Ron Homer of RBC GAM: How We Are Helping To Make Housing More Affordable

To make an impact to address this crisis, our country needs to figure out ways to increase the flow of capital into lower income communities so that residents can purchase existing homes and developers will be encouraged to build new homes.

In many large cities in the US, there is a crisis caused by a shortage of affordable housing options. This has led to a host of social challenges. In this series called “How We Are Helping To Make Housing More Affordable” we are talking to successful business leaders, real estate leaders, and builders, who share the initiatives they are undertaking to create more affordable housing options in the US.

As a part of this series, we had the pleasure of interviewing Ron Homer.

Ron Homer, Chief Impact Investing Strategist at RBC Global Asset Management, leads RBC Global Asset Management’s impact investing effort. Ron, based in Boston, MA, is responsible for servicing the firm’s impact investing clients and ensuring that investment solutions are implemented based on each client’s customized impact requirements. Ron’s background and extensive experience in community investing enables him to identify a broad range of impact investment solutions for clients.

Before joining RBC GAM-US, Ron was co-founder and chief executive officer of Access Capital Strategies LLC, an investment adviser specializing in community investments that was acquired by RBC GAM-US in 2008.

Previously, Ron enjoyed an extensive banking career including thirteen years as president and chief executive officer of the Boston Bank of Commerce.

As an industry veteran who has worked in the financial services industry since 1969, Ron is often sought to consult with leading government officials on a variety of community impact issues. Ron chaired the board of MassHousing — an industry leader among state housing finance agencies — since the height of the housing crisis in 2009 through 2016. He has also held several other leadership positions for industry trade associations and served on the boards of numerous organizations including Sallie Mae, Nynex Telephone, and the Boston Foundation.

Ron is vice chair and a founding board member for the Initiative for a Competitive Inner City, a research organization founded and chaired by Harvard Professor Michael Porter to promote private sector investment in America’s inner cities.

He earned a BA from the University of Notre Dame, an MBA from the University of Rochester, and holds FINRA Series 7 and 63 licenses.

Thank you so much for doing this with us! Before we dig in, our readers would like to get to know you a bit more. Can you tell us a bit about your “backstory”? What led you to this particular career path?

My interest in impact investing stems from my roots and is driven by a desire to expand economic opportunities and social conditions in traditionally underserved communities.

Born and raised in the Bedford Stuyvesant section of Brooklyn, NY, I was the oldest child of dreamers who migrated to the U.S. from the West Indies. Both of my parents were raised by single mothers seeking a better life for themselves and their children. From 1940 to 1960 Bedford Stuyvesant went from 75% white to 85% Black. I grew up as this transition took place, so I witnessed firsthand the impact of the change: Less homeownership, more overcrowded living conditions, absentee landlords, less city services, businesses closing, less policing, declining schools etc.

In 1967, Robert F. Kennedy, helped established the Bedford Stuyvesant Restoration Corporation, one of the first Community Development Corporations in the nation. At that time, he articulated a formula that I believe is as true today and it was then. The program for the development of Bedford Stuyvesant was established to combine the best of community action with the best of the private enterprise system. Kennedy said, “Neither by itself is enough, in their combination lies our hope for the future.”

Two months before my college graduation at the University of Notre Dame, I had the opportunity to spend time with Robert Kennedy and his wife Ethel in a motorcade as he traveled through South Bend, Indiana on his way to make a speech at Notre Dame as part of his bid for the democratic presidential nomination. We drove through the poorest black sections and poorest white sections of South Bend, and Kennedy saw the combination of desperation and hope of the people living in these neighborhoods, and at one point, he turned to me and said, “If I get elected president, I’m going to need your help to bring about the change needed to expand opportunities for these communities.”

That same day, Martin Luther King Jr. was assassinated, and just a few months later, Robert Kennedy was assassinated. The combination of these events led me to begin to explore ways in which I could use the opportunities afforded me in ways to expand opportunities for others. Since those motivating events, my career has been geared towards understanding and building linkages between community, government, and private enterprise for the goal of community economic development.

I went on to become the first in my immediate family to graduate from college and spent a year providing social services in South Bend as part of the local federally sponsored Great Society anti-poverty program. It was through this experience that I realized that social change required economic solutions. I went on to get an MBA at University of Rochester and joined a major bank as a management trainee and eventually held a wide variety of lending positions.

At age 32, I became the Chief Operating Officer of the largest Black-owned bank in the US, Freedom National Bank of New York. Four years later, in the aftermath of school busing confrontations, I helped establish a Black-owned bank in Boston, Boston Bank of Commerce, becoming its Chief Executive Officer and a principal shareholder.

Years later in Boston, I advised Harvard Business School Professor and competitive advantage guru, Michael Porter, in forming the Initiative for a Competitive Inner City, a research organization focused on attracting private sector investment in underserved urban centers.

In 1997, I co-founded Access Capital Strategies LLC, an investment adviser specializing in community investments. In 2008, this firm was acquired by RBC Global Asset Management, and 12 years later, I remain with the organization as Chief Strategist of Impact Investing.

