How The
Fortune Society
Achieved a
TRIPLE
BOTTOM
LINE
with Castle Gardens
Written by Mitali Nagrecha
and JoAnne Page
©FrederickCharles,Fcharles.com|Curtis+GinsbergArchitectsLLP
1
TABLE OF CONTENTS
3
Timeline
4
Section 1 Introduction
6
Section 2 Background
Section 2.1 Incarceration, Reentry and The Fortune Society
Section 2.2 Supportive Housing as a Reentry Solution
Section 2.3 Fortune Becomes a Housing Provider and Opens the Fortune Academy
Section 2.4 Fortune's Experience Overcoming Not In My Backyard Resistance
11
Section 3 Castle Gardens Pre-Development
Section 3.1 A Preview of Castle Gardens
Section 3.2 The Conception of Castle Gardens
Section 3.3 The Castle Gardens Pre-Development Planning Team
Section 3.4 Board and Community Engagement During Castle Gardens Pre-Development
Section 3.5 Selecting a Castle Gardens Development Team
Section 3.6 Castle Gardens Pre-Development Financing
21
Section 4 Raising Capital for Castle Gardens
Section 4.1 Financing Introduction
Section 4.2 Castle Gardens Capital Funding Sources
Section 4.3 Castle Gardens First Money In and Funder Technical Assistance
Section 4.4 Leveraging Relationships for Castle Gardens Financing: Community Support and
Coordinating Funders
Section 4.5 Board and Organizational Development during Castle Gardens Supportive
Housing Fundraising
Section 4.6 Low-Income Housing Tax Credits and Closing on Castle Gardens Financing
30
Section 5 Construction
Section 5.1 Managing Risk during Castle Gardens Construction
Section 5.2 Building the Castle Gardens Construction Team
Section 5.3 Co-Developer as Construction Expert and Fortune Executive Involvement
Section 5.4 Community Engagement during Castle Gardens Construction
33
Section 6 Opening the Doors to Castle Gardens
Section 6.1 Planning and Fundraising for Castle Gardens Operations and Supportive Services
Section 6.2 Castle Gardens Lease-Up Introduction
Section 6.3 Castle Gardens Affordable Housing Units Lease-Up
Section 6.4 Castle Gardens Supportive Housing Units Lease-Up
Section 6.5 Castle Gardens Building Management
40
Section 7 Conclusion
Exhibit A. Tenant Letter
Exhibit B. Castle Gardens Organization Chart
2
CASTLE GARDENS DEVELOPMENT TIMELINE
1996
»
TheFortuneSociety(“Fortune”),aNewYorkCityserviceproviderandadvocacyorganization,duringastrategicplanning
process,focusesonlackofsafe,affordablehousingopentoitsclients,individualswithcriminaljusticehistories.
1998
»
Fortunepurchasesshellof“Castle”buildingandadjacentvacantlotinManhattanville,NewYorktodevelopashousingfor
Fortuneclients.
2002
»
FortunelaunchestheFortuneAcademyintherenovated“Castle”building,whichprovides19bedsofemergencyhousing,
41bedsoflonger-termhousingandsocialservicestoformerlyincarceratedhomelessmenandwomen.
2005
»
»
»
FortuneSocietyBoarddiscusseswhattodowiththevacantlotadjacenttotheFortuneAcademy.
Fortunediscussesneedforpermanent,affordable,supportiveandsafehousingforFortuneclients.
DennisDerryckoftheNewSchoolapproachesFortuneaboutenteringadesignideaforthevacantlotintheJPMorgan
ChaseCommunityDevelopmentCompetition.
2006
»
»
»
»
»
»
Fortunebuildspre-developmentteam.
NewSchoolteamwinsJPMorganChaseCommunityDevelopmentCompetition.
FortunehiresJonathanRoseCompaniestoconductFeasibilityStudyforthevacantlot.Feasibilitystudydesignedto
achieveFortune’striplebottomline(housingandsupportiveservicesforFortune'sservicepopulation;afinancially
sustainablebuildingandservices;andbenefittothelocalcommunity.)
FortuneengagescommunityandBoardinpre-developmentphase.
FortuneBoarddecidestopursuedevelopmentofthevacantlotasmixedaffordableandsupportivehousing
withaservicecenter.
Fortunebeginstoassembledevelopmentteam.IssuesfirstRFPforco-developer.
2007
»
»
»
Fortuneissuessecond,follow-upRFPforco-developer.PartnerswithJonathanRoseCompaniesasco-developer.
Fortunecontinuestobuilddevelopmentteam,includinghiringCurtis+Ginsbergasarchitecturefirm.
Fortuneandteamplansbuildingdesignandbeginsfundraising.
2008
»
»
»
Fortuneandteamcontinuestoplanbuildingdesignandfundraising.
HiresGeneralContractor,LettireConstruction.
Fortuneclosesoncapitalconstructionfinancing.
2009
»
»
OngoingconstructionofCastleGardens.
Planningbeginsforleaseupandongoingoperationsandsupportiveservices.
2010
»
»
»
»
Fortunemeetsleaseuptiminggoals.
CastleGardensreceivesTemporaryCertificateofOccupancy.
FortunehiresCastleGardens’staff,includingsuperintendent.
Firsttenantsmovein.
©FrederickCharles,Fcharles.com|Curtis+GinsbergArchitectsLLP
3
otherchallenges,thecommunityoppositiontoitshousing
project,asitsoughttoestablishhousingservicesfor
populationsthattheneighboringcommunityviewedwith
stigmaandfear.1
SECTION 1. Introduction
InJuly2010,TheFortuneSociety(“Fortune”),aNewYork
Citybasednon-profitthathasservedindividualswith
criminaljusticehistoriessinceitsfoundingin1967,opened
thedoorstoCastleGardens,anapproximately110,000
squarefootgreen,mixeduse–affordableandsupportive–
housingdevelopmentinWestHarlem.CastleGardens
providesapproximately20,000squarefeetofservicespace
andapproximately90,000squarefeetofresidentialspace,
composedof:
»
»
»
»
AfteropeningtheAcademy,Fortunecontinuedtoevolveits
modelofsupportivecongregateemergencyandphased
permanenthousing.Thiswasstepone.Workingtofind
permanent,affordablehousinginwhichtoplace“graduates”
oftheAcademywouldbesteptwo.Fortuneclients,carrying
thestigmaoftheirrecordsandtheirneedsforsupportive
services,hadfartoofewgoodoptions.In2005,Fortune
begantothinkabouthowtouseitsadjacentlottofurther
meetclientneeds.
50supportivestudioapartmentsforhomeless
individualswithahistoryofinvolvementinthe
criminaljusticesystem;
13supportivefamilyapartmentsforhomeless
familieswithatleastonememberformerly
incarcerated;
50family-orientedaffordableapartmentsforthe
greatercommunity;and
Anapartmentforalive-inSuperintendant.
Afterfiveyearsofplanning,fundraising,constructionand
lease-up,TheFortuneSocietyopenedthedoorstoCastle
Gardens,anaward-winningprojectevenasitopened.Castle
GardenshasbeengivenTheCharlesL.EdsonTaxCredit
ExcellenceAwardintheareaofSpecialNeedsHousingfrom
theAffordableHousingTaxCreditCoalition;theDownstate
ProjectoftheYearbytheNewYorkStateAssociationof
AffordableHousing;theBostonSocietyofArchitectsJohnM.
ClancyAwardforSociallyResponsibleHousing2011;andthe
MultifamilyExecutiveProjectoftheYear:Affordable,Merit
Award2011.CastleGardensalsoreceivedcertificationfrom
EnterpriseGreenCommunitiesin2010.
Thestate-of-the-artgreenbuildingincludesagreenroof
space,severalcommunitymeetingspaces,alibraryanda
computerlab.Infiveyears,Fortuneanditsdevelopment
teamtookCastleGardensfromprojectidea,toraising
approximately$43milliondollars,toopeningthedoorsto
114apartmentsandaservicecenter.
Fortunehascreatedthistoolkittosharetheexperiences
andlessonslearnedindevelopingCastleGardens,
permanenthousingthataddressestheneedsofformerly
incarceratedhomelessindividualsandlowincome
neighborhoodresidents.
Significantly,Fortuneaccomplishedthreegoals-its
"triplebottomline"withtheproject:
»
»
»
HousingandsupportiveservicesforFortune's
clientpopulation;
Afinanciallysustainablebuildingand
services;and
Benefittothelocalcommunity.
The Fortune Society
Fortuneprovidesformerlyincarceratedpeoplewith
wrap-aroundservices,includingeducation,employment
services,housingassistance,substanceabusetreatment,
mentalhealthtreatment,familyservices,alternativesto
incarceration,HIV/AIDSservices,dischargeplanning,
counseling,casemanagement,andlifetimeaftercare
neededtobreakthecycleofcrimeandincarcerationand
tobuildproductivelivesintheircommunities.Allof
Fortune'sprogramsaredesignedtomeettheunique
needsofthispopulationthroughskilled,holistic,and
culturallycompetentservices.
Fortune'sdecisiontodedicateitselftodevelopingCastle
Gardenswasinformedandmotivatedbyitsclients'needs.
Throughoutitsover40yearsofwork,Fortuneexperienced
greatsuccesswithitsholisticone-stopapproachtoreentry
services.In1996,duringtheagency'sstrategicplanning
process,Fortunerecognizedthatmanyclientswerehurtby
thelackofsafe,affordablehousingopentoindividualswith
criminaljusticehistories.Inparticular,personswith
historiesofviolentconvictionsandthosewithoutatrack
recordofdrugfree“cleantime”hadanexceptionallydifficult
timebeingacceptedintoalreadyverylimitedaffordable
supportivehousing.Theagencydecidedtoaddressthisissue
bycreatingitsownsupportivehousingmodel.Fortunemade
thetransitionfromsocialservicesprovider,housingprovider
andlandownerwhenitopenedtheAcademyinApril2002.
1
TheFortuneAcademy(alsoknownas“theCastle”)provides
emergencyshort-termandlonger-termsupportivehousing
tohomelessformerlyincarceratedpeople,regardlessoftheir
criminalhistory.”TheFortuneSocietyovercame,among
4
ThisstoryisdescribedintheNIMBYToolkit.Thistoolkithighlightsthe
experiencesofFortuneasitestablishedtheCastle,asupportiveresidence
inWestHarlemforapproximately60menandwomenreleasedfrom
incarcerationtohomelessness.Thetoolkitfocusesonhelping
organizationsaddresscommunityoppositionitfacesasitworksto
establishservicesforpopulationsthatareconsidered“threatening.”“Not
inMyBackYard”(orNIMBY)oppositioncanresultinsignificant
programdelaysorevencompleteshutdown.
ThistoolkithighlightsFortune'sexperiencesineachofthe
fourphasesinthedevelopmentofCastleGardens:
» Pre-DevelopmentPlanning(2years):Thissection
includesinsightintoFortune'sanalysisofits
capacitytoundertakeanotherhousingproject;
whethersuchaprojectwasthebestuseofthe
emptylottofulfillitsmission;Fortune'searly
brainstormingprocess,includingtwofeasibility
studies;itspredevelopmentengagementwiththe
Boardandthelocalcommunity;theBoard'sdecision
tomoveforwardwiththedevelopmentandthe
principlestheysoughttoachieve;Fortune's
selectionofadevelopmentteam;andhowthe
organizationfundedpre-development.
» ProjectFinancing(18months):Thissection
detailsFortune'scapitalsourcesoffunding,
includinglowincomehousingtaxcredits(themain
sourceoffundinginaffordablehousing
developments)andothergovernmentandprivate
revenuestreamsforsupportiveandaffordable
housing.ThesectiondescribeshowFortune
accessedthevariousfundingstreamsbybuilding
andleveragingrelationships,workingwiththelocal
communityandcoordinatingfunders.Finally,the
SectiondiscusseshowTheFortuneSocietyandits
Boardchangedorganizationallyasaresultofthe
capitalfinancingprocess.
» Construction(18months):Whileconstruction
managementwillvarysitetosite,thissection
providesFortune'ssuggestionsformanagingriskas
asocialserviceagencyduringtheconstruction
phase.Fortunepartneredwithaco-developerwith
expertiseinconstructionmanagement,builtits
constructionteamearlyandwithsignificantdue
diligenceanddedicatedhigh-levelinternalcapacity
tosupervisingthedesignandconstructionprocess.
Finally,Fortunewascarefulnottoerodeitshardwoncommunitysupportwithconstruction-related
disruptionstoitsneighbors.
» MovingIn:ThissectiondescribesFortune's
operationsandserviceplans,andtheongoing
fundingnecessaryforCastleGardens.Italso
describeshowFortunemanageditscomplex
lease-upprocess,whichrequiredjuggling
affordableandsupportivehousingfunders'
eligibilityrequirementsandtimelines.Finally,the
sectionbrieflydescribesCastleGardens'
buildingmanagement.
2
Thistoolkitisacasestudythatisintendedtoserveasa
resourceforotherorganizationsthinkingaboutstartinga
supportivehousingproject,orintheprocessofplanningone.
ThetoolkitalsoprovidessomeofFortune'sdevelopment
materialsanddirectsreaderstootherhelpfulresources,
includingtechnical“how-to”documentscreatedbythe
CorporationforSupportiveHousing(CSH).2CSH's“Toolkit
forDevelopingandOperatingSupportiveHousing”(CSH
Toolkit)linkstomanyusefultools,someofwhicharecited
heretohighlightandexplainFortune'slessonslearned.The
FortuneSociety'sDavidRothenbergCenterforPublicPolicy
(“DRCPP”),thepolicyandadvocacywingofTheFortune
Society,alsoprovidestechnicalassistancethatintegrates
Fortune'sinternalexpertise–thelifeexperienceofformerly
incarceratedstaffandclientsandfirst-handexperienceasa
longstandingdirectserviceprovider.Inparticular,DRCPPis
workingwithorganizationsinterestedinreplicatingthe
CastleGardensmodelinotherjurisdictions.
©FrederickCharles,Fcharles.com|Curtis+GinsbergArchitectsLLP
CSH's"ToolkitforDevelopingandOperatingSupportiveHousing,"referredherein,isavailableatwww.csh.org/toolkit2.
5
SECTION 2.
Background
Photo:LarryBercow
6
TheFortuneSocietywasstartedtohelpindividualswiththis
transition.Asthestoryin“FortuneandMen'sEyes”,theoffBroadwayplaythatwasthecreativeinspirationforthe
foundingofFortuneSocietyshowed,theexperienceofliving
inprisoncanbeagrislyone.TheplaywrightJohnHerbert,
whohadservedtime,createdamesmerizingstorythatDavid
Rothenbergthenproduced.Theplaygeneratedpublic
discussionabouttheexperiencesofincarcerationandthe
arguablymoredifficultprocessofreentry,andDavid
Rothenbergjoinedaudiencememberswhohadhistoriesof
incarcerationtofoundTheFortuneSocietytoservepeople
withcriminaljusticeinvolvement.Today,TheFortune
Societyservesapproximately3,000individualsannuallywith
holisticreentryservices.
