CSH seeks to help ensure that such projects include multi-year lease terms of the greatest length deemed feasible.
Such units are integrated into community settings and sponsors typically avoid a concentration of more than a few such units in any one site. When possible, scattered site units may be geographically clustered to achieve management and service economies.
PROSCONSSCATTERED SITEIntegrates clients into the communityNon-profit usually does not need to engage property management servicesLack of space to deliver services presents challenge and adds cost to services budget Lack of common space inhibits ability to build community and foster tenant leadershipIf unit is located in an environment which is unhealthy, can lead client to return to unhealthy behaviorsNeighbors can display a negative attitude toward clientIsolation of client can be a problem; inhibits peer support networkSINGLE SITEEnhances ability to provide services in a more centralized manner; allows for spontaneous outreach as tenants enter and leave buildingProvides the non-profit with the ability to create a healthy living environmentCommunity-building activities are easier to organizeProject may face community opposition as a development which houses a “massing” of clients who may be viewed as undesirable (NIMBYism)Certain client groups may not do as well if they are living in an environment which is only comprised of tenants with the same issuesTenants may be less likely to form relationships outside the building
Turnkey: Developer develops property and then turns ownership over to the service provider for a predetermined fee.Co-Development: Developer and service provider work together to develop property and create tenant selection plan, and share the developer fee and property ownershipMaster Leasing: Owner leases specific units to a service provider (usually for multiple years), who then subleases units to tenantsService Contract: To comply with service provision requirements specified in capital financing, owner contracts with service provider to provide supportive services and often tenant recruitment as well.
PROSCONSOwnershipAssures permanent use of the units as affordable supportive housing (if properly financed)Non-profit sets operating budget, and can assure that staffing, operating expenses and replacement reserves are adequately funded New construction enables the non-profit to control how the building is designedAcquisition and rehabilitation may be positively received in community as a mechanism for “cleaning up” a deteriorated building or siteAcquiring or developing property is time- consuming and requires upfront capital; it can take up to 2-3 years, from concept to lease-upRequires substantial upfront commitment of fundingAcquiring or developing affordable housing is a highly technical area that requires the expertise of a housing “developer”LEASINGUnits can be brought online quickly In some cases, building owner will engage property management services, relieving non-profit of this workLeasing of units is less highly technical than new construction or acquisition/rehabilitationLeases will be short-term, typically from 1-10 years Each leased unit must be covered by some form of rental subsidy (Sec. 8, S+C)Tenancies can be jeopardized if rental subsidy amount doesn’t keep pace with market rentsIn hot real estate market, may be difficult to find landlords willing to lease units
Projects typically have little or no hard debt.Due to the need for a service providers, PSH project sponsors are often a partnership of agencies.PSH projects frequently require a longer development timeline and intensive community outreach strategy.Lenders and tax credit investors want to see committed operating subsidies and service funding
Personnel – Majority of BudgetDirect staff including program directors, case managers, nurses, and supervisory staff. Employee benefits and salaries should be included in budgetOther expensesConsultant/contractual services; Social/client services; Transportation; Staff training; Supplies & materials for services; General office supplies and support
Development 101 Holly Denniston Senior Program Manager Corporation for Supportive HousingJune 13, 2011www.csh.org
Types of PSH Single-Site, Single-Purpose Development Projects Single-Site, Integrated Supportive Housing Development Projects Master Leased Housing Projects Scattered-Site Housing Projects
Types of PSH Single-Site, Single Purpose All units in a property are required to be dedicated to PSH with an extended use or similar agreement Developed either through new construction or acquisition/rehabilitation Size of such projects varies widely Many CSH-sponsored projects fit this model
Types of PSH Single-Site, Integrated Housing Projects with a mix of units dedicated for supportive, affordable and/or market rate housing as secured by an extended use or similar agreement Developed either through new construction or acquisition/rehabilitation activities The size of such projects varies widely CSH prioritizes working with projects that dedicate at least 10% of the units as supportive housing for CSH’s target or priority populations
Types of PSH Master Leased Housing Projects Under this strategy, supportive housing providers lease several units within a development, a floor within a building, an entire building or development, or units in a number of buildings, from the owner(s) in order to provide PSH The supportive housing provider then subleases the units to eligible tenants, and serves as the landlord for the tenants.
Types of PSH Scatted Site Housing Projects Households (usually using tenant-based subsidies) directly lease individual units from landlords Units are not dedicated to PSH through any extended use or similar agreements
Role of Owner, Developer, Property Manager and Service Provider
Development Team Roles Owner Developer Service Provider Property Manager
Roles and Responsibilities: Memorandum of Understanding Roles and responsibilities of partners Target population and tenant selection plan Supportive service plan Property management plan Project policies and procedures Ongoing communication
Two Key Project Goals: Recruiting supportive housing tenants: Tenant Selection plan stipulates how property manger will market to potential tenants and will vet tenants with credit and background checks to ensure that homeless households are screened in. Embracing goal of housing stability: Property management plan includes system of coordination between property manager and service provider to promote housing stability
Three Types of Budgets: Capital, Operating and Services
Funding Differences between Supportive Housing and Affordable Capital Operating Capital Operating Services Affordable PSH
Three Types of Budgets: Operating Property operations such as management staff, landscaping, utilities, reserves. Services Delivery of supportive services to tenants. Capital Land, buildings, new construction, soft costs of development, capitalized reserves.
Capital Financing Predevelopment Construction Permanent
Development Sources Grants Soft Debt Low Income Housing Tax Credit Equity Bonds Conventional Debt
Developing PSH Projects typically have little or no hard debt Sponsors are often a partnership of agencies Frequently require longer development timeline Desire to see committed operating and services funding Need for early stage financing
Sources and Uses Combines costs with the financing sources
Fifteen Year Operating Budget Show projection of income and expenses
Service Budget Components Personnel – Majority of Budget Other Expenses to support staff and office
Permanent Supportive Housing: An Operating Cost Analysis101
Is Permanent Supportive Housing a Good Investment?