There is a long-standing recognition among those committed to affordable housing that putting a roof over someone’s head is not in itself sufficient. Unless accompanied by an interlocking suite of accessible supportive services, communities inevitably fall short of their potential of helping residents build more fulfilling and satisfying lives.

Laura Bailey
Laura Bailey

More recently, affordable housing professionals have taken this idea to the next level. We have realized that focusing affordable housing communities on groups with specific requirements is the most efficient and effective way to deliver these services. Rather than create communities for people with a broad array of needs, developers often dedicate some or all of their portfolios to these specialized communities.

Capital One has joined forces with a range of government, nonprofit, and community stakeholders to create viable financing for these developments. In recent years, we have helped open communities serving the formerly homeless, veterans, people with disabilities, and grandfamilies—or family groups consisting of older adults raising grandchildren or other younger relatives. As part of these efforts, our underwriting team goes beyond financial analysis. The team’s confidence that our nonprofit partners can deliver the specialized supportive services required by the project and can attract the resources to sustain these programs weighs heavily in their decision-making process.

Ending Veterans’ Homelessness in a Miami Community
Homelessness among veterans has been an important focus for affordable housing. To help meet this need, Carrfour Supportive Housing, Florida’s largest nonprofit affordable housing developer, recently opened Karis Village, an 88-unit community in Miami-Dade County. Seventy-four of the apartments are earmarked for tenants earning 60% of the area median income (AMI) or less, while 14 are reserved for those earning at or below 33% of the AMI. Approximately half are set aside for at-risk veterans transitioning from homelessness.

Before Capital One agreed to finance Karis Village, we conducted a listening tour in southern Florida to better understand the landscape for community development and affordable housing. Identifying a partner like Carrfour Supportive Housing with experience providing supportive services was an integral part of our decision to invest.

Karis Village offers a variety of on-site supportive services aimed at helping residents achieve independence, including literacy training, employment assistance and counseling, health and wellness services, financial management, and case management. The community has a site manager who is adept at helping residents navigate the systems at the Department of Veterans Affairs.

We also made our own commitment to ensure the continued viability of these programs. In addition to providing an $8 million construction loan and purchasing $25 million in low-income housing tax credits (LIHTCs), Capital One left in place a $250,000 social purpose grant, distributed evenly over 10 years, specifically to fund these initiatives.

Karis Village was one of two affordable housing developments for veterans that opened in Miami-Dade’s Gould neighborhood in 2018. Together, they met the requirements set forth by the Department of Housing and Urban Development, enabling the locality to declare an end to veterans homelessness in the area.

Maximizing Existing Services for People with Disabilities
One of the most pressing challenges for people with disabilities is access to specialized care. The Boston Home, which operates a 96-bed skilled nursing facility serving adults with advanced multiple sclerosis and similar neurological diseases, realized the answer was right on its doorstep. It developed Harmon Apartments, a 36-apartment affordable housing community, on land it owned next to the facility, making Harmon an ideal solution for people with neurological diseases or transitioning from long-term care in Boston.

This proximity makes it easy for residents to take advantage of The Boston Home’s slate of outpatient services. For instance, Harmon Apartment residents can easily access the organization’s rehabilitation services, which include physical therapy, occupational therapy, speech therapy, and VitalStim neuromuscular electrical stimulation for swallowing. They can also participate in B.Fit!, a program that includes exercise, community outings, and compensatory cognitive strategy training. In addition, Harmon Apartments offers on-site resident services that include fitness and social programs, caregiver training, counseling, and support for accessing community services.

Thirty of the units in Harmon Apartments are designated affordable, and eight of these are reserved for people with incomes at or below 30% of the AMI. Capital One provided a $7.3 million construction loan, $1.2 million in permanent financing, and a $200,000 social purpose grant, which is being disbursed over 10 years and used to fund a portion of the resident services coordinator’s salary. We also invested $10.6 million in LIHTCs issued by the Massachusetts Department of Housing and Community Development.

The extent of Capital One’s participation reflects the unique opportunity of locating a community for people with neurological disorders on the grounds of one of the nation’s premier facilities for people with these conditions.

Housing That Addresses the Generation Gap
Grandfamilies is the latest targeted segment that Capital One has added to its affordable housing portfolio. The U.S. Census reported in 2017 that 2.6 million grandparents were raising their grandchildren, but despite these numbers the challenges grandfamilies face have been largely overlooked. Housing often tops the list of issues they face. Because their dependents are not their own children, these adults do not qualify for many forms of subsidized housing.

Meeting the needs of this underserved group was the inspiration for Plaza West, the first community to offer grandfamilies support in Washington, D.C., and one of only a handful in the United States. Developed by the Mission First Housing Group, Plaza West reserved 50 of its 223 apartments to grandfamilies between 30% and 60% of the AMI. The remainder of the units provide affordable housing for individuals and families making less than 60% of the AMI.

We were impressed by the selection of services that Mission First proposed to offer. In virtually every case, these older adults stepped in because a family trauma—whether it be mental illness, addiction, or some other cause—made it impossible for the children’s parents to take responsibility for their care. As a result, the onsite Grandfamily Community Life program manager provides residents with support for trauma as well as twice-weekly tutoring. Additionally, Plaza West has partnered with Howard University’s School of Social Work, which hosts a grandfamilies support group at the development.

When Plaza West opened in 2018, one of the most gratifying findings was that residents reported that just being in a community with others sharing their situation has itself been beneficial. Capital One’s support included a $7.5 million construction loan, a $35.5 million purchase of LIHTCs, and another 10-year, $200,000 social purpose grant to help fund on-site support services for residents.

Playing a Proactive Role
These three groups are not the only ones suited for targeted affordable housing. Affordable housing communities have been created for people dealing with addiction and mental illness as well as for young people aging out of foster care. The expense of providing targeted supportive housing services and the difficulty in locating the expertise to deliver these services on a sustained basis, however, have led some financial institutions to shy away from these transactions, no matter how appealing they seem in concept. In their eyes, these specialized communities are riskier investments than communities with broader mandates or those that simply offer shelter.

As these examples show, careful groundwork can instill the necessary degree of comfort for financial institutions to pursue these projects. We have found that identifying high-quality housing developers with their own resident services or established relationships with local providers; understanding how these organizations have covered the cost of services in the past, either through grants or fundraising; and taking an active role in building coalitions to support these efforts can give us the assurance not only that the costs of these programs will remain manageable over time but, more important, that they will make a substantial difference in the lives of residents. And in cases where we thought it would be meaningful, we have stepped up ourselves and provided a social service grant that demonstrates our own commitment to their mission.