SECTION 2.1 Incarceration, Reentry and
The Fortune Society
TheUnitedStatesincarceratesitscitizens–inparticularits
minoritycitizens–ataratethatfaroutpacesthatofother
countries.Thecountryhaslessthanfivepercentofthe
world'spopulationbuthas25%oftheworld'sprisoners.3
Today,2.2millionpeopleareinthenation'sprisonsorjails.4
Mostoftheseindividualsreturntotheircommunities:
studiesshowthat95%ofincarceratedpeoplearereleased
fromprison.5Unfortunately,approximately40%of
individualsnationwide6areincarceratedagain.
Inpart,thisisbecauseofthemanychallengesofreentry.
Justice-involvedindividualssufferfrommentalillnessand
substanceabuseathigherratesthanthegeneralpublic.
Accordingtoarecentstudy:“[s]ubstanceabuseappearsto
beinextricablyinterrelatedtocriminalbehavior,”andas
manyas80%ofthenation'sprisonandjailpopulationare
seriouslyinvolvedwithalcoholandillicitdruguse.7National
studiesshowthat56%ofstateprisonersand64%ofjail
inmateshavementalhealthissues.8Further,mostformerly
incarceratedindividualscomefrompoverty.9When
incarcerated,menandwomenexperiencethelossofsolid
familyandcommunityties,andwhatwenowknowisthe
traumaofincarcerationitself.Often,whenreleasedfrom
prison,peoplearewithoutresources,employment,support
andguidance.
3
Seee.g.AdamLiptak,“InmateCountinUSDwarfsOtherNations,”New
YorkTimes(April23,2008).
4
LaurenE.GlazeandErikaParks,“CorrectionalPopulationsintheUnited
States,2011,”BureauofJusticeStatistics,U.S.DepartmentofJustice
OfficeofJusticePrograms(2012).
5
Seee.g.JoanPetersilia,“Whenprisonerscomehome:ParoleandPrisoner
Reentry(2003)”.
6
PewCenterontheStates,“StateofRecidivism:TheRevolvingDoorof
America'sPrisons.”(April2011)(“45.4percentofpeoplereleasedfrom
prisonin1999and43.3percentofthosesenthomein2004were
reincarceratedwithinthreeyears,eitherforcommittinganewcrimeor
forviolatingconditionsgoverningtheirrelease.Whiledifferencesin
surveymethodscomplicatedirectcomparisonsofnationalrecidivism
ratesovertime,acomparisonofthestatesincludedinboththe
Pew/ASCAandBJSstudiesrevealsthatrecidivismrateshavebeenlargely
stable.WhenexcludingCalifornia,whosesizeskewsthenationalpicture,
recidivismratesbetween1994and2007haveconsistentlyremained
around40percent.”).
7
MatthewHiller,etal.,“PrisonerswithSubstanceAbuseandMental
HealthProblems:UseofHealthandHealthServices,”AmericanJournalof
DrugandAlcoholAbuseVol.31(2005).
8
DorisJ.JamesandLaurenE.Glaze,“MentalHealthProblemsofPrison
andJailInmates,”BureauofJusticeStatisticsSpecialReport,U.S.
DepartmentofJusticeOfficeofJusticePrograms(2006).
9
Seee.g.DorisJ.James,“ProfileofJailInmates,2002,”BureauofJustice
StatisticsSpecialReport,U.S.DepartmentofJusticeOfficeofJustice
Programs(2004)(83.6%ofjailinmateshadmonthlyincomesofless
than$2,000/month.71%ofjailinmatesin2002reportedtheywere
employedinthemonthsbeforetheirarrest.).
HousinghasalwaysbeenofparticularconcernforFortune's
clients.Approximately20%ofindividualsinstateprisonand
30%ofindividualsinjailhadexperiencedhomelessnessin
theyearbeforetheirincarceration.10Forthosewithmental
illness,theratesofhomelessnessbeforeincarcerationtend
tobehigher.11Theratesarealsohighforthosereturningto
majorurbanareas.12Ina36-citysurveyonhungerand
homelessness,prisonreleasewasidentifiedbyofficialsinsix
citiesasamajorcontributortohomelessness.13Further,
accordingtoaqualitativestudybytheVeraInstituteof
Justice,paroleesreleasedfromincarcerationwhoentered
homelesssheltersinNewYorkCitywereseventimesmore
likelytoabscondduringthefirstmonthafterreleasethan
thosewhohadsomeformofhousing.14TheFortuneSociety
believesthatthisdatasuggestthepositivepublicsafety
impactofprovidingstablehousingandcomprehensive
servicestoindividualsbeingreleasedtotheircommunities.
Until1996,Fortune'shousingservicesconsistedofdoingits
besttoconnectclientswithexistinghousingresourcesinthe
community.Thiswasnoeasytask.Individualswithcriminal
historiesfaceahostofchallengesinsecuringaffordable,
10 DorisJ.JamesandLaurenE.Glaze,“MentalHealthProblemsofPrison
andJailInmates,”BureauofJusticeStatisticsSpecialReport,U.S.
DepartmentofJusticeOfficeofJusticePrograms(2006).
11
Seee.g.DorisJ.JamesandLaurenE.Glaze,“MentalHealthProblemsof
PrisonandJailInmates,”BureauofJusticeStatisticsSpecialReport,U.S.
DepartmentofJusticeOfficeofJusticePrograms(2006)(“Stateprisoners
whohadamentalhealthproblemweretwiceaslikelyasthosewithout
tohavebeenhomelessintheyearbeforetheirarrest(13%comparedto
6%).”).
12
UnitedStatesDepartmentofJusticeOfficeofJusticeProgramsBureauof
JusticeStatisticsandUnitedStatesDepartmentofJusticeFederalBureau
ofPrisons,“SurveyofInmatesinStateandFederalCorrectional
Facilities.”(2001).SeealsoBureauofJusticeStatisticsUSDepartmentof
Justice,"SurveyofInmatesofLocalJails,1996."(1999).
13 USConferenceofMayors,AStatusReportonHungerandHomelessness
inAmericanCities(2002).
14 MartaNelson,PerryDeess,andCharlotteAllen,“TheFirstMonthOut:
Post-IncarcerationExperiencesinNewYorkCity,”VeraInstituteof
Justice(1999).
7
assubstanceabuse,unemployment,andlackofindependent
livingskills.Thefacilitybedsareforemergencyhousingand
forlonger-termhousing.Residentslivingintheemergency
housinginitialphaseoftheAcademyliveinsharedrooms
oftenenteringtheresidencewithnosourceofincome,
incompletedocumentationsuchasidentification,andno
trackrecordofsuccessordrugfree“cleantime.”
Residentslivinginthenext
phaseunitsliveineither
9
stablehousing.Often,individualsarereturninghometo
familiesandcommunitiesalreadyfinanciallystretched.
Exacerbatingtheimpactonlocalsheltersisthefactthat
privatelandlordsroutinelyrefusetorentapartmentsto
individualswithcriminalhistories.Inaddition,multiple
otherbarrierstohousingforindividualswithcriminal
historiesseverelylimithousingoptions.Theseinclude
federal,stateandlocalstatutorybarstoaccessingpublically
supportedhousing,suchaslimitedeligibilityforprograms
becausethedefinitionsofhomelessnessinmanyfederaland
localagenciesexcludethosebeingreleasedfrominstitutions.
Theforcesofgentrificationinlow-incomeneighborhoods,
stigma,discrimination,“NotinMyBackyard”(NIMBY)
attitudes,andwoefullyinadequatesuppliesofaffordable
housingcontributesignificantlytotheproblem.
InMay2002,astheresultofafive-yearperiodofplanning,
fund-raising,communityrelationsworkandconstruction,
FortunelaunchedTheFortuneAcademy,alsoknownas“the
Castle,”asupportivehousingdevelopmentlocatedinthe
ManhattanvilleneighborhoodofWestHarlem.The
neighborhoodisapredominantlylower-middleandworking
classLatinoandAfrican-Americancommunitythatistightly
knitandpoliticallyorganized,mostrecentlyagainstthe
expansionofColumbiaUniversityandtheaccompanying
expectationofgentrificationandrisingpropertyvalues.
SECTION 2.2 Supportive Housing
as a Reentry Solution
Sinceitsopening,theAcademyhasbeencitedasamodel
programbysuchrespectedandvariedinstitutionsasThe
UrbanInstitute,18AIDSHousingofWashington,19andtheU.S.
DepartmentofJustice.20
SECTION 2.3 Fortune Becomes a
Supportive Housing Provider and Opens
the Fortune Academy
Supportivehousing,whichCSHdefinesas“permanent,
affordablehousinglinkedtohealth,mentalhealth,
employment,andothersupportservices”15comeinavariety
ofdifferentformsvaryinginsize,fundingstreams,lengthof
stayandservicesavailable.16Theseprogramshavebeen
heraldedasan“effectiveandefficientapproachtomeetthe
housingandspecializedserviceneedsofex-offendersinone
comprehensiveprogram.”
TheAcademyserveshomelessindividualsfromNewYork
City'sfiveboroughs,allofwhomhaveahistoryofcriminal
justiceinvolvementandareinneedofawidearrayofsocial
servicestoaddressissuesadjunctivetohomelessness,such
Thesuccessofsupportivehousingprogramsisattributedto
thefactthattheseprojectsprovidebothstableandsafe
housingtohomelessformerlyincarceratedmenandwomen,
alongsidewraparoundservicessuchastheonesFortune
provides.Thereisgrowingevidencethatsupportivehousing
forhomelessformerlyincarceratedpersonsreduces
recidivism,makesneighborhoodssafer,promotesfamily
reunification,andismorehumaneandcosteffectivethanreincarceration.17
In1996,asaresultofastrategicplanningprocess,The
FortuneSocietydecidedtoaddressthebarriertosuccessful
reentrythatmanyoftheirclientsfacedbecauseoftheirlack
ofaccesstoappropriatehousing.TheresultwasTheFortune
Society'sfirstsupportivehousingproject,theAcademy.
15 CSHToolkit,“Aboutsupportivehousing.”
16
18 CaterinaGouvisRomanandJeremyTravis,"TakingStock:Housing,
Homelessness,andPrisonerReentry,"UrbanInstitute(2004).
KendallBlackandRichardCho,"NewBeginnings:TheNeedforSupportive
HousingforPreviouslyIncarceratedPeople,"CommonGroundCommunity
andCorporationforSupportiveHousing(2004);NinoRodriguezand
BrennerBrown,"PreventingHomelessnessAmongPeopleLeavingPrison."
VeraInstituteofJustice(2003);RichardP.SeiterandKarenR.Kadela,
"PrisonerReentry,"CrimeandDelinquency49,no.3(2003).
19 KristinaHalsandRachelMoorhead,"FromLockedUptoLockedOut:
CreatingandImplementingPost-ReleaseHousingforEx-Prisoners,"Aids
HousingofWashington(2007).
20 "TheFortuneAcademy:HousingforHomelessEx-PrisonersFromDream
toReality,”availableathttps://www.ncjrs.gov/pdffiles1/204806.pdf
17 Fordetails,seetheNIMBYToolkitatp.4orCSHToolkitSection1.
8
SECTION 2.4 Fortune's Experience
Overcoming Not In My Backyard
Resistance
CommunityBoard:InNewYork
City,CommunityBoardsarelocal
representativebodiescomposedof
unsalariedmembersappointedbased
ontheirinvolvementinthe
community.TheCommunityBoards,
amongothertasks,haveanadvisory
roleindealingwithlanduseand
zoningissues;andinassessingthe
needsoftheirneighborhoodsto
presenttotheCityduringitsbudget
process,andtoCityagencies.(See
“AboutCommunityBoards,”bythe
NewYorkCityMayor'sCommunity
AffairsUnit,availableat
http://www.nyc.gov/html/cau/html/
cb/about.shtml#govt.)
Fortunespentconsiderabletimeandenergyaddressingone
particularchallenge:“NotInMyBackyard”(NIMBY)
opposition,whichcandelayorevenderailaproject.
Fortune'sstrategyhadtwoparts:
(1)Fortunecollaboratedwiththecommunity
withrespect,transparency,accountability,
accessibilityandneighborliness;and
(2)Fortunedidnotwaiveronitsgoal,which
wastoprovidecongregatesupportivehousingto
itsclientpopulation.ThedetailsofFortune's
approacharesharedintheNIMBYToolkit.
Fortuneidentifiedcommunitystakeholders,and
workedtobuildone-one-onerelationshipswith
neighborhoodgroupssuchasthe
CommunityBoard.
Fortunehiredaformeremployeewhowasknownand
trustedinthecommunityasacommunityliaison,andpaired
himwithaformerlyincarceratedFortunestaffmemberwho
hadbeenadrugdealerinthecommunitybeforeturninghis
lifearound.ThetwoofthemworkedasateamwiththeCEO
andothermembersofFortune'sleadershipincludingthen
BoardChairRolandNicholson,meetingwithneighborhood
residentsandattendinganarrayofregularlyscheduled
communitymeetings.(Fortunestillattendssixmonthly
communitymeetingstomaintainitsconnectiontothe
communityanditsawarenessofcommunityissues.)
Further,FortunecreatedtheFortuneAcademyCommunity
AdvisoryBoardthatbecameapartoftheCastleGardens
developmentprocess.Fortuneinvitedelected
representatives,neighborsandmembersoftheformal
neighborhoodCommunityBoardtobemembers.Fortune
wascarefultoinviteopponentstoserveontheAdvisory
Board,recognizingtheimportanceoftheirvoice.Overtime,
communityoppositionbecamecommunitysupportas
Fortuneproveditselfasagoodneighborthathelpedmake
theneighborhoodsafer.Fortune'ssuccessinaddressingthe
neighborhood'sNIMBYresistancewascrucialtothe
successfuldevelopmentofCastleGardens.
CommunityAdvisoryBoard:“To
createasenseofsharedownershipin
theprojectandfurtherintegrateitself
intothecommunity,Fortunecreated
aCommunityAdvisoryBoardearlyin
theprocess.Theyinvitedasmembers
electedrepresentatives,Community
Boardleadership,andneighbors,
includingopponentsoftheproject.
