Affordable housing provider retools Downtown HQ, gears up for CEO's exit
Daily Memphian
Wayne Risher
Thousands of low-income apartment dwellers in nine states depend on office workers doing their jobs in a historic office building on venerable Cotton Row in Downtown Memphis.
One Union Place, perched on a bluff overlooking the Mississippi River and Memphis cobblestone landing, houses headquarters of ALCO Management, a privately held operator of more than 5,700 units of government-subsidized housing.
ALCO Management, founded in 1974 by Frank Z. Jemison, is renovating, expanding and reconfiguring its offices at 35 Union in hopes of improving working conditions for a growing staff.
The idea is that a modern work space will support the 45 employees to better meet the challenges of providing quality housing to impoverished residents in the heavily regulated government-subsidized housing niche.
“We have sort of a 1980s layout, which has a lot of private offices that get all the river view,” Jemison said. “We’re changing that somewhat. We’re opening up the offices so everybody gets to see. I think that’s good.”
Room to grow
ALCO Management bought controlling interest in the four-story building’s office condominiums from late philanthropist and businessman Clarence Day in 1984. ALCO occupies the second floor and part of the third. Residential condominiums are on the top floor.
ALCO is taking over the entire third floor, where it will add a community space for staff gatherings, a kitchen and café along the wall on the river side. A third-floor balcony facing the river is the only planned exterior change. Offices will line the southern wall, which backs up to Jack Tucker Alley. Second floor additions will include a fitness room and a wellness room.
“We want it to be a place people will come to work every day and have access to the great river views, have access to the amenities and really enjoy working here and being supported by the physical environment,” said Berkeley Burbank, vice president of development.
The renovation will provide room for organic growth, although there’s no deliberate hiring initiative on the horizon. “We’re setting our office up to accommodate another 20 or so (employees), being hopeful and optimistic about the future,” Burbank said. “We don’t have folks ready for those seats, but we want the company to continue to be sustainable.”
CEO succession
The renovation is expected to be completed next spring, as the homegrown company prepares for the retirement of founder and chief executive officer Jemison.
Jemison, 71, is stepping down from active management next July and has designated Burbank to succeed him as CEO. Burbank, 46, has been with ALCO 14 years.
In July 2020, it will have been 50 years since Jemison began working in his father and uncle’s businesses, which operated Holiday Inn franchises, built hotels and apartments, and manufactured air-conditioning ducts.
“It’s just time,” Jemison said. “We’ve got a great team here who’s done most of the work for the last seven to eight years. I think it’s just time for me to have a further transition.”
The family will still be represented, by Jemison’s daughter Sarah Jemison, who is a development project manager at ALCO. She previously worked as a housing advocacy organizer for the National Low Income Housing Coalition in Washington.
“It’s important to me, and I think it’s important to all the team here, that we’re committed to providing good housing for people that make very low incomes,” Frank Jemison said. “And they’re people who deserve that kind of attention. Sarah is committed to that, as well as being good at the numbers, smart. We have a whole team who are interested in providing the kind of housing we provide. I’m real proud of them.”
All in the family
Jemison was introduced to apartment development when the family business sent him to Arkansas to build apartments in Marianna and Forrest City. He got on-the-job training in how to syndicate the projects, or line up investors, and how to manage the properties.
When he set up his own company, he took the name from ALCO Manufacturing. A maker of air-conditioning ducts, it was the only family company that had money left after the 1973-74 recession hit, Jemison said.
His departure comes as ALCO prepares to sell off its last market-rate apartment communities and become fully focused on the affordable-housing market.
“In a real estate business, you either keep it going and be fully committed to the future, or you have to wrap it up,” Burbank said. “Frank clearly has made the decision to keep it going, so we want to be ready for the future. We want to be fully sustainable.”
ALCO taps government incentives including low-income housing tax credits, property-tax abatements and tax-advantaged bonds, partners with investors to raise capital, and navigates a web of government regulation from the IRS to housing subsidy programs.
The company has benefited from strong relationships with First Tennessee Housing Corp. and Regions Bank, which have been regular providers of equity for ALCO’s low-income housing tax credits, Burbank said. ALCO also has worked closely with Wesley Housing Corp., he said.
Filling a need
Jemison said he decided to emphasize affordable housing “because I understood it well. We had a competitive advantage because of it. It’s highly regulatory. And it does end up housing people who really need the housing.”
“I found it was something I was committed to because I liked the process. I figured out I could be successful at it. I thought, ‘We’re caring for the properties we own and the people who live there pretty well,' and I was proud of what we were doing,” Jemison said.
Employees in the main office support a network of property managers, assistant managers and maintenance personnel at 61 properties concentrated in Tennessee, but spread out from Missouri to South Carolina. ALCO has about 250 employees.
The work that goes on in the main office matters to residents. It includes verifying residents’ incomes, keeping track of responses to maintenance work orders, keeping up with Department of Housing and Urban Development regulations on Section 8 rent subsidies, and setting up the financing structure of deals to acquire and renovate property.
