The region’s massive post-recession job and wage growth has continued to outpace housing growth resulting in exponential rental cost increases. This supply gap compounds the likelihood of homelessness, compromises access to proximate medical care and ultimately halts the recovery progress amongst the already vulnerable veteran population. Willow Housing’s 60 veterans’ homes would help fill an urgent need in the U.S. Department of Veterans Affairs' (VA's) initiative to end veteran homelessness by 2016, but a key state funding source was eliminated. So, the county of San Mateo’s Housing Department stepped in and advocated for the project in part by committing $375,000 from its pool of extremely limited resources, an unusual action given its historical position of funding projects.
Brief Description of Development
"Located in Menlo Park, Calif., a hyper-affluent city in San Mateo County situated in the heart of Silicon Valley, Willow Housing was developed by Core Affordable Housing and brings 60 new affordable homes for formerly homeless and at-risk of becoming homeless veterans to an area traditionally lacking reasonably-priced housing. Its 54 studio apartments and five one-bedrooms are affordable to those earning no more than 30-to-40 percent of the area median income (AMI), with a single two-bedroom manager unit. More than just a bed: Apartments also come furnished with a dresser, kitchen table and chairs along with a full-size kitchen equipped with dishwashers, microwaves and garbage disposals. Centrally located to promote social interaction and minimize isolation, the community center at the development houses property management and service staff offices, a business center with computers that supports resume and job search programming, a multi-purpose space with kitchen, laundry facilities, TV lounge, fitness center, bike storage area and rooms to conduct training, group meetings or recreational activities. Outdoors, residents can enjoy walking paths, a picnic/BBQ area and community garden."
But for the 9 percent LIHTC program, which funded nearly 70 percent of the $18.7 million needed for design, construction and operating reserves, Willow Housing would not have been built. It would’ve taken years for the city or county to accumulate that much additional soft debt and unlikely that such a large portion of their public resources would feed into one project targeting a single population, given the diverse populations experiencing the area’s housing crisis. Additionally, the U.S. Department of Veterans Affairs’ annual budget is unpredictable and focused on healthcare, not housing, but the existence of the LIHTC program made it possible for Congress to set aside land under its Enhanced Use Lease program (BURR initiative: Building Utilization Review and Repurposing Initiative) so that they could dedicate underutilized land to help enable deeply affordable veterans housing without the need for significant amounts of additional cash subsidies. It was the combination of leveraged resources in the public-private partnership (local public subsidy and federal public land with private LIHTC equity and private development expertise) that was a critical component in the ability to deliver an efficient, high-quality residential community serving the VA’s mission of housing homeless veterans with special needs.
Building Specifications and Amenities
Focus groups with current and formerly homeless veterans were conducted at the VA Palo Alto’s Homeless Veteran Reintegration Program’s weekly gathering for program participants and alumni to gather insights that would inform design decisions. For example, homeless veterans’ facilities have traditionally felt institutional, but at Willow Housing, special care was taken to design an elegant, dignified complex comparable to market-rate housing. Hallways and apartments were equipped with warm fluorescent lighting to avoid triggering negative effects of bright light on residents dealing with traumatic brain injury and light sensitivity. Outdoor community spaces were created as tranquil respites and feature a BBQ area with furniture, vegetable garden, oak trees and meandering landscaped paths. On-site clinical support delivered at Willow Housing by the VA at its Palo Alto Campus includes health care, drug treatment and mental health services, but residents also have access to nursing homes, inpatient facilities/outpatient clinics and a 100-bed homeless domiciliary that treats homeless and/or substance-dependent veterans with the goal of returning them to independent living. The campus also offers a 180-day residential treatment program and 70 beds as permanent housing for graduates of its Homeless Veterans Rehabilitation program.
- Total number of units: 60
- Number of LIHTC units: 60
- Square Footage: 43,766
- Rentable Square Footage: 28,112
- Gross per sq. ft. costs: $405.76 ($268/sq. ft. hard costs)
The development was built on land leased by the U.S. Department of Veterans Affairs, which reduced costs by $12 million. That donation, combined with $12.8 million in LIHTC equity, a $2.9 million loan from the city of Menlo Park, $1,615,000 VA capital contribution and $55,000 pre-development grant from LISC as well as $375,000 in San Mateo County HOME funds and $830,000 from its Affordable Housing Fund program, amounted to nearly $31 million eliminating the need for permanent loans. HUD’s VASH (Veterans Affairs Supportive Housing) program combines Housing Choice rental assistance for homeless veterans with case management and clinical services provided by the VA. The 35 project- and 10 tenant-based VASH vouchers allotted to Willow Housing allows a substantial cash flow directed as a continual subsidy source for in-house supportive services and upfront capitalized funding of $500,000, which helped expand the basic services during the early years of the housing program.
- Total Annual Allocation of Federal LIHTCs Awarded: $973,240
- Additional State Funds: San Meteo County, CA: $375,000 HOME soft loan & $830,000 AHF funds
- LIHTC equity Invested: $12,800,000
- Total Development Costs: $17,085,366 ($11,729,288 hard costs)
- Qualified Basis: $12,639,482
- Eligible Basis: $17,085,105
Achievement of goals.
Willow Housing was a Design Assist project, a collaborative team-oriented method that capitalizes on the benefits of early engagement between parties involved so everyone understands all aspects pre-construction, allowing for the ability to mitigate or avoid potential conflicts. The general contractor was part of the initial planning stages and worked with the team to ensure the construction budget was closely managed, which involved several rounds of value engineering. Because the design review process was overseen by a third-party code compliance entity, the total project duration was only 11 months. Typically, more complex compliance procedures and/or longer construction schedules make projects more vulnerable to inflationary increases and higher construction loan interest expense. Additionally, because the project was subject to prevailing wage rates, the labor costs of the project were generally more predictable and steady as compared to open bidding that is more subject to market fluctuations. The stories told by veterans living at Willow Housing, which measure the development’s extraordinary results, are too many to tell. In the face of set-backs, tragedies, illness and turmoil, their stories of perseverance and ultimate victory are overwhelming