FortuneuseditsAdvisoryBoardto
©FrederickCharles,Fcharles.com|Curtis+GinsbergArchitectsLLP
shareinformationontheproposed
renovationsandprogramdesign,
listentothearearesidents'concerns,
andsolicitinputfromtheBoard
members,honoringtheirlocal
experienceandknowledge.”(See
NIMBYToolkit.)
10
SECTION 3.
Castle Gardens
Pre-Development
Photo:DavidY.Lee
11
SECTION 3.1: A Preview of Castle Gardens
CastleGardensisanothermajorsteptowardfulfilling
Fortune'soriginalmission-drivengoaltoprovideservicesto
itsclientsandhavethefinancialstabilitytodosolong-term;
anditsadditionalgoaltoservethecommunityinwhichitis
locatedandhadbecomeapartofsincetheopeningofitsfirst
housingdevelopment.CastleGardensmeetsFortune'striple
bottomline.
OneofthebenefitsoftheAcademylandpurchasewasthat
theadjacentvacantlot,whichFortunealsoowned,allowed
forfuturedevelopment.21WhenFortunedecidedtodevelop
theAcademyaftermuchplanninganddeliberation,it
becamealandownerandsupportivehousingprovider,anew
roleforthesocialservicesagency.Thedecisiontoproceed
withthedevelopmentoftheadjacentemptylotwasmade
afterasimilarlyhighlevelofanalysisandscrutiny.Fortune's
processofBoardandcommunityengagementandof
organizationalreflectioncontinuedasitdecidedtodevelop
CastleGardens.
Theotherfiftyapartments,withrentsat50-60%AMI,range
fromstudiostothreebedroomapartmentsandareavailable
tolowincomeandverylowincomemembersofthe
communityat-large.Finally,CastleGardenshasanapartment
forthelive-insuperintendant,whois,asdescribedinaNew
YorkTimesarticleshortlyafterCastleGardensopened,akey
anchoroftheCastleGardenscommunity.
CastleGardensalsohasapproximately20,000squarefeetof
dedicatedservicespace.Aswillbeexplainedingreater
detail,Fortunewasdedicatedtofindingawaytoincludea
largeservicespace,aprioritythatrequiredFortuneto
exhibitgreatercreativityinitsprojectdevelopment.The
CastleGardensservicespacehasexpandedservicesfor
Fortune'sclients,buildingresidentsandcommunity
members.Thebuildinghasacomputerlabandlibrary,a
725-square-footconferenceandeventroomwithstate-ofthe-arttechnology,andanenergy-efficientgreendesignthat
willleadtosignificantlong-termhealthbenefitsand
costsavings.
ThedevelopmentofCastleGardensrequiredaserious
organizationalcommitmenttoanotherlarge-scale
supportivehousingproject.Itwouldtakefiveyearsof
intensiveefforttoopenit,whichwouldinvolvesignificant
internalmanpowerworkingalongsideexternalpartners.As
CSHadvises,thedecisiontotakeonsuchaprojectshouldbe
adeliberateoneinwhichtheorganizationconsiderscapacity
andmission,andunderstandsthevariousrolesitcanplayin
suchadevelopment.Capacityconcernsincludefinancial
capacityandviability,staffingcapacity,Boardcommitment
andacarefulconsiderationofopportunitycostsof
dedicatingtimetothisparticularproject.22Particularly
powerfulisthisframingofthedecisionbyCSH:“Oncea
supportivehousingprojectisbuilt,itmustbeoperated,
managedandmaintainedfortherestofitsusefullife,which
couldbe30,40,50years,orlonger,andtheserviceneedsof
thetenantsmustbemetthroughouttheproject's
operationallife.”
CastleGardensisacuttingedgegreenbuildingdesigned
accordingtothefollowinggreenstandards:USGreen
BuildingCouncilLeadershipinEnergyandEnvironmental
DesignCertification(LEED)forNewConstruction,Gold
Certification;EnterpriseGreenCommunitiesGuidelines;and
NewYorkStateEnergyandResearchDevelopmentAuthority
(NYSERDA)MultifamilyPerformanceProgram.Theproject
hasfeaturesdesignedtoreduceutilityusageandcostsbyat
least20%comparedtoastandardbuilding,including:
»
»
Arainwaterharvestingsystemthatconserveswater
ysupplyingmake-upwaterforthecoolingtower,
b
irrigationforthegreenroof,andwaterfor
cleaningsidewalks.
Mechanicalsystemsincludeahigh-efficiencyboiler
locatedontherooftop,whichenhancesperformance.
Appropriately-sizedHVACsystems,whichreduce
operatingexpenses.
SECTION 3.2: The Conception of
Castle Gardens
CastleGardensisagreenbuildingwith113affordable
apartmentsforindividualsandfamiliesearning60%orless
oftheAreaMediaIncome(AMI),includingfiftyfurnished
studioapartmentsand13largerapartmentsthatare
supportivehousingforhomelessindividualsandfamilies
withincarcerationhistories.
»
»
»
Aluminumsolarshadesaboveeachwindowonthe
southfaçadethatblocktheintensesummersunand
keepapartmentscoolerduringthewarmermonths
whileallowingdaylightintotheunitsduring
thewinter.
Energy-efficientappliances,theuseofoccupancy
sensorsforlightinginpublicspaces,low-flow
plumbingfixtures,andadditionalinsulationto
reduceutilitydemand.
21 WhenFortunedevelopedtheAcademy,itlegallysplitthepurchasedlotin
two.Itcontinuedtoownthevacantlot,whichitmortgagedandusedasa
parkinglot.
22 SeematerialslinkedinCSHToolkit,Section2A.
12
Theagencypotentiallybecomesalandowner,alandlordand
adebtortoamultitudeoffundingstreams.Adecisionto
beginsuchaprojectisnotonetobemadelightly.Theupside
isalsogreat:“suchdevelopmentactivitiesestablishan
organizationasanimportantstakeholderwithatangible
investmentinthecommunity,withgreaterpotential
influence,andbetterabletopresentthecaseforaffordable
andsupportivehousingwithgreatercredibilityintheeyesof
manydecisionmakers.Finally,successindevelopingand
operatingrealestatecangreatlyenhanceanorganization's
credibilitywithphilanthropy,governmentagencies,and
otherpotentialfundingsources.”Fortune,forexample,has
recognizedthisupsidewithCastleGardensthrough
increasedeffectivenessinserviceprovision,increased
communitysupport,increasedcompetitivenessinfunding
proposals,enhancedmarketingopportunitiesincluding
mediacoverage,andinterestinFortune'stechnical
assistancetoreplicatethemodel.
SECTION 3.3 The Castle Gardens
Pre-Development Planning Team
Inordertodeterminehowitshouldachieveitstriplebottom
line,Fortunehadtobetterunderstanditsoptionsforthesite,
andconsiderthoseoptionsinlightoffitandcapacity.
Aswasrecommendedbyexperts,Fortune'sfirststepwasto
conductfeasibilitystudies“toevaluatethebenefitsofseveral
differentviabledevelopmentoptionsforthissitegiventhe
currentzoning.”Thisincluded“review[ing]theconditionsof
thesiteandtheneighborhood,gather[ing]comparablemarket
data,perform[ing]azoninganalysis,evaluat[ing]various
housingdevelopmentoptions,andfinallyperform[ing]a
financialfeasibilityanalysisfortheselectedoptions.”23
Inlate2005,Fortunestaffhadstartedconversations
internallyandwithitsBoardaboutitsoptionsforthevacant
lotasitlearnedthatthelandwasvaluedatconsiderably
morethanithadcosttopurchase.InDecember2005,the
Boardhadpreliminarydeliberationsabouthowbesttomeet
Fortune'sgoalsofprovidingservicesinthefuture,financial
stability,andpromotingitscorevalues.TheBoarddiscussed
whetheritshouldsellthelandandcreateanendowmentfor
TheFortuneSocietyforfuturefinancialstabilitytoprovide
reentryservices;ordevelopthelandaslowincomehousing,
marketratehousingand/oraservicecenter.Thevalues
questionwasalwaysanimportantonetoFortuneasit
consideredhowbesttoutilizetheemptylotinsupportofits
mission.Thedecisionaboutwhattodowiththelottookona
greatersenseofurgencywhenFortunewasadvisedthatthe
politicalandeconomicclimateunderthecurrentmayor
providedanopportunetimetoundertakeaprojectsuchas
this.Aseedhadbeenplanted.
InNovember2005,Fortune'sfirstexperthadapproachedthe
agency.DennisDerryck,aprofessorofProfessionalPractice
andManagementatMilanoSchoolforManagementand
UrbanPolicy(“Milano”)attheNewSchoolwithastrong
commitmenttoHarlem,approachedFortunetoaskifitwas
interestedinhisstudentsdesigningaprojectforthelotto
enterintoaJPMorganChaseCommunityDevelopment
Competition.24Fortuneagreed.Thecompetitionwasan
opportunitytobrainstorm–andthewinningprojectwould
beawarded$25,000.
DerryckandhisteamofstudentsfromParsonsInstitutefor
DesignandMilanoprovidedFortuneacreativespark,25
creatinganopportunityforFortunetodosome“bluesky”
visioningabouttheprojectandwhatmatteredmosttothe
For additional materials on how to
decide if a supportive housing
project is a fit, consider these
CSH resources:
23 JonathanRoseandCurtis+Ginsberg,“FortuneSociety:FeasibilityStudy
for625West140thStreet,”(October2006).
CSHToolkit,SectionII.A,including:
» AssessingReadinessfor
SupportiveHousing
DevelopmentActivities
»
FortuneanditsBoardwereguidedby
ateamofpaidandprobonoexperts.
Fortunehadlearnedearlyonthe
importanceofbeingclearaboutits
capacityandstrengthsandweaknesses
andsolicitedexpertadvicethroughout
theprocess.
AssessingFit:DoesDeveloping
SupportiveHousingFitwith
YourStrategicPlan,Missionand
OrganizationalStructure
13
24
“TheaimoftheJPMorganChaseCommunityDevelopmentCompetition
hasbeentoassistlow-andmoderate-incomecommunities,small
businesses(particularlyminority-andwomen-owned),andlow-to-
moderate-incomeindividualsandfamiliestoachievetwocommonly
incompatiblegoals:economicprofitabilityoftheirbusinessestogether
withpromotingsocialsustainabilityintheircommunities.”(Summary
adoptedfromNewSchoolcoursematerials.)
25
ThestudentsweretaskedwithdesigningFortuneanaffordablehousing
optionforhomelessformerlyincarceratedpersons,possiblyona
permanentbasis;aservicecenterforclientsresidinginpermanent
housing;andthedevelopmentanddesignofasustainableincomestream
tosupportwrap-aroundservices,possiblyintheformofmarket-rate
housingonthesite.Fortunewascommittedtolookingintofinancial,
environmentalandsocialsustainability.
Pre-Development Tips from
Fortune's Experience
»
»
»
»
»
»
»
»
»
Enlistarangeofexpertsduringthisphaseto
provideadviceinareaswherethe
organizationdoesnothavesufficientexpertise.
Carefullyconsidermissionandorganizational
goalsandhaveexpertsworkthroughthe
variousoptionstoobtainthosegoals.Beclear
aboutwhatisnegotiableandwhatthe
organizationmusthave.
Keepanopen-mindandbeguidedbytheidea
of“choicepoints”whentheprojectcanbe
haltedorshapeddifferently.
Securepre-developmentplanningfunds.This
mayonlyrequirelimitedfunding,buthaving
moneyavailabletoengageexpertsiscriticalto
beingabletomakeaneducateddecision.
Haveseniorleadershipcommitment.
CultivateBoardengagementearlyandregularly.
Engagewiththecommunityearlyandregularly.
UseRFPprocesstoselectpartnersina
competitiveandtransparentway.
Carefullythinkthroughorganization's
capabilitiesandlimitationsandsolicit
expertsandsupportinareasinwhichitis
needed.Behonestaboutthisupfront.
buttheorganizationhadtostepbackandconsiderall
options(includingsellingtheland),andtoanalyzethese
optionswithrigor.FortuneissuedanRFP,selectingand
hiringJonathanRoseCompanies(JRCo),aNewYorkCitybased“greenrealestatepolicy,planning,development,civic
developmentandinvestmentfirm”toconductafeasibility
study,paidforwithagrantfromtheCorporationfor
SupportiveHousingandtheJPMorganChaseAwardmoney.
JRCowastaskedtoprovidean“assessmentofhousing
serviceoptionsforthesite,anestimateofprojectcosts,
identificationofprospectivefundingresources,andaproject
timelineforcompletion.”
organization'smission,andengagingFortune'sneighbors
throughitsCommunityAdvisoryBoard.26Thestudents'
designwasabigpicturethoughtpiecefortheprojectand
consideredthefollowing:(1)afinanciallysustainableproject
thatmeetstherequirementsofthelendingcommunityand
willgenerateanincomestreamtostrengthenFortune's
financialcapacity;(2)socialrateofreturntobenefitthe
communityandsociety;and(3)developingan
environmentallysustainablebuilding.Thestudents'
brainstorminginspiredFortunetocommittoagreen
buildingwithdesignelementsthatincludedthecommunity's
affordablehousingneeds.Whatismore,thestudents'design
wontheJPMorganChaseawardinMay2006–providing
Fortunewith$25,000thatwasthenappliedto
pre-developmentcosts.
Simultaneously,Fortunebegantheprocessofbringingin
additionalexperts.Thestudents'projectprovidedoneoption
ofhowFortunecouldgeneraterevenueandfulfillitsmission,
26 FortuneSocietyCommunityAdvisoryBoardMeetingMinutes
(March28,2006).
14
Thefeasibilitystudywouldexplore
alloptions,includingsellingtheland
outright,retainingallorpartofthe
spaceforhousing,servicesorboth;
andwouldtakeintoaccountFortune's
mission,theneedsoftheorganization,
itsclients,communityrelationsand
needs,sustainabilityand
financialfeasibility.
Fortuneenlistedaconsultant,JayeFox,toprovide
assistanceinreviewingfinancial,architectural,andproject
planningconcepts.FortunealsohadtheCorporationfor
SupportiveHousingprovidingextensiveandmuchvalued
probonoadvice.
clearthatFortune'srelationshipwiththecommunityasit
plannedCastleGardenswasdramaticallydifferentthan
whenithadstartedtheAcademy.