Over several decades and within each of the organizations that I was affiliated with, doors were opened that facilitated more people of color to enjoy the benefits of the American dream of wealth, home ownership and income appreciation. Today, I continue to work tirelessly to increase access to funding and improve our communities, and I continue to believe that we can all do better if we share our collective wisdom and resources going forward.

Can you share the most interesting story that happened to you since you began your career?

While I have been part of many projects during my career, the most interesting one came from when I was 25 years old working for Marine Midland Bank and I was assigned to a real estate lending division of a bank in Rochester, NY. The Rev. Franklin D. Florence, president of the community organization, FIGHT (Freedom, Independence, God, Honor, Today), came to the bank and said he wanted to build a housing development and shopping center in a vacant area of a black community in Rochester, and he wanted the bank’s help in doing it. The bank president assigned me to lead the project and we ended up building a 300 unit housing development with a supermarket. I was not only a lender, but I was also a partner in helping build this project. Accomplishing this at such a young age, I felt so excited as if I found a cure for cancer. Twenty years later, I returned to the development and realized it went from brand new homes to a dilapidated haven for gang and drug activities. This taught me the interesting life lesson that just a building alone does not create change. Warehousing large groups of poor people without built in support mechanisms is not a cure.

Are you able to identify a “tipping point” in your career when you started to see success? Did you start doing anything different? Are there takeaways or lessons that others can learn from that?

Early in my career, I worked on a project during the Nixon Administration’s Operation Breakthrough. Their project was to try to build affordable housing throughout the country using modular homes to try to bring down the cost. The strategy was to go to housing authorities around the county and have them buy these modules with Federal grants and subsidies. However many of the approvals to build these houses got stalled by communities who did not want low income housing in their neighborhoods. Instead of the company, Sterling Homex, holding off on the production of the module homes, they continued to manufacture and store the units. At 26 years old, I was assigned to make sure all of these projects would get completed. I traveled throughout the country to put these deals together by working with insurance companies, and various governments. I learned many lessons during this experience such as you have to look at problems from different peoples’ perspectives rather than your own. I also learned that there are solutions for every problem. This was the “tipping point” in my career because I gained confidence that I could solve tough problems and persuade many different groups of people to help bring about change. I also learned that even the best of plans need good execution to achieve impact.

None of us are able to achieve success without some help along the way. Is there a particular person to whom you are grateful who helped get you to where you are? Can you share a story about that?

Yes, that person is Rod MacDougall. He was the head of the Marine Midland Bank in Rochester, NY, and he helped me start my career. Rod was a leading banker for more than three decades. He went on to become the CEO of New England Merchant Bank and Treasurer of the Harvard Corporation.

Rod was a mentor of mine. Early in my career, Ron taught me a number of valuable lessons. One is that no matter how smart you think you are, there’s no substitute for being prepared and hardworking. He also stressed that learning is a constant exercise. There is a difference between having 30 years of experience versus one year’s experience 30 times.

After completing a summer internship at Marine Midland, Rod asked me what I wanted to do with my career. I told him I wanted to become a Bank President. He responded by saying, “To be honest, I don’t know if that’s going to be possible because throughout the region there were no black branch managers, loan officers or operations supervisors, much less a black brank president. However, I’ll give you the opportunity to learn everything you need to know to become a loan officer, branch manager, supervisor and maybe eventually you may become president. But until then, you just need to learn the trade and see where it takes you.”

Thanks to Rod’s mentorship, I went on to become the Chief Operating Officer of the largest Black-owned bank in the U.S., Freedom National Bank of New York in Harlem at age 32

Later in my career, when I moved to Boston to form my own bank, Boston Bank of Commerce, Rod, then also in Boston, helped me by introducing me to many key people that helped build relationships in the city.

Do you have a book, podcast, or talk that’s had a deep impact on your thinking? Can you share a story with us? Can you explain why it was so resonant with you?

The combination of my own experiences, the experience of others with whom I am close and information gathered through a wide variety of media sources have help me understand and put into context some of my own thinking. Most recently, The Color of Law: A Forgotten History of How Our Government Segregated America by Richard Rothstein, and The Color of Money: Black Banks and the Racial Wealth Gap by Mehrsa Baradaran resonate with my own life experiences

Can you please give us your favorite “Life Lesson Quote”? Can you share how that was relevant to you in your life?

One of the first pieces of advice I got from an early boss is that success in business is like a marble game in a playground. You need marbles to get in the game and the brighter and shinier the easier it is to find a place to play. “You should focus on accumulating marbles (knowledge, relationships, expertise etc.) and keeping as bright and shiny as you can”.

Ok super. Let’s now shift to the main part of our discussion about the shortage of quality affordable housing. Lack of decent affordable housing has been a growing problem in the United States. But it seems that it has gotten a lot worse over the past five years, particularly in the large cities. I know this is a huge topic, but for the benefit of our readers can you briefly explain to our readers what brought us to this place? Where did this crisis come from?

