2021: CFFA President Perspectives

In this wide-ranging interview, Finance Authority President Jean Carter Ryan describes the organization’s priorities in 2021, including maintaining (or even raising) its strong bond fund rating, and several new programs focused on investment in struggling neighborhoods and the small businesses within them. One key to aligning programs with community needs: the Authority’s consistent communication with community leaders and stakeholders. She also sees the current rising construction costs being countered by very low interest rates — yet another reason to feel positive about the year ahead.

How optimistic are you for the year ahead, given all the city experienced in 2020?

Jean Carter Ryan:  I’m very optimistic, and it’s based on what we were able to accomplish in 2020 and what our pipeline looks like for 2021. With our traditional portfolio programs , we are still seeing a lot of projects making capital investments in central Ohio, and we help facilitate financing so they can do it for a lower cost.  We’re not seeing a slowdown in our pipeline. We’ve also spent a lot of time looking at the needs of the community and what we can do to address them. We’ve worked hard to create financing solutions to address problems that are new to us, and we’re looking forward to rolling those solutions out and seeing the impact that they have.

  How do you identify the community needs that influence Finance Authority priorities or your investment partner interests?

We’ve taken a couple of different looks at the community. We’ve conducted interviews with community leaders and stakeholders to see what they’re seeing as priorities, and we’ve had similar conversations with our board members, who are also community-based business leaders. And by simply working with our clients we’ve learned what they see as needs. With that kind of approach, and our personal engagement with boards  and other initiatives in central Ohio, it gives us really rounded input.

 For readers of this article who may not be aware of what you’ve done recently, what are some of the community needs you’re considering?

What has been clearly identified, in the City of Columbus, Franklin County, and our suburbs, is a housing problem –  in terms of both inventory AND affordability. There have been a number of significant commitments made to address the problem, but it’s not enough. We’re in the process of raising an affordable housing loan loss reserve which will increase the flexibility of our existing bond program, giving the community another tool to address the affordable housing crisis in Franklin County.

The other thing that we’re looking at is, how do we assist neighborhoods that are not seeing the success that other neighborhoods are seeing? What can we do to help turn that around? How can we work with neighborhood groups and small businesses in terms of their capital needs? So we created the Neighborhood Improvement and Small Business Loan program. We’ve been creating programs we think are going to make a difference.

What neighborhoods do you feel have the greatest need and the best opportunity for success?

We’ve been working on the Southeast Side, south of Nationwide Children’s Hospital, the Parsons Avenue corridor. Our first loan was to Community Development for All on People. (Read about it here.)  We’re also looking to do work in Franklinton and potentially the Hilltop. Then Linden, up along the Cleveland Avenue corridor, would be another area of focus.

 Are you encouraging people in those neighborhoods to contact you? 

Yes. We’d love to talk to them. We’ve got the programs. Now, we just need to find the clients.

 What are the types of clients you want to hear from?

Small businesses in these neighborhoods looking to purchase or rehab a building or purchase machinery and equipment. Same thing with non-profits in those same neighborhoods, those looking to increase their programming through some type of building investment. Those are the ones we’re targeting.

Are you surprised your pipeline of projects is so strong, given where we were a year ago and all the disruption we saw? Were you worried at any point, or did you have enough faith in the leadership in Columbus and the potential that we get through it?

I think anybody who wasn’t worried wasn’t paying attention. We were worried, but we kept seeing that there was still investment taking place. All the work that has been done, the groundwork that has been laid by leadership in our community over the past 10 years, has really stood us in good stead during this crisis. We had a strong enough economy that, even though it’s slowed down, we’re still seeing activity. If that groundwork hadn’t been laid, then we would have been in a much more challenging position than we were.

 Let’s talk about your bond rating. You’ve maintained that enviable A- bond rating from Standard & Poor’s. What’s the key to that success, and do you anticipate any changes to that this year? How hard do you work to keep that rating?

We’ve worked very hard to maintain our rating and address anything that would impact it. A lot of what we do is based on our team. We have a very, very strong team, and both our financial advisor and our legal counsel help us determine the right types of projects to fund in that bond fund.

