Affordable housing for veterans needs to be more than a roof and four walls.

Developers are used to figuring out the financing needed to build a housing development, but that’s just one part of a three-legged stool, according to Patrick Sheridan, senior vice president of housing development at Volunteers of America.

Veterans housing is difficult because it requires two other important legs—rent subsidies and supportive services, he said during a panel discussion at the AHF Live conference in Chicago.

To help meet these needs, many developers are turning to the Department of Housing and Urban Development and Veterans Affairs Supportive Housing (HUD-VASH) program. HUD-VASH combines rental assistance from HUD with case management and clinical services from the VA.

There are 65,755 tenant-based vouchers available throughout the county and 3,222 project-based vouchers under the program, according to Jesse Vazzano, national director of the HUD-VASH program for the VA. Another 10,000 vouchers are anticipated to be released.

“The HUD-VASH program specifically targets homeless veterans,” Vazzano said. “Our priority group is chronically homeless veterans. These are veterans that have not had easy lives for whatever reason. They’ve been homeless for at least 12 consecutive months or have had four episodes of homelessness in three years. They have a lot of challenges. They often have recurring health-care issues that often aren’t diagnosed until we can get them stabilized in housing.”

The numbers show that HUD-VASH is largely a tenant-based program, with only about 5 percent or the vouchers being project-based, said Karen Przypyszny, senior vice president, equity placement, at the National Equity Fund (NEF). A low-income housing tax credit (LIHTC) syndicator, NEF has financed a number of veterans housing developments across the country.

Przypyszny and many others would like to see at least 20 percent of the 10,000 new vouchers that are being approved each year be project-based.

This change is important because it helps ensure the long-term viability of services at a development. It would also make LIHTC syndicators and other funders much more comfortable knowing that a deal has project-based assistance instead of tenant-based vouchers.

Speakers on the “Emerging Trends: Housing Our Nation’s Veterans” panel stressed that one of the challenges of developing and operating a veterans community is providing a high level of services.

“You can get the real estate financing figured out pretty well,” said Mark McDaniel, president and CEO of Great Lakes Capital Fund. “It’s the social service part that’s the problem…What you find is it really is cobbling together a service package.”

His firm has financed several recent veterans deals and has also served as a developer.

Although the VA provides key services, the housing developments often need additional service money and service providers.

This often means teaming with local service agencies to bring in additional support. McDaniel also said it's key to have the local VA medical director involved.

Stewart Hill, vice president of client relations at the Pinnacle Family of Companies, has been working with veterans with tenant-based HUD-VASH vouchers in more than 20 markets across the country.

“No. 1 is you need to have a lot of flexibility when you’re looking at working with these veterans,” Hill said, adding that Pinnacle has put together several programs for its veteran residents, starting with the application process and rent deposits.

His apartment communities tend to be large 150- to 200-unit developments, and Pinnacle will typically intersperse 10 to 15 veterans throughout a development. His team works to integrate the veterans into its communities and encourages them to be active in the social, life-skills, and educational programs that are offered.

Hill emphasized the importance of property managers working closely with case managers. If a property manager sees a veteran resident having any problems, the property staff will call the case manager.

McDaniel also recommended having vets on the management team.

Developing and operating veterans housing is not something to do just to gain extra points when competing for LIHTCs, he said.

"The management company has to have a heart for this work," McDaniel said. "It’s more than managing a facility. It’s managing residents that have had this huge commitment to our safety, the United States. They’ve given a lot. It’s our time to support them. They have to recognize that and believe in that. Not everybody’s wired for that."

Connect with Donna Kimura, deputy editor of Affordable Housing Finance, on Twitter @DKimura_AHF.