September 11, 2013 Private Investment in Autism Housing Roundtable: Summary Notes
Held at CBRE San Francisco
(notes by Jill Escher [email protected], and Mark Jackson, [email protected])
(1) The challenge: Booming demand, and little supply
--We face a rapidly increasing population of individuals with autism and related disorders, and very little capacity to house them. The magnitude of the problem will only increase over time.
--There is need for private investment capital, in addition to nonprofits, to provide housing options for this special needs population.
--Because of high costs for property and construction, combined with restricted ability for DD adults (the lowest income group) to pay market rent, and high taxes and other expenses, successful investment in this area is challenging.
(2) The State and Regional Centers erect unnecessary regulatory obstacles
--The Regional Centers, while trying to interpret state and federal guidelines (but also within their own discretion) tend to oppose projects that strike them as "mini- institutions." However, parents and consumers view small and mid-sized communities as safe, caring, programatically robust, least restrictive environments that actually provide a more inclusionary setting for certain adults This is consistent with ARCA's stated desire to provide a multitude of housing options.
--The RC's need to be open to privately owned co-ops, family-owned partnerships and similar models. SARC is currently fighting one such model run by HCC. RC's need to offer solutions rather than persist in resisting viable and consumer-friendly new projects.
--The RCs fail to take into consideration the unique and very challenging nature of substantial autism, the growing population, the amenities and spaces and supervision needed, and the economic realities.
(3) Private investors need financial incentives to provide housing for autistic/DD adults
--Lack of Section 8, whether as vouchers or as project-based contracts, is an obstacle to matching DD adults with privately owned units. Getting DD adults Section 8 vouchers should be a priority, as should creating more project-based projects with Sec 8 subsidies attached.
--In any event, Section 8 and SSI can be insufficient to cover rents in our high-priced region. Between 2009-13, the maximum federal SSI benefit increased $36 monthly.
During the same period, the average rent for a 2-BR apartment in San Francisco increased by $1,032.
--Private investors should explore partnerships with nonprofits that would improve the chance for property tax waivers.
--Working with municipalities, which each have a mandate (SB812) to include DD housing in their General Plan Housing Element, may be a good way to get Housing Authority money (ie, project-basing) and other subsidies.
--Getting inexpensive land (government land?) may be key to viability. In rural areas, land acquisition and construction costs can be substantially reduced.
(4) Consideration of the service component
--A developer or owner need not get involved in the various service components that are needed to serve adults with autism and may focus solely on acquiring suitable units.
--Projects, like Friends of Children with Special Needs in Fremont, can combine a private investment component (eg, LLC) for the housing portion, and a separate nonprofit component for an adjacent community center and/or SLS agency.
--The service component, whether ILS, SLS, or on-site or proximate center-based services, is more expensive and more complex than the housing component. This should probably be separated from the private investment component. Or the investor could simply provide housing and assume each consumer will obtain appropriate individualized onsite and offsite services through the Regional Center based on existing options. This is consistent with ARCA's stated desire to separate housing and services.
(5) Pilot projects are needed
--It's important to create pilot projects that provide sustainable special needs housing, with all the complexity and expense that entails, but that are financially replicable. Replicability and creating acceptable models will be an entry into the larger funding sources including national foundations and corporate partners. Economies of scale may also be important, given the volume of impending demand.
--Three business models: (1) Pooling investment funds into an account, held by a managed LLC, to purchase, rehab and run a facility or facilities. (2) A group of families banding together to build and run a facility, operated as an LLC for purposes of asset protection, accounting, and management. (3) Partnering with nonprofits. Creating a "dream project," perhaps with a mix of market-rate and below-market-rate units, plus coordination with an onsite service component, is a big job that requires strong leadership and solid financial structure and backing. In spite of a focus on small-scale solutions, RCs have supported some of these projects (eg, Sweetwater Spectrum in Sonoma) in the past.
(notes by Jill Escher [email protected], and Mark Jackson, [email protected])
(1) The challenge: Booming demand, and little supply
--We face a rapidly increasing population of individuals with autism and related disorders, and very little capacity to house them. The magnitude of the problem will only increase over time.
--There is need for private investment capital, in addition to nonprofits, to provide housing options for this special needs population.
--Because of high costs for property and construction, combined with restricted ability for DD adults (the lowest income group) to pay market rent, and high taxes and other expenses, successful investment in this area is challenging.
(2) The State and Regional Centers erect unnecessary regulatory obstacles
--The Regional Centers, while trying to interpret state and federal guidelines (but also within their own discretion) tend to oppose projects that strike them as "mini- institutions." However, parents and consumers view small and mid-sized communities as safe, caring, programatically robust, least restrictive environments that actually provide a more inclusionary setting for certain adults This is consistent with ARCA's stated desire to provide a multitude of housing options.
--The RC's need to be open to privately owned co-ops, family-owned partnerships and similar models. SARC is currently fighting one such model run by HCC. RC's need to offer solutions rather than persist in resisting viable and consumer-friendly new projects.
--The RCs fail to take into consideration the unique and very challenging nature of substantial autism, the growing population, the amenities and spaces and supervision needed, and the economic realities.
(3) Private investors need financial incentives to provide housing for autistic/DD adults
--Lack of Section 8, whether as vouchers or as project-based contracts, is an obstacle to matching DD adults with privately owned units. Getting DD adults Section 8 vouchers should be a priority, as should creating more project-based projects with Sec 8 subsidies attached.
--In any event, Section 8 and SSI can be insufficient to cover rents in our high-priced region. Between 2009-13, the maximum federal SSI benefit increased $36 monthly.
During the same period, the average rent for a 2-BR apartment in San Francisco increased by $1,032.
--Private investors should explore partnerships with nonprofits that would improve the chance for property tax waivers.
--Working with municipalities, which each have a mandate (SB812) to include DD housing in their General Plan Housing Element, may be a good way to get Housing Authority money (ie, project-basing) and other subsidies.
--Getting inexpensive land (government land?) may be key to viability. In rural areas, land acquisition and construction costs can be substantially reduced.
(4) Consideration of the service component
--A developer or owner need not get involved in the various service components that are needed to serve adults with autism and may focus solely on acquiring suitable units.
--Projects, like Friends of Children with Special Needs in Fremont, can combine a private investment component (eg, LLC) for the housing portion, and a separate nonprofit component for an adjacent community center and/or SLS agency.
--The service component, whether ILS, SLS, or on-site or proximate center-based services, is more expensive and more complex than the housing component. This should probably be separated from the private investment component. Or the investor could simply provide housing and assume each consumer will obtain appropriate individualized onsite and offsite services through the Regional Center based on existing options. This is consistent with ARCA's stated desire to separate housing and services.
(5) Pilot projects are needed
--It's important to create pilot projects that provide sustainable special needs housing, with all the complexity and expense that entails, but that are financially replicable. Replicability and creating acceptable models will be an entry into the larger funding sources including national foundations and corporate partners. Economies of scale may also be important, given the volume of impending demand.
--Three business models: (1) Pooling investment funds into an account, held by a managed LLC, to purchase, rehab and run a facility or facilities. (2) A group of families banding together to build and run a facility, operated as an LLC for purposes of asset protection, accounting, and management. (3) Partnering with nonprofits. Creating a "dream project," perhaps with a mix of market-rate and below-market-rate units, plus coordination with an onsite service component, is a big job that requires strong leadership and solid financial structure and backing. In spite of a focus on small-scale solutions, RCs have supported some of these projects (eg, Sweetwater Spectrum in Sonoma) in the past.