1

Assembling the Resources for Supportive HousingMinneapolis, June 7, 2012

ryan.moser@csh.org

2

What Is Supportive Housing?

A cost-effective combination of permanent, affordable housing with services that helps people live more stable, productive lives.

3

Models of Supportive Housing

• Single-Site, Single Purpose• Single-Site, Integrated

• Clustered Scattered-Site• Scattered-Site

• Set-Asides

SERV – Integrated Housing

• Bergenline Ave (Hudson County, NJ) and Boulevard East (Bergen County, NJ)– Each building has12 units that include 5 PSH units and 7

affordable units. • Guttenberg (Hudson County, NJ)

– 14 unit property that offers 6 PSH units and 8 affordable units. • PSH units serve people with serious mental illness. All

units serve people at 50% and below AMI.

5

Vision Drives Resource Development

• Mission Mandate• Community and Individual Needs• Agency Priorities• Budget Drivers• Choice of Population, There is Never Enough

Supportive Housing to Serve Everyone

6

Developing a Supportive Housing Initiative

Can be confusing! Not necessarily linear No standard model Tasks are interdependent Multiple players

7

TWO: Feasibility

ONE: Concept

THREE: Dealmaking

FOUR: Development

FIVE: Operations

Go?No Go?Go?

Go?

No Go?Go?

8

Targeted Tenancy

Serv

ices

Ope

ratin

g

Capi

tal

Development Budget

Operating Budget

Services Budget

9

A Typical Deal• Capital

– HOME/CDBG– Low Income Housing Tax Credits– Federal Home Loan Bank

• Operating– HUD McKinney– Section 8

• ServicesMedicaidPhilanthropy/FoundationsLocal SourcesSpecialized Partnership Services C

Development

Scattered-Site or

Set-Aside

10

The First Leg:Capital

C

11

To Build or Not to Build,That is the Question.

Pros• Long term project stability• Take advantage of

property assets; affordable housing market

• Building culture can be pro-social

• Exciting flagship• Easier to offer onsite

services

Cons• Minimum 3 year timeframe• Development Requires a

High Capacity Housing Partner

• Not In My Back Yard• Concentration

C

12

Capital Builds the Box

• The costs of designing, purchasing, building or rehabilitating, and filling housing units with tenants.– Soft Costs: Consultant Fees, Architectural

Drawings, Marketing Units, Appraisals, Legal Fees, Permits, and Studies

– Hard Costs: Acquisition, Construction or Rehabilitation, and Offsite Improvements

C

13

Capital Sources• Capital funding is generally offered in the

form of either:– A grant– A deferred loan (which operates as a grant for a

specified period of time)– A low-interest loan– A Low-Income Housing Tax Credit Award

providing investment equity

14

Castle Gardens, The Fortune SocietyCapital Sources

• NYS Housing Finance First Mortgage $3,600,000• NYS Housing Finance Second Mortgage $4,000,000• Federal Home Loan Bank Affordable Housing Program

$1,500,000• NYS Office of Temporary and Disability Assistance, • Homeless Housing Assistance Program $5,500,000• NYC Supportive Housing Loan Program (SHLP) $8,300,000• Mayor’s Fund $250,000• NY City Council $2,000,000• Borough President Capital Funds $1,000,000• NYS Energy Research Development Authority $239,390• Enterprise Green Communities $50,000• Low Income Housing Tax Credits $16,060,594• Deferred Developer Fee $ 1,000,000

Total $43,499,984

C

15

Sources & Uses

Schedule of Sources & Uses – Combines costs with the financing

Total $ Amount #1 IHCDA Trust Fund

#2 IHCDA HOME

#3 Donations Tax Credit

Equity #4 AHP Tax Credit

Equity

Deferred Developer

Fee Acquisition $1,200,000 $1,200,000 Construction $8,000,000 $750,000 $1,800,000 $5,450,000 Soft Costs $2,250,000 $600,000 $1,650,000 Reserves $250,000 $250,000 Developer’s Fee $1,200,000 $800,000 400,000$ Other $0 Total $12,900,000 $750,000 $1,200,000 $1,800,000 $600,000 $8,150,000 400,000$

Total # of development units 80Total Development Cost per Development Unit (excluding reserves) $161,250

