All the developments that won subsidy in the latest competition for low-income housing tax credits (LIHTCs) in Illinois will set aside at least 10 percent of their apartments for supportive housing.

“Basically everyone did it,” says Mary Kenney, executive director of the Illinois Housing Development Authority.

A growing number of states are calling for communities that mix conventional affordable apartments with supportive housing apartments for people who are disabled or at risk of homelessness. Advocates and officials say these “integrated” supportive housing properties are good policy—they can also help satisfy a mandate from the U.S. Department of Justice (DOJ).

Thirty-two LIHTC allocating agencies have scoring incentives or set-asides for developments dedicating 35 percent or fewer of their units for supportive housing. That’s up from 22 allocating agencies in 2012, according to Housing Credit Policies in 2013 that Promote Supportive Housing, a new report from CSH, formerly known as the Corporation for Supportive Housing.

Also, 25 state qualified allocations plans (QAPs) for awarding LIHTCs promote multiple integrated models, often offering higher points or a set-aside for greater than 50 percent supportive housing and then fewer points for 25 percent or less supportive housing, says CSH, a sign that housing agencies recognize the benefits of a variety of development models.

In Illinois, developers are strongly encouraged to reserve up to a quarter of the affordable apartments at their properties for supportive housing—their applications can get up to an extra 10 points in the LIHTC competition. The 100-point Illinois competition is very tough, and all the winning applications in the most recent rounds have received points for including supportive housing.

In many states, services are provided to the residents of these integrated supportive housing properties by outside agencies, not the property manager. “Your landlord shouldn’t also be your service provider. That permeates too much control over the person’s life,” says Mark Shelburne, counsel and policy coordinator at the North Carolina Housing Finance Agency. “Since these are primarily medical interventions. They need to at the discretion of the beneficiary.” For the last 10 years, NCHFA required all properties subsidized with 9 percent LIHTCs to reserve 10 percent of their apartments for supportive housing. Developers continue to apply for far more LIHTCs than the agency has to distribute.

Developers also continue to submit applications for more than three times the available LIHTC supply in Illinois, despite their initial trepidation about including supportive housing in their communities. “There was a lot of resistance initially,” says IHDA’s Kenney.

However, Illinois affordable developers have come to accept the incentive. "Our experience with special-needs residents is that they integrate well with neighbors and form unique bonds in the community," says David Brint, president of affordable housing developer Brinshore Development, whose most recent integrated development, Emerson Square, opened in Evanston in November.

Segregation and supportive housing

In 2009, the DOJ's Civil Rights Division began an aggressive effort to enforce the U.S. Supreme Court’s 1999 Olmstead v L.C. decision on Title II of the Americans with Disabilities Act. The decision calls on states to eliminate unnecessary segregation of persons with disabilities and to ensure people with disabilities receive services in the most integrated setting appropriate to their needs.

States that create supportive housing in which all of the apartments are reserved for people with disabilities have become an unexpected target of this enforcement. “Such sites are not necessarily best practice or are at worst arguably illegal,” says NCHFA’s Shelburne. A number of states including Delaware, Georgia, Illinois, North Carolina, and others have statewide settlement agreements in place to take the necessary action to comply with Olmstead.

Three states, Delaware, Iowa, and New Jersey, specifically mention Olmstead in the QAPs, according to CSH.

It’s far from clear how the argument with DOJ will end. Groups like CSH still promote supportive housing developments where all the apartments serve people at risk of becoming homeless as a viable supportive housing strategy.

Developers are still building this type of site-based supportive housing in Illinois, where of the 2,300 supportive housing units that opened in the last three years, two-thirds were site-based projects and one third were integrated.

“Whatever their situation might be, people should have options with respect to their housing,” says IHDA’s Kenney.