BATTLE CREEK, MICH. SILVER STAR APARTMENTS is the first low-income housing tax credit (LIHTC) development in Michigan to provide permanent supportive housing to homeless veterans.

After opening its doors last September, the development was leased in a quick 39 days, a strong show of demand for the 75 apartments.

Silver Star is helping many of the estimated 1,800 homeless people in Calhoun County, where the development is located. Of those individuals, 356 are veterans. Statewide, there's an estimated 2,500 homeless vets.

“More than anything it's given me a chance not to worry so much,” says resident Michael Carter. “Being homeless obviously brings a whole set of problems. Whether you are staying with friends or family, you never have a place to put down roots.”

Carter was an Army sergeant during the Vietnam era. He served eight years, working in electronics. More recently, he worked at an auto-parts factory before being laid off.

“Given this opportunity, this housing, it has allowed me to have a base to re-establish what I need to re-establish without having to worry if I'm being a burden on anyone else,” says Carter.

With a new apartment, he's back in school part time, studying human services. “I look at it as my chance to give back for all the things that I've been given,” says Carter.

Silver Star was developed by Marvin D. Veltkamp of Trilogy Development, a general partner in the project along with his partners, William S. and Connie M. Antisdale. Veltkamp is also CEO of Medallion Management, the leaseholder and managing agent.

Named after one of the military's highest honors, Silver Star is unique in that it combines the experiences of a seasoned for-profit developer, a nonprofit service provider, and federal officials at the Veterans Affairs (VA).

Open to men and women, the $8 million project is located on the campus of the Veterans Affairs Medical Center in Battle Creek. As a result, the developers needed to negotiate a tricky enhanceduse lease to build on federal land. This required lengthy negotiations with VA officials. Developers say the project would not have gotten done without the support of Sen. Debbie Stabenow (D-Mich.). Officials believe this is the first time that a for-profit developer was allowed to use an enhanced-use lease for VA property.

Medallion Management was ultimately able to secure a 75-year lease for the site, which allows residents convenient access to the services and programs at the VA hospital.

After negotiating for about eight months, Medallion received a signed lease on Dec. 26, 2008. With no time to spare, developers broke ground a few days later on Jan. 2, 2009. They had received the tax credit reservations in 2007 and were facing a deadline to complete the project by the end of 2009 or risk losing the credits. In Michigan, construction season can be severely cut short by harsh winter weather. Fortunately, the development team was blessed with a mild winter and was able to finish the project on schedule, says development coordinator Nathan Rykse.

Inside the deal

Silver Star features furnished onebedroom apartments. Family Home Health Services coordinates the supportive- housing services, including case management, nursing services, psychiatric services, and substance-abuse treatment.

Much of the project financing came from LIHTCs awarded by the Michigan State Housing Development Authority (MSHDA). Developers sold the credits to Great Lakes Capital Fund for $4.7 million in equity through a multi-investor fund.

The idea for the project was floated years earlier. Mitch Milner of Milner and Caringella, Inc., had brought the concept to Great Lakes in 2005. A consultant and developer, he had worked on a veterans project in Chicago. Great Lakes officials then introduced him to Veltkamp, who has a strong track record of developing affordable housing in the state, says Mark McDaniel, CEO of Great Lakes Capital Fund. From there, the project slowly took shape.

“We knew in our hearts this was going to be a unique and important development that would help change people's lives,” says McDaniel.

While the lease is the most unique feature of the deal, other moves were also critical. MSHDA is providing projectbased Housing Choice Vouchers for all of the units, which bring in important rental subsidies and keep rents low for residents.

MSHDA also provided a first mortgage HOME loan of $1.6 million as a fully amortizing 35-year fixed-rate loan. A second MSHDA HOME loan of nearly $2.5 million will be deferred at 1 percent, simple interest due and payable at the end of 35 years.

“Vibrant cities and neighborhoods, the very foundation upon which Michigan's return to economic stability depends, rely on the pride that people have in their homes and where they live,” says Keith Molin, executive director of MSHDA. “Silver Star is a prime example of building a strong sense of place for homeless veterans.”

MSHDA is committed to ending homelessness in the state by 2016, says Molin. To help reach that goal, there are two projects for homeless vets in the works in Michigan, including the 150-unit Piquette Square in Detroit by nonprofit Southwest Housing Solutions Corp.

Nationally, there is growing interest in building housing for homeless vets, says Deb DeSantis, president and CEO of the Corporation for Supportive Housing. She attributes the interest to communities trying to respond to the need. About 131,000 vets are homeless on any given night in America.

In Michigan, Molin and others at MSHDA have continued to be involved with Silver Star, most recently sharing Thanksgiving dinner with residents. “There were foot soldiers and riflemen,” says Molin. “There were former officers and enlisted men. They represented combat experience that encompassed the cold skies of Korea, the swamps of the Mekong Delta, the heat of the desert in Kuwait, and the danger found in the streets of Baghdad.”

They have all come home to Silver Star.