Talking Heads Michael Rubinger, Local Initiatives Support Corporation

11 min read

Building Sustainable Communities

Michael Rubinger was heavily influenced by John F. Kennedy’s poetic words, “Ask not what your country can do for you, ask what you can do for your country.” Michael studied international relations and was planning to travel the world assisting developing countries. When America’s society started fracturing in the mid-60s, he felt it was more important to focus on improving the home front, which he did by teaching math and social studies at a public school in Harlem for two years.

These humble beginnings would lead to one of the most prolific careers in affordable housing.

Michael joined New York City-based Local Initiatives Support Corporation (LISC) in 1980, becoming its President and CEO in 1999, and helped chart the company’s early course of revitalizing inner-city urban housing, driving its expansion into long-neglected rural areas and in recent years developing a comprehensive approach of building safe, healthy neighborhoods now known as “Building Sustainable Communities.” Today, this concept is being replicated all across the country.

LISC, which has offices in 30 cities, invested $994 million last year in community development projects, with private companies, nonprofits, and government agencies chipping in another $3 billion. The result was more than 17,000 affordable homes and apartments and the addition of 2.1 million square feet of retail and community space. LISC has started schools, child-care facilities, and health clinics; built playing fields; and dispensed loans to businesses. The goal is to transform urban areas of decay and neglect into neighborhoods where people want to live and work.

Tax Credit Advisor sat down with Rubinger to discuss these revitalization efforts and his legacy.

Tax Credit Advisor: Tell us about yourself. Where did you grow up? What was your college major? What was your very first job out of college?

Michael Rubinger: I grew up in the New York metropolitan area, attended Brown University where I majored in International Relations, and from there I got my Master’s at the Fletcher School of Law & Diplomacy at Tufts University. My first job out of college was teaching social studies and math in the New York Public school system at an all-male junior high school in Harlem. I did that for two years before
moving on to The Ford Foundation.

TCA: You once told an interviewer that you wanted to work overseas in the developing world after college, but felt it was more important to focus on America’s blighted cities. Why did you choose that career path?

Rubinger: I was a product of the Kennedy years. As a nation, we deluded ourselves into thinking that everything was okay here in this country and what we needed to do was focus on the rest of the world. And then in the mid-60s, the country exploded. I felt we needed to refocus and think about taking care of our own backyard before worrying about everybody else’s. My experience teaching in Harlem reinforced that, when I realized firsthand how bad things were in the inner city. That’s when I decided to work for The Ford Foundation.

TCA: How did your time at The Ford Foundation shape your future?

Rubinger: Ford had a very eclectic agenda. I worked in the National Affairs Division, in the Office of Social Development. I arrived in 1970 at roughly the same time that The Ford Foundation was putting together its first community development initiative, which focused on supporting Community Development Corporations in 10 to 12 cities. Ten years later, LISC evolved out of that program. As the program expanded, The Ford Foundation realized that it could not continue managing everything internally, so it created LISC in 1980 as an intermediary to expand the Foundation’s work in community development and grow the number of CDCs that it was working with. Now I was gone by that time. I left in 1975 to work for an organization called Manpower Demonstration Research Corporation, a social research organization, and then I worked for New York Mayor Ed Koch during his first administration. But I ended up going back to Ford to work on LISC. The field of community development was evolving and I happened to be there at the right time.

TCA: Last year, LISC invested almost $1 billion toward community revitalization projects. How can affordable housing developers leverage your financial resources? What are your most popular programs? What do you look for in a partner?

Rubinger: LISC is organized geographically, so we have certain places that we target. Our headquarters is located in New York City, but we have offices and staff in 30 cities. We also have a rural development program that reaches into 38 states, but the bulk of our work is focused in these 30 cities. We principally work with non-profits, but we do occasionally work with for-profit developers. Our non-profit partners are community-based organizations. We feel it is important for the residents in the communities where we work to be involved, to have a say in what goes on and a stake in what gets accomplished. We work with these organizations in any number of ways. We have grant programs that provide early seed money, pre-development money for planning and the like. We have loan programs that help finance projects as they get underway. As a non-profit ourselves, we are better prepared to come in early and take on more risk than private capital. Much of our lending is of a pre-development variety, such as land acquisition, so that we can get the projects to a point where they can attract more conventional financing. We also have a subsidiary in Chicago called the National Equity Fund that is a major syndicator of Low Income Housing Tax Credits. We have a New Markets Tax Credit program as well that helps finance a wider array of community projects. LISC fills gaps that conventional financing may not want to do. We provide a level of comfort for conventional lenders to come into these deals.

TCA: LISC received a $77 million allocation of New Markets Tax Credits in June. What is your opinion of this program? Do you support making it permanent? Is there enough support in Congress to make the program permanent?

