Breaking Ground
Holly Wiedemann, President and Owner, AU Associates
By Darryl Hicks
10 min read
Holly Wiedemann is an award-winning developer based in Lexington, KY and a leading advocate for affordable housing and historic preservation.
Since forming AU Associates in 1990, she has created some of the most innovative affordable housing, mixed-income and historic preservation properties in Kentucky and West Virginia.
Wiedemann first got involved in National Housing & Rehabilitation Association through its Historic Preservation Development Council. She has since developed numerous landmark adaptive-reuse projects, including several winners of NH&RA’s prestigious J. Timothy Anderson Awards for Excellence in Historic Rehabilitation.
She is also the current chair of the Board of Directors of NH&RA.
Tax Credit Advisor sat down with Wiedemann to learn more about her work ethic, her love for rehabilitating historic buildings and the biggest takeaways from the past year.
Tax Credit Advisor: What was your path into affordable housing?
Holly Wiedemann: I have been focused on affordable housing and real estate development since I graduated with a degree in Landscape Architecture and Urban Design. After working for a large architectural firm where we designed very large, urban, mixed-use developments (Tabor Center in Denver, River Center in San Antonio, Independence Center in Charlotte), I realized I needed to know more about the financial end versus the design perspective. I decided I needed a MBA and went to Duke for graduate school. I also took all the real estate development and finance courses from University of North Carolina (UNC) at Chapel Hill. While there, I took a class on affordable housing from Michael Stegeman, who later became Assistant Secretary for Policy Development and Research at HUD. This was before the 1986 Tax Reform Act that created the Low Income Housing Tax Credit (LIHTC) and Section 42.
TCA: What inspired you to start your own development company?
HW: After business school, I had the privilege of working for Winn Development in Boston. Section 42 had recently been enacted, as well as Emergency Low Income Preservation Act (ELIPHA) shortly thereafter. I believe this period of time was an incredible gift, as I essentially was earning a PhD in affordable housing. Castle Square was one of the very first projects to go through the arduous process of converting from a Below Market Interest Rate (BMIR) loan program to a different mechanism, which allowed a conversion to incentivize the owner to maintain the property as continued low-income occupancy while allowing an eight percent return, increased Section 8 rents coverage, capital improvement loans, and equity take out loans that were limited to 70 percent equity with a ten percent hold back under Section 241. The evolution from ELIPHA to Low Income Housing Preservation and Resident Homeownership Act (LIHPRA) allowed the program to morph into eligibility for 100 percent rehab loans along with equity take out loans. I mention this obscure and Ice Age program that several of us remember! At one of the conferences in Washington, DC, led by Chuck Edson and Chris Foster, several of us NH&RA members were on the podium; namely David Reznick, Charlie Allen from Recapitalization Advisors, Herb Stevens, Steve Wallace, Monica Sussman and me (Monica and I were both child prodigies at the time, likely around 19 years old, or less). Of course, Larry Curtis, John Gahan, Jerry Breed, Peter Richardson, Howard Cohen, Laura Burns, and so many others were there as well, including all of the usual suspects, too numerous to name. This was a quintessential program that was like cheese to hungry mice. I would say that NH&RA members love a keen intellectual challenge that can be argued incessantly in esoteric ways that most other people would find excessively boring, but we don’t. (Especially over a lovely dinner with a glass of wine, or two). Anyway, after eight years in Boston, my father died and my mother needed to sell the family farm. My husband, at the time a management consultant for McKinsey, suggested we return to Kentucky and buy the family farm. We did. At the time, Castle Square was halfway through construction. I was responsible for all the numbers on the project, as well as calculating the construction draws with nine different funding sources, all of which had different requirements (i.e., Flexible Subsidy, BRA funds, HUD, etc.), which was incredibly complex. I continued to work for Winn from Kentucky, preparing the documents and numbers and sending a FedEx each week to continue the construction, draw requests and everything else that was required in a 500-unit project of this complexity (working remotely long before the COVID pandemic). Given how much fun this was, of course I was well on my way to becoming a developer. The next step was to start my own company, AU Associates. Any project subsequent to Castle Square was a walk in the park, comparatively speaking.
TCA: Being a young woman in a male-dominated industry, who were your role models and what advice did they give that led to your success?
HW: I have been asked this question many times. The fact of the matter is that I never have considered gender. My primary focus is upon merit, regardless of creed, color, race, gender or anything else. I think not being hung up on gender has served me well. It really doesn’t matter. All that matters is if you have the grit, commitment, smarts, determination and integrity to get the job done.
TCA: How many units of affordable housing have you developed and how many units are you currently managing?