Aroundthistime,ColumbiaUniversitywasbuyinglandin
WestHarlemandthecommunitywasconcernedabout
gentrification.TheCommunityAdvisoryBoardrequested
thatFortuneincludeaffordablehousingthatwastruly
affordabletothelocalcommunityincludingapartmentsfit
forfamilies,andexpressedaneedforcommunityspace.28Ina
strangeturnofevents,TheFortuneSocietyanditsformerly
incarceratedclientsbecamethe“goodguy”asitworkedwith
thecommunitytoincorporateitsinput.Infiveyears,
Fortune'srelationshipwiththecommunitywentfrom“notin
mybackyard”to“wewanttoliveinyourhousingproject.”On
September12,2006,ataBoardmeetingdeemedoneofthe
mostimportantinFortune'sBoardhistory,JonathanRose
CompaniesandCurtis+Ginsbergpresentedtheresultsofthe
feasibilitystudy,reviewedtheoptionsforthelotand
recommendeddevelopingthelotwithmixedaffordableand
supportivehousingrentalsratherthansellingtheland.
Fortunehadtomakethecasethattheproposeddevelopment
mademoresensethansellingthelandatapproximately$9
million(theapproximatedvalueinthefeasibilitystudy)to
createanendowmentforFortunetoprovide
reentryservices.
Atthisearlystage,then,Fortune'steamofplanningexperts
includedtheNewSchool,JonathanRoseCompanies,Curtis+
GinsbergArchitects,LLP(“Curtis+Ginsberg”)(whowere
enlistedbyJonathanRoseCompaniesasarchitectural
advisorstothefeasibilitystudy),theCorporationfor
SupportiveHousing,andconsultantJayeFox.
Request for Proposals
ThroughoutthedevelopmentofCastleGardens,
FortunehiredexpertsthroughtheRequestfor
Proposals(RFP)process.RFPsallowedFortuneto
solicitandlearnfromarangeofideas,“meet”multiple
providersandcomparethemside-by-sidebefore
makingadecision.TheRFPprocessalsosettheright
relationshipandtonewithprovidersbecausethey
knewtherewascompetitionandhadincentiveto
providecompetitivepricesandqualityservice.
Theprojectedvalueoftheendowmentwasbasedonthe
assumptionthatitwouldyield,at5%,anannualincomeof
$450,000ofunencumberedsocialservicesfunding.Fortune
calculatedthatrent-freeservicespacetargetedwouldyield
thatmuchinsavingsthatcouldbeusedtosupport
servicesinstead.
SECTION 3.4 Board and Community
Engagement During Castle Gardens
Pre-Development
FortuneengageditsBoardregularlyinthepre-development
phase,andinApril2006theBoardwasnotifiedthatFortune
hadengagedJonathanRoseCompaniesandwastold“the
Boardwillbepresentedwithaseriesofalternativesthatare
workedoutaccordingtocostbenefit,jugglingbenefitto
client,benefittocommunity,andbenefittooursustainability.”TheBoardwassupportivefromtheonsetand
reiteratedthatFortune'scorevaluesshouldbepresented
whenevaluatingeachoption.TheBoardstressedthatthe
developmentofthelotshouldbeaprofitableenterpriseto
helpsustainTheFortuneSocietyforyearstocome.27Some
membersoftheBoardhadalargerroleinpre-development
planning.BettyRauch,ChairofFortune'sBoard,wasa
memberofFortune'spre-developmentSteeringCommittee.
TheBoardalsocreatedaVacantLotPlanningCommitteeto
focusonthisproject.
Withcreativityandcarefulanalysis,
Fortune,withthehelpofitsexperts,
demonstratedthattherentfreeservice
space,rentalincomeandsocialgood
ofprovidinghousingtoclientsand
thecommunitybettermetFortune's
mission-driventriplebottomline–
servicestoclients,financial
sustainability,andservicetothe
Harlemcommunity.TheBoard
consideredthedecision,andina
unanimousdecision,theBoardvoted
28
todevelopthelotasrecommended.
FortuneanditsexpertsalsometwithFortune'sHarlem
neighborsearlyonandoften.InJuneof2006,Fortune
introducedJonathanRoseCompaniesanditsarchitectural
firm,Curtis+Ginsberg,toitsCommunityAdvisoryBoard.As
Fortuneanditsadvisorssoliciteditsneighbors'input,itwas
27 FortuneAcademyCommunityAdvisoryBoardMeetingMinutes
(June6,2006).
28 FortuneSocietyBoardMeetingMinutes(September12,2006).
15
organizationcoulddiscontinueorreshapetheprojectifthe
risktoorganizationalfunctioningwasdeterminedtobetoo
great.”29Fortune'snextstepsintheprocessweretoassessinhousecapacity,todecideitsroleindevelopment,andselect
itsdevelopmentteam.
The Feasibility Study
“Basedonhowitfitswiththestatedprojectgoals,its
financialfeasibility,localsupport,themanagementof
risk,thepreferredbuildingprogramwouldbetobuild
55,000squarefeetofFortuneSocietyservicespace
andsupportivehousing,withtheremaining55,000
squarefeet[sic]dedicatedforaffordableand
supportiverentalsfinancedwithLowIncomeHousing
TaxCredits.”Thefeasibilitystudytookintoaccount
Fortune'sprioritiestoprovidesupportivehousingfor
Academygraduatesandhaverentfreeservicespace.
Thebuildingwouldhaveoneortwofloorsofservice
space,twoorthreefloorsofsupportivehousingfor
Fortuneclientsandfloorsofaffordablehousing.The
designanticipatedfittingintothe“QualityHousing”
zoningschemeforamorecontextualdesign,amore
efficientfloorplate,lowerconstructioncostandmore
squarefootage.Thenewbuildingwouldbeattached
totheexistingAcademybuilding.
CSHdetailsafewofthechallengesthatariseindeveloping
supportivehousingthatorganizationsshouldconsiderin
assemblingadevelopmentteam,includingfinancialrisk,
stafftimeandknowledgeofrealestatetransactionsand
affordablehousingfinance.Thedeveloper“istheorganizationdesignatedastheleadagencyonthedevelopmentof
theproject.Thedeveloperisultimatelyresponsible,whether
throughin-housestafforthroughengagingtheservicesofa
developmentconsultant,formanagingthedevelopment
teamanddrivingthedevelopmentprocess,fromthe
acquisitionofthesitethroughtotheleasingupofthe
completedunits.Inmanycases,thedeveloperwillcontinue
toowntheprojectafteritiscompletedandoperational.”30
CSH'sdescriptionfortheprojectmanagerofadevelopment
teamisusefultounderstandingthetasksdevelopment
entails.Projectmanagersaretypicallyresponsiblefor
“assemblingthedevelopmentteamofexpertswhowill
design,build,financeandmanagetheproject;identifying
andobtainingcontrolofasuitablesiteforthehousing;
workingwiththedevelopmentteam,particularlythe
Withtaxcreditfinancing,Fortunewouldbeableto
providehousingtoitslocalcommunityandhave
lowerrisk,morecontroloverthefuturecharacterof
thebuildingandregularcash-flow.Marketrate
rentalsandmixedincomeprogramunitswerefound
tobelessfinanciallyfeasiblethanlowincometax
creditprograms(either4%or9%),especiallygiven
NewYorkCity'scommitmenttosuchdevelopments.
Fortunealsorejectedthemorelucrativeoptionof
co-opsbecauseofitsvaluescommitmentto
providinghousingthatwasinfactaffordabletothe
surroundingcommunity.Thefeasibilitystudyalso
envisionedbeingabletoaffordalargeFortune
servicespace,auniquefeatureinanaffordable
housingdevelopment,andonethatrequiredmore
complexfinancing.Theresultsofthefeasibilitystudy
werepresentedtoFortune'sCommunityAdvisory
BoardonNovember1,2006.
JoAnnePage,Fortune'sPresidentandCEO,recallsin
particulartheinsightofMaxAnsbacher,aformerFortune
Boardmember,whosaidFortunewillhavemany
opportunitiestosellthislandandonlyoneopportunityto
ownit;andifFortunesoldit,theymightendupwith
adjacentlandusedforapurpose–suchasluxuryapartments
–thatmightcreateoppositiontotheexistingAcademy.
FortuneanditsBoardwerecommittedtoitsclients,the
Academy,anditslow-incomeneighbors.
SECTION 3.5 Selecting the Castle Gardens
Development Team
©FrederickCharles,Fcharles.com|Curtis+GinsbergArchitectsLLP
AlthoughtheBoardandFortunewereexcitedaboutthe
projectdescribedinthefeasibilitystudy,Fortunethoughtit
importanttokeepanopenmind,andwasguidedbytheidea
of“choicepoints”throughouttheprocess,“atwhichthe
29 NIMBYToolkit.
30 CSHToolkit.“RolesandResponsibilitiesofDevelopmentTeamMembers”
16
architect,todesignthephysicalspace;obtainingappropriate
financingforthedevelopmentfromprivatelendersand
publicagencies;obtainingalldesignreviewandplanning
approvalsfromlocalagencies;maintainingcompliancewith
allfundersduringthepre-developmentandconstruction
process;implementingandmonitoringtheconstruction
processwiththeconstructionteam;selectingandhiring
propertymanagementservices;andmonitoringtheproperty
managementagentasitimplementsinitiallease-up
totenants.31
Optionthreewasoutofthequestionbecauseanout-of-the
boxturn-keydevelopmentwouldnotmeetFortune'sneeds.
Fortunerequiredalargeservicespacetoserveitsclientsand
becausesuchaspacewouldprovideservicedollarsthrough
rentalsavings.Fortunewasplanningonthistrade-offwhen
itchoseagainstthesaleofthelottocreateanendowment.
Thisrequirement,ontopoftheaffordableandsupportive
housingspace,madetheprojectuniqueandmorecomplexto
developandfinance.Thiswasnotaturn-keyhousingproject
andFortunewantedaco-developerinterestedandableto
workonanout-of-the-boxproject.Further,Fortunefeltit
essentialtoreservetherighttochooseornotchoosefunding
sourcesbaseduponrequirementsthattheymightmakefor
useofthebuilding,andthispossibilityofrejectionof
availablefundingbasedonmissionwouldnothavebeen
acceptabletomany
turn-keydevelopers.
Buildingthedevelopmentteamwasarisk-management
choicepoint.Fortunehadtoconsiderthefinancialimpact
andriskofthevariousdevelopmentteamoptions.Inlowincomehousingtaxcredit(“LIHTC”)financing–expectedto
beakeypartofFortune'sfundingmix–adeveloper'sfeeis
builtintothefinancingstructure.Enlistingaco-developer
meantsplittingthedeveloperfee,whichisbadlyneeded
unrestrictedfundingforanagency.
Adevelopmentpartnerwouldassumesomeoftherisksand
guaranteesassociatedwithaprojectofthisscale.Further,
therightco-developerwouldenhanceFortune'sfunding
applicationsandhelpbuildrelationshipswithadditional
funders.WhileFortunewasadvisedbyotherstohirea
developmentconsultant(thecheaper,lesssupportive
option)andserveasdeveloperonitsown–therebysaving
thedeveloper'sfee–Fortuneassessedthatitdidnotknow
enoughaboutdevelopmentandconstructiontobeableto
superviseconstructionandprovideconstruction-related
guarantees.Astheeconomyitselfbecamedeeplytroubled
duringlate2008,itbecameclearthatrecognizingthisand
enlistingaco-developerwiththestatureofJonathanRose
Companiesprovidedalevelofprotectionagainstfinancial
riskthatwasneededfarmorethanhadbeenanticipated
whenthedecisiontobringinaco-developerhadbeenmade.
Further,underlowincomehousingtaxcreditfinancing,the
developerwouldberequiredtoprovideguarantees,which
protectinvestorsbyholdingtheproject“liableforcertain
things,includingtaxbenefitshortfalls,unanticipated
operatingdeficitsanddevelopmentcostoverruns.”32
Fortunehadthefollowingchoicesofhowtodevelopthe
land:
»
Option1:Serveasthesoledeveloperandhandleall
projectrelatedtasksandtheoverallmanagementof
theprojectin-house.Fortunecould,underthis
option,hireadevelopmentconsultanttomanagethe
projectbaseduponinstructionsprovidedand
decisionsmadebytheorganizationalongtheway.
Thisoptionentailedgreaterriskbutwouldmean
Fortunewouldretainthefulldeveloper'sfee.
»
Option2:Partnerwithadeveloper.Underthis
scenario,Fortuneanticipatedworkingwitha
co-developerasateam.Thisrelationshipmayvary
fromprojecttoproject,butFortunewaslookingfor
apartnertohelpplantheprojectandsecurecapital
financingcommitments.Theco-developerwould
mostlikelytakeprimaryresponsibilityfor
constructionandrelatedfinancialguarantees.The
co-developerandFortunewouldsplitthe
developer'sfee.
»
Option3:Contractwithadeveloperwhowould
developtheproject,receivethefulldeveloper'sfee,
andthenturnthebuildingovertoFortune
oncecompleted.33
Fortuneselectedaco-developerthroughtworoundsofRFPs.
Fortunewantedmuchfromitsco-developer,andtheRFPs
wereusedtoevaluatewhichoftheapplicantco-developers
wouldmeettheproject'sspecificneeds.ThefirstRFP
solicitedco-developerapplicationsthatweretobejudgedon
anyhistoryofcomparabledevelopmentprojects,strengthof
references,organizationalcapacity,experienceworkingin
andwiththeWestHarlemcommunity,greenbuilding
experience,andthedeveloper'scost-sharingproposal.The
RFPwasdraftedbyFortune'sconsultantbasedonFortune's
requirementsforaco-developer,withthesupportofCSHand
anattorneywhoisanexpertontaxcredits,andwassentto
18pre-qualifiedfirms.
ThesecondRFPwasusedtofurthervettherespondentsand
narrowedthefieldtotwoco-developers.ThisRFPtestedthe
developers'creativityincombiningfundingsourcesina
viablewaytosupportFortune'sprojectgoalsofservicespace
forFortuneservices,housingforitsclientsandaffordable
housingforthecommunity.Ashasbeenmentionedbefore,
Fortune'srequirementofalargeservicespacewasunusual
inanaffordablehousingproject.JonathanRoseCompanies,
thefirmthatconductedthefeasibilitystudy,wasonboard
withthisrequirementandwaswillingtoworktobringin
multiplefundingsources.Theothercontender,“C”,knewlow
31 CSHToolkit.“RolesandResponsibilitiesofDevelopmentTeamMembers”
32 CSHToolkit.“UnderstandingLowIncomeHousingTaxCredits:Howto
SecureEquityInvestmentsandEvaluateSyndicationOptions.”
33 CSHToolkit.SectionII.B.
17
incometaxcreditsbutofferedamoreturn-keyproject–it
didnotwanttoincludealargeservicespacebecauseit
wouldbehardertofundandthereforecarriedagreaterrisk.
WhileCwouldhaveallowedFortunetoplayamorelimited
day-to-daydevelopmentrole,Fortunewouldalsonothave
optimallymetitstriplebottomline.
