March 13, 2019 News » Cover Story

Despite funding snag, nonprofit is not giving up on housing for homeless 

Homeward and onward

click to enlarge Phase 1 of The Commons includes 58 apartments, and Phase 2 would add around 60 more. - COURTESY OF EBERSOLDT AND ASSOCIATES
  • Courtesy of Ebersoldt and Associates
  • Phase 1 of The Commons includes 58 apartments, and Phase 2 would add around 60 more.

Editor's note: This is the second installment in a two-part collaboration with the Independent's sister publication, the Colorado Springs Business Journal, exploring in depth the region's affordable housing challenges.

With a proposed $18 million permanent supportive housing project for chronically homeless people, a local nonprofit has ventured into uncharted territory — and must wade through a complex federal funding process that even many experienced commercial developers have no idea how to navigate.

Homeward Pikes Peak wants to build a 58-unit housing development with on-site case management, health care and counseling services at Academy Boulevard and Uintah Street, north of The Citadel mall. While the city's on board with the project, its success will require obtaining an extremely competitive type of federal tax credits.

Such Low Income Housing Tax Credits, which affordable housing developers sell to investors to raise capital, are awarded by the Colorado Housing and Finance Authority (CHFA) to projects that meet stringent requirements and respond to a critical need. In Colorado Springs, most developers that have won credits in recent years are out-of-town, for-profit companies that have expertise in building and funding affordable housing.

As a small nonprofit with no development experience, Homeward Pikes Peak doesn't exactly fit that description. But it's partnered with an experienced affordable housing developer — Minnesota-based Dominium — on its permanent supportive housing proposal, dubbed The Commons. Should Homeward Pikes Peak secure the tax credits, the city has agreed to use funds from the U.S. Department of Housing and Urban Development to pay for the site.

Homeward Pikes Peak has already invested about $50,000, Executive Director Beth Roalstad says, in an environmental study and other pre-development costs. That was half of its total revenue in 2016, according to tax forms, though Roalstad says the nonprofit did some project-specific fundraising to offset those costs.

The catch: Only about one in every three projects that apply for tax credits through CHFA actually gets them, and the process can be especially difficult for first-time applicants.

Roalstad learned that the hard way March 7, when The Commons' application was denied because of a technical error. At a public meeting discussing the project, Roalstad says, she wasn't specific enough when explaining funding sources — disqualifying The Commons from receiving this round of state and federal tax credits.

Roalstad is taking it in stride.

"This is a setback, but we're not defeated," she says — Homeward Pikes Peak will apply for the next round of federal credits in June.

That was a luxury that Kevin Walker, president of Walker Schooler District Managers, couldn't afford when his application for a senior affordable housing development was denied by CHFA in 2014. Walker says he and others involved in the project lost close to $100,000 in pre-development costs, and when a different senior housing development won tax credits that year in Colorado Springs, he decided not to reapply.

"It's so difficult, such a bureaucratic process," he says of applying for tax credits. "I won't ever do it again."

That said, Walker — who chairs the Housing and Building Association of Colorado Springs' Public Policy Committee — says his own experience makes him think highly of the nonprofit for rising to the task.

Homeward Pikes Peak could also look to Greenway Flats, a joint permanent supportive housing development by Nor'wood Development Group and Springs Rescue Mission, for a glimmer of hope. The 65-unit project, also a collaboration between a nonprofit and for-profit developer, was awarded tax credits in 2016.

Larry Yonker, the CEO of Springs Rescue Mission, admits it can be difficult, even painful, for a nonprofit to take on the costs needed to jumpstart such a project before it's even approved. But while one might wonder whether that money could be better used for shelter services, Yonker says it's time to focus on housing.

"I have 50 or more men, and probably half a dozen to a dozen women, who are all employed, but they're trapped in the shelter — which was never designed for, or intended to be, a transitional or a permanent housing," Yonker says. "Most communities have a lot more units than we do."

Both Greenway Flats and The Commons grew out of the Pathways Home Colorado Supportive Housing Toolkit, a state-funded training program offered annually since 2014.

Through the program, nonprofits from across the state learn what it takes to establish permanent supportive housing, including contracting with health care providers, navigating Medicaid and securing capital investment. Nonprofits conclude the training by pitching a project to potential funders.

Roalstad, along with Andrew Phelps, the city's homelessness prevention and response coordinator, attended the four-month training that began in the winter of 2017. The mentors Roalstad met through the program introduced her to Dominium, the developer that Homeward Pikes Peak ultimately partnered with on The Commons.

Permanent supportive housing projects, which house vulnerable populations — the chronically homeless, people with disabilities, and those with substance use or mental health disorders — are currently one of CHFA's highest priorities for assigning tax credits, says Steve Johnson, CHFA's community development director.

That's not only because the state needs a way to house its growing homeless population, but because projects like these are "harder to do," Johnson says. "You're not just providing housing. You're providing a suite of services to really meet those residents where their needs are."

However, CHFA could determine that another project was more deserving of the tax credits for a variety of reasons. For example, market demand and proximity to other tax credit projects play a role in CHFA's decision, and rural communities have also been prioritized this year.

Homeward Pikes Peak has so far applied for tax credits to build only the first phase of the development, which would have 58 apartments at a per-unit construction cost of nearly $200,000. (A second phase, which would require additional funding, would add around 60 more apartments.)

While Roalstad admits that may cause some sticker shock, she points out that the estimated cost to provide services — including medical treatment, incarceration, police intervention and emergency response — for one chronically homeless person in Colorado Springs was estimated at $57,000 per year in 2013.

"If we manage it well and take care of the property, it easily has a 30- to 50-year lifespan," she says. "Just think about that. That's going to help several thousand citizens of our community be safe and get access to health care, mental health care, and help them get on the pathway to jobs."

Phelps, the city's homelessness prevention and response coordinator, agrees. While such projects may require risky investments, "the real risk is doing nothing," Phelps says. "Because we know that chronic homelessness is expensive. And it's clear that as a community, we have to act and get these people into affordable housing."


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