Q&A with Terri Ludwig of Enterprise Community Partners

9 min read

President and CEO-Elect Terri Ludwig shares market insights as she takes the helm of Enterprise Community Partners.

Enterprise Community Partners was founded in 1982 by Jim and Patty Rouse—developers who revolutionized the way America thinks about urban areas—with a clear mission: ensuring that all low-income people have the opportunity for fit and affordable housing, as well as helping Americans move out of poverty.

The Enterprise Community Board of Trustees recently named Terri Ludwig president and chief executive officer. Ludwig, who is succeeding Doris W. Koo, who served in this capacity since 2007, will assume the position on Jan. 1, 2011. MHN Editor-in-Chief Diana Mosher recently visited with Ludwig at Enterprise’s New York office to talk about her market observations and plans for the company as she steps up to her new role.

MHN: What changes will you make at Enterprise when you assume your position? What are your objectives for the organization?

Ludwig: Enterprise remains driven by a fundamental belief that moving up and out of poverty and building a better future starts with a safe, decent and affordable home. Much of what I’ll be doing over the next two to three years will involve building off our 30-year legacy. Enterprise is one of the largest providers of affordable housing in the nation. We’ve brought over $10 billion in capital into communities across the country and have helped produce over 1 million homes in our history.

Just last week, I had the opportunity to meet a woman named Heather Smith and her two daughters, Chase and Genesis, who recently moved into new housing here in New York City. Heather is a victim of domestic violence, and she was in dire need of an affordable home. I’m happy to report she also has been able to secure a job and now is able to provide a much more stable future for herself and her daughters. I’m personally excited to meet people like Heather. It reinforces the impact of our work.

As I take the helm of Enterprise, it’s important for me to think about how we can deliver more results to more people—so [my new position] is certainly about building off our good work, but it also [involves] thinking about new innovations going forward. We have a legacy of innovation. We’ll be looking at how we use market-based disciplines and bring private capital to a sector that’s so desperate for more capital as our needs continue to grow in the low-income communities that we serve.

Enterprise is also about social change, and we’ll be looking at how to best use our model to drive change in our communities. I’m really privileged to be at the helm of a tremendous organization, and I’ll continue to focus on our capital solutions—making sure we’re bringing innovative financing into communities [as well as] new solutions—and how we innovate in the field to tackle some of the most critical and pressing needs in our communities. Finally, we’ll really focus on our policy efforts. We have a very large and significant presence in Washington, D.C., and also at the local and state levels. As we look at our markets across the country, we’ll be making sure that we’re having policy changes that can enable systemic changes in our communities.

MHN: What are the most pressing challenges to affordable housing and community development right now, and what solutions do you propose?

Ludwig: The Gulf Coast needs immediate attention, particularly by Congress. While we’ve been rebuilding homes in the Gulf Coast since [Hurricanes] Katrina and Rita hit, one of our critical tools has been the Go Zone Low Income Housing Tax Credit. It expires at the end of this year, so we need Congress to act—and act now—to extend the tax credit placed-in-service deadline. There’s a lot at stake. The Go Zone Tax Credit would stimulate 6,000 affordable housing units being built. This is over $1 billion dollars of construction activity and, of course, all the accompanying jobs. So this is a relatively easy fix for Congress to make. It’s simple; it’s straightforward. It’s simply extending that placed-in-service tax credit deadline. We need another two years to make sure these units get built and get occupied. And so we urge Congress to take that immediate action.

Our second priority is to make permanent or extend the New Market Tax Credit program. This is a very important tax subsidy that brings additional investment into low-income communities by fostering the creation of commercial, retail and manufacturing properties in low-income communities. And, in fact, the New Market Tax Credit has helped to develop or rehabilitate 68 million square feet of real estate and, most importantly, has provided over 400,000 jobs since its inception. So this, as you can see, is a very important tax credit for us. And it expired last year, so we’re calling for a one-year extension or, ideally, to make this tax credit a permanent program.

MHN: Where do you see GSE reform headed?

Ludwig: Many people don’t realize that the GSE multifamily business was profitable. As we’re going through this reform and these discussions, we need to focus on the needs of multifamily, in addition to the single-family market. The GSEs have provided important capital and liquidity to multifamily. As we have these conversations going forward, we’ll certainly be an advocate so that multifamily doesn’t get lost in that discussion.

