Monday, June 24, 2024

The cost of homelessness: At least $100M toward housing, the end goal for the unsheltered

This is the fifth and final in a series of articles taking a look at money invested to support people in housing crises

Lakeside Reserve, with 40 units for permanent supportive housing, was built in 2017 and Good Shepherd executive director Katrina Knight said its opening is correlated with a drop in chronically homeless numbers. (Port City Daily/Amy Passaretti)

SOUTHEASTERN N.C. — The National Alliance to End Homelessness endorses a housing-first approach, guided by the tenet that basic needs, such as shelter, are critical above all else to getting people back on their feet.

However, adequate housing stock is not always easy to come by in the Cape Fear region, even though both the city and county have made financial contributions to more affordable housing in the last decade. 

PART 1: The cost of homelessness: $1M for tracking data, assisting nonprofits in Cape Fear

PART 2: The cost of homelessness: 10%, the chronically homeless, use 90% of resources

PART 3: The cost of homelessness: City, county dole out at least $9M over 10 years

PART 4: The cost of homelessness: 5 nonprofits invest nearly $11M per year

Based on a study prepared by Bowen National Research for the city and county, there is a projected gap of 4,163 rental units through 2030 for households making 80% average median income or lower. It also lists a gap of 2,416 for-sale units over the same time period.

Bowen’s research found working people earn on average $10 to $11 an hour, while they need to make $16 to $17 an hour in order to afford housing in New Hanover County.

The median price of a home in Wilmington is $399,900, yet according to the study, for people making under 30% AMI, a $74,000 price tag, or $575 rent, would be considered “affordable.”

For someone homeless, it still may not be affordable. According to the National Alliance to End Homelessness, a 2015 study by the University of Chicago indicated a homeless individual has a mean salary of $6,934 — which comes to $3.60 per hour based on a 40-hour week. 

Within the county, the lack of affordable housing is most acute in Wilmington city limits, according to Bowen. Many people spend 50% to 75% of their income on housing; the national rule of thumb is individuals should spend 30% of their income on housing.

Cumulatively, local government entities have allocated at least $65 million toward initiatives that encourage developers to build projects with units geared at lower socioeconomic individuals.

Area organizations have also invested money, including Cape Fear Collective, which put $17 million over the last two years into buying up affordable housing stock to sell to nonprofits that work with unsheltered individuals. This includes Leading Into New Communities, which provides shelter and services to the recently incarcerated, and Good Shepherd, the largest homeless services provider in the region.

Good Shepherd spends $4,000 per person to get someone back to housing and manages its own permanent supportive housing unit, Lakeside Reserve, to assist.

Also enduring costs for permanent shelter are nonprofits such as Eden Village. Founder Dr. Thomas Dalton, an anesthesiologist at Novant New Hanover Regional Medical Center, and partners made an initial $5 million investment to house 31 people, with future plans for expansion.

Altogether, the number put toward boosting housing initiatives is closer to $100 million over two decades in the greater New Hanover region.

As expressed by Dalton: “It’s cheaper to house people, which is a hard issue but the right thing to do.”

The conclusion was validated through a study done by Jamboree — a California-based affordable housing provider that leverages resources to develop housing stock — in partnership with United Way and the University of California. It identified that it’s 88% cheaper to house someone than to keep them homeless.

Phase one of Eden Village with 31 tiny homes to house chronically homeless, disabled individuals is near completion. (Port City Daily/Amy Passaretti)

Permanent Supportive Housing

Permanent supportive housing is touted by professionals as one of the best ways to keep people from slipping back into homelessness. It is especially vital to the chronically homeless, with housing providers that work in tandem with supportive services, such as employment assistance, transportation, mental health referrals or substance use treatment for tenants.

One example in Wilmington can be seen in Eden Village, a tiny home development for the homeless. Its first resident will move into a one-bedroom unit this month. 

Dalton and 30 co-founders have been fundraising and constructing phase one of Eden Village since 2020. Dalton said he is waiting on the county’s certificate of occupancy to officially open. 