The shortage of affordable housing stems in part from the fact that federal, state and local governments have uniformly adopted policies that restrict an increase in the supply of affordable housing. There is a great deal of underutilized land located in urban centers close to higher educational facilities, hospitals, public transportation, highways and critical broadband infrastructure. However the land is often underutilized because zoning and permitting restrictions combined with poor schools and safety concerns make it more expensive to build and riskier to develop and finance. On the other hand, zoning restrictions in adjacent suburban communities are often designed to keep lower income families out and to support increased valuations of scarce housing in safe neighborhoods with quality K-12 schools.

The way federal government currently subsidizes affordable housing through tax credits is limited by the amount of credits allocated and is further limited since the resulting allocations to developers are often based upon cost as opposed to number of units built. The average cost of a Low Income Tax Credit unit built in Boston is above the average cost of a single family home.

Can you describe to our readers how your work is making an impact to address this crisis? Can you share some of the initiatives you are leading to help correct this issue?

To make an impact to address this crisis, our country needs to figure out ways to increase the flow of capital into lower income communities so that residents can purchase existing homes and developers will be encouraged to build new homes.

It’s really a two way street. Communities need to understand how the capital markets work and the tools that are available to access the market such as government-sponsored loan programs. On the other hand, lenders and developers need to apply those tools to previously underserved areas recognizing the potential for attractive returns.

At RBC Global Asset Management, we create specifically targeted pools of capital as means to provide an incentive to bring the two groups together.

This ties back to the words of Bobby Kennedy, which is that the best program for development “combines the best of community action with the best of the private enterprise system. Neither by itself is enough, in their combination lies our hope for the future.”

Can you share something about your work that makes you most proud? Is there a particular story or incident that you found most uplifting?

I feel proud anytime I drive through the Roxbury, Dorchester, and Mattapan sections of Boston and see the projects that I have been a part of that still exist and have improved the communities. I have helped finance shopping centers, office buildings and small businesses in these areas, and I am particularly pleased because I know it has helped improve opportunities those communities in some fashion.

However the most rewarding experience I can share is when traveling at Logan Airport in Boston, a baggage handler grabbed suitcase and said, “Aren’t you Ron Homer? I got my house through the Boston Bank of Commerce and I just want to thank you.” Over the years, I have been stopped quite a few times by strangers with similar stories about how the bank helped their quality of life. These are the experiences that I cherish the most. The most uplifting story will be the day when these stories would be so common that they would go unnoticed. That would be progress.

In your opinion, what should home builders do to further address these problems?

Government can really help lay the ground work for revitalization. The growth of our suburbs with baby boomers was facilitated and supported through a wide range of government policies and programs.

Aspiring developers in underserved communities should lobby for legislation that will enable them to overcome barriers for development in these areas. They then should expend the energy to execute on their plans for neighborhood development. Creating wealth opportunities for themselves and others in the community as well as the nation

Can you share three things that the community and society can do to help you address the root of this crisis? Can you give some examples?

Leaders in underserved communities need to understand how the capital markets work and what tools are available to them to help develop their communities.

Government leaders need to create and apply programs that provide incentives for underserved communities to facilitate community development.

Local business leaders need to understand opportunities and incentives they can utilize to facilitate investments in low income communities.

If you had the power to influence legislation, are there laws which you would like to see introduced that might help you in your work?

I would encourage an investment in the infrastructure needed to help set the table for increased investments by the private sector. The proposed American Family Act of 2021 provides some of the framework for these types of investments.

What are your “5 things I wish someone told me when I first started leading my company” and why? Please share a story or example for each.

What you are trying to do is really hard and you won’t be successful without the help of others.

Being too far ahead of the pack can be detrimental.

The big picture is exciting but details are critical.

Communication is essential and powerful.

Hope for the best but prepare for the worst.

You are a person of enormous influence. If you could inspire a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. :-)

I would help provide access to the opportunities that I had coming from a place like the Bedford Stuyvesant section of Brooklyn, NY. I wish I could provide that for every young person in America, regardless of race.

Is there a person in the world, or in the US whom you would love to have a private breakfast or lunch with, and why? He or she might just see this, especially if we tag them. :-)

I would like to have a private meeting with whomever is elected the next mayor of Boston in November 2021. Boston has great resources, but it is also a place of great inequalities. It is a city with so much potential for leading the way for a more racially balanced society and economy.

The next Boston Mayor has a great opportunity to help develop the low income areas of the city and I would love to talk about it over lunch.

How can our readers further follow your work online?

There are a few ways. You can learn more about my work as RBC Global Asset Management’s Chief Strategist of Impact Investing, here: http://go.pardot.com/l/441592/2020-11-10/z2sv4l.

I am also the Vice Chair of the organization, “Initiative for a Competitive Inner City,” in Boston. This is a research organization focused on attracting private sector investment in underserved urban centers. You can follow my work here, https://icic.org.

This was very meaningful, thank you so much! We wish you continued success!