no transportation up there, etc., a number of different factors. So those are things we have to always keep in mind, and it becomes a part of what we do.

Tim Fulton 25:04Okay, what's interesting here is you're talking about the various contributing factors for a limit in the amount of affordable housing we have. That's right. Got it. And then to address the other question, how do you approach the surrounding communities? Or do you? We do. Okay.

Bruce Luecke 25:25Yeah, I mean, over the past couple years, we've completed a project in Grove City, we've completed a project in Reynoldsburg. So we work within the city, and we work in the suburbs. So this gets to your second question about community support, etc. Every time any developer — it doesn't matter if it's a market rate development or an affordable development — it still has to go through a process, a zoning process. If it needs to be rezoned, it still has to go through an approval process in that community. And so maybe what makes affordable a little bit harder than some others is you do get NIMBYism, and we work very closely with those neighborhoods. We want to be a good neighbor. And so we don't tend to force anything at anybody. We get to know the neighborhoods, and if it's in the city of Columbus, we know the neighborhood commissions, we know the people who will make a difference in those areas, and we spend a lot of time with them. Does it always work? No, it doesn't always work. But that's the approach we've opted to take, and that is, we have to be a good neighbor. And so we've had many examples where we might have changed some things slightly because it turned out to be something that the community brought up, it was a win-win, and we changed a couple things. There's a lot of discussion that goes on prior to taking it to any kind of municipal bodies to get approved.

Tim Fulton 27:17To get that support. Absolutely, right. And, Bruce, what is your background? What brings you to this role?

Bruce Luecke 27:24Yeah, so for the most part, I was a banker for most of my career. I was on the Homeport board. I had actually retired. I'd been retired for about a year, and then we needed to replace our CEO. I think it goes something like this: one of the board members — we had a small group of board members sitting around talking about what we were going to do — and one said, "You're not doing anything right now, so how about filling in on an interim basis?" So I did, I filled in on an interim basis, and somehow interim turned into permanent, and I've been here, it'll be six years. I'm actually retiring at the end of the year. So congratulations. Thank you. But yeah, so interim turned into six years, but it's been wonderful. It's been just a blessing to be able to do this.

Tim Fulton 28:07Yeah, absolutely. I tend to end interviews with two really basic questions. What is Columbus doing well? And what is Columbus doing not so well? So I want to posit that to you. You can obviously include all of Central Ohio, from your perspective, and this could be specifically related to Homeport or not. What is Central Ohio doing well?

Bruce Luecke 28:32So, you know, about six or seven years ago, we came together with a number of our peers to create the Affordable Housing Alliance of Central Ohio here in this market. And it has paid a lot of dividends. I was skeptical at first, having organizations — you know, you do a little of this, right? Well, you're giving up power, like we are. But we've been very good at really concentrating on the top two or three things that are going to help everyone. And it's not only been financially, but it's also been very helpful from an advocacy perspective. And so I've seen the whole affordable housing concept and idea grow so much in Central Ohio over the past five to six years, where the community really embraces that, the business community has embraced it. And when I hear peers around the state from other cities, I don't think there's any place like Central Ohio that has truly embraced affordable housing as a need. Now, whether we're all there yet is a different issue, but people see it. And I think there were a couple things that drive that. Affordable housing is always going to be a social issue, it always has been and always will be. I mean, stability is just critical. But I think what the Central Ohio community — and this is not just the public sector, but this is the private sector here — what they've also truly realized is this is an economic development issue. If we don't have housing, we're not going to be able to continue to attract business, we're not going to be able to have a strong business community here, a strong neighborhood community here. The whole point about being a prosperous community isn't going to happen unless we have housing for people to live. So they've embraced that. And so I think that's been the difference. It's been the combination of the two. And so I see Central Ohio as out ahead. And a couple things have happened just to demonstrate that point. Columbus passed a $100 million affordable housing bond fund a couple years ago to allocate dollars. There were a number of organizations working together with the Alliance who put together a $100 million Housing Action Fund to be able to fund what we do here. So there's more and more happening there. I think the awareness level is very high.

Tim Fulton 31:14And it's a matter of collaboration too. Like, that's what's causing that awareness, correct, and moving the ball forward.

