A new Social Impact Bond (SIB) program will help finance a permanent supportive housing development for Denver’s most vulnerable residents.
Officials recently held a groundbreaking ceremony for Sanderson Apartments, which will serve 60 formerly homeless individuals. The nonprofit Mental Health Center of Denver is developing the project and will deliver key services to residents who may have mental health needs and substance-abuse histories.
Denver’s SIB program will play a critical role in funding programs at the community, which will utilize a Housing First model, says Oriana Sanchez, director of facilities at the Mental Health Center of Denver.
“We’re excited to be partnering with Denver and helping to bring this new initiative to the city,” Sanchez says. “It will help us provide an even more service-enriched program to this building.”
SIBs are an innovative financing tool that will allow Denver to use funds from private investors to house and serve 250 chronically homeless individuals who frequently use expensive emergency services—police, jail, the courts, and emergency rooms—at a cost of approximately $7 million per year. The savings and benefits from reduced costs in the criminal justice system will be captured by the city and used to repay lenders for their up-front investment to cover the cost of the program.
SIBs are sometimes called “pay-for-success” plans. Repayment to investors is contingent upon achieving certain program targets. The repayment will be less if outcomes are not achieved.
In operation for more than 25 years, the Mental Health Center of Denver is known for its comprehensive mental health and substance-abuse programs, but it has also been a longtime housing provider, owning and operating seven apartment buildings with 122 units, according to Sanchez.
The approximately $14 million Sanderson Apartments will be the organization’s largest supportive housing development and its first low-income housing tax credit (LIHTC) project.
“We know that housing is very important to being able to provide services to folks,” Sanchez says.
Enterprise Community Investment is providing about $12 million in LIHTC equity to the development. The housing credits were awarded to the project by the Colorado Housing and Finance Authority (CHFA) in 2015. Sanderson Apartments was among the 282 permanent supportive housing units supported by CHFA in 2015—the most in any single year of the housing finance agency’s history.
Additional financing sources include Colorado Housing Investment Fund, Colorado Division of Housing, Denver Office of Economic Development, and Denver Housing Authority.
Sanderson Apartments, which is scheduled to open next year, is designed by Davis Partnership Architects and will be constructed by Denevue Construction Services.