Aftertheco-developerdecisionwasmade,Fortunethen
workedwithJRCotoselecttherestofitsdevelopmentteam.
Toselectitsarchitect,Fortuneleverageditsrelationshipsand
workedwithCSH,JRCo,HomelessHousingandAssistance
Program,andtheNewYorkStateDormitoryAuthority
(NYSDA)tocreateashortlistofarchitectswithanexpertise
ingreendesign,governmentbudgetsandthecreativityto
designastructurewithmaximumvaluewithinsucha
budget.Fortunedescribedwhatwasdesiredasa
“champagnebuildingonabeerbudget”:theorganization
wantedabuildingthatwasbeautifulandshowedhowmuch
tenantswerevalued,aswellasbeingfunctionaland
environmentallyresponsible.
Further,inthissecondRFP,Fortunewasexplicitthat
“[o]neofFortune'sconcernsisthat
restrictionsfromfundersmustnot
driveclientselectionorprogram
designinawaythatiscontraryto
Fortune'sprogrammodelsorgoals.”
TheRFPwassentonlytotheshort-listedarchitecturalfirms,
andwaswrittentoevaluatetheirabilitytomeetthese
criteria.Importantintheselectionprocessweresitevisits,
duringwhichFortunelearnedaboutthefirms,butalso
learnedaboutconstructionpossibilitiessuchasmaterial,
socialservicesareas,securityandlineofsight,colorsand
comfort.FortuneandJRCowereabletonarrowthefieldto
twoarchitecturefirms;onealargeprestigiousarchitecture
firmthathadworkedwithJRCobefore;andtheseconda
smallerfirm,Curtis+Ginsberg,thathadnotdesigneda
buildingforJRCobuthadworkedwithsisteragenciesand
hadworkedontheCastleGardensfeasibilitystudy.
34
Fortunetestedapplicantsonhowtheywouldrespondto
Fortune,forexample,wantingtowalkawayfromaparticular
fundingsourcebecauseofvaluesissues.Agreeingtodoso
wouldexposetheco-developertogreaterfinancialriskand
potentialdelaysinclosingonfundingfortheproject.Finally,
Fortune,becauseitalreadyownedthelandandhadother
pre-developmentactivitiesintheworksorcompleted,was
lookingforthebestpossibledealonthedeveloper'sfee.C
wantedthefulldeveloper'sfee,therebycuttinginto
Fortune'saccesstounrestrictedfunds.
FortuneandJRCousedreferencechecksanddecidedtouse
Curtis+Ginsberg,whichwasrespectedandhighquality,but
smallenoughsuchthatMarkGinsberg,co-ownerofthefirm,
wouldbedeeplyinvolvedwiththeproject.Aswiththedecision
tohireJRCo,Fortuneknewthatresearchingthefirmalonewas
notenough,andthatitwasimportanttoknowwhichindividuals
withinthecompanywouldbeactiveontheprojectday-to-day.
FortuneselectedJRCobecausetheco-developeragreedto
workwithFortuneonthesefundingquestions.Theywere
willingtodosobecauseitwasalarge-scaleproject,because
ofFortune'srecord,becauseitwasgoodforJRCo's
reputation,andbecausetheyhadthestomachforabigriskbigreturnproject.But,importantly,theyalsodidthis
becauseJonathanRoseCompany'svalueslinedupwith
Fortune'svalues;andFortuneverifiedthisbydiligently
checkingJRCo'sreferencesandtrackrecord.Reference
checkswereanimportantpartofFortune'sdecision-making
inchoosingadevelopmentteam.Fortuneinvestigatednot
onlytheprincipalofthefirmsitwasconsideringbutalsothe
staffthatitwoulddirectlybeworkingwith.SincePaul
Frietag,theseniorpersonatJRCowhowoulddirectly
managetheproject,wouldbepivotaltothequalityofJRCo's
role,Fortune'sduediligenceincludedanin-depth,extremely
positivereferencecheckofhisworkonpriorprojectsandat
hisprioremployment.JonathanRosewasalsoaskeddirectly
whathispersonalrolewouldbeintheproject,and
respondedthattheproject“wouldhaveallofhispersonal
involvementthatwasneeded.”Thatincludedtakingpartin
regularSteeringCommitteemeetingsandbeingavailableto
providecoachingandconsultationduringthecourseofthe
projectandFortune'sCapitalCampaign.(Inaddition,asthe
economyofthecountryenteredcrisismodejustasthe
projectwastocloseonconstructionfinancinginthewinter
of2008,JonathanRoseendedupfarmorepersonally
involvedinbringingfinancingtoaclosethanever
anticipated).
Fortune'schosenarchitect,Curtis+Ginsbergalso,alongwith
JRCo,helpedFortuneunderstandwhatitwantedfromits
generalcontractor.Fromthispointforward,Curtis+Ginsberg,
JRCoandateamfromFortunemetweeklyaboutdesign
elementsincludingmaterials,tiles,trafficflowandmore.
Fortune'steamincludedSherryGoldstein,ChiefofStaff;JoAnne
Page,CEO;andattimesSeniorVicePresidentofPrograms
StanleyRichardstocontributetodecisionsaboutservicespace
andflowquestions.Asaresultofthisprocess,Fortunebeganto
solidifyitsdesignpreferencesforthebuilding.
Fortune'spartnershelpedindraftingtheGeneralContractor
(“GC”)RFP,releasedinMarch2008.“TheGeneralContractor
isresponsibleforprocessingthenecessaryinsurance
coverageandbuildingpermits,contractingwith
subcontractors,managingtheconstruction,andensuring
wagesandlaborstandardsaremetforallconstruction
workers.”35TheRFPstressedFortune'sproject-specific
prioritiesincludingthegreenbuildingrequirements,price
requirementsbecauseofgovernmentfundingandprevailing
wagerequirements.
35 CSHToolkit.“RolesandResponsibilitiesofDevelopmentTeamMembers”
34 Fo
rtuneSocietyCo-DeveloperRequestsforProposals:PhaseII.
18
Further,FortunesoughtaGeneralContractor(GC)thatcould
coordinateandmanageacomplexsetofgovernment
agencies,eachwithitsownmonitoringrequirements.The
stateandcityfundingagenciesmonitorconstructionandsign
offonApplicationandCertificateforPaymentdocumentsthat
verifyprogressandreleasefunding.Thecontractorwould
needexperienceinmanagingthatprocessandcompletingthe
constructiononschedule,andfunderswouldconsiderwho
theGCwasinmakingfundingdecisions.Somedevelopersdid
notfindthiscomplexprojecttobetherightfit,andFortune
conductedinterviewsandsitevisitsoftheapplicantsto
narrowthefieldtoonecontractor–LettireConstruction–
thatmetallofFortune'scriteria,includingprice.
TheCastleGardensconstructionteamalsoincludedthe
followingexperts:
»
»
»
»
»
Alandscapearchitecturefirm;
Amechanical,electricandplumbing
engineeringfirm;
Astructuralengineeringfirm;
Asustainabilityconsultant/commissioning
agency;and
Ageotechnicalengineeringfirm.
TheCastleGardensdevelopmentteamalsohadPaul,Weiss,
Rifkind,Wharton&GarrisonLLPasattorneysfortheproject
andKarenShermanofShermanLawastheattorneyfor
Fortunetohandleitsrelationshipwiththeco-developer.
Fortunefollowedadvicethatitretainanattorneyseparate
fromitsco-developertoprotecttheorganizationintheareas
inwhichitsinterestsandresponsibilitiesmaydiffer;and
sharedanattorneywithitsco-developerfortheproject.
Theseattorneysassistedindraftingthesitedevelopment
agreementandreadyingFortune'scorporatedocumentsto
allowfortheproject.36KarenShermanalsoplayedan
importantroleforFortuneassheguidedFortune'sCEO
throughthecomplexitiesoftheguarantees,thesite
developmentagreementwiththeco-developer,andthehost
ofcommitmentsanddocumentsthatFortunehadtoagreeto
andbinditselfwithoverthecourseoftheproject.
©FrederickCharles,Fcharles.com|Curtis+GinsbergArchitectsLLP
Finally,Fortuneintegrateditsprojectteam,Boardand
internalexpertiseintocommittees,includingaCastleGardens
SteeringCommittee,whichincludedFortuneCEOJoAnne
Page;ChiefofStaffSherryGoldstein;JonathanRoseand
additionalJRCostaff;FortuneBoardmemberBettyRauch;
andotherBoardmembersandFortunestaffattimes.Fortune
alsohadaProjectManagementTeamcomposedofFortune
andJRCotodealwithday-to-dayplanning;andaRealEstate
sub-committeeofitsBoard.
36
FortuneSocietyBoardMinutes(November26,2008)(Theboardadopted
aresolutiontoamendFortune'scertificateofincorporationtoinclude,
amongFortune'spurposes,theprovisionofaffordablehousingforlow
incomepersonsandfamilies.Fortune'sBoardvotedyesunanimously.)
©FrederickCharles,Fcharles.com|Curtis+GinsbergArchitectsLLP
19
SECTION 3.6 Castle Gardens
Pre-Development Financing
Fortunerequiredfundstocarryoutthepre-development
activitiesdetailedabove.AsCSHsays,“[t]obeeffectivein
housingdevelopmentactivities,andtobeabletomovea
projectforwardinatimelymanner,anorganizationneeds
accesstoresourcestopayforpredevelopmentactivities–the
earliestactivitiesinthedevelopmentprocessnecessaryto
establishinitialplansfortheprojectandtoassessthe
feasibilityoftheproject'ssuccessfulcompletionand
operation.Whilesomeoftheseactivitiesmayonlyrequire
stafftimeandnotincurcosts,others,suchasengagingthe
servicesofconsultants,performingamarketanalysis,initial
architecturaldrawings,evaluatingpotentialsites,and
obtainingsitecontrol,willrequirefinancialresourcestopay
fortheassociatedcosts.”37Tofundthepre-developmentcosts,
Fortunehadthesourcesoffunding(inadditiontousing
Fortune'sunrestrictedfundsandstaffandtime),detailedin
thechartbelow.
37 CSHToolkit.“ApplyingforFinancingforPredevelopmentActivities.”
Photo:JohnDalton
38 Informationavailableathttp://www.db.com/us/content/en/1080.html.
CastleGardensPre-DevelopmentFundingSources
FundingSource
Type
Amount
Process
JPMorganChase
Competition
Award
Grant
$25,000
ThiswasthemoneyFortunereceived
asaresultofthestudents’winning
design.
Corporationfor
Supportive
Housing
Planninggrant;
Interest-freeProject
InitiationLoanrepaid
atpredevelopmentloan
closing;Interestbearing
pre-developmentloan
repaidatconstruction
closing;Pro-bono
consulting
$15,000
$50,000
$647,000
respectively;
probono
services
Fortunehadalongstandingrelationship
over7yearswithCSHandreceived
consultingservicesfromCSHinaddition
tothisfunding.CSHhadbeenimpressed
withFortune’sAcademyandwas
interestedinreentrysupportivehousing.
DeutscheBank
Americas
Foundation
Interest-freepre
developmentloan;and
pre-developmentgrant.
$25,000
$50,000
respectively;
eachyear
forthree
years.
Fortuneappliedforthisfunding
throughanRFPforDeutscheBank’s
SupportiveHousingAcquisitionand
RehabilitationEffort(SHARE)program,
whichsupports“developersofnew
PermanenthousingforNewYorkers
withspecialneeds.”38Thefundswereto
beusedforpredevelopmentand
developmentofCastleGardens.
20
SECTION 4.
Raising Capital for
Castle Gardens
Photo:DavidY.Lee
21
homelessformerlyincarceratedpopulationwith
additionalchallengesincludinghistoriesof
addictionandmentalillness,servicesincluded
intensivecasemanagementandabroadarrayofinhouseservices.
SECTION 4.1 Financing Introduction
OnceJonathanRoseCompaniescameonboardin2007,
FortuneandJRCobeganapplyingforfinancing,eachdrawing
upontheirknowledgeoffundingstreamsandpasttrack
recordwithfunders.Together,JoAnnePage,Fortune'sCEO,
andWhitneyFoutz,JRCoProjectManager,wrotetheirfirst
proposaloverMemorialDayweekendof2007.Thatwasthe
firstofmanyproposalsneededtobringinfullfinancingfor
theproject,whichclosedonDecember18,2008.In18
months,FortuneandJRCoraisedtheapproximately$43
millionrequiredforcapitalconstructionoftheproject,a
fundraisingpaceunheardofbyindustrystandards,andwhich
includedoveradozenfundingsourcesofvaryingtypes.
ThissectionfocusesprimarilyonthecapitalfundingforCastle
Gardens,withreferencetotheoperatingandservicesfunding
considerationsthatinfluenceddevelopmentfundraising.
Fundingforeachoftheseareascomesinmanyforms.First,
capitalfundingsourcesforhousingdevelopmentsare
typicallyintendedforeitheraffordablehousingprojectsor
supportivehousingprojects.InFortune'scase,because
CastleGardensincludedbothaffordableresidentsand
supportiveresidents(whowouldalsomeetaffordable
housingcriteria),Fortunewasabletoapplyforbothtypesof
funding.Further,fundingcanbetaxcreditequity,agrantora
loan.Forthesetypesoffunding,organizationsmaybe
eligible“asofright”(bymeetingeligibilitycriteriaand/or
throughnegotiations,ratherthanthroughanRFPprocess),
orthefundingstreammayrequireparticipationina
competitiveprocesstosecurethefinancing.43Loansmayalso
be“softloans”(alsoknownasforgivableloans)orloanswith
lowinterestthatareflexibleonhowandwhenthey
getre-paid.44Thelatterisoftenthecasewithsupportive
housingfundersbecausethefundersdonotexpectan
incomestream.Rather,theyrequirethattheprojectbeable
toprovideservicesforanumberofyears,whichhastobe
budgetedin.Forexample,oneofCastleGardens'keyfunders,
theNewYorkCityDepartmentofHousingPreservation
Development'sSupportiveHousingLoanProgram,requires
thebuildingbeusedassupportivehousingfor30years.
Affordablehousingprojects(moresothansupportive
housingprojects)typicallyincludeharddebtforwhichthe
projectwouldcarryamortgagetobeamortizedovertime.