There are many who are continuing to support the Low Income Housing Tax Credit program—finding ways to help us bring new investors into that marketplace and provide the necessary support. And certainly a lot of folks are talking about whether it makes sense to have a small transaction fee that could go to foster affordable housing in some way. We certainly think that’s a viable and good idea. The GSEs also provided liquidity to multifamily markets that are not subsidized, necessarily, but provide very important rental housing for low income families. So [we’re in favor of a] careful and thoughtful transition to ensure the liquidity in the multifamily market will continue.

MHN: What do you see as the future of the Low Income Housing Tax Credit?

Ludwig: The LIHTC is one of the most successful government programs in our history. It has encouraged thousands of private-public partnerships and has brought much-needed private capital into low-income communities. We think it’s very important to continue this program and [would like to] see it expanded. Just to give you a sense of the statistics, since 1986 the LIHTC has helped build nine out of 10 affordable units in this country—a total of at least 2 million units across the country that have been built by the LIHTC. And it’s a very efficient vehicle because the tax credits begin to flow from the government only when you have a secured outcome. With over 2 million homes being created, the outcomes are very important to our communities. One of our priorities is to make sure we continue to drive … our partners [and] new investors into the marketplace.

MHN: You were most recently at Merrill Lynch Community Development Company. What experiences there, and in other capacities, will be helpful in your new role?

Ludwig: In my role at Merrill Lynch, I built and led their community development efforts across the country. With partners like Enterprise, we brought over $2 billion in loans and investments to low-income communities across the country. Much of that work was in affordable housing, but we also developed strategies and structures for primary care facilities, for small business, for workforce development, educational facilities and others. So, [our activities] were quite broad in scope, but all focused on low-income communities and making sure everything we did had a double-bottom line, if you will, with both financial and social returns.

Enterprise believes that successful communities are diverse with a mix of affordable and market-rate housing and access to jobs, educational and health care facilities. So we look to provide very holistic solutions in our communities. I think my experience at Merrill Lynch will translate in a very direct way to my work here at Enterprise.

I also ran a community financial development institution called ACCION New York, which provided micro loans to low-income entrepreneurs living throughout our community. Community Development Financial Institutions (CDFIs) provide important financing and support for under-served markets and people. I sit on the Community Development Financial Institution Advisory Board at the U.S. Department of the Treasury, so I not only have experience in running a CDFI, but also in making sure we’re lining up policies, programs and funding for CDFIs across the country that can really impact low-income communities. The Enterprise Community Loan Fund is one of the largest in the country. I look forward to expanding those efforts, and I very much look forward to working with that team.

MHN:How does Enterprise decide where and how resources will be allocated?

Ludwig: We have loans or investments in virtually every state across the country. In addition to that, we also have certain markets that we focus on, so we have boots on the ground in 11 places and there are eight impact markets. And then we have three program offices in communities where we think we have the ability to make a very strong impact in the marketplace, working with our partners on the ground.

MHN: Are there lessons or takeaways that market-rate developers can glean from affordable developers?

Ludwig: One of the most important lessons that we’ve taken on here at Enterprise is thinking about our commitment to environmental sustainability. Enterprise is seeking to green all affordable housing by the year 2020. That’s a big statement; it’s a stake in the ground that we’ve done very purposefully to try to bring some of our best practices—as well as our financial capital—to other developers of affordable housing and also of mixed-rate and market-rate housing. We are certainly looking at those lessons and sharing them actively with the field. Our Enterprise Green Communities criteria have been adopted across the country, not only by developers but also by policy makers. We do have a development arm called Enterprise Home that works in the Mid-Atlantic region. It’s 100 percent green and has also taken on ideas around community building that encourage formation of social bonds and allow neighbors to interact. For many of the developers that follow the principles of New Urbanism, these [concepts] are very important.

MHN: What effect has the mid-term elections had on the industry?

Ludwig: No doubt we’ve all been challenged by the lack of action on certain key principles and key legislation we think are important. We’re finding we need to do more work around some of the regulatory fixes, rather than pass legislation. One of the best things about Enterprise’s work is that it enjoys bipartisan support. So, for example, the LIHTC and some of the other programs we use in our communities have been a hallmark of both Republican and Democratic parties. I think that will serve us well going forward.   

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