“We feel like we have a competitive advantage or an understanding of all the rules and regulations that help us to be successful,” Burbank said.
Ramping up activity
Burbank said ALCO aspires to step up its development pace, going from an average one or two deals a year to five or six deals. He defined a deal as acquiring new property, such as recent additions of Magnolia Terrace in Jellico, Tennessee, and Cathedral Place in Mobile, Alabama, or major renovation of existing assets.
Projects in the coming year will include a $10 million plus renovation of 272-unit Chickasaw Place apartments on Mimosa in Binghamton. ALCO has owned the community since the mid-1980s, and it underwent a “moderate” renovation in 2004, Burbank said.
ALCO sought a bond issue and tax abatement for Chickasaw Place from the Health, Education and Housing Facilities Board of Memphis and Shelby County. The project will include new kitchens, bathrooms, larger community space, addition of an exercise room, more computers for residents and property-wide WiFi, an outdoor ball court and playground, increased and updated security, and major system upgrades.
ALCO said it would provide new facilities for the Neighborhood Christian Center, which provides after-school and other social services for residents in a partnership with the landlord.
As part of an emphasis on “building community,” Burbank said ALCO partners with community organizations such as Neighborhood Christian Center and Agape Child & Family Services to offer programs at various properties.
ALCO in Memphis
Chickasaw Place is one of 13 ALCO communities in Memphis with 2,327 units of rent-subsidized housing. Its other Memphis properties are Breezy Point, Creekwood Village, Eastern Heights, Greenbriar, Pershing Park, Presidential West, Ridgecrest, Robinhood Park, Rolling Hills, Saints Court, Summit Park and Todd Creek apartments.
ALCO has a third-party management agreement with Henry Turley Co. and Belz Enterprises to manage 549 apartments in Uptown: Uptown Square, Greenlaw Place and The Metropolitan.
Turley manages its own market-rate apartments in communities including South Junction and Central Station, but it chose to outsource management of Uptown apartments. Uptown Square renovated and reduced the density of Lauderdale Courts public housing, and The Metropolitan was built where part of Hurt Village public housing was razed.
“Uptown residents have a pretty broad range of incomes, but we developed (Uptown) primarily for low- and moderate-income people – those with fewer options to live in a nice neighborhood,” said CEO Henry Turley Jr.
“ALCO knows the various programs that help sustain nice apartments while charging less than market rentals. And ALCO cares. Their approach to accommodating our residents is consistent with Jack’s (Belz) and mine,” Turley said.
Paul Young, director of the Memphis division of Housing and Community Development, said, “ALCO is well-known as a quality affordable housing developer and property management firm in this area. As experts in affordable housing, we often seek ALCO’s input, and we welcome their expansion.”
Growing workload
Burbank said ALCO’s workforce expansion is driven by the importance of training and professional development of employees and a commitment to provide on-site personnel at apartment communities with a robust suite of management tools.
“Housing is a very regulated industry just broadly,” Burbank said, “and assisted and affordable housing is all the more regulated, so our learning and development departments spend a lot of time working with our employees to make sure we are in compliance with all the rules and regulations.”
“Property management tools are becoming more sophisticated,” he said. Home office staff provides technical support for digital platforms. They cover everything from maintenance personnel tracking work orders to prospective residents completing applications for housing and paying rent.
Burbank said educating employees about the federal Fair Housing Act is paramount. The act bars discrimination in housing on the basis of race, sex, national origin and other factors.
“We want to treat everyone fairly and follow all the Fair Housing rules,” Burbank said. “When an employee comes to us, the first thing they have to do is complete that Fair Housing training before they can even begin their job.”
‘Small piece of puzzle’
Rent subsidies create a guaranteed stream of income, but serving people living in poverty brings its own challenges.
“Our biggest challenge for managing 100% Section 8 affordable housing is the continuum of problems and concerns that low-income families have,” Burbank said.
“We are working hard to work with families and provide good quality housing, but we know we’re a small piece of the puzzle for the success of a family,” he said.
“We do strongly believe a good, stable home is a foundation for success of the family, but by no means is it a guarantee. Obviously, education challenges, child care, health and safety, nutrition, all of these things, we don’t pretend to have the silver bullet or to be the solution for all of those problems, but we do endeavor to be a small piece of the success of those families,” Burbank said.
One Union Place is a former Swift and Co. meat-packing plant. The building dates to 1925, according to a nomination form for the Cotton Row Historic District on the National Register of Historic Places. It’s on the west end of Howard’s Row, a group of mid-1800s buildings that line the south side of Union where it descends from Front toward Wagner and Riverside.
Grinder Taber Grinder construction has been hired to carry out plans by designer Ann Parker of Parker Design Studios and architect Christopher Schmidt of CS Studios. Jeremy Turner of Cushman & Wakefield Commercial Advisors will be owner’s representative on the project.
