The Uniqueness of Blue Butterfly

6 min read

A sanctuary for homeless vets and abuse survivors

In a park-like corner of a former naval base in the San  Pedro neighborhood of Los Angeles sits a community that clearly demonstrates how affordable housing can better lives. Blue Butterfly Village, opened in April 2015, reserves its units for veterans experiencing homelessness. There is a move-in priority for families led by women who have survived domestic abuse or military sexual trauma.

The 73 homes at the Village are large enough to raise a family, each with two-bedrooms and its own front door. The homes are spread over a hilly, nine-acre site, set back from Palos Verdes Drive North, a busy Los Angeles street. Even though it is surrounded by a dense urban neighborhood, the community includes gardens, playgrounds, a walking path and even a protected butterfly sanctuary.

“While we are in an urban area, it’s actually idyllic,” says Bob Pratt, President and CEO of Volunteers of America (VOA) Los Angeles.

VOA can target these particular people by providing project-based rental subsidies that serve this population.

“We had to get approval from regulatory agencies for our preference to house victims of domestic violence and assault,” says Pratt. “We couldn’t get a gender preference.”

The Village provides these families with a full suite of supportive housing services from counseling and case management to drug treatment and job training. The families living in 61 of the housing units receive rental subsidies provided by Sec. 8 vouchers through the Department of Housing and Urban Development-Veterans Affairs Supportive Housing (HUD-VASH) program. The other families living in the other 12 units receive rental subsidies with a preference for veterans under California’s Mental Health Services Act.

The fight for the site
The homes at the Village were originally built in the 1990s for military personal at the Long Beach Naval Shipyard as part of a large military housing campus covering dozens of acres in San Pedro.

The shipyard closed in 1997 and in 2000 VOA appliedto turn the empty, duplex units into housing for the homeless. VOA seemed to have a reasonable chance at winning at least part of the site, since the law governing how cities re-use military bases prioritizes renovations that help homeless people.

But a committee of local officials refused VOA’s plan to create new supportive housing. The San Pedro area of L.A. has relatively few homeless people, according to their data. Instead, local officials decided to give parts of the site to a new college campus and a prep school.

VOA appealed the decision to federal officials.

“We found a good pro-bono law firm,” says Pratt. “HUD invalidated the city’s process – they were supposed to use city wide data.” L.A. as a whole has a significant need for new housing for the homeless.

VOA eventually won the right to develop nine acres of the old Navy Village, next to the new Rolling Hills prep school and new campus of Marymount California University, which are now open.

Finding the funds
The next challenge was finding the funding to build.

It cost $24.4 million to develop Blue Butterfly. VOA would need an allocation of Low-Income Housing Tax Credits (LIHTCs) to pay for the project.

The competition for 9% LIHTCs is brutally competitive in California. Developers apply for many times more tax credits than the state has to distribute. VOA’s plan for the Village would score highly in most aspects, but lost points because its location is slightly too far away from services and amenities its residents need.

The secluded site is a mile’s walk from San Pedro’s downtown and about a half mile from two smaller shopping centers, including a grocery store and coffee shops.

“We were too far away from amenities to earn the points we needed,” says Pratt. VOA worked with local officials to get a bus stop within a quarter mile of the Village.

The developer also began to negotiate with tax credit officials to show that the benefits of a private, peaceful site for the Village’s residents outweighed its somewhat inconvenient location.

“The location was part of the reason the property is good for people with a difficult past,” says Patrick Sheridan, VOA’s Vice President for Housing.

The community includes the Palos Verdes Blue Butterfly Sanctuary – an area protected by the U.S. Fish and Wildlife Service that is the habitat of an endangered species of butterfly.

VOA hoped tax credit officials might give special consideration to their plan. If not, VOA’s other plan was to attempt to raise private funds to build.

An opportunity opened for the Village when the State of California closed its network of redevelopment agencies in the state budget battles after the Great Recession. Many affordable developers had to delay their applications for LIHTCs while they replaced the funding once supplied by the agencies. Suddenly the competition for LIHTCs was not so difficult.

“There were more tax credits than there were applicants,” says Pratt. In 2013, VOA applied for LIHTCs and won a reservation. The $24.4 million project received $18.3 million from the sale of Low-Income Housing Tax Credits to the National Equity Fund (NEF), which syndicated the tax credits to Bank of America.

The project also received $2.7 million in soft financing from the Los Angeles Housing + Community Investment Dept. and another $1.2 million in soft financing from the City of Los Angeles Department of Mental Health. The Federal Home Loan Bank’s Affordable Housing Program provided another $1 million. VOA deferred $600,000 of its developer fee.

Charitable foundations also lent a hand, including a $500,000 grant from the Home Depot Foundation. “We had three separate Home Depot events on the property,” says Sheridan. “They built a gazebo and a community garden.”

A local nonprofit called Designed from the Heart offered to provide original interior designs for the homes at the Village. “Each unit is decorated differently and furnished,” says Sheridan. “The residents just love it. Just about everything about this project is unique.”

Sources of Funding
$18.3 million, Low-Income Housing Tax Credit investment by National Equity Fund (NEF), syndicated to Bank of America

$2.7 million, Los Angeles Housing + Community Investment Department (soft financing)

$1.2 million, City of Los Angeles Department of Mental Health (soft financing)

$1 million, Federal Home Loan Bank (Affordable Housing Program)

$500,000, Home Depot Foundation (grant)

$600,000, deferred developer fee

$24.4 million, total development cost