Interview: Retiring Homeport CEO Bruce Luecke Talks Affordable Housing
Last month, Homeport CEO Bruce Luecke announced that he would be retiring at the end of the year. The former banking executive led the affordable housing nonprofit for over five years, overseeing the development of new housing throughout Central Ohio while also working to make sure the organization’s many tenants stayed housed as the region’s economy was thrown into turmoil by the coronavirus pandemic.
“I love doing what we’re doing, and it is bittersweet,” Luecke said during a recent interview with Columbus Underground. “I think it’s just the right time; we have a good team, we have good momentum going, and it’s the right time for a transition.”
Read on for much more from our conversation with Luecke, including his thoughts on the affordable housing market in Columbus, the need for tax incentives to encourage development, and the negative impact that outside investors can have when they start buying up local real estate. The interview has been edited for length and clarity.
Brent Warren: How are you feeling about Homeport at this moment, and the state of affordable housing in general in Central Ohio?
Bruce Luecke: I’m very pleased that over the last five, six years, affordable housing has become a more important topic here in Central Ohio, and that’s due to the work of, certainly not just us, but all my peers, and a number of others in the market that do this work. The issue that I see here – you know, it’s always been a social issue, always will be a social issue – but it’s also an economic development issue for a growing community like Central Ohio. So, if we’re going to continue to grow and stay prosperous, you have to have a strong housing market. Having said all that, unfortunately there’s no silver bullet, so, we have to continue to build. Overall, we need more units, and that’s across absolutely all income levels, but affordable units in particular – we need more affordable units, period.
And, secondly, a pending concern that potentially could happen as a byproduct of the pandemic, is there was a negative impact to a lot of landlords in this market. Most owners of apartment buildings are smaller landlords, so there may be over the next one to three years, more landlords looking to sell, and, depending upon the prices that those go for…that’s just going to create more issues around affordability, because, in order to pay for the deal, investors are going to have to increase rents. We’re going to have to watch that really closely and I know we’re looking at it, and our peers are looking at ways to try and get behind that.
Number three, for the 54,000 individuals paying 50% or more of their income on housing, it isn’t that they don’t have housing, it’s that they’re paying too much for it. I love some of the pilots that are now in place, [like] a program at Columbus State called Success Bridge, which provides housing assistance and case management assistance to those individuals who are completing school. There were at risk of dropping out because they…just couldn’t afford to stay in school, so the program provides those benefits so they can finish their education. So think about putting that program on steroids right now, into a program called Resiliency Bridge, which would be a broader program, but the concept is the same – how do you use tactical rental assistance, so if I need to be re-skilled, or be in school another year in order to really qualify for a good job, then I might get a year and a half of rental assistance or another type of assistance, and have a case worker to help me get there.
BW: So that’s different than a traditional job training program, where an organization says, ‘We’ll help, but you have to keep yourself housed all that time, all on your own.’ This is pairing that kind of direct help with actual financial assistance?
BL: That’s exactly right, and so, when we talk to our residents, many of them would love to improve their education, get re-skilled or whatever, but the comments we get back are, ‘I can’t afford to take a day off much less a week or a month, there’s too many risks. I’m putting my housing at risk, my family at risk.’ So we need to build more, we need to preserve more, and then we need to be creative as far as how we help people and use tools – housing tools and other tools – to help people increase their incomes.
How does Homeport play into that? We’ve been singularly focused over the last five years on building more housing. In fact, we have the largest pipeline we’ve ever had. And then, number two, we have 6,500 residents, and that number will continue to grow – how do we keep them housed? Our mission over the past year and a half was to work with those individuals to make sure they stay housed. We’re just starting to see people come out of it, but part of the issue is, now we’re catching up on all the issues they had before, and our residents are making very reasonable decisions, you know, do I catch up on my car payments or do I pay my rent? Well, we want them to catch up on both, because we want them to be able to drive to work, and have a job, and keep their job. So last year we paid out about $475,000 in rental assistance from April to December, and for this year, we’re running at least at the same pace. We’ve done that a couple of different ways – we’ve worked very closely with Impact Community Action, but we also set up our own funds, if for what ever reason they didn’t qualify for government-related funds.
We also have some great peers – the Affordable Housing Alliance is now up to about 20 organization, and it just amazes me everyday, how well we work together on the big issues.
BW: When you talk about investors buying up property, and the worry that they could then raise rents, what can be done about that?