From there, tenants will be phased in a few at a time weekly. The initial development will serve 31 chronically homeless individuals. Potential tenants must have been homeless for at least a year and have some sort of disability. People can apply using an online form, which can also be printed out. Eden Village will also mail an application out if requested.

Director Shawn Hayes estimates it costs roughly $250,000 to operate Eden Village annually, with each home needing $650 to $700 for monthly maintenance. This includes insurance, staff and donor-dependent supplies.

Residents can stay indefinitely and pay an average $300 per unit. That’s 77.8% less than the average rent for an apartment in Wilmington, which is $1,920, according to Zillow. The market price has increased 13% over last year.

After resident contributions, Eden Village has a near $130,000 gap to fund annually.

The initial phase of the community took nearly $5 million to build, with the city and county putting $500,000 toward the project. 

The first village, located at 1302 Kornegay Ave., was built without debt, Dalton pointed out, which helps keep costs down. Also, construction included a $225,000 investment in solar panels — with the funds donated — which will maintain affordable utility rates.

Eden Village allows individuals to receive services on site, such as medical care, substance use treatment, and access to social services. Its community center offices are open to all outside case management, social workers, substance abuse counselors, and more.

“We will work with anyone that wants to work with us,” Dalton said.

Residents also have access to communal amenities such as a library, computer lab, laundry room and food bank.

Dalton said the vision is to lean into the aspect of community and show people they belong.

“Get to know their name and their story; get out of your car and sit and talk to someone,” Dalton said of EV’s residents. “Dine with them regularly, get to know them. That’s the community side of Eden Village and what it’s all about.”

As noted in part two of “The Cost of Homelessness,” 10% of the homeless population — usually the chronically homeless — eat up a bulk of public resources, such as medical expenses. 

Dalton said the village can support about 10 — out of the 31 — of the more vulnerable, challenging tenants at a time. In-depth research is still being done on tracking specific cost breakdowns, he added.

The average unsheltered individual is expected to live to age 50 — 20 years less than the housed populations’ life expectancy, according to the National Coalition for the Homeless. People with chronic conditions or disabilities have a harder time healing without shelter as well, Dalton said.

“Not every person that is housed at Eden Village is one of our high-cost medical folks,” he added. “Many have limited societal costs.”

Eden Village staff anticipates a slightly smaller need for phase two of the village, as it would utilize 3D printed walls for building, essentially saving 50% on costs. It also is quicker to build by going this route.

Currently, each home costs about $60,000 to construct, a 66% increase from when the concept began in 2021. 

Dalton is willing to invest more into the plan. Phase two will bring another 30 homes to serve the same number of people. It does not yet have a location, but the goal is to secure 3 to 4 acres near the current community.

Zoning and other governmental regulations dictate where certain construction and operations can take place. As Dalton looks to expand operations, he said he needs support from the city and county to secure adequate land. He has been asking officials for possible property donations that would be suitable for another tiny home community, knowing infrastructure will need to be laid first, as it was for phase one.

“The bottom line is that housing the chronically homeless is a health, heart, and economic benefit to our community,” he said. 

Studies have found providing housing is less expensive than leaving someone living on the streets. The National Alliance to End Homelessness reported an average cost savings of $31,545 per person housed in a Housing First program over the course of two years. Another study by the alliance showed the program could cost up to $23,000 less per consumer per year than a shelter program.

Cape Fear Continuum of Care data indicates 95% occupancy of all 256 permanent supportive housing beds in the region, with more than 325 chronically homeless in need of shelter.

In 2017, Good Shepherd opened a permanent supportive housing complex, Lakeside Reserve, for the chronically homeless. The development offers on-site case management and supportive services including transportation, counseling, and life-skills training.

It cost $5 million to construct Lakeside and was funded with $1 million from State Employees Credit Union. The remaining funds were raised by public and private grants. 

Lakeside, located on 4 acres of land behind Legion Stadium, currently has 40 units of supportive housing, each measuring 660 square feet. 

It currently costs Good Shepherd $7,650 per resident at Lakeside. Rent is no more than 30% of a resident’s income, the rest is subsidized by agencies through unrestricted fundraising, Good Shepherd executive director Katrina Knight said.

