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Elyse Cherry has served since 1997 as CEO of BlueHub Capital, a community finance institution that has invested over $2 billion in communities nationwide to build affordable housing, health centers, schools, and other community facilities; prevent home foreclosures; create jobs; and promote resiliency. Under Cherry’s leadership, BlueHub’s innovations have included the creation of a first-of-its-kind foreclosure prevention initiative and new benchmarking software to reduce energy use in affordable multifamily housing. The Boston Globe and Commonwealth Institute have repeatedly recognized BlueHub as a Top 100 Women-Led Business in Massachusetts. An active civic and business leader, Cherry is a member of the Board of Trustees of Eastern Bank and the Board of Directors of the Boston Foundation, as well as Chair of the Board of the Forsyth Institute. She has served on the boards of directors of more than a dozen privately held companies, including Zipcar. She is a past chair of the Massachusetts Cultural Council, and she chaired the board of Mass Equality during that organization’s historic fight for marriage equality in the Commonwealth. Cherry, an attorney, graduated from Wellesley College and Northeastern University Law School. She received Wellesley’s Alumnae Achievement Award in 2017.
Lindsay Gearheart: Tell me about your background and what led you to the founding of BlueHub Capital.
Elyse Cherry: I grew up in Revere. I’m a product of Revere Public Schools, and went off from there to Wellesley. Then I went to East Tennessee and joined the East Tennessee Community Design Center as a VISTA volunteer. I eventually went to law school and joined Hale and Dorr in their real estate finance and development area, but I always wanted a for-profit life and a non-profit life — all at the same time. I wasn’t particularly interested in waiting until I got older to have a non-profit life. I had various friends who were interested in founding what we now call BlueHub Capital but in those days called Boston Community Loan Fund. They came and asked me to help with that, in part, because I had the real estate and legal skills that we needed to be sure we knew how to write good real estate loans. I was delighted to do that, and in 1985, I joined the Board of Directors, and we hired our first staff member, who’s still with us today.
From the very beginning, we wanted to figure out how to create an organization that balanced at the intersection of downtown and community in which community values and downtown expertise worked together to help build healthy communities where low income people live and work. I’m pleased to say our mission has remained unchanged in for the past 35 years. We started with a grand total of $3,500 and, as I often say, not enough gray hair among us to know that we couldn’t build an organization with such a small amount of money. So, we just proceeded. I am proud to say that, notwithstanding our tiny beginning, we now have over a $1 billion under management. We’ve lent about $2 billion, and we’ve leveraged another $10 billion to help build healthy communities, so it’s been a wonderful run.
LG: How have you grown from a small Boston startup to a model for community investment in the U.S.?
EC: I was a member of the Board of Directors and then Chair of the Board — really driving strategy. Then in 1997, I agreed to lead the organization full time — because the organization had made a commitment to grow to scale and also to expand our geography. We spent a lot of time paying attention to what the community needed and then trying to figure out how to develop other business lines that satisfied those needs. Then, we went out and figured out how to raise funds for the business lines that we wanted to develop.
We developed a second business line, which in those days was called Boston Community Development Venture Fund. Then, we developed the SUN initiative, which is our foreclosure relief undertaking. SUN stands for Stabilizing Urban Neighborhoods. We developed a solar practice that was aimed at assuring that low income people and communities had access to the benefits of solar power and were included in resiliency planning. We grew our core businesses, the original one being our loan fund, which is now BlueHub Loan Fund, and then developed these other business lines to go along with the Loan Fund to attempt to satisfy the needs of the communities we were serving as those needs evolved.
LG: How do you evolve your work to meet communities’ changing needs, whether that because of climate change, emerging technologies, employment trends, etc.?
EC: One of our core values is that effective institutions evolve to meet the changing needs of the communities that they serve, so we have built that expectation right into our work. I’ll give you an example: back in about 2007, we were listening to people in the community, and what we were hearing was that housing prices were skyrocketing and people’s mortgages were skyrocketing, but we couldn’t figure out how that could be since nobody’s income was skyrocketing — wages were essentially flat. We wrote our first white paper on the foreclosure crisis in 2007 well before anyone had come to terms with the magnitude of the foreclosure crisis. We saw a real disconnect between what people earned and what they were borrowing, and we don’t think that was sustainable. And then of course everybody knows what happened in 2008 when the foreclosure crisis hit.
We then decided to try to put together an undertaking that would help solve the problem. The challenge was that we were trying to serve low income people who were already in default or foreclosure, and anybody you talked to with a potential source of capital would say, “Really?” I went out to the capital markets to try to raise capital to be able to make new mortgages for people, to be able to lend people money to stay in their homes. What I heard was, “If anybody were foolish enough to lend you the money, it would cost somewhere around 12 or 14%.” I would joke that, “I went to law school, not business school. I never learned how to borrow at 12% and lend at 6%!” But the inability to raise capital was no joke. So we went out to civic-minded people here in the Boston area, and we talked to them about what we were trying to do.
What we wanted to do was to raise enough money to do $50 million worth of lending. We were putting up $10 million of our own money, and we really needed to find people to lend us the rest. People stepped up to the plate in astonishingly generous ways. The Boston Foundation gave us a planning grant so we could develop our business model and organizational structure and figure out how to assess the financial capacity of primarily low-income homeowners who had defaulted on their existing mortgages to pay a new mortgage. And then we raised loan reserves and borrowed funds from a lot of individuals who were willing to sign on with us because they were so concerned about the magnitude of the foreclosure crisis. Once we had used those funds to prove out our business model, East Boston Savings Bank agreed to provide a $75 million credit line . Finally, after four or five years, we were able to get the U.S. Treasury to issue a bond for $100 million so that we would have an ongoing source of funds to lend.