BL: Let me step back for a second…Columbus, even though prices are increasing, it’s still an inexpensive market, relative to the coasts. So, what we’re starting to see is investors pouring dollars into Columbus and buying up multifamily units, and in fact, it’s starting to happen with single family. So it’s already happening today, and we’ll see if this happens with the smaller landlords, and whether they’ll be looking to get out, because in many cases this was either their income or retirement. And so, whoever the purchasers are, they are going to have to have rents that pay for what they put into it. How can we compete against that? What we need is access to quick strike funds. So, typically an investor might come in, pay a premium, pay in cash, and close in 30 days – that’s more difficult for us to do because we don’t have that kind of cash. So being able to quickly tap into low-cost equity dollars, capital dollars, would be a big benefit.
The White House just announced a number of different plans, [including], for real estate that is federally-owned or financed, they’re going to be favoring nonprofit and local ownership versus investor ownership. At the end of day, we need to compete against those kind of offers, and capital is what we need to be able to do that with – low-cost, patient capital.
BW: Where is the biggest gap in all those different tiers of housing, in Columbus, where is the need the greatest?
BL: I just talk about what we concentrate on, and our bread and butter has always been, typically, building housing for people who make between $20,000 and $45,000 a year, so we’re using tax credits to do that. Generally speaking it’s people who are making 60% of the area median income. That market’s growing, but there’s another market that has really emerged over the last couple years; we call it workforce. It’s for those individuals making between $45,000 and $90,000 a year, because housing is getting really expensive for those families also, and there aren’t tax credits to be able to fund that. You have to be more creative in how you build a capital stack to build it and also to build it…so the rent covers the cost. And so, we’re starting to creep into that space. The way we’ve done it right now is to work together with partners, so we have a couple of joint ventures with CASTO – one of which opened up in Clintonville, at the back of Graceland Shopping Center.
BW: You came from the banking side of things, was there anything that surprised you coming over to Homeport?
BL: The nonprofit world is very different than the for-profit world, but I have so much respect for the nonprofit community here in Central Ohio, because they’re doing the things that others wouldn’t…incredibly passionate people that are just taking on great work. I’ve really grown to respect and admire the leaders out there and the things they’re doing with a fraction of the money that, in many cases, for-profit businesses have.
Secondly, affordable housing, particularly in the market that we serve, is incredibly complicated. I’ve never seen more complicated capital structures in my life…because you have to piece together sources from so many different places. And so, I never really even thought about that before I got into it, but it really takes expertise, and really smart people putting these together.
BW: You mentioned policy changes at the national level and the impact that those can have. Looking ahead the next few years, are there any policy changes at the local or regional level that you think could have a big impact?
BL: How the state and county use the ARPA (American Rescue Plan Act) money, I think, will be a pretty big deal. We, as the Affordable Housing Alliance, have put a plan together that we’ve presented to the city and the county and the business community, dedicating 30% of those recovery funds into affordable hosing. This is sort of a once-in-a-lifetime thing, and wouldn’t it be great to use some of those dollars as a basis for longer-term investment?
And then there are things that are being worked on as we speak – the City of Columbus is working on their zoning policy, and tax incentives always come up, and they’re going to be needed if we’re going to meet the needs of individuals making less than 60% of the area median income, so there are a lot of items like that, that absolutely we need to continue to stay focused on if we’re going to meet the needs.
BW: Do you think the tax incentive policies could be strengthened? When I looked at it for an article earlier this year, it seemed like there weren’t really that many affordable units generated by those tax abatements and incentives.
BL: You’re right, when you think about it, [it’s only] 10% of 100 units, or 20%…so that’s why I think we need to continue to think outside the box. So I’d go back to, again, the ventures with CASTO that we have. They build at a higher scale than we can build. At Graceland, for example, I think it’s 184 units, half of which are affordable, well, that’s like doing two tax credit deals, those 90 units. I give a lot of credit to CASTO, and we’re working with Kaufman [Development] in Franklinton; I give credit to those organizations that are willing to think that way.
BW: Any Homeport projects in the pipeline that you’re particularly excited about or that you want to call out?
BL: We have two that are opening this fall, one of which opened [recently]…we added 32 units in an annex building, next to our existing Hamilton Crossing senior independent living location out in Whitehall. The first individual got her apartment, she had had a really tough time over the last year and a half. To see her face when she turned the key to that apartment and walked in and saw it…this is what you do this job for.
Kenlawn Place, in North Linden across from New Salem [Baptist Church], that’ll probably start leasing up in November or December, and then Mulby Place [also in Linden], is planned to close and start construction in the fourth quarter.
Maple Meadows, up in the Northland area is under construction, we’ll get Franklinton hopefully going early next year, so we have some really strong projects.
For more information, visit homeportohio.org.