At a city council meeting earlier this month, Knight pointed out there was a drop in the chronically homeless population, from 82 to 32 over two years, directly correlated to Lakeside’s opening.

“It’s both a drop in the number of people needing a shelter bed but, more importantly perhaps, it’s also housing a number of people who would never entertain shelter and would otherwise remain sleeping on our streets, in the woods, and in encampments around our city,” Knight said. “Moving them to housing is a win for us all.”

In 2022, Good Shepherd partnered with Cape Fear Collective to take over Driftwood, a 15-unit permanent supportive housing complex that closed in 2020. With $1 million from Cape Fear Collective and $883,609 in U.S. Department of Housing and Urban Development’s Community Development Block Grant, dispersed through the city, the development was saved to serve chronically homeless and people with disabilities. 

“At a time when we are so short on housing overall, particularly affordable housing, with folks with the fewest resources, even losing 15 units, which sounds modest, is a real crisis,” Knight told PCD in August. “It’s important we were able to figure out someone that could intervene and rescue those units.”

The city also donated a former Wilmington Fire Department station to Good Shepherd for additional housing in September. The property, located at 3939 Carolina Beach Road, is valued at $456,000 and will create about 33 permanent supportive apartments.

“Permanent supportive housing works elsewhere and it’s working here,” Knight told city council in March. “Our residents overwhelmingly do not return to homelessness, significantly reduce their use of the ER and hospital system, and experience improved physical and mental health.”

She noted since February, Good Shepherd has moved three gentlemen, who had been unsheltered and were camping downtown, back to housing. She attributes PSH as a major factor.

“If we had more of those units, we could end the homelessness of more of the folks who need it most,” Knight added. 

Just last month, city council approved a plan to use $2.5 million in HOME (homeowner assistance fund) American Rescue Plan Act funds. The bulk of the money, $2.1 million, is going toward additional permanent supportive housing units — the top priority pointed out by local stakeholders.

City community development and housing planner Suzanne Rogers estimates the funds will build 66 units. 

Of the $2.5 million, $350,000 is being used for supportive services for eligible tenants. Another $50,000 will be designated toward nonprofit capacity building to assist organizations with data collection, staffing and other needed resources.

The plan still requires HUD approval. Following that, the city will release requests for proposals to qualified organizations to receive the funding.

A rendering of Starway Village, a 278-unit workforce housing complex, planned for Carolina Beach Road. (Courtesy photo)

Affordable Housing

Bowen estimated a projected housing gap of more than 10,700 rental units and more than 13,000 for-sale housing units within the county over the next 10 years. 

It also denoted Wilmington rents have increased by 9% over the last year and identifies 52% of Wilmington renters as cost-burdened, spending more than half their income on housing. 

In total over the last year, more than 2,000 units have been approved for construction within city limits, with 26% designated to workforce housing and permanent supportive housing. 

Workforce housing developments include: 

  • Arboretum West (360 units, 36 workforce housing)
  • Switchyard (192 units, 19 workforce housing)
  • Vivo Apartments (234 units, 23 workforce housing)
  • The Range (346 units, 35 workforce housing)
  • Canopy Pointe (72 units, 100% workforce housing for seniors)
  • Barclay West-Mosby (570 units, 15 workforce housing)

Income requirements range from 30% of the average median income — about $56,000 for New Hanover County — to 80% AMI. For example, Canopy Pointe will offer rents ranging from $367 to $1,050, based on income and available one- and two-bedroom units.

The city also allocates 1 cent of collected property taxes, which is 39.5 cents per $100 valuation, toward workforce and affordable housing projects. It adopted the policy in its fiscal year 2023 budget, for a $2.15 million value and plans to continue the practice moving forward. 

An additional $1.5 million was appropriated in the budget last year toward affordable housing, to be used at council’s discretion.

County commissioners voted in February 2022 to spend $15 million over the next five years toward affordable housing projects. Three million dollars was spent this fiscal year to create 152 units for people who make less than the median income. The funds were allocated to East Carolina Community Development and Terroir Development as loans with 2% interest rates from the county. 

Covenant Senior Apartments will include 68 units on Alex Trask Drive, targeted at elders making at or below 60% AMI. 