The U.S. Treasury bond represented the first time that we actually were borrowing money that had a term that was as long as the money we were lending out. To put that more clearly, our initial borrowings had only been for five years, but we were making 30-year mortgages. There was a real risk about how the funds would be repaid at the end of the five years. But we all took the risk together, and as we proved out the model, we were able to get longer term money and finally 30-year money.
I should tell you that the SUN initiative has now stabilized better than 1,100 families in seven states, and we have made more than $180 million worth of loans. We have been able to reduce the amount of outstanding principal that people owed by about $68 million. We’ve been able to reduce monthly payments by about $42 million, and we’ve actually been able to create roughly $100 million in equity. And these were all folks who were in the final stages of foreclosure or had already lost title to their homes, had no equity, and were close to eviction. It’s been a very useful tool to stabilize low income families and allow them to stay in their homes with mortgages they can afford.
I’m really delighted to be able to say that about 92% of SUN borrowers regularly satisfy their SUN program mortgage obligations and only about 8% of SUN borrowers are seriously delinquent.
Our cost of funds is higher than our banking colleagues’ cost of funds and, of course, the people we’re lending to are much riskier borrowers, so our lending rates are a little bit higher than what you might find if you were looking for a mortgage and we include a shared appreciation mortgage as part of the transaction. But one of the things we’re proudest of is that we’ve had 20% of our borrowers repair their credit, repay their loans and go back out into the commercial markets. They become regular borrowers just like everybody else, and we think that’s a home run – for everyone.
LG: A few years ago, you were named a Solar Champion of Change by the White House. Could you talk about what work led to that recognition?
EC: One of the things we’ve always focused on is trying to assure that low income people and low-income communities get the same level of service, availability and access to, for example, clean energy, that our wealthier neighbors take for granted. We started in 2007 to figure out how to put capital structures together that would allow us to put solar panels on the roofs of affordable housing developments. One of the first projects we did was at Washington Elms, which is an affordable housing development in Cambridge. We had a great press conference; Governor Patrick came and spoke. And the kids were all really proud because instead of listening to people say they were part of the problem, they could say, “We’re part of the solution, we have solar panels on our roof.” It was very exciting.
On a personal note, it was exciting for me because I could remember as a small child visiting my grandmother at Newtowne Court, which is the sister affordable housing development right next door. My grandmother has long since passed, but to be there, at Washington Elms, having figured out how to create the contractual and financial structures to get the solar panels up on the roof so that everybody could participate in the benefits of free and clean energy — it was a moving day for me.
So that was a lot of the work that the Solar Champion of Change award was based on. We have continued that work, and we’ve been very active for the last three or four years in the state’s SMART program, which is the program that’s trying to expand the availability of solar energy. Our consistent perspective has been that we need to assure that low income families have the same access to solar energy and the benefits of solar energy as everyone else. We’ve been banging that drum pretty consistently and for a long time.
LG: How does BlueHub Capital work with civic, government, community-based and private sector partners to stabilize, revitalize, and transform communities?
EC: That’s a big question. We do lots of different things. As I just mentioned, we’ve been working with Massachusetts, both regulatory officials and legislators, and a coalition of renewable energy activists to develop the state’s solar program, so that’s one example.
We are also a member of the Equitable Uphams Collaborative, which is a Boston-based collaborative that includes Dorchester Bay Economic Development Corporation, Boston Medical Center, and a bunch of other folks as well, and we’re focused on trying to achieve a strategy to develop Uphams Corner, particularly focusing on equitable outcomes and creating new economic health and education opportunities.
We’ve also partnered for a long time with Harvard University through the Harvard Local Housing Collaborative to create and preserve affordable housing in Boston.
We’ve got a Rhode Island example, too. We’ve partnered with Farm Fresh Rhode Island. That’s an organization in Pawtucket that supports local farms and increases access to fresh, healthy food. Our loan fund provided financing for Farm Fresh to develop 60,000 square feet for a food hub in Providence. It’s got jobs and green space, and it’s a terrific collaboration of not just BlueHub but public sector supporters and foundations and banks in Providence.
LG: A final question: Why do you think being in Massachusetts makes a difference for your organization? How do you think Massachusetts is positioned to be a leader for the rest of the country?
EC: Massachusetts has always been a hub of innovation, right from the very beginning. We don’t have deep fertile soil, and we don’t have deep water ports. What we have are smart people who work hard and figure out new things! We have all of our wonderful colleges and universities here, and we generate a tremendous number of new initiatives and innovative approaches in technology, finance and, really, every sector. In that sense, we live in a rich, fertile environment in which to hatch new ideas.
When we first started back in 1985, we were one of the first participants in what was then a nascent community development loan fund initiative that people were trying to get going across the country. We were part of the very beginning of that movement. We had our first conference with about 19 people here in Waltham, and there are now thousands and thousands of people in this movement. In Massachusetts, we can draw on people who want to lead values-based lives, are well-educated, have had good experience downtown, so to speak, and are interested in using their experience to promote community values. All of that, together, has meant that Massachusetts was a welcoming place to start. We began in Boston and expanded through Massachusetts, and now we’re active across the country.
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