Case Study

A Permanent Solution for Homelessness

8 min read

Sulzbacher Village gets women and children back on their feet

A new and disturbing trend in homelessness was taking over in Jacksonville, FL at the beginning of this decade.

Cindy Funkhouser, president and chief executive of Jacksonville’s Sulzbacher Center for the Homeless, was seeing a change in demographics away from the men who had made up the bulk of people the center had previously sheltered.

“There was a huge surge in homeless families and homeless women,” she remembered. So her group, started in 1995 by the city of Jacksonville, the United Way of Northeast Florida and local businessmen and philanthropists, began to think about building a second campus, this one for women and children.

“We recognized building a shelter was not a solution,” she said. Sulzbacher wanted permanent affordable housing to be part of its new campus. It wanted to be able to help people like Glenda, a formerly homeless resident who now lives in permanent housing in the new Sulzbacher Village with her daughter.

The two of them had been living in her car after a domestic situation became untenable and they were evicted. “We were hungry. We were tired. We were dirty,” she recalled in Sulzbacher’s newsletter. Glenda was grateful for even a place on the floor. But eventually they found a permanent home in Sulzbacher Village, giving her and her daughter a key piece of stability that has enabled her to transform her life.

The brand new Sulzbacher Village is a good example of a new philosophy that looks for permanent rather than temporary cures for homelessness. The 124-unit development for homeless women with children includes 70 permanent housing units, partially financed by $9.2 million in Low Income Housing Tax Credit money ($8.4 million in proceeds) raised by a multi-investor syndication from Hunt Capital Partners, Los Angeles.

There’s a lot of energy being ginned up for projects like these, according to Funkhouser, whose nonprofit employs a total of 200 people. Buy-in for the Village came from private donors, who contributed more than $7 million to a capital campaign. A local church donated land. Support also came from the state HFA, the Florida Housing Finance Corp., which granted a $3.5 million State Apartment Incentive Loan, in addition to the allocation of tax credits. And there was support from the city of Jacksonville, which “has decided it wants to end homelessness, not manage it,” says Funkhouser.

In all, about $20 million was raised for the project, with no hard debt at all. And those involved in the financing brought a passion to get the project built that facilitated a complicated deal that didn’t resemble the usual LIHTC transaction.

There were seven or eight investors in the syndication, said James Crowder, Hunt Capital Partners director, with one being a commercial bank looking for Community Reinvestment Act credit.

More Like Assisted Living
Sulzbacher Village is “a one-stop shop for women and children that need a home and services to get back on their feet and back into long-term housing,” said Crowder. “Sulzbacher is very good at it. They know how to get people back on their feet.”

“The operator really knows what they are doing,” agreed Dana Mayo, executive partner at Hunt Capital Partners. With a large array of supportive services on hand, “it’s more like assisted living” than traditional real estate, he said.

But as good as Sulzbacher may be at running the unit (it will soon have four in the Jacksonville area, two of which are medical units), tax credit finance wasn’t something they’d ever tried before. So they brought in TVC Development, the affordable housing development arm of Vestcor, to be a co-developer.

“We were hired as the developer for Sulzbacher as they have no experience in the tax credit world,” said Ryan Hoover, TVC Development president. “We helped them get financed and helped build the building and get it leased up. Then they will be the owners and we will walk away.”

The developer took the project to Florida Housing Finance Corp. and put in the application for the nonprofit.

The construction was done by Summit Contracting Group of Jacksonville. “They’re one of the biggest multi-family housing contractors in the nation,” said Hoover. PQH Group of Jacksonville was the architect.

But before the build began, “It took about as long to get the thing designed and closed as to build it,” said Hoover. “That was the easy part, to build it.” (The whole project took about two years.)

“It’s a homeless development, so it’s a lot more complicated than a straight tax credit deal.”

Hoover noted the design involved “a lot of green energy, low flow showers and toilets, high-efficiency air conditioning units and appliances. A big part of the design is they come furnished. The homeless don’t have a lot of furniture. IKEA did a bunch of the furniture in the units.”

He described the layout this way: “It’s three stories, with residences on two and three. On the first floor, one wing is the health center. Move into the middle and there’s the office and full commercial kitchen. Then you move into activity rooms and there are classrooms with little playgrounds for all different ages.

“Above that, two of the three wings are the tax credit units. The third wing has the temporary units. All have electronic access, security cameras all over, LED lighting. It’s pretty technologically advanced.”

The temporary units total 54, with 36 short-term emergency units, ten “medical respite” units funded by area hospitals, and eight units for homeless female veterans, said Funkhouser.

The 92,000 square foot facility has 70 studio, one- and two-bedroom apartments restricted to women and families that earn up to 33 and 60 percent of the area median income.

Services at Sulzbacher
The vast majority of occupants (the short-term units are filled, the permanent ones more than half-filled) are single women and women with children, she said. There is one single father in residence with children and a couple of intact families, said Funkhouser.

Medical services are heavily geared toward pediatrics in a “huge” clinic, she said. “We want to have all the wraparound services our families need,” including medical, dental, vision, pharmaceutical and behavioral health.

Sulzbacher is a work in progress—an early learning center with therapists to help relieve the children’s trauma from being homeless had just opened the same day Funkhouser discussed the project with a reporter. Other amenities for kids include an art studio, multi-purpose room, a computer lab and a basketball court.

But Funkhouser said everything should be occupied by the end of this month or next.

The Sulzbacher CEO would use Housing Tax Credits again, and also wants to look at New Markets Tax Credits. “At the end of the day, (tax credits) are the best vehicle we have to build affordable housing,” she said. And the lack of affordable housing is a huge cause of homelessness, Funkhouser feels.

That doesn’t mean she found the whole process easy. “This is the most complicated thing I’ve ever done in my life,” Funkhouser commented.

The financing and development partners also had a complicated but fulfilling assignment with Sulzbacher Village. Both Crowder and Mayo said they got a lot of satisfaction out of the project, and Hunt Capital Partners now has helped finance a total of four developments for homeless or developmentally disabled people, two in Florida, one in Texas and one in Washington state.

“Sulzbacher is a fabulous operation,” Mayo said. “We had two great partners with them and FHFC. This was a transaction they really wanted done.”

“We’d like to do more of these,” Crowder said.

“We would do it again,” agreed Hoover. “This one was a little more complicated because of the homeless demographics and the rent, but we got it worked out.”

Sulzbacher Village won’t solve homelessness in Jacksonville by itself, even with its second facility, the original Sulzbacher Center for the Homeless in the downtown of the city. Funkhouser said the last count done came up with about 1,500 homeless people in Jacksonville.

But if you are a homeless woman with children in Jacksonville, you won’t be turned away at Sulzbacher. Funkhouser promises it. You may have to sleep on pallets on the dining room floor, but “nobody with children will ever be turned away.”

Story Contacts:
Dana Mayo, Executive Managing Director
Hunt Capital Partners, Los Angeles

James Crowder, Director
Hunt Capital Partners, Los Angeles

Ryan Hoover, President
TVC Development, Jacksonville, FL

Cindy Funkhouser
President and Chief Executive of Sulzbacher, Jacksonville, FL

Mark Fogarty has covered housing and mortgages for more than 30 years. A former editor at National Mortgage News, he has written extensively about tax credits.