C

16

Sources of Financing

Federal Sources:• Federal Home Loan Bank Affordable

Housing Program (AHP) ($750,000)• HUD 811 & 202

C

17

Sources of Financing

State Sources:• Low-Income Housing Tax Credits (LIHTC) • Indiana Development Fund or New York

State Housing Assistance Program• HOME and Community Development Block

Grant (CDBG) Funds

C

18

Sources of Financing

County or Municipal Sources:• HOME/CDBG• Local Housing Trust Funds• Tax Reaction/Scavenger Sale/donation of

publicly-owned land (for acquisition)• Tax Increment Financing Districts (TIFs)• Empowerment Zones• Enterprise Zones

C

19

Low-Income Housing Tax Credits

• Eligibility is based on tenant income using HUD median income data, adjusted for family size

• Rent restrictions – below 60% of AMI• Tax credits received over the first 10 years of

operation, but compliance period is 15• Typically suited for projects of at least 20 units

C

20

Key Concept:Housing Funding is

Restricted to Housing

21

The Second Leg:Operating

22

Operating Pays the Bills

• The costs of operating and maintaining the housing, including all costs of maintaining the project once it is ready for occupancy:– Utilities– Maintenance Services– Insurance– Security– Debt Service or other Loan Payments– Operating and Replacement Reserves– (rent)

23

Schedule of Sources and Uses of Funds Schedule of Income and Expenses

USES INCOME

Hard Costs

Acquisition Gross Residential Rent

Construction Gross Commerical Rent (if any)

Contingency Other income

Soft Costs Vacancy Allowance

Professional fees EFFECTIVE GROSS INCOME

Financing fees

Start-up costs EXPENSES

Developer fee Real estate taxes

Contingency Insurance

Reserves Utilities

Capital Maintenance and repairs

Operating Building payroll

TOTAL USES = Management, admin. & marketing

TOTAL EXPENSES =

SOURCES

Equity EFFECTIVE GROSS INCOME

Owner's TOTAL EXPENSES

Investor's NET OPERATING INCOME =

Loan Debt Service

Grant Cash Flow =

TOTAL SOURCES =

Budget for capital funds used in the acquisition and improvement of the real estate.

Annual budget for the operation of the real estate once development is complete.

DEVELOPMENT BUDGET OPERATING BUDGET

Relationship with the Development Budget

O

24

Who Pays for Operating Support

• Sources that pay for costs of operating and/or maintaining the housing or physical component of supportive housing

• Who comprises the primary sources?– Federal - HUD– State– County/Municipal

• Again, depends on your TARGET POPULATION O

Sources OverviewName Source Description

Shelter Plus Care

HUD McKinney

5 or 10 yr project-based subsidies – homeless, disabled

Supportive Housing Program

HUD McKinney

Funds leasing or operating costs – homeless, disabled

Project Based Section 8

HUD and PHA

Administered by state or local housing authority

Section 811 HUD Funds independent living facilities – could be used for sup hsg

HUD VASH HUD Funds leasing and supportive services for homeless veterans

O25

26

HUD McKinney – Shelter Plus Care

• Rental assistance only eligible activity under SPC• Funds provide the operating costs excluding

services• Target Population: Homeless and Disabled as

defined by HUD• Applicant must provide supportive services in

an amount at least equal to the rental assistance provided during the term of the grant

O

27

HUD – Shelter Plus Care

• New construction: 5-year initial grant• Rehabilitation: 10-year initial grant• Can be sponsor-based or project-based

subsidies• Must apply through the local Continuum of Care

– Grants are large because must be for 5 or 10 years is there room in the Continuum?

