A conversation with Jan McCormick, NNEHIF’s VP of Asset Management

 

Jan

Jan McCormick laughs when she remembers the pigeons crowding the windowsill outside the tiny office when she walked into NNEHIF in 1999. Since that day, she’s grown the asset management division she started into a team responsible for overseeing the host of properties NNEHIF manages in its equity funds. Though the growth McCormick helped shepherd for these properties has had a profound impact throughout Northern New England, this interview revealed the close ties she maintains with the network of affordable housing partners that help her team perform their duties each day.
1) How does your position as Vice President of Asset Management for NNEHIF differ from your counterparts’ role in conventional real estate?
Conventional developers aim for a return on their investments through annual income and the appreciated value of their properties. Though those sources of revenue certainly play a role in the profitability of our low-income housing tax credit (LIHTC) portfolio, they don’t represent the prime inducement for our investors. Instead, we focus on the operation of our properties to deliver expected investment return, especially the federal tax credits that represent the biggest financial benefit for them.
2) Traditional real estate portfolios diversify holdings to mitigate risk. Does that strategy apply to NNEHIF’s holdings? If so, how do your duties change to manage different categories of properties?
Though our projects are diversified by their geography and our development partners, the diversity that’s unique to our business is the types of properties we help to create. These include family-oriented workforce housing, elderly housing, and services-enriched housing for special needs populations. The latter is often the most time-intensive due to the requirements of this particularly vulnerable sector of tenants. But serving their needs may represent the best fulfillment of our affordable housing mission.
3) Enhancing long-term vitality of your assets is largely dependent on the property managers who maintain them. How do you work with them to protect your holdings?
Our property managers are responsible for both the physical care of our properties and the verification of that care through the regular financial reports they issue. They must also fulfill certain duties to maintain compliance with the properties’ LIHTC status, and submit reports on those activities as well. We analyze this information quarterly to monitor operating success and compliance. But we also perform annual site visits to get a real-world read on the people and properties behind the numbers.
4) How else do you work to meet LIHTC compliance requirements?
Compliance duties are led by an asset manager and shared among staff, but we also outsource compliance monitoring and provide a compliance consultant free of charge to our developers and property managers. That service supports the candid relationships we enjoy with these professionals. We’re fortunate to work with colleagues who help us identify and solve problems before they escalate.
5) Does that collaborative spirit extend to your other partners as well?
Absolutely. Effective asset management is proactive in nature, and depends on a dedicated team to keep things running smoothly. We hold our assets for 16 years, which is a long tenure for real estate. Our management is a dynamic process, made especially complex by the tax regulations in our industry. There are also a multitude of players involved. But one of the advantages of being a local LIHTC syndicator is the power of those relationships. These are people we’ve come to know and trust to work with us to get the job done.
6) What’s changed since you first started at NNEHIF?
A lot! Beyond the growth of our assets and the funds that power them, our department’s support of NNEHIF’s advocacy mission has been especially rewarding for me. Our expertise in asset management has granted us incredible insight into the complex requirements of our industry and the needs of the population it serves. Ultimately, we’re working to safeguard not only the value of our holdings, but the lives of the people they house. I can’t think of a better return on our investment than that.

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Sustainable Standards

Article 1_Gilford VillageGilford Village Knolls III is the first multi-family Passive House residence in New Hampshire. But if you ask Sal Steven-Hubbard of Lakes Region Community Developers, it won’t be the last. As the real estate development director at LRCD, she is excited about the new senior living apartments being built in the town of Gilford.

“A few years ago, LRCD made the commitment to use green and sustainable practices and policies throughout the organization,” said Steven-Hubbard. “So when NH Housing’s QAP offered additional points for developing affordable housing that meets Passive House standards, we went for it.”

LRCD (formerly Laconia Area Community Land Trust) was successful in getting resources from NH Housing— the hard part was that the project had already been designed without Passive House Principles.

As the name suggests, this is the third phase of an affordable community for elderly residents. The first phase was started by a group in the 1980s, and the second phase was built in the early 2000s. The Gilford Village Knolls Trustees tried repeatedly to build a third phase without success. In 2016, the advocate group turned to LRCD for development expertise. Little did they know that the partnership would produce such sustainable results.

Committed Partners

The Trustees already had designs for the building, so the LRCD worked with Peter Stewart of Stewart Associates Architects to integrate Passive House principles. It wasn’t easy to work with existing designs, but Stewart managed to add features to make as tight a building envelope as possible so that the building can be heated and cooled at a very low cost. A 344-panel solar array on the top of the building adds sustainability to the project overall.

Martini Northern is the construction company bringing the plans to life. Steven-Hubbard notes that Martini Northern, Stewart Associates Architects, and indeed, all of the project partners, made for an effective team.

“Everyone worked very hard on this project and have all remained committed to doing the right thing— it’s been a great process,” she said.

NNEHIF also partnered with LRCD. NNEHIF placed the investment with TD Bank who provided equity for the project.

