Providing affordable housing has always been a daunting task for owners and developers who have taken on this challenge. The financing process alone has often been referred to as "brain damage" because of all of the complex paper work. Many for-profit developers have avoided affordable housing because of criticisms that it's riddled with red tape and the process is too slow.
But that hasn't stopped the Columbus, Ohio-based National Church Residences (NCR), a nonprofit owner, manager and developer of affordable projects, that provides housing for both seniors and low-income families. Run by Thomas W. Slemmer, its president and CEO, the company's mission is to provide quality housing and care at affordable prices. "Trying to balance the mission of the organization with the money side is very difficult," explains Slemmer. "Most developers have a fairly pure motive and this is a return on their investment. Our motives are mixed."
NCR is faced with a unique set of challenges. "We obviously have to have good financial management and be able to manage our apartments just like anybody else in terms of income, expenses and asset management," says Slemmer. "But, also we have to balance that with the mission. So, the difference between a not-for-profit and a for-profit is kind of night and day."
For instance, Slemmer reports to a 24-member board of trustees that not only sets the mission, but also sets the goals for the company – which owns 225 low-income senior housing and family-style apartment communities – to accomplish. But, the board is not allowed to receive any type of benefit from anything that NCR does. "Not only does it mean that your board doesn't get paid, it means that they can't get a return of any kind on what this organization is doing," says Slemmer. "So, they're making decisions based on obviously sound business practices [as well as] on the mission."
As a result, some of the challenges that Slemmer faces include, how fast to grow and how to manage risk and mission at the same time. "If we're successful one year, how do we leverage that success to meet more of our mission the next year?" he says.
"The lenders look for typical kinds of returns in underwriting and safeguards," explains Slemmer. "But if there is some margin here, the question is, 'What do you do with that success?' And that is the challenging part of this job. Do you put that success back into services? Do you spend the money on producing more housing? Do you hire more staff? How do you manage the successes of this organization? And it's challenging working with a board of trustees, because not all of them think exactly the same way."
However, Slemmer has a clear vision of what can be done with any given opportunity, says Jim Bowman, president of the national Affordable Housing Trust, a nonprofit organization that serves as a development and financial consultant to other nonprofits. "Slemmer is concerned and careful about the fiduciary responsibility of the organization," says Bowman. "But he has a good balance between seeing opportunities and moving forward on those without exposing the organization to too much risk."