We’ve done a number of projects that fit what we’re looking for: projects that have a gap in their financing but that have strong ability to repay. This is not risk capital. This is money for projects that need to fill in a slug of money in their capital stack.

Our team has helped us do everything that we need to do to maintain that A- rating. And we’re working hard to upgrade it from A- to A which will mean even better rates for our clients. Whether we accomplish it is another question, but we’re looking to not only stay strong and stable, but to move it up.

 Could the rating move up as soon as this year, or is it a longer-term project?

It could. We have a very strong partner in JobsOhio, who has recently committed a significant amount of money to Ohio’s Port Authority Bond Fund Program Reserves, and we’re trying to determine if that additional reserve will allow us to get an upgrade in our rating.  We’re in the process, as we speak, of executing on that commitment. 

 Interest rates are very low right now. How does that affect your programs or your approach to the programs?

It definitely helps us market our programs. Everybody’s interested in the availability of capital, and the cost of capital is very attractive right now, so it makes it easier for projects to be completed. When the cost of capital is high, it’s hard for folks to make their numbers. We’ve got our issues in central Ohio in terms of the construction costs because there’s been so much activity going on. The low cost of capital really helps mitigate some of that. 

 What is your target activity for TIF bond this year, and how are the funds raised by these bonds typically used?

TIF bonds, which stands for Tax Increment Financing, are a significant portion of our bond activity, and I don’t see that really slowing down either. We’re going to continue to look to strong projects. We have a lot of redevelopment projects happening in and around town, whether it’s up in Dublin with Bridge Park or down in Beulah Park in Grove City. The Finance Authority is working with many of those developers to help them figure out how to solve their public infrastructure financing needs. Usually, those funds go toward traditional public infrastructure – roads, water, sewer, traffic lights, et cetera. They also go to projects like parking garages that are necessary for some of the redevelopments that we’re seeing.  

 Do you spend time communicating with developers, or are they aware and simply come to you when they need additional financing tools?

It’s constant communication. Even in the economic development world, of which Patty and I both have been in for a long time, there’s still a lack of understanding and knowledge about bonds and how entities like ours can help finance projects and solve problems. So getting the word out is really critical. 

How do you get the word out?

We try to do our very best to know the developers and who’s doing what. Patty and I know all of these people. We offer to talk to them about what we think we can provide to help that project be more competitive. We’re very proactive.

 Tell us about the future of the Property Assessed Clean Energy (PACE) financing program. 

The PACE program is really, really helpful for two sets of clients. One type of client is working to retrofit and upgrade their buildings, putting in HVAC, building wraps, controls that are more efficient; the other is new builds. As people put up brand-new buildings that are more energy-efficient, they have an opportunity to put in a slug of this property-assessed clean energy capital, and it is really beneficial to them in terms of their overall financial view of the project because it shows up as equity rather than debt. We are seeing, again, in both of those areas, more activity.  We’ve also seen an up-tick in interest from communities joining the Columbus Regional Energy Special Improvement District (ESID) to enable PACE financing in their communities.

Our central Ohio Energy Special Improvement District, which is how these PACE programs are run, is one of the most active in the country. That said, we did see a drop in PACE projects last year. That’s one of the sectors that was really hit by COVID, because energy improvements don’t add top-line revenue for building owners, so they only make improvements when they have to. So they hit pause. That’s something we’re going to monitor this year and see how it bounces back in 2022.

 How did the Finance Authority adapt to the Covid situation, and do you have a timeline for returning to the office? 

We, like most of the world, have worked from home most of the time. One of our staff is in our office every day. Others, like Patty and I, are in a couple times a week. But mainly we work from home. The telephone and virtual meeting tools have been effective for us. I know personally, I miss the face-to-face interaction with folks, and through the computer is not how I want to see people. 

We thought we’d be back by now. Obviously, it’s just taking the country a lot longer to get this infection under control than anyone anticipated. I do think that learning the ability to work from home is something many of us view as adding to our work experience. We will be back eventually. We’re just going to keep following and monitoring.