Henderson, Ken. A new housing model that could help reduce drug and homeless problems across the country is starting in this small town overlooking the Ohio River.

In April, The Shelter for Women and Children, Inc., and Wabuck Development Co., Inc., broke ground on the first of many recovery centers that are part of Gov. Ernie Fletcher’s statewide Recovery Kentucky initiative.

As transitional supportive housing developments, the centers will use recovery program models based on Alcoholics Anonymous that include peer support, daily living skills training, job responsibilities, and challenges to practice sober living.

According to the University of Kentucky and Kentucky Housing Corp. (KHC), more than 100,000 Kentuckians are abusing illicit drugs and about 6,900 Kentuckians are homeless.

The first project, The Women’s Addiction Recovery Manor (WARM), will provide counseling, support, and hope for women recovering from drug and alcohol addiction. It is expected to open in summer 2007.

WARM will serve as many as 100 women at a time. They’re expected to stay eight months to two years, said Garry Watkins, president of Wabuck, an affordable housing developer in the state specializing in smaller, rural projects.

“Recovery centers are the first step in easing the hold that drugs and alcohol have on the life of these addicts,” said Gov. Fletcher. “These centers not only offer the hope of full recovery, but produce graduates that have the skills necessary to be productive citizens.”

Wabuck’s WARM is the prototype for a total of 10 recovery centers in various parts of the state. Half of them will serve men, and half will serve women. Each can house up to 100 occupants, with most rooms set up for two occupants or as dormitories. There will also be between 20,000 and 30,000 square feet of space for facility use such as central dining.

WARM itself will have 40 units, of which 38 will be two-bedroom units averaging 400 square feet in size. It will also have two dormitories holding up to 12 people each. The dormitories are not tax-credit eligible and are not income restricted like the apartments are.

Working out issues

It will take many layers of financing to put the $4 million WARM project together.

Most of the financial assistance is coming in the form of about $2.9 million in low-income housing tax credit equity, a $500,000 Affordable Housing Program grant from the Federal Home Loan Bank of Cincinnati, $500,000 in HOME funds, and $150,000 from the state affordable housing trust fund.

At press time, a tax credit syndicator had yet to be found. Some prominent investors, like CAHEC in Raleigh, N.C.; Ohio Capital Corporation for Housing; and Enterprise Community Investment, Inc, weren’t sure if they wanted to dip their feet in the water yet, according to Watkins of Wabuck.

“It’s a fairly new model,” he said. “Syndicators are working through different issues.”

The recovery centers’ operating budgets will come from project-based Sec. 8 rents and the Governor’s Office for Local Development, which will provide $300,000 in block grant funding for up to three years.

“The money from the local government is only guaranteed for three years,” said Watkins. “Syndicators need to know if the money will be discontinued … They’re a little leery on the future of it. Underwriting is a problem.”

Unlike Wabuck, he added, most of the other developers interested in the recovery initiative are nonprofits that would be undertaking development for the first time. Their financial strength is an issue, he added.

Other difficult issues include working out gender-specific and fair housing issues, as well as ensuring that the housing is being used according to the prescribed recovery methodology.

“The nature of the housing is residential and not a treatment center,” said Watkins.

To make the project more attractive, Watkins is considering setting aside operating reserves of between $125,000 and $400,000.

So why put up the time and money required for the project? “When we saw the huge amount of tax credits being set aside for these centers, to stay in business, we had to go where the credits are being allocated,” said Watkins. “We have a great relationship with KHC. They had a program they wanted to promote.”

In 2005, 26 percent of the tax credits in the state were reserved for housing homeless people in the state who are alcohol- or chemically dependent.