Bruce Luecke 31:23Yeah, I mean, the Alliance is interesting, because if you think about the continuum of housing, we concentrate in the permanent space, but one of our peers in the Alliance is the shelter board. And Habitat for Humanity's in there, and permanent supportive housing organizations are in there. And so it kind of goes across that whole spectrum of housing and the need for housing, because there isn't just one need. I think the second thing, real quickly, that we've really tried to work on, that I think the community is really starting to understand, is there is absolutely no silver bullet here. There's no silver bullet. So we actually built a three-part platform, the Alliance did, and have been working on the platform. Number one, we do need more housing, we do need to invest in more housing. And so we need the dollars to be able to do that, number one. Number two, we need to keep the housing that we already have affordable. And that comes in two different forms. It comes either in the form of making sure neighborhoods stay stable and putting dollars back in the neighborhoods to help keep them that way. Or, there are more and more apartments now, because of the market and what's happened in the market, that are increasing in value. So it's very difficult for an organization like us to buy at market value but keep rents affordable. So that's another area that we're really concentrating on. And then I would say the third element is something that's based on housing, but it's not really housing, it's really based on helping people increase their incomes so they can afford more. And so we just kicked off, I think, a really neat program called Resiliency Bridge. And what Resiliency Bridge does is provide people who have the motivation to increase their earning power and their skills or their education — it surrounds them with housing support, with food support, with a case manager, and the whole point is to get them from where they are at today to at least about a $20-per-hour job. Because they have to do that to get through the benefit cliff, right? And if they can get to that point, they can come out of affordable housing, and it's a benefit to them. I mean, they're building their skills. When we talk to our residents, one of the problems they have is when you ask them, "Would you like to be able to do this?" they say, "Sure, but I can't afford to take a day off, a week off, a month off to be able to go back to school or retraining or whatever." So this Resiliency program actually supports them for that period of time. So it takes risk away from them and does allow them to get to that point. So it's just getting off the ground now, and it's based upon a program that we've been piloting at Columbus State called Success Bridge, which has helped students stay in school with these kinds of programs. So I think that's a lot of good stuff. As far as where we still need to go, Columbus is really looking at their zoning code. They're looking at tax incentives. A number of the municipalities are doing the same thing. Those things need to happen. The regulatory environment to get things done is just difficult right now, and so they need to get done.

Tim Fulton 35:08Okay. And that's your answer to what Columbus is doing not so well? It's this opportunity to fix the regulatory environment, basically.

Bruce Luecke 35:17Yeah, I wouldn't say it's not so well, but it's not done yet.

Tim Fulton 35:22Well, it's hard to do things. We've got a city charter, we've got all kinds of things that we could dust off and look at, right?

Bruce Luecke 35:30That's exactly right. But that's in process. So the relook at the zoning code is in process right now.

Tim Fulton 35:35Absolutely. Is there anything else, Bruce, that you wanted to cover today?

Bruce Luecke 35:39No, you know, I just can't reinforce again the need, particularly in a growth community like Central Ohio. Isn't it wonderful to live in a community that's growing and thriving? But sometimes that also brings the dark side of growing with it, and we just have to make sure we acknowledge that. And again, the last thing I would say is, like I said before, there are no silver bullets here, and there's no one organization or project that can do it alone. And so we have to band together, we have to work together across the business community, in the public sector, and across the housing markets, etc., to be able to do this.

Tim Fulton 36:21Absolutely. Bruce, thank you so much for your time.

Bruce Luecke 36:25Sure, Tim, I appreciate it.

Tim Fulton 36:37Thank you for listening to the Confluence Cast, presented by Columbus Underground. Again, you can get more information on what we discussed today in the show notes for this episode at theconfluencecast.com. Please rate, subscribe, share this episode of the Confluence Cast with your friends, family, contacts, enemies, your favorite housing advocate. If you're interested in sponsoring the Confluence Cast, get in touch with us. We can be reached by email at info@theconfluencecast.com. Our theme music was composed by Benji Robinson, our producer is Phillip Cogley, I'm your host, Tim Fulton. Have a great week.