– Example: 15 unit, 1bd, SPC for 5 years = around $1 million dollars

O

28

HUD – Supportive Housing Program

• Operations – HUD Regulation: Pay up to 75% of annual costs– Using other cash resources, make up difference

between the total costs and the SHP grant• Leasing

– Can pay for up to 100% of annual leasing costs– With leasing, you cannot be the owner

O

29

SHP Considerations

• SHP budgets do not allow for annual increases, even if your costs rise over time

• Continuums may have additional budget requirements

• Initial grant is typically for 2-3 years. Grants are renewed competitively on annual basis after initial award

• Grant is a direct grant with HUD• Online:

www.hud.gov/offices/cpd/homeless/library/shp/index.cfm O

30

Continuum of Care Homeless Bonus Project

• Bonus allocated to Continuums on annual basis

• Must fund ONE permanent supportive housing project that serves homeless, disabled

• Equal 15% of Continuum’s pro-rata allocation• In past, project had to be 80% housing and

20% services

O

31

Bonus Project Considerations

• Good money if your project is located in Continuum with a decent size bonus

• Can fund leasing or operations• Some Continuums are not able to use their

bonus dollars due to lack of matching funds

O

32

Key Concept:Get to know your

Continuum of Care.

33

Tenant-Based Section 8

• The typical scattered-site rental subsidy only program

• Can be challenging for tenants with special needs to navigate

• Specialized waiting lists can be set up by PHAs

O

34

Project-Based Section 8• Project-Based voucher remains attached to

the unit.• Lesser known voucher component, and is

optional for the PHA up to 20%.• PHA attaches rent subsidy to a unit of rental

housing through a contract with the owner that can last from 1 year to 15 years.

O

35

Sponsor-Based Section 8

• Newer process, similar to Shelter Plus Care administration where vouchers go to a sponsor agency

• Can be used to increase access for people in need of supportive services

• Available in Moving To Work sites• Signals from HUD that they will review waiver

requests for PSH related sponsor-basing

O

36

Project-Based Section 8 Considerations

• PHA may have restrictions that exclude the population project intended to serve

• May require some education with PHA• Section 8 certificates may be

oversubscribed• More info:

www.tacinc.org/Docs/HH/OpeningDoors/ODIssue28.pdf

O

37

Public Housing Units

• Also administered by the PHA, although there are sometimes different applications

• Barriers can be harder to negotiate• Efficiencies sometimes have higher vacancy

rates

O

38

Key Concept:Get to know your PHA/Vouchering

Agency.

39

State/Local Rental Assistance

• Does not necessarily have the same targeting as Federal rental assistance.

• May not have the same barriers related to CJ populations.

O

40

Section 811

• The Section 811 program allows persons with disabilities to live as independently as possible in the community by increasing the supply of rental housing with the availability of supportive services.

• Current RFP has changed the format providing only operating assistance and requiring a partnership with the Medicaid administering agency and focus on high cost recipients.

O

41

Section 811 Considerations

• Announced through competitive process in the HUD SuperNOFA (notice of funding availability)

• Timeframe: Spring

O

42

HUD HOPWA Program• National dollars – Competitive SPNS dollars• Local dollars – formula dollars funneled through

Dept of Public Health or Dept of Housing• Amount of funding varies by location• Funding specific for HIV/AIDS population• Funding can include rental assistance, however,

grants are typically not for more than 2-4 years at one time

O

43

Funding Restrictions to Consider• As we discussed with services, public

financing program rules can differ significantly by source

• Need to consider:– How does the source define

homelessness?– Are their qualifying disabilities?– Are there barriers based on Criminal

Justice or other restrictions? O

44

Key Concept:Operating stream may

hide the need for capital funding.

45

The Third Leg:Services

S

46

Develop a Service Plan

You’ll use it to inform your Service Budget• TARGET POPULATION • Service Needs• Services Program

– Overview, Partners and Roles, Staffing, Outcomes

• Budget and Staffing Plan

S

47

Common Approaches

• Contracts with funders for services to a set of eligible clients.

• Reimbursement agreement for certain services to eligible clients.

• Fixed fee for maintaining the health of individual clients.

• Grants that help cover service expenses.