According to Tom MacDonald, VP of Acquisitions at NNEHIF, Passive House developments can be expensive to construct, however, the longer term advantage is that the anticipated lower operating costs that can help keep the rents affordable.

“Passive House projects help promote our mission, and those of our developers, to build safe, energy-efficient affordable housing for the long-term, and that plays a large role in the attractiveness of the transaction for our investors,” said MacDonald.

Building performance

Steven-Hubbard doesn’t know when the next Passive House project will be, but she’s certain that LRCD will continue to pay close attention to the design principles. She’s especially eager to see how Gilford Village Knolls III performs in the coming years.

Passive House Institute US (PHIUS) will be monitoring the building over the next two years and providing LRCD with data about everything from energy usage and savings to CO2, temperature, and moisture— information that can help LRCD make data-based decisions for future projects.

The elderly housing facility (age-restricted for residents ages 62 and older) features 24 one-bedroom apartments, a community room, a laundry room, and an office for the resident services coordinator.

Perhaps the best thing about Gilford Village Knolls III is its location. Nestled in the center of the small, serene village of Gilford, residents can easily walk downtown to the library, community center, and churches. Phase three is also next to Gilford Village Knolls II, and a walking path connects all three phases of the development.

Passive House standards may make the housing sustainable, but for the residents of Gilford Village Knolls III, a sense of community makes the housing home.

 

Huston Commons: How Housing First is done

 

The basic premise of Housing First is simple. If someone is experiencing chronic homelessness – meaning they are continuously homeless for a year or more, or have had four or more episodes of homelessness in three years – they are provided housing first and then given the support they need to work on other issues they may have.

Before Housing First became an accepted and proven model, people would often receive housing only after they met certain thresholds, such as sobriety, employment, or treatment for mental illness.

According to Greg Payne, Development Officer at Avesta Housing, housing was often used as “a carrot,” an incentive to get people to change behaviors. The “housing ready” model does work for some populations, but when survival is the primary goal, it’s tough to take care of the rest.

“What we’ve learned over time is that homelessness is too traumatic and difficult to expect that people can battle and overcome these other obstacles before getting housing,” said Payne. “Housing First works because the stability of a home makes the other life changes much more possible to achieve.”

Avesta has developed three affordable apartment buildings in Portland, Maine using the Housing First approach: Logan Place in 2005, Florence House in 2010, and Huston Commons in 2017.  The key to success for these communities is to offer the 24-hour support and services that residents need to thrive, whether its treating addiction, opening a bank account, or learning new life skills. At all three properties, there is 24-hour on-site support, provided by Preble Street.

Partners for a common purpose Avesta and Preble Street have had an ongoing partnership for more than twenty years. In the early 2000s, leaders at both organizations were frustrated by the high numbers in Portland’s homeless shelters – and concerned that some of those people kept bouncing from shelter to the emergency room to jail and back again. It was clear that they needed to try something different. Together they decided to open a property specifically targeting those who have the most struggles and are most difficult to house.

When Logan Place opened the doors to its 30 apartments on March 23, 2005, shelter numbers immediately went down 10% (and stayed down).  Mark Swann, Preble Street’s Executive Director, knew the tenants who moved into Logan Place.

“I’d known most of them since 1991 when I started at Preble, and I’ve since watched their lives transform with the sanctity of a home,” he said. “Suddenly instead of encountering Geno on a park bench where he’s intoxicated at ten o’clock in the morning, I was in his apartment talking to him about the Red Sox and playing a game of cribbage.”

Huston Commons is the most recent Housing First project, welcoming 30 more people who were previously experiencing chronic homelessness. Preble Street and Avesta again worked closely together. Avesta found a site to develop the property, following many conversations with Preble Street about what neighborhood would work best. Avesta managed planning and zoning, inviting Preble Street to participate at hearings or other meetings, when necessary. Avesta was also responsible for coordinating the financing (using LIHTC as the funding base) and building of the project itself.

Simultaneously, Preble Street worked on finding funding for their on-site social workers, which is, according to Payne, “the single biggest impediment” to developing properties like Huston Commons, due to a complete lack of an ongoing source for support services.

A third partner has played a critical role: the Portland Housing Authority provides project-based rental assistance for the tenants, who have little to no income.

“If we didn’t have the site-based section 8 vouchers, I don’t think any of this would work,” said Swann. “We’ve been blessed to have such a supportive partner in PHA.”  With all the costs of building and staffing Housing First projects, housing people is still less expensive than allowing those same people to repeatedly cycle through public resources.  Payne puts it succinctly: “It costs more to the public, and to the person.”

Stories to tell

NNEHIF has been around for more than two decades, investing in relationships and helping to build safe, affordable homes. After twenty years and counting, you can believe that we have a lot of good stories to tell. We started this blog to share some of them with you!

Coastal Kids Preschool ground breaking

If you have good story about your experience with NNEHIF, or projects built using Housing Tax Credits, we want to hear about it. Email us at info@nnehif.org.