Brandon Stengel/Farm Kid Studios
Brandon Stengel/Farm Kid Studios

Rising Cedar in Minneapolis has created a new model for providing service-­enriched housing for adults with serious and persistent mental health illness. It has integrated 40 units of permanent supportive housing for adults suffering from mental illness, with ­social services and the service provider, Touchstone Mental Health, headquartered under the same roof.

Developed by Project for Pride in Living (PPL), the $11.7 million Rising Cedar is supported by significant public and private investment, including low-income housing tax credits (LIHTCs), from the federal, state, county, and local levels.

The units are set aside for residents who earn between 30 percent and 50 percent of the area median income, and Hennepin County provides rental subsidies for all 40 units.

Residents receive three meals a day, medication administration, health-care coordination, and 24-hour customized living services. The Community Health and Wellness Center on site, which is open to residents as well as the public, includes health and fitness classes, psychiatric care and nursing services, and other therapies, such as massage and acupuncture.

By providing affordable housing with specialized on-site services, the developer says millions of public dollars will be saved on hospitalization and other health-care costs. Rising Cedar costs $64,970 a year to house and treat one adult, whereas a traditional psychiatric nursing home costs almost $250,000 per year for one adult.

AHF asked some of the stakeholders in Rising Cedar about the importance of this supportive housing project, their role in the project, and the significance of the LIHTC program.

Chris Wilson
Director of Real Estate  Development,  Project for Pride in Living It would be no exaggeration to say that without the LIHTC, Rising Cedar and other developments serving special-needs populations would simply not exist. The combination of high service needs and low incomes, which characterize these populations, are untenable with standard debt-financing approaches. Ironically, we are anticipating, and are in the process of documenting, that the Rising Cedar project will save 2 million to 3 million in tax dollars annually.

PPL worked with Touchstone Mental Health over the course of two years, refining the design concepts and building elements that would make for a calming, workable environment for persons with mental illness. As developer, we prepared the financing applications, oversaw the design work, selected the contractor and all the various support services, provided construction management, negotiated with the limited partner, and now, our property management department manages the building.

Martha Lantz
Executive Director, Touchstone Mental Health The LIHTC has afforded the development of Rising Cedar a unique, innovative model that uses research in neuroscience, architecture, and design in order to create a living space that enhances mental health and well-being while providing long-term housing. This first model of its kind responds to a critical need for permanent, affordable, supportive housing and integrated services for adults living with a serious mental illness, who, on average, die 25 years earlier than the average person.

Touchstone elected to partner with a housing organization and architectural firm to collaborate and link the mental health and housing industry together and provide a therapeutic living environment for people who are otherwise at high risk for hospitalization, nursing home care, or homelessness. The result provides the opportunity to replicate and expand this integrative health approach to ensure that the critical housing and healing needs of this population are met.

Joe Hagan
President and CEO, National Equity Fund Rising Cedar represented a unique opportunity to assist two premier Minnesota nonprofits, Project for Pride in Living and Touchstone Mental Health, with an innovative approach to meeting the housing and service needs of people with serious and persistent mental illness. Because of the LIHTC program, special-needs populations across the country are able to live in affordable and safe homes that include critical support services.

Besides supplying the necessary investment funds, our role was to partner with the development team and provide our experience and broad understanding of the issues essential to a complex project like Rising Cedar. We were able to assist the team by working with the city, state, and county funders to bring the development through a very complicated investment process.

Wesley Butler
Residential Finance Manager, City of Minneapolis, Department of Community Planning and Economic Development Rising Cedar is an excellent example of how the LIHTC can be utilized to construct a greatly needed supportive housing project. The LIHTC allowed this project to generate approximately $8.2 million in equity, or [about] 75 percent of the total development cost. As a result, the project doesn’t have an amortizing first mortgage and, therefore, has no debt service. By eliminating debt service, the project is able to offer 40 units of affordable housing to adults with serious mental illness and fund necessary supportive health and wellness services. The LIHTC is an essential component in the development of affordable housing for special-needs populations across the nation.

As a sub-allocator of the LIHTC program in Minnesota, the city of Minneapolis, in partnership with the Minnesota Housing Finance Agency, provided the necessary LIHTCs for this project.

Markus Klimenko
Program Manager, Hennepin County Housing and Homeless Initiative This project is unique in that it was designed to provide customized services for residents’ specific needs, which helps them to lead more stable lives and increases their likelihood of finding employment and developing more self-reliance. The county’s involvement included awarding contracts and coordinating support for the remediation of the site, project construction, and services for residents. The county also worked to utilize [Minnesota Department of Human Services] Group Residential Housing waivers and CADI waivers and assigned 20 transition program vouchers to the project. Since it opened in July 2013, Rising Cedar has reduced county expenditures that otherwise would have gone to emergency rooms, treatment facilities, nursing homes, or shelters.