WereferreaderstoawealthofinformationbyCSHon
fundingsupportivehousingprojects,andprovideabrief
summaryoftherelevantterms.Inadditiontopredevelopmentfunding,supportivehousingprojectsrequire
fundingforeachcomponentoftheproject:capital,operating
andservices.39
» Capital(ordevelopment)financingsources“are
thosesourcesthatmaybeusedtofundthecosts
associatedwithacquiring,creating,and/orrehabilitatinghousingunits,costssometimesreferredto
asbricksandmortarcosts.”40
» Operatingsources“aredefinedasthosesources
thatmaybeusedtopayforthecostsofoperating
and/ormaintainingthehousingorphysicalcomponentofsupportivehousing.Operatingcostsina
projectownedbyahousingsponsorincludeallcosts
ofmaintainingtheprojectonceitisreadyforoccupancy,suchaspropertymanagement,utilities,
maintenance,insurance,security,debtserviceor
otherloanpayments,andoperatingand
replacementreserves.”41
Eachfundingsourcehasitsownrequirementsandlimitations
suchaspopulation,incomelevel,orapartmenttypeandsize.
Unlikemostprojectswhichprovideeitheraffordablehousing
forlow-incometenantsorsupportivehousingforpersons
withspecialneeds,CastleGardenswasdesignedtoprovide
bothsupportiveandaffordablehousing,whicharedistinctive
intheirrequirementsandintheirfundingsources,increasing
thecomplexitybothofthefundingsourcesandofthe
requirementsthatcomewiththem.
» Services:“Theterm‘supportive’insupportive
housinggenerallyreferstoflexibleservicesdesigned
primarilytohelptenantsmaintainhousing.Tenants
ofsupportivehousingareindividualsandfamilies
whofacecomplexchallenges–peoplewhohave
beenhomelessandwhoalsohaveverylowincomes
andoftenserious,persistenthealthissuesand/or
disabilitiesorotherbarrierstohousingstability.
Thesechallengesmayincludementalhealthissues,
substanceuseissues,andHIV/AIDS.Theyareoften
timesexacerbatedbypersistentandlong-term
poverty.Thetypesofservicesthatcomprisethe
‘support’insupportivehousingemergefromthe
variedneedsofthepeoplewholiveinthehousing.”42
InthecaseofFortune'scommitmenttoservinga
CSHcautions,“It'sonethingtoputtogetheralistof
prospectivesourcesoffunding,andanotherthingtoensure
thatthesourceswillworktogether,andwillpayforwhat's
neededatthetimeit'sneeded.Manysupportivehousing
projectsmustrelyona‘layercake’offundingsources...Itis
42 CSHToolkit.“FinancingSupportiveHousingGuide.”
39 CSHToolkit.“FinancingSupportiveHousingGuide.”
43 CSHToolkit.“TypesofFinancingforSupportiveHousingDevelopment
andOperations.”
40 CSHToolkit.“FinancingSupportiveHousingGuide.”
44 CSHToolkit.“TypesofFinancingforSupportiveHousingDevelopment
andOperations.”
41 CSHToolkit.“FinancingSupportiveHousingGuide.
22
Project Financing Tips from
Fortune's Experience
» Thinkthroughwhatrelationships–bothpublicand
private–youcanleverageorneedtopartnerto
leverage.Politicalleverage,reputationandtrack
recordareimportantinbeingabletosecure
funding.Theyarealsonecessarytoencourage
funderstocoordinatewitheachotherandto
providetechnicalassistancethatishelpfulin
securingfunding.
» Similarly,organizationsshouldthinkthroughtheir
internalavailableresourcestoengageinraising
financesdirectly.Itisaserioustimecommitment.
» Financingandprojectdesignisanevolutionaryand
iterativeprocess.Organizationsshouldbeclearon
whatcompromisestheyarewillingtomakesothat
theycanstaytruetotheirvalueswhileensuring
financialviabilityforconstruction,operationsand
services.
» Unrestrictedfundssuchasadeveloper'sfeewill
giveorganizationsimportantflexibilityto
accomplishtheirmissions.
» Communitysupportcontinuestobecriticalduring
thisstage.
» Securingfinancingcanbuildanorganizationand
strengthenitsBoard.
criticaltounderstandallofthevariousprogramparameters
andrequirementswhenlayeringonesourcewithanother.”45
KeytoFortune'schoiceofco-developerwasJRCo'strack
recordinworkingonprojectsthatinvolvedcoordinating
withandmeetingthedemandsofmultiplefunders.
State,theseagenciesare:NewYorkCityDepartmentof
HousingPreservationandDevelopment(HPD),NewYork
StateHousingFinanceAgency(HFA)andtheNewYorkCity
HousingDevelopmentCorporation(HDC).Non-profit
housingdevelopers“cansellthecreditstoinvestors,anduse
theproceedsasequityintheproject.”CSHestimatesthat
LIHTCusuallymakeup30–50%oftotaldevelopmentcosts.
“Theamountofequitythatcanberaisedforaprojectisa
functionofhowmuch‘qualifiedbasis’thereisintheproject.”
‘Basis’issimplytheprojectcoststhataresubjectto
depreciation–likeconstruction,appliancesandtraditional
softcosts.”Thetotalamountoftaxcreditsdependsonthe
basis,thetotalnumberofaffordableunitsavailableandthe
taxcreditrate,whichiseither4%or9%dependingonthe
program.Investors,inFortune'scaseasyndicator,purchased
thetaxcredits,therebyprovidingFortuneequity.CSH's
materialsprovidedetailonthevariouswaysinwhichtax
creditsmaybesoldandtipsforevaluatingoptions.Tax
creditscanalsobecompetitiveorasofright,andeitherhard
loansorsoftloans.46
Oneparticulartypeoffundingiscriticaltosupportive
housingprojects.Asdiscussedabove,theCastleGardens
feasibilitystudyconcludedthataffordablehousingrentals
wouldoptimizefinancialandmissiongoals.Acommon
sourceofaffordablehousingfundingisLow-IncomeHousing
TaxCredits(called“LIHTC”or“taxcredits”),whichoffer
privateindividualsandcorporationsincentivestoinvestin
low-incomehousing.“TheTaxReformActof1986created
andprovidesforadollar-for-dollarcreditagainstfederal
incometaxesowed,asopposedtotaxdeductions,which
reducetaxableincome.Inexchangeforthesebenefits,
individualsandcorporationsinvestinlow-incomehousing,
usuallypayinglessthanadollarforadollar'sworthofcredit
(therebycreatingareturnontheirinvestment).”LIHTCare
allocatedtostatesbasedontheirpopulation,andstatesthen
designateagenciestodistributetheLIHTC.InNewYork
46 TheexplanationofLITCisderivedfromCSHToolkit,“UnderstandingLow
IncomeHousingTaxCredits:HowtoSecureEquityInvestmentsand
EvaluateSyndicationOptions.”
45 CSHToolkit.“DealStructuringforSupportiveHousing.”
23
For tips on how to prepare
supportive housing budgets
see CSH's Toolkit Sections:
1.PreparingtheSupportive
HousingProForma
2.TypesofFinancingfor
SupportiveHousing
DevelopmentandOperations
3.HowtoPrepareaSupportive
HousingProjectDevelopment
Budget
4.HowtoPrepareaSupporting
HousingOperatingBudget
5.ConsiderationsforDeveloping
andManagingtheSupportive
ServicesBudget
» Maximizingthedeveloper'sfeeforunrestricted
fundsforFortune;
» Securingfinancingforsufficientservicespace;
»
» Minimizing/managingrisk/guarantees.
Avoidingoverlyrestrictiveorvalue-compromising
fundingsources;
Fortunestartedwithanidealprojectdesign,andhadarange
ofdesigncontingenciesandpriorities.Thefinalprojectwas
theproductofthisevolutionaryprocessandwasdetermined
byprogramdesignpriorities,zoningrestrictions,funders'
interestsandrestrictions(includingtheneedforongoing
operationalandservicefunding),andanunyielding
dedicationtocorevalues.
Asdiscussedabove,largeservicespacewasacorevaluefor
financialandclientservicereasons,butitwasalsothewild
cardinthedesignandfundingpuzzle.Muchofthefundingfor
supportiveandaffordablehousingprojectscomesfromlow
incomehousingtaxcreditsandotherhousing-basedfunding.
Thesefundingsourcespayacertainamountpersquarefoot
ofhousingspace,andallowforasmallservicearea;therefore,
Fortunewouldhavetofundraiseseparatelyandcreativelyfor
thelargerservicearea.Theorganizationwaswillingtoadjust,
butnotsuchthatFortune'svaluesorfinancialfeasibility
wouldbecompromisedinanuntenableway.Throughthe
buildingdesignandprojectfinancingprocess,Fortune
graduallyreducedtheserviceareasquarefootageto
approximately20,000feetofservicespace.48
Usingthis,thedeveloperscreatedaproformabudget,which
includedafinancialplanforoperatinganddevelopingthe
projectandconsideredrentalincome,developmentcosts
andoperatingcosts.47Theproformaincludedanestimateof
theproject'sLIHTCeligibilityamount,alargeproportionof
theexpectedfundingbalance,anditsadditionalfunding
requirements.Fortunewasinformedbythesamefunding
issuesitconsideredasitchoseitsco-developer.Inparticular,
thefollowingwereimportantissues:
Itisimportant,asitwasinthepreviousphase,for
organizationstobeclearonwhattheirprioritiesareand
wheretheyarewillingtocompromise.FortuneandJonathan
RoseCompaniesresearchedfundersandtheirfundingareas,
requirements,andlimitationsandwentbackandforth
adjustingtheprojectandfundingsourcestobuildbackoutto
afinalproject.
Whatnext?AsFortuneandJonathanRoseCompaniesbegan
developingthecapitalfinancingplan,thefeasibilitystudy
providedastartingpointofwhattheyneededtoraisemoney
for,includingthenumberofaffordablehousingunits,
supportivehousingunits,andthesquarefootageof
servicespace.
» Theaffordableandsupportivehousingfunding
mixneeded;
» EnsuringFortunewaspaidatleastinpartforthe
land,valuedatover$9million,whichitalready
ownedandwasprovidingfortheproject;
Itisimportanttonotethatafeasibilitystudyisastarting
pointandthataproject'sdesignandfinancingstructure
evolvethroughoutthefinancingandconstructionphases.As
Fortune'sCEOJoAnnePagedescribesit,financinganddesign
areaniterativeandevolutionaryprocess.
SECTION 4.2 Castle Gardens Capital
Funding Sources
48
47 CSHToolkit“PreparingtheSupportiveHousingProForma,”and“Types
ofFinancingforSupportiveHousingDevelopmentandOperations.”
24
FortuneSocietyExecutiveCommitteeMeetingMinutes(April24,2007).
Fortune'soriginalfeasibilitystudyset55,000squarefeetasthedesired
sizeoftheservicespace.However,itprovedimpossibletoachievefunding
forservicespaceofthatsize,sotheservicespacewasgraduallyreduced
to25,000squarefeetinthebuildingdesign,andthenfurtherreducedto
20,000squarefeetasotherbuildingcostsmountedandreducedthe
moneyavailablefortheservicespace.Fortuneheldthelineat20,000
squarefeet,whichprovidedtherent-freespacenecessarytoachievethe
rentalsavingswhichequaledtheincomethata$9millionendowment
wouldhavegeneratedat5%interest,therebyremainingconsistentwith
therationaleusedtojustifydevelopingthelandratherthansellingitto
createanendowment.
CastleGardensPermanentCapitalFundingSources49
FundingSource
Type
Amount
Process
EnterpriseGreen
Communities
Constructiongrant
$50,000
FortunehadarelationshipwithEnterprise
GreenCommunities,aLIHTCsyndicator,
becauseitfundedtheAcademy.Fortune
submittedaproposalandwasawarded
thisgrant.
FederalHomeLoan
BankofNewYork50
CompetitiveGrant
treatedasSoftLoan
$1.5M
JonathanRoseidentifiedthisprivatesourceof
fundingandaproposalwassubmitted.The
FederalHomeLoanBankofNewYorkfunded
Fortunethroughacompetitiveaffordable
housingprogram.Thiswasagrantissuedto
FortuneandloanedbyFortunetoCastle
Gardens.
HudsonHousing
Capital/CapitalOne
Community
Development
Finance
LowIncomeHousing
TaxCreditEquity
$16,060,594
FortuneissuedanRFPforasyndicatorforits
LIHTC,selectingHudsonHousingCapital
(“Hudson”).Hudsonmatchedtheprojectwith
CapitalOneasthetaxcreditinvestor.
Mayor'sFundto
AdvanceNewYork
City
Grant
$250,000
Fortunebecameawareofthisgrantthrough
HPD.HPDwasworkingcloselywithFortune,
andaroundthattime,amajordonorcameto
HPDandsaidhewasinterestedinasupportive
housingproject.Theanonymousdonorgave
$250,000toHPDthroughtheMayor’sFundto
AdvanceNewYork,whichwasgrantedto
CastleGardens.
ManhattanBorough
President'sOffice
Grant
$1M
TheBoroughPresident,becauseofhislong
workingrelationshipwithFortuneand
supportfortheproject,committed$1million
indiscretionaryfunds.CastleGardensfit
BoroughPresidentScottStringer'svisionfor
housingdevelopmentinWestHarlem.This
moneywasreceiveduponclosing,andwas
unrestrictedfundingusedforconstruction.
NewYorkCity
Council
Grant
$2M
Throughtheappropriationsprocess,Castle
Gardenswasallocated$2MinCityCouncil
funding.Thiswaspossiblebecauseof
Fortune'sCommunityBoardandAdvisory
Boardrelationships,thestrongreputationthat
ithadwithlocalCityCouncilmemberRobert
Jackson,andCityCouncilSpeakerChristine
Quinn,andtheirdeepcommitmentsto
affordableandsupportivehousing.
49 ProformaSummary:AffordableHousing+FortuneSupportiveHousing+FortuneProgramSpace,”TheFortuneSociety(LastUpdated:December23,2008).
50
Currentinformationavailableathttp://www.fhlbny.com/community/housing-programs/ahp/index.aspx(TheFederalHomeLoanBankofNewYorkhas
anaffordablehousingprogram.“Eachyearsince1990,theHLBhassetaside10%ofitsprivateearningstosupportthecreationandpreservationof
housingforlowerincomefamiliesandindividualsthroughtheAffordableHousingProgram(AHP).AHPfundsareawardedtomemberswhosubmit
applicationsonbehalfofprojectsponsorswhoareplanningtopurchase,rehabilitate,orconstructaffordablehomesorapartments.Fundsareawarded
throughacompetitiveprocesswhichtypicallytakesplaceeitheronceortwiceayear,attheHLB'sdiscretion.”Permittedusesinclude,“[a]cquisition,
construction,orrehabilitationofRentalHousinginwhichatleast20%oftheproject'soccupantsmustearn50%orlessoftheareamedianincome.”)