Estrella Landing will create 84 units on Gordon Road, aimed at people earning 80% AMI, with 21 of the units for people making 30% AMI.

The county has also implemented financial assistance programs to help individuals afford adequate housing and assist with someone at risk of becoming homeless. 

During the Covid-19 pandemic, the Homeowner Assistance Program started and was funded with $1.5 million to help people get out of arrears on their mortgage. 

In September 2021, the county started the Workforce Housing Gap Rental Assistance Program to provide gap payments to keep rent affordable. Of the $924,000 committed to the program, $400,000 has been paid out to date. The remainder has to be allocated by December 2024.

In addition, the country’s budget includes funding for non-county agencies, some related to affordable housing. In the last several years, money appropriated to these programs have ranged from $50,0000 to $100,000.

Since 2021, New Hanover County has administered the Emergency Rental Assistance Program locally. The county is the passthrough for the federal funds but uses local resources, including staff, to administer the program. ERAP has provided more than $28 million in assistance to residents impacted financially by Covid-19, assisting with rent, utilities or other household costs. Individuals qualify with three criteria: someone eligible for unemployment or who has experienced a reduction in income, demonstrates a risk of experiencing homelessness or housing instability, and has an overall income below 80% AMI.

The city also doles out financial assistance through its housing programs, including the Home Ownership Pool — providing up to a $25,000 loan in down payment assistance for low income families. It also funds the Housing Rehabilitation Program — with a goal to preserve affordable housing stock — and Rehabilitation Incentive Loan, offered to developers providing small-scale rental projects. 

In the fiscal year 2023 budget, the city allocated $2.2 million to the housing programs.

Also offered through the city are housing counseling and education programs, including tips on working with real estate agents, credit counseling, home maintenance, homeowners’ insurance and more. 

The city and county collaborated on its first-ever housing partnership last year. The local governments invested in Starway Village, a 278-unit apartment complex planned for Carolina Beach Road. 

In November 2021, the city and county approved granting $3.5 million and $1.9 million, respectively, from ARPA funds for the development. Starway Village is aimed at housing Wilmington’s workforce that earn between $27,000 and $47,000 per year. Rent prices for the units, which range from one- to three-bedrooms, will span $754 to $999.

Last fall, city council also voted to donate three parcels of land that were declared surplus to Cape Fear Habitat for Humanity. The nonprofit will use the properties, valued at $84,200, to construct homes for local low- to moderate-income families with stable employment.

Since 2018, the city has donated 12 properties to Cape Fear Habitat for Humanity, over $1 million in value. The county has also contributed $212,461 toward infrastructure for a Habitat development on Daniel Boone Trail.

The county also allocated costs to Legacy Landing, a Cape Hear Habitat for Humanity project, and Haven Place, 14 acres donated in 2019 for a housing project, for $1.17 million in infrastructure financing.

Government entities are not the only ones contributing to affordable housing. As mentioned earlier, Cape Fear Collective leverages data and community assets to tackle inequalities. It recently launched an affordable housing initiative geared at families making less than $45,000 annually, or between $45,000 and $65,000 for workforce housing.

The reason it decided to tackle this venture? Home prices in southeastern North Carolina have risen 22% faster than the rest of the state based on CFC’s research. In New Hanover, home prices increased by 5.2% annually since 2013.

CFC has invested more than $16 million in salvaging housing stock, with more than 100 units already secured, mostly in New Hanover County. The entity purchases and rehabilitates properties to be transferred to nonprofit partners to maintain as affordable rentals or sold to homebuyers. 

It has sold 10 properties to date.

Recently, CFC was involved in the purchase of two duplexes on South Fourth Street, sold to Leading Into New Communities. Already established as four apartments, CFC renovated them with modern amenities and sold them to LINC for $460,250. They

will be used for the previously incarcerated population, again showing the vast array of demographics considered homeless. 

It’s a prime example of CFC’s mission.

“We recycle money back into the funds and acquire another property to hopefully go to another nonprofit or hopefully a homebuyer,” CFC director of community engagement Kevin Maurer explained to PCD. “The housing market is difficult and tough to get into; we’re hoping to lower that barrier and opening that aperture to allow more people to get in.”