HW: When I began AU, the first couple of years I consulted with developers/owners all over the country to preserve affordable housing for LIHPRA. I was responsible for the preservation of 20,000 units. This also provided me a war chest of funding to do my first development, a 24-unit, mixed-income adaptive re-use of a 1924 school in Midway, KY, a la a Bob Kuehne-esque model. Boston Financial was the syndicator, and that was literally the good housekeeping seal of approval. From there, AU has now developed over 1,350 units with 234 of those currently under construction and another 252 shovel-ready units that will begin later this year. We manage everything we develop. (Editor’s note: The late Bob Kuehne was one of the country’s foremost developers of affordable housing and historic rehabilitation advocates.)
TCA: A majority of your business is adaptive reuse. What property types do you find most appealing?
HW: From an emotional standpoint, I am a sucker for historic/adaptive re-use projects. The majority of AU’s first decade or so of development was comprised of historic/adaptive re-use deals. As AU matured, we had to shift from smaller, rural historic developments to urban infill, new construction large projects. The challenge is intriguing there as well, not only from a design point to fit into the context of the surroundings, but to creatively address all of the requirements of the Housing Finance Agency (HFA) and funding commitments.
TCA: Now that 2020 is over, what big plans do you have for 2021?
HW: Go on vacation, attend in-person NH&RA conferences, hug, go out to eat, visit our children out of state and enjoy getting together! As previously mentioned, we will be wrapping up two projects this year, along with starting and/or completing construction on three more.
TCA: Are there lessons you learned during the pandemic that you have adopted on a permanent basis?
HW: Zoom calls can actually be effective and work as a reasonable stand-in for actual, real-life conversations. We have shifted our entire property management platform to become far more ‘touchless’ and have migrated towards online payments, project portals, online applications and lease renewals, as well as online work orders.
TCA: Being a small developer, how many tax credit investors do you work with? How do you know which investor to use when a new project comes along?
HW: We have been incredibly fortunate to work with outstanding tax credit investors thus far. We have done multiple projects with Community Affordable Housing Equity Corporation (CAHEC), particularly given that they have a more mission-based platform versus being CRA driven. We have also enjoyed working with Redstone on bigger projects (thank you NH&RA) and it has been a pleasure to work with my predecessor as chair, Bob Fein (who serves as a principal and COO at Redstone). We have also worked with a number of community banks. Our decision around the syndicator is a function of the project size, location, complexity, type and other funding sources. I am extraordinarily thankful that all of our investors to date have expressed an interest on working together again on upcoming deals.
TCA: Tell our readers more about the AU Associates. For example, what are you most proud of as a company and what sets you apart from other companies that own and operate affordable housing?
HW: My mantra was that we develop properties in which we would like to live. At the beginning of my career, particularly with a focus on historic adaptive re-use projects, each deal was like a snowflake, its own special crystal. Over time, of course, we have shifted to more standardized projects and I trust that we have learned something from every project that will be helpful for the next. We continue to raise the bar and learn from experience. I am most proud of the fact that our industry, as a whole, serves our most vulnerable. We make the communities in which we develop better places because of our work. We provide beautiful, functional and worthwhile (I believe it is far more than ‘decent’) affordable housing that is a place that the residents, and we as the owner, can be proud of. Our investors are happy.
TCA: What achievements are you most proud of as NH&RA’s chairwoman?
HW: I am most proud of NH&RA President Thom Amdur and the entire NH&RA team. Thom, Kaitlyn Snyder, Brooke Williamson and the entire team responded to the pandemic with an incredibly rapid pivot. They produced a series of timely, informative and valuable Town Halls that showcased panelists who led the way in helping us all figure out the new world we were facing. We addressed every topic imaginable. Not only that, the virtual conferences were filled with up-to-the-minute information that addressed legal issues around moratoriums, how to address delinquencies, new architectural considerations, how to keep your team connected and how to move forward. As a testament to our leadership team at NH&RA, Thom and CEO Peter Bell were able to provide some NH&RA members as part of the Biden transition team, in order to represent the most pressing initiatives and objectives for our industry. I believe that this leadership will provide dividends to come for this upcoming administration. It has been an incredible honor to serve as NH&RA’s chair. I just regret that the last time we saw each other was last February. I love our conferences and the opportunity to see old friends and make new ones. Let’s hope that will be before us in 2021.
TCA: Thank you for your time. Before we go, would you like to share with our readers a favorite historic rehabilitation project?
HW: Thank you. We just completed a project called Victory Point that we did for the Veterans Administration (VA). It was what they call an EUL, or Enhanced Use Lease, where we leased ten acres from the VA campus here in Lexington. It looks like an arboretum and is absolutely beautiful. The property had four abandoned historic buildings built in the early 1930s, including a nurses dormitory, two duplexes for the doctors and the hospital administrator’s house. We rehabilitated these buildings and then augmented them with an additional six newly constructed buildings to create 50 units of affordable housing for veterans that have all the supportive services in place on the campus. We just placed it in service and we’re leasing up now. That was a really fun, fabulous project that allowed me to indulge my love of historic rehabilitation.