25
CastleGardensPermanentCapitalFundingSources
FundingSource
Type
Amount
Process
NewYorkCity
Departmentof
Housing
Preservationand
Development
SupportiveHousing
LoanProgram51
InterestOnlyLoan
$8.3M
ThiswasCastleGardens'secondfunding
source,broughtinthroughJRCo'strackrecord
andknowledge.Basedonthestrengthofthe
feasibilitystudy,communitysupportand
HPD'sbuy-intotheprogrammodel,theproject
received$8.3millionandtheteamwasableto
negotiateastreamlinedreportingprocedure.
NewYorkState
EnergyResearch
andDevelopment
Authority
Grant
$239,390
FortuneandJRCoapplied,througharolling
applicationprocess,forfundingforagreen
affordablehousingprogram.
NewYorkState
HousingFinance
Agency52
$21.7Mtaxexempt
bondsproceedsduring
construction,paid
downtoa$3.6M
permanentmortgage.
SubsidyLoan;$4M
AccruedLoan
$7.6M
JRCotooktheleadinsecuringtaxexemptbond
proceedsalongwithasoftsubsidyloan.HFA
issuesandsellstaxexemptbonds.Bond
holdersofthesefederallytaxexemptprivate
activitybondsreceivetax-exemptintereston
theirinvestment.HFAthenusestheproceeds
tomakemortgageloanstohousingdevelopers
thatagreedtorentatleast20%oftheunitsto
low-incomehouseholds.(CastleGardensis
100%low-incomeandverylow-income
housing).Inaddition,HFAbondfinancing
comeswithanas-of-rightallocationof4%
federallow-incomehousingtaxcredits,which
helpedFortuneraiseasignificantequity
investmentintheproject.
NewYorkState
OfficeofTemporary
&Disability
Assistance(HHAP)
HomelessHousing
andAssistance
Program
Interestonlysoftloan
$5.5M
Fortunehadbuiltastrongworking
relationshipwithHHAP,whichhadprovided
keyfundingfortheCastle.Theproposalfor
CastleGardenswasthefirstproposal
completedbytheFortune/JRCoteamandthe
firstmoneyawardedinSeptember2007.
“Programfundsareawardedthroughan
annualcompetitiveRequestforProposals
process.”53Thisfundingwasthecriticalfirst
steptofinancingtheconstructionofCastle
Gardens.AswiththeCastle,HHAPprovided
“firstmoneyin”whichwasessentialto
bringinginotherfunders.HHAPstaffwere
flexibleandsupportiveduringbothplanning
andconstruction.
51 Currentinformationavailableathttp://www.nyc.gov/html/hpd/html/developers/shlp.shtml.
52 Currentinformationavailableathttp://www.nyhomes.org/index.htm.
53 Currentinformationavailableathttp://otda.ny.gov/programs/housing/hhap.asp.
26
Aswasmentionedattheoutset,astheresultof18monthsof
meetings,relationshipbuildingandproposalwriting,Fortune
andJRCowereabletoworktogethertoraiseover$43million.
JoAnnePage,Fortune'sCEO,attributesthistoFortuneand
JonathanRoseCompanies,asco-developers,takingjoint
responsibilityforprojectfinancing,therebyleveragingtheir
connections,relationshipsandexpertisetosecureadvice
andfunding.
“providescapitalgrantsandloanstonot-for-profit
corporations,charitableandreligiousorganizations,
municipalitiesandpubliccorporationstoacquire,construct
orrehabilitatehousingforpersonswhoarehomelessandare
unabletosecureadequatehousingwithoutspecial
assistance”throughanRFPprocess.54
FortunehadbuiltacloserelationshipovertimewithHHAP
becauseHHAPhadfundedtheAcademythrougha
competitivebidandconsideredtheAcademyoneoftheir
flagshipprojects.BecauseofthepartnershipthatFortuneand
HHAPhadbuiltaroundthefundingandoperationofthe
Academy,itwaspossibletohaveHHAPandtheDormitory
AuthorityoftheStateofNewYork(DASNY)provideadvice
duringtheearlystagesofthinkingthroughCastleGardens
wellbeforeanyapplicationforfundingwasmade.
Thesestrongrelationshipswithfundersandgovernment
entitiesthenallowedtheco-developerstoensurethattheir
fundersworkedtogethertopiecetogetherfundingand
coordinateprojectoversight.Further,althoughcombining
bothaffordableandsupportivehousingfundingstreamswas
achallenge,thisgavetheCastleGardensprojectmore
diversified-andthereforemorestable-funding.Intheend,
theprojecthadcityandstatecompetitivefunding,asofright
low-incometaxcredits,appropriationsfromelectedofficials,
foundationsupport,privategrants,bankfundingandfunding
fromFortune'scapitalcampaign.
Throughtheseearlydiscussions,Fortunewasabletosolicit
feedbackandtechnicalassistanceaboutCastleGardensfrom
HHAP,bothaboutitsselectionofaco-developerandarchitect,
andafterJRCojoined,ondesignplansandoverallfinancing.
ThepreviouspagefeaturesachartofCastleGardens'
permanentcapitalfundingsources.Inadditiontothesources
below,CastleGardenshadtwocapitalfundingsourcesforthe
constructionperiodonly.First,CapitalOneCommunity
DevelopmentFinanceprovidedaletterofcredit,orcredit
enhancement.Underthisletterofcredit,theprojectwouldpay
afeetothebank,inexchangeforwhichthebankwouldagree
topayiftheprojectdefaultedonconstructionpayments.
BythetimeHHAP'sRFPwasreleased–atwhichpoint
Fortunecouldnolongercommunicatewiththeagency
becauseofcompetitivebiddinglaws–Fortunehadreceived
significantadvicethathelpedinshapingtheprojectandits
implementation.FortuneandJRCosplitdrafting
responsibilitiesfortheproposal,witheachorganization
takingtheleadonitsareaofexpertise.Inthiscase,JRCo
wrotethetechnicalsectionsandFortunewroteaboutthe
program,includinghowitwouldfulfillFortune'slong-term
servicecommitment,theexpertiseithaddevelopedin
runningtheCastle,andtheproject'stargetpopulation.
Thisletterofcreditwasrequiredtosecurethesecond
construction-period-onlyfundingsource,$21.7millionin
bondfinancingfromtheNewYorkHousingFinanceAgency.
$3.6millionofthisfundingbecameapartoftheCastle
Gardenspermanentfunding,ascapturedinthechartbelow.
Theother$18.1millionwasrepaidin2011.CastleGardens
permanentfinancingwasstructuredsothatasHFAwas
repaid,additionalLIHTCbecameavailabletotheproject(the
totalvalueofLIHTCisalsocapturedinthechartonthe
previouspage).
AsshownbyFortune'sexperience,itisimportantfor
organizationsinthefundraisingphasetothinkabouttheir
relationshipstofunders;theircapacitytohandlefunding
applications;andtheirareasofandgapsinexpertise.
ThroughasuccessfulcompetitivebidwhenanRFPwas
issued,Fortunereceiveda$5.5millionsoftloanfor
constructionfromHHAP.Thiswasabigmomentforthe
projectbecauseitgavetheprojectgravitas,andbecause
HHAPwasflexibleinhowthefundswereusedandwas
willingtofillgapsaroundwhatotherfundingcovered.
SECTION 4.3 Castle Gardens First Money In
and Funder Technical Assistance
CasteGardens'firstcommitment,fromtheNewYorkState
HomelessHousingandAssistanceProgram(HHAP),built
momentumandcredibilityforCastleGardens.HHAP
54
Asdescribedincurrentmaterials:“TheHomelessHousingandAssistance
Program(HHAP)providescapitalgrantsandloanstonot-for-profit
corporations,charitableandreligiousorganizations,municipalitiesand
publiccorporationstoacquire,constructorrehabilitatehousingfor
personswhoarehomelessandareunabletosecureadequatehousing
withoutspecialassistance.”“Programfundsareawardedthroughan
annualcompetitiveRequestforProposalsprocess.Applicantsand
awardeesrepresentabroadrangeofnot-for-profitandcharitable
organizations,generallywithexperienceeitherinhousingdevelopment
ormanagement,orintheprovisionofsocialservices.Arelativelysmall
numberofgrantshavealsobeenmadetomunicipalities.”
http://otda.ny.gov/programs/housing/hhap.asp.
SECTION 4.4 Leveraging Relationships for
Castle Gardens Financing: Community
Support and Coordinating Funders
Fortune'srelationshipwiththecommunityandCommunity
Board9wascriticalduringpre-developmentandcontinued
tobesoduringprojectfinancing.55Anorganization'sabilityto
accessHPD'sfundingstreamistied,inpart,toitsabilityto
55
27
Fortune'sproposedprojectwasincludedinCommunityBoard9'sfunding
requeststotheCityCouncil.Eventhoughfundingwasnotgranted,this
inclusionwasanimportantdemonstrationofcommunityandCommunity
Boardsupportthatwasessentialtosecuringothersourcesoffunding.
©FrederickCharles,Fcharles.com|Curtis+GinsbergArchitectsLLP
secureCommunityBoardsupport,whichisoneofthecriteria
thatHPDusesindeterminingwhetherornottofunda
project.Fortune'sabilitytoovercome“notinmybackyard”
resistanceduringthedevelopmentoftheAcademy,andthe
inclusionofbadlyneededfamily-orientedaffordablehousing
tomeetcommunityneed,provideditwiththefoundationof
communitysupportnecessarytoaccessHPDfundingfor
CastleGardens.
Thegroupworkedtogethertocraftafundingstructurethat
wouldprovidesufficientcapitalforconstructionandongoing
operatingandsupportiveservicesfunding.HPDhadaformula
forapartmentsizesandfundingonthesupportiveand
affordablehousingsides,whichbecamedataforthedesign
andfinancingiterativeprocess;andHPDandFortune
coordinatedwiththeHFAthroughouttheprocess.
Intheend,CastleGardensreceivedatotalof$8.3millionin
fundingfromHPD'sSupportiveHousingLoanProgram,which
providesfinancing,includingfornewconstruction,tonot-forprofitorganizationstodevelopsupportivehousingfor
homelesssingleadults.TheHPDloansare“todevelop
permanenthousingwithon-sitesocialservice.Loanshavea
30yeartermandneitherprincipalnorinterestisrepaidifthe
sponsorcomplieswiththetermsofaregulatoryagreement
requiringthatthepropertybeusedforhousingforlowincomehomelessdisabledtenantsfor30years.”Theprogram
requirestherenttomeetcertainaffordabilitycriteria56and
FortunewasabletousethisHPDfundingfortheaffordableas
wellasthesupportiveunits.
AtthetimewhenFortuneapproachedHPD,theCityagency
wasnearitscapforfundingallocations.However,HPD
coordinatedwiththeNewYorkHousingFinanceAgencyto
accessadditionalfunding.BecauseHPDfundingwasnot
grantedthroughacompetitiveRFPprocessbutrather
obtainedthroughnegotiations,andwaslikelytobealarge
sourceoffundingforCastleGardens,HPDandFortunehada
partnershipinwhichthetwoorganizationsworkedtogether
ondesignandfundingfortheoverallproject.
56
Currentinformationavailableat
http://www.nyc.gov/html/hpd/html/developers/shlp.shtml.HPD
fundingforCastleGardenscamewiththerequirementthatFortunehad
todedicateacertainnumberofapartmentstoindividualsreferredfrom
theDepartmentofHomelessServices(DHS)andtheremaining
apartmentscouldbeusedforotherpopulations.
Asreferencedabove,HPDandHFAcoordinatedandworked
togethertoprovidefundingtoCastleGardens.HFAplayeda
significantroleinCastleGardens'financing:itprovidedthe
28
projectbondfinancingduringtheconstructionphase,which
wasconvertedinto$3.6millioninpermanentcapital
financing.Further,CastleGardensreceivedanother$4million
inpermanentfinancingfromHFA.
competitivepriceandanattractiveworkingrelationshipthat
ledtoitbeingchosenbytheFortune/JRCoteam.
Surprisingly,duringatimeofeconomicuncertaintyinwhich
taxcreditsthathadbeengoingforover$1foreachdollarof
creditweretradingwellunderadollar,Fortunewasableto
getanabovemarketpriceonitstaxcreditsfromHudson
HousingandCapitalOneCommunityDevelopmentFinance
(CapitalOne)(assyndicator),thebankwithwhichthey
workedandwhichwastheinvestor.
DetailsonCastleGardens'otherfundingsourcesandhow
FortuneandJRColeveragedrelationshipstoweavetogether
financingisincludedinthechart.
SECTION 4.5 Board and Organizational
Development during Castle Gardens
Supportive Housing Fundraising
Asthefinancialmarketsworsenedinthefaceoftheeconomic
crisisthatwasgrowingtowardtheendof2008,many
projectsthatweretryingtocloseonfinancingfoundthatthe
pricesthattheyhadbeenrelyingonfortheirtaxcreditswere
reducedbytheirpurchasers.Inmanycasesthatmeantthat
projectswereunabletomoveforward.InFortune'scase,
HudsonHousingandCapitalOnehonoredtheircommitments
tothepricethattheyhadoffered,evenasthemarket
continuedtodropandthatpricebecamemoreandmore
above-market.
Fortune'sBoardcontinuedtobeactiveduringthefundraising
phase,andtheProjectSteeringCommittee,whichmet
regularly,includedtheBoardChairBettyRauch,JRCo,and
JoAnnePage.TheProjectSteeringCommitteealsoaddressed
raisingfinancingforsuchitemsasthebuildingstaircaseand
purchaseoffurnitureforofficespace.OtherBoardmembers
joinedSteeringCommitteemeetingsoccasionally,and
importantdecisionswerebroughtbeforetheBoardandthe
ExecutiveCommitteeoftheBoard.
(SeeSection6.1).
However,althoughHudsonandCapitalOnedidnotreduce
theirprice,theyinsteadaskedforadditionalguarantees,both
ofJonathanRoseCompaniesandofFortune.Aswas
mentionedabove,Fortunehadnegotiatedtogetpaidforthe
CastleGardensland,whichitalreadyownedatthetimeof
development.Theappraisedpricewassignificantlyhigher
thanwhathadbeenpaidatthetimeofpurchasingtheland
fortheAcademy,andFortunenegotiatedtobepaidsomething
inbetween.Butasthelargereconomyfaltered,Hudson
HousingandCapitalOneaddedtherequirementthata
portionofthatpaymentbeplacedinaspecialreservefund
thatwouldprovideadditionalfinancialguaranteesfor
theproject.
AstheCastleGardensprojectcontinuedtorequiresignificant
decision-makingresourcesfromtheBoard,Fortune'sBoard
evolved,andintheendstrengthenedasaresultoftheintense
process.ThefinancialdisclosuresrequiredofBoardmembers
toaccessfunding,includingHPDfunding,wasonejuncture
duringthedevelopmentprocess.