LINC currently operates 14 permanent supportive housing units, with offering affordable living a goal for executive director Frankie Roberts. He said people with a legal history often find it difficult to find landlords who will rent to them.

“Our objective is to put individuals in a position, not to survive, but be able to thrive,” Roberts said.

LINC’s database has a current waiting list of 25 to 30 people looking for a place to live after being released from jail.

Also provisioning more permanent shelter to vulnerable populations is Family Promise of the Lower Cape Fear. Last year, the nonprofit, providing prevention for at-risk families and case management for those homeless, helped 7,261 people — 4,418 were children. 

Family Promise, operating with a roughly $760,000 budget, offers an emergency shelter, short-term shelter and assists families with finding permanent housing. It’s seen a 96% success rate securing homes for families, who stay at least one year.

“[Client] numbers have dropped dramatically,” Family Promise director Anne Best told PCD. “Because there’s no housing to move people into that’s affordable.”

She said the nonprofit assists many people who don’t even bring in $2,000 per month, but landlords are asking for tenants’ income to be three times the amount of rent

Families are also staying longer in transitional housing due to the lack of affordability. In 2020, the average stay was 217 days, according to Best, which increased to 345 days in 2022.

“Our case manager works with them diligently, addressing barriers, increasing their income to be successful,” Best said. “The goal is getting them to regain independence, for the rest of their lives.”

While most clients coming through Family Promise are fleeing domestic violence, A Safe Place advocates for victims of human trafficking. Sixty-two percent of its clients in 2021 were homeless.

READ MORE: Nonprofit assisting trafficking victims ceases shelter intakes while transitioning to new, larger site with long-term housing

The nonprofit provides restorative housing and case management for survivors. It provides emergency shelter for individuals for up to 60 days in a safe, secure location. It also allows individuals with substance use disorder to apply for supportive housing to transition into an approved recovery program, covered financially by A Safe Place for a period of time. 

One in five homeless people in the U.S. have a substance use or mental health disorder, according to a study by the National Library of Medicine.

Nonprofits advocate that housing first is the gold-standard. Yet, some have pushed back on the notion.

One Wilmington city council member, for example, recently voted against using city funds for more permanent supportive housing, calling the housing first approach “antiquated.” 

Luke Waddell views the policy as a blanket hand-out and opposes the lack of requirement for substance use and mental health services. 

“We look at someone who’s sick with a substance abuse issue, killing themselves slowly, sometimes quickly, and label them a victim,” he told Port City Daily last month. “Then, since they’re a victim, everything must be given to them, and nothing can be asked of them.”

A housing first approach does not mandate someone participate in services before obtaining permanent shelter or keeping it. 

Knight said, based on her research and support from the National Alliance to End Homelessness, substance abuse is not the primary cause of homelessness; the expense of housing rises to the top.

“Nationally and here in Wilmington, the chief reason that our residents find themselves unhoused is the mismatch between people’s income and the income they need to afford and hold onto housing in our very expensive city,” she said. “Having said that, persons with disabilities disproportionately experience homelessness due to their special challenges and limited income.”

Outside of the 256 permanent supportive housing options in town, there are also local rapid-rehousing initiatives. Three exist in New Hanover County — Good Shepherd, First Fruit Ministries and Coastal Horizons — which offer a total of 95 beds. Another 98 beds are available as transitional living situations through Good Shepherd, First Fruit, Coastal Horizons and Family Promise of the Lower Cape Fear.

Based on the point-in-time count and the nearly 2,000 people accessing services through Cape Fear Continuum of Care’s coordinated entry process, there is a gap of 1,536 beds and units needed for those enrolled in street outreach.

Both forms of shelter are meant to increase self-sufficiency and offer clients a choice to participate in additional services (such as substance use treatment or mental health support), according to the National Alliance to End Homelessness.

“As a community, as a society, when we don’t get absolution, whether prevention or interventions that get people back to housing, it’s possibly even more costly to leave people homeless,” Knight said. “We need to stay focused and not take our eye off the ball, and hard as it is, focus on different ways of adding to that housing inventory.”

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