Rubinger: It’s a great program and a complement to the Low-Income Housing Tax Credit. When it came along at the end of the Clinton Administration, New Markets broadened that opportunity, so that now we could do more than just housing. We could finance business development, community facilities and other forms of commercial and retail real estate. It has allowed us to do projects that we never would have been able to do. That said, I certainly support making it permanent but I don’t know if there is enough support in the current Congress to do that. In the context of a Congress where anything is difficult to get done, I don’t know how we can feel overly optimistic. However, we and others have done a lot of work educating the Congress on the value of the New Markets Tax Credit. We testify. We meet with Representatives and their staffs. And we take them out to as many projects as we can, because that is the best way to see the program. Fortunately, we are able to get the New Markets Tax Credit extended every couple of years, but we need to make it permanent and I hope it will happen soon.

TCA: Do you have a favorite New Markets project?

Rubinger: There is one project in Washington, DC that is being put together by an organization called SOME, which stands for So Others Might Eat. SOME has done a lot of work over the years in expanding access to affordable housing but this project – called The Conway Center – also involves the expansion of a Federally Qualified Health Clinic from 5,000 square feet to 37,000 square feet. When it is completed, the clinic will serve 3,500 more people every year. The facility provides a full range of services, including primary healthcare, internal medicine, pediatrics, OBGYN, mental health and substance abuse, in what is a very poor community where 25 percent of the population is living in poverty. The health clinic expansion has spurred the development of 180 units of affordable housing financed with Low Income Housing Tax Credits and a center for employment training. So it has a lot of different parts: housing, healthcare, and employment and training. It is a project-level version of what we try to do more broadly in all of our communities. It is a tremendous opportunity and a catalyst for the area where it is being built. The investor and lender is Morgan Stanley and The Kresge Foundation out of Detroit is also providing loans for this project. The health clinic alone will cost $15 million and it is using about $13 million in equity from New Markets Tax Credits. It is a great example of what you can do with New Markets Tax Credits and how flexible they can be.

TCA: In September, the Federal Reserve Board appointed you to a 15-member Community Advisory Council. What is the FRB hoping to achieve from this advisory council?

Rubinger: I am fortunate to be chairing the committee. My belief is that the Fed wanted a voice coming directly from communities. The people who are serving on the panel are all engaged in local community development activities, so the Fed will get a good feel for what is going on in America’s communities. What they want to hear from us is what is going on in low and moderate income communities and how government policies are impacting those communities.

TCA: One of your biggest initiatives right now is the Healthy Futures Fund, which ties housing with health care. How did this come about and what impact is it having in low-income communities?

Rubinger: We were looking for opportunities to get more involved in the financing of health clinics in the neighborhoods where we worked. It was The Kresge Foundation who suggested that we develop a fund that was explicitly created, on the one hand to finance Federally Qualified Health Clinics, but also was deliberately connected to affordable housing in order to provide tenants with easier access to medical services. We then went to Morgan Stanley and they invested in the first fund, which we established three years ago and have since committed the entire $100 million investment to projects around the country. A second round of $100 million was recently announced. LISC’s financial contribution will be providing New Markets Tax Credits, while Morgan Stanley is both an equity investor and lender and The Kresge Foundation is a lender and grant maker. These are Federally Qualified Health Clinics that by definition are intended for very low-income people. The Conway Center project I just described in Washington, DC is being financed through the Healthy Futures Fund, while the affordable housing piece is being financed through LISC’s National Equity Fund using Low-Income Housing Tax Credits. The 180 units of housing will be connected directly to the clinic, providing easy access for those residents to take advantage of the health services. The clinic will also be available to the broader community as well.

TCA: When describing the process of revitalizing neighborhoods you once said, “If you do housing, it’s not enough. If you do jobs, it’s not enough. You have to deal with all the things that make up a desirable neighborhood, and you kind of have to do all of them at once.” What do mean by that?

Rubinger: LISC started out in the 80s as an affordable housing finance organization. We had considerable success, but what we realized over time was that it was not enough. We had to deal with all of the other social and economic issues facing these communities. Developing the housing was fine, but if you did not do something about the schools, then people would leave. And if you did not do something about safety then it would be difficult to attract businesses into the neighborhood. There would not be jobs or places for people to shop and quality of life would be affected. To create a sustainable, healthy and desirable neighborhood you have to take on all of these issues. Obviously, it is hard to achieve, but that is what we are trying to do.

TCA: You recently announced that you would be stepping down in June 2016. What has been your crowning achievement thus far? And what do you want to be remembered for?

Rubinger: I think LISC has grown and is stronger and doing more things in more communities now compared to when I took over in 1999. It was a strong organization to begin with, but I am proud of our growth and expansion. And more specifically I would like to be remembered for the strategy that I just described, which we call Building Sustainable Communities. It is a comprehensive approach to development that is impacting hundreds of communities and I see other people in the affordable housing field moving in this same direction. I am happy to be associated with this strategy and this progress.

Darryl Hicks is vice president, communications for the National Reverse Mortgage Lenders Association and a 24-year veteran of associations managed by Dworbell, Inc., the management company of NH&RA.