S

48

Budget Components (cont)

• Other expenses– Consultant/contractual services– Social/client services– Transportation– Staff training– Supplies & materials for services– General office supplies and support

S

49

Federal Service Funding

• Significant portion of funding for services• Some funding directly apply to feds

– Continuum of Care (through local process)

– Special request for proposals

S

50

Federal Service Funding

• Majority of funding flow to local level– Alphabet Soup - TANF, Medicaid,

SAMHSA, Dept of Ed, VA, DOL, SSA– Departments of Health & Human

Services, Social Services, Education/Training, Employment, Workforce Investment Board, Schools

S

51

Federal Sources to Consider

• HUD - McKinney Vento Programs– Through Continuum of Care– Typically limited % and part of larger request – Flexible funding

• HUD - HOPWA Program– National: Part of housing request– Local: Depends on local criteria – may be

good source for HIV impacted client services

S

52

Federal Sources to Consider• HUD - CDBG Funding

– Block grant to local jurisdictions– Check Consolidated Plan for Current Spending

Priorities– Flexible dollars for services

• HHS – Health Related Funding– Ryan White service dollars go through local

planning council – services for HIV+– Advocacy for line item to fund services in

supportive housing– Dollars distributed to local/state agencies

S

53

Federal Sources to Consider

• Special RFPs– Programs through Dept of Agriculture,

Education, Labor, Justice (SCA), Veterans Affairs, Social Security Admin. and Youth Related Programs, SAMHSA

– Not frequent; often narrow population focus

S

54

Veterans Administration Resources• The Department of Housing and Urban

Development and the Department of Veterans Affairs Supported Housing (HUD-VASH)– Long-term case management – Supportive services– Operating support

• Veterans Justice Outreach Initiative

S

55

State, County, Municipal Resources

• Medicaid for eligible participants and eligible services

• Revenue through the Community Mental Health Centers

• Dollars may be available through other agencies depending on population (i.e., Division of Child Services and the Youth Aging Out of Foster Care partnership with Connected by 25)

S

56

Key Concept:Services are often the most

difficult leg to fund and require the greatest

creativity.

57

Strategic Considerations

58

Private Funding• Can Play an Important Strategic or Gap Filler Role• Foundation Dollars

– Explore both local and national foundations– Usually targeted to specific activities, population,

or geography • Other Private Funding

– Grants through banks or corporations - Usually targeted to specific activities, population, or geography

– Private philanthropy/fundraising– Community Foundations

59

Strategies

• Pick up the phone• Compromise on targeting• Advocate for funding using budget neutral

approaches, targeted to your audience• Offer funding, support, resources in exchange for

consideration• Use philanthropic support as a leading wedge

60

Pitfalls

• Compromise doesn’t mean water down• You’re creating housing for people with CJ histories,

not jails• Be mindful when mixing funding resources, keep

the focus on low threshold• Resist the urge to do it on the cheap• Resist the urge to transitionalize

61

Leveraging Mainstream Resources

• Mainstream Public and Affordable Housing Resources

• Health Care Systems– Health Reform– For-Profit Entities (Hospitals/Managed Care)

• Examples of Federal Direction– Current Section 811 RFP

62

Bud Clark Commons (Portland, OR)• 130-unit PHA-owned and

managed supportive housing• Waiting list populated by

referrals from 3 FQHCs using DESC Vulnerability Assessment Tool on clinic patients

• Services include:– PHA-provided housing

stability services– 2 contracted mental health

clinicians– Medical case management

and primary and behavioral health services by 3 FQHCs

63

CSPECH (Massachusetts)• Partnership between MHASA, MBHP

(Value Options), and health and supportive housing providers

• Developed through the Community Support Program as part of an 1115 Medicaid waiver

• Targets chronically homeless with high health need indicators

• Uses both scattered and single-site projects to access housing through providers

• Uses contracting structure to extend support network to non-billing agencies

64

CSH Lending Products

CSH Lending Products

Project Initiation Loans (PILs) • These early stage loans are a unique CSH offering. They

encourage developers to get projects off the ground with incredibly flexible terms that include 0% interest, typically up to $50,000.

Predevelopment Loans • CSH predevelopment loans are flexibly structured to meet

your project’s financing needs. We can even consider loans of over 100% of collateral value.

65

CSH Lending Products

Acquisition Loans • Financing for real estate acquisition in connection

with the development of supportive housing.

Other Lending Products• Construction• Mini-Perm Loans• Preservation Finance

66

Why CSH Lending

All CSH loan products are tailored to your needs. We offer below market rates and favorable terms to provide early stage capital to supportive housing projects that can make a difference in your community. We’ll even work with you to pair financing with technical assistance to help ensure that your project is the highest quality supportive housing.

67

68

Key Concept:You’re not in it alone

FINANCING PHASES