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The number of people in the US who are unsheltered or lack a permanent place to live has increased steadily since the Covid-19 pandemic, topping 650,000 last year.
Community Solutions, a New York-based nonprofit, buys multifamily properties through its CS Large Cities Housing Fund and converts half of the units into housing for homeless individuals. The other half are preserved as affordable workforce housing.
“Two of the biggest challenges communities face in solving homelessness are the lack of affordable housing dedicated to people exiting homelessness, and the complexity of housing systems that delay the placement of people into available homes,” said Community Solutions’ Nadine Maleh. Using private capital rather than publicly-funded housing models “provides units in a fraction of the time and at a much lower cost.”
Transitional housing
The Large Cities fund aims to acquire 2,500 units in 16 cities where the nonprofit works with local homelessness response teams. Once investors are repaid, ownership of the units will be refinanced and transferred to local nonprofits for transitional and affordable housing preservation.
The CS Large Cities Housing Fund has reached almost half of its target, acquiring 1,155 apartment homes in Charlotte, Denver, Nashville, Phoenix, Baltimore and Jacksonville, Fla. The units have so far helped about 270 individuals transition out of homelessness.
Big bet
Community Solutions was a winner of $100 million in the second round of MacArthur Foundation’s 100&Change competition addressing critical global problems. Most of the 2021 grant was used for its Built for Zero initiative to “accelerate an end to homelessness in 75 US communities in five years.” Community Solutions used $10 million of the award to launch the Large Cities fund to invest in a subset of its Built for Zero communities.
The 10-year fund is structured with a return-cap of 9% for investors, which include healthcare systems Kaiser Permanente and UnitedHealth Group, financial institutions Wells Fargo and Truist, family office IWP, and the Ford, Leon Levine and Frances and Benjamin Benenson foundations.
Some of Community Solutions’ funders, including Trinity Health, Amazon Housing Equity Fund and Baltimore Community Foundation, provided $30 million in highly concessional capital for investments in specific communities.
In Jacksonville, Fla., for example, the fund has acquired 175 units in three properties using designated funding from Northern Trust. More than a quarter of housing placements for Jacksonville’s homeless veterans were in Community Solutions’ units.