InordertoaccessHPDandotherfundingsources,Board
memberswouldberequiredtoprovidein-depthfinancial
disclosures,whichsomeBoardmembersdecidedtheywere
unabletodoandresigned.Whilethiswasdifficult,italso
meantthattheBoardmemberswhodecidedtostaydeepened
theirengagementwithanorganizationthatwasgrowingin
prominenceasahousingprovider.Forthosethatwereonthe
Board,thesuccessfulopeningofCastleGardenswasa
momentofgreatpride.
December2008wasamonthfraughtwithtensionasthe
economicclimateworsenedandheatednegotiationsabout
guaranteesandcontractualtermstookplace.However,all
partiesinvolvedweredeterminedtobringfinancingofthis
projecttofruition.Finally,atFortune'sDecember9FullBoard
Meeting,JoAnneannouncedthatCastleGardenswouldclose
onfundingonDecember18,atatimewhenmanyother
organizations'dealshadfallenapart.
SECTION 4.6 Low-Income Housing Tax
Credits and Closing on Castle Gardens
Financing
FortunehadissuedanRFPinSpring2008tocreate
competitionandyieldthebestpossiblepriceonitsLIHTC.
ThiswascriticaltohavingthefundingtomeetFortune'sgoal
ofhavingrobuston-siteservicespace.HudsonHousing
Capital(HudsonorHudsonHousing)andEnterprise,thetwo
mainLIHTCsyndicators,werecompetingforFortune'sLIHTC
business.FortunehadoriginallyassumedEnterprisewould
fundtheprojectbecauseithadfinancedtheAcademyandhad
providedtechnicalassistancetotheCastleGardensproject.
However,HudsonHousingwantedtoentertheNewYork
market,andtodosowithJRCo.Hudsonofferedamore
29
SECTION 5.
Construction
Photo:JohnDalton
30
SECTION 5.1 Managing Risk During
Castle Gardens Construction
OnFebruary19,2009,TheFortuneSocietyandJRCohosted
agroundbreakingforCastleGardens,withremarksfrom
MayorMichaelBloomberg:
Fortunemanagedtheavoidableriskassociatedwith
constructionby:
“Supportivehousingisessentialfor
thehealth,safety,anddignityof
manyvulnerableNewYorkerswho
areweatheringhardeconomic
times...Bycombiningpublicand
privatefundsandpartneringwith
organizationslikeTheFortune
SocietyandJonathanRose
Companies,theCityhassetthe
stageforastunningnewgreen
housingcomplexthatwillbecome
animportantanchorinthisWest
Harlemcommunity."
57
AlsoonhandforthegroundbreakingceremonywereCongressman
CharlesRangel;ActingCommissionerMarcJahr,DepartmentofHousing
andPreservation;CommissionerDavidHansell,OfficeofTemporaryand
DisabilityAssistance;President/CEOofNewYorkStateHousingFinance
AgencyPriscillaAlmodovar;MichaelColgrove,DirectorofNYCOfficefor
NYSERDA;KeithFairey,NewYorkDirectorandRegionalOperations
OfficerforEnterpriseCommunityPartners;PatriciaJones,Chairof
CommunityBoard9;MarkGinsbergofCurtis+GinsbergArchitectsLLP;
NickLettireofLettireConstruction;JamesCovington,SeniorVice
PresidentofCapitalOne;JohnS.Zeiler,CEOofHudsonHousing;AlfredA.
DelliBovi,PresidentoftheFederalHomeLoanBankofNewYork;and
hundredsofsupporters.
» Buildingitsconstructionteamearlyand
withcare;
» PartneringwithJRCoinordertoleveragethefirm's
constructionexpertiseandreducerisk;
»
» Engagingwiththecommunitythroughoutthe
constructionprocess.
Creatinghigh-levelinternalcapacitybydesignating
Fortune'sChiefofStafftoserveaspointperson
duringtheconstructionphase,supportedbyother
ExecutiveTeammembersandtheBoardChair.
SECTION 5.2 Building the Castle Gardens
Construction Team
Fortune'sdevelopmentofCastleGardenswasatypical
becauseFortunebeganpre-developmentknowingand
owningitssite.Fororganizationsthatdonothaveasitein
mind,pre-developmentwillincludeselectingandsecuringa
projectsite,62andprojectsitesforsupportivehousingcan
rangefromapartmentorsingle-roomoccupancybuildings
(SRO),townhouses,orsingle-familyhomesthatexclusively
houseformerlyhomelessindividualsand/orfamilies;
apartmentorSRObuildings,ortownhousesthatmixspecialneedshousingwithgeneralaffordablehousing;rentsubsidizedapartmentsleasedintheopenmarket;andlongtermset-asidesofunitswithinprivatelyownedbuildings.63
Asexpertsinthefieldofsupportiveandaffordablehousing,
includingCSH58andTheEnterpriseFoundation,59explain,the
constructionprocesshastwotypesofrisksassociatedwithit:
» Risksthatarelargelyunknowableinadvanceand
thereforeinherenttothedevelopmentprocess,and
Fortune'sconstructionprocesswentsmoothly.Fortunewas
oftenabletoreporttoitsBoardthatconstructionwasahead
ofscheduleandbelowcost,andthebuildingreceivedits
TemporaryCertificateofOccupancyinJuly2010.61
Asthepressreleasefromtheeventdemonstrates,the
community–includingneighbors,electedofficialssuchas
thenBoroughPresidentScottStringer,CityCouncilSpeaker
ChristineQuinn,CityCouncilmanRobertJacksonand
Fortuneclientsandstaff–wereexcitedtoseetheproject
movetowardsreality.57Asthefirstceremonialshovelbroke
ground,Fortunewasawarethatconstructionwasa
challengingprocessthatwouldhavetobecarefullymanaged.
Delaysinconstruction,andthereforelease-upcanbecostly
toaprojectasfundersrequirelease-upaccordingtoa
certainscheduleandtherentalincomeisneededto
meetcosts.
» Risksthatarewellunderstoodandthereforeare
generallyavoidablewithdiligentmanagementand
oversightoftheprocess.60
Withitslocationchosenanditscommitmenttonew
construction,Fortune'snextstepwastobuildoffthefeasibilitystudy'sdesignideastoconceptualizethebuilding's
designandconstructionoptionsgivenzoningandstructural
requirements.Thebuildingwouldbedesignedtofitwithin
existingzoningregulations,therebyavoidingtheneedto
seekzoningvariances.AsCSHexplains,itisdesirableto
60 CSHToolkit.“NavigatingtheConstructionPeriod.”
61
FortuneSocietyBoardMeetingMinutes(May19,2009)(Constructionon
schedule);FortuneSocietyBoardMeetingMinutes(July21,2009)
(Constructionwasaheadofschedule);FortuneSocietyBoardMeeting
Minutes(February4,2010)(Constructionwasaheadofschedule);
FortuneSocietyBoardMeetingMinutes(March16,2010)(Construction
was85%completeatthistimeandaheadofscheduleandbudget).
58 CSHToolkit.“NavigatingtheConstructionPeriod.”
62 CSHToolkit.SectionII.D.“SelectingandSecuringtheProjectSite”
59 TheEnterpriseFoundation,Inc.,“RisksinAffordableHousing
Development:ImportantFactorstoWatch”(2000)(linkedinCSHToolkit).
63 CSHToolkit.“WhatisSupportiveHousing.”
31
builduponasitethatisalreadyzonedfortheintendeduse,
“…sincetheprocessofseekingandbeinggrantedazoning
variancewilladdtimeanduncertaintytothedevelopment
efforts,andmaygiveanyopponentstotheprojectadditional
opportunities,andadditionalleverage,toblocktheplanned
development.”
representativesfromotherfunders.Theorganizational
commitmentduringthisphasewassignificant.Asdescribed
above,thefunderswouldmonitorconstructionandsignoff
onpayment;theywouldalsohavetoapproveanychanges
madetotheoriginalplansasconstructionprogressed.
Inaddition,theCastleGardens'SteeringCommittee,atthis
timecomposedofJonathanRoseandothersfromJRCo;
FortuneBoardChairBettyRauch;CEOJoAnnePage,Senior
VicePresidentofProgramsStanleyRichards,ChiefofStaff
SherryGoldsteinandothersfromFortunemet
approximatelyeverysixweeksuntilconstructionwas
completed.
Withthisinmind,anessentialpartofriskmitigationin
constructingCastleGardenswastobeginthedesignand
constructionprocessearlybybuildingitsdevelopmentteam.
Forexample,asdescribedearlier,FortuneissueditsRFPfor
architecturaldesignservicesinJanuary2007.Fortunealso
thoughtitwasimportanttohaveacleardesignforthe
buildingearlyontohavearealsenseofpriceasitbegan
raisingfinancing.Further,certainfundersrequireddesign
detailsaspartofthefundingapplication.InFortune'scase,
theHomelessHousingandAssistanceProgram(HHAP)
fundingapplication,dueinlateAprilorearlyMay2007,
required“SketchPlansoftheproposedbuilding”toincludea
siteplan,eachfloorplan,andtypicalunitplans.64Additional
detailsofFortune'searlydesignandconstructionteam
selectionaredescribedinSection3.5above.
SherryGoldsteindedicatedapproximately20%ofhertime
tooverseeingCastleGardensconstructionuntilactual
constructionwascompleted.However,sheandotherkey
membersoftheteamparticipatedinaconstructioncall
everytwoweeksasofmid-2012andcontinueduntilall
itemsofthepunchlistweresatisfactorilycompleted.
SECTION 5.4 Community Engagement
during Castle Gardens Construction
SECTION 5.3 Co-Developer as
Construction Expert and Fortune Executive
Involvement
Inadditiontothepotential"NotinMyBackyard"orNIMBY
communityissuesassociatedwithareentrysupportive
housingproject,whichFortunehadaddressedasdescribed
inSection2.4above,constructionprojectscanbedisruptive
toneighbors.Fortunewantedtominimizethispotential
straintoitscommunity.Ithadworkedhardtobuild
relationshipsintheneighborhoodwhenitopenedthe
Academyandinoperatingthatproject,andwantedto
maintainthatasitsnewcommunityspaceopened.
TheCastleGardensdesignteamhadmetweeklyforayearto
planthebuilding,but,aswithanyconstructionproject,
issues,questionsanddecisionsaroseduringconstruction,
andtheprocessrequiredmonitoringandarangeofsmall
andlargedecisionsonthepartoftheowner.Thesedecisions
includefine-tuningdesign,materials,finishes,layoutand
more;andmanyofthesedecisionsarecost-sensitive.
Fortunewasthekeydecision-makeronthesequestions–it
hadarangeofalternatesdependingonwhatitcouldafford
astheprocesswentalong–anddrewheavilyonJRCo'sand
MarkGinsberg'sexpertisetounderstandtheoptions.
Fortuneworkedwithneighboringbuildings,includingby
providingtenantassociationsnoticeonhoursof
construction,streetclosures,andprogress.CEOJoAnnePage
servedaspointpersontoanswerquestionsandliaisewith
thecommunity.
FortunealsocontinuedtoengagewithitsCommunity
AdvisoryBoardandCommunityBoard9,andtoattendsix
regularlyscheduledcommunitymeetingsamonth,
somethingthatithasdoneconsistentlysincepurchaseofthe
shelloftheAcademyandthevacantlotin1998.Aswithits
effortstobuildthetrustneededtoovercomeoriginalNIMBY
resistancefortheAcademy,Fortune'spolicywastomaintain
opencommunicationandproactivelyprovideinformationto
itsneighbors.Fortunecompletedconstructionaheadof
scheduleandhadstartedtheleaseupprocessonan
aggressivetimeline.(SeeSection6).
Fortunemanagedriskbyusingtheexpertiseofitscodeveloper,JRCo,duringtheconstructionprocesstosupervise
construction.WhitneyFoutzcontinuedtobethepoint
personfortheproject,supportedbyPaulFreitag,Managing
DirectorofDevelopment,aswellasotherJRCostaff
asneeded.
FortuneassignedSherryGoldstein,ChiefofStafftoFortune's
CEOandakeymemberofFortune'sExecutiveTeam,to
participateinweeklyconstructionmeetingstomonitor
constructionandmakedecisionsonFortune'sbehalfas
issuesarose,andtoconferwithFortune'sExecutiveTeam
whennecessary.Weeklyconstructionmeetingsalsoincluded
JRCo,Lettire,Curtis+Ginsberg,arepresentativefrom
fundersHPDandHHAP(representedbyDASNY),and
64 SeeFortune'sRFPforArchitecturalDesignServices.
32
SECTION 6.
Opening the Doors to
Castle Gardens
Photo:DavidY.Lee
33
definedeligibilitycriteriabecauseoftheirspecialneeds.
NY/NYIIIfunds35ofCastleGardens'50supportivestudios
andall13ofitssupportivefamilyunits.Forvaluesreasons,
Fortunechosetoleave15ofitssupportivestudiosoutofits
applicationforNY/NYIIIfundinginordertobeabletohouse
homelessclientswhoneededpermanentsupportivehousing
butdidnotfitNY/NYIIIcriteria,andthusneededtouseother
fundingtoprovidefortheservicesforthoseclients.Aspartof
itsfund-raisingstrategyFortunealsohas,asdescribed
herein,aCapitalCampaigntofundservicecenterstart-up.
SECTION 6.1 Planning and Fundraising for
Castle Gardens Operations and Supportive
Services
CastleGardenswouldrequireongoingfundingforoperating
expensesandsupportiveservices.Operatingexpensesare
thecostsassociatedwithrunninganyresidentialbuilding,
andtypicallyincludegeneralandadministrativecostssuch
asmanagementfeesandaccountingfees;payrollfor
administrativestaff,maintenancestaffandsecurity;utilities,
marketingandleasing;maintenanceandrepair;taxes;and
insurance.65Supportiveservicesfundingisforthecosts
associatedwithprovidingsocialservicesatCastleGardens–
thesupportiveservicesthatmadetheprojectmorethanan
affordablehousingdevelopment–andthecostwould
dependonthenatureandrobustnessofthesupportive
services.(SeeSection4.1foradditionaldetails).Finally,itis
importanttorememberthattheongoingfundingstructure
wouldhavetoincludeaplanforpayingdownhard
constructiondebtwhereitexisted.
Fortune'sabilitytogenerateservicefundingthroughrental
incomewasonlypossiblebecauseFortunewasawarded
Project-BasedVoucherSection868rentalsubsidyforallofits
supportivehousingapartmentsandsomeofitsaffordable
housingapartmentsthroughaNYCHousingPreservation
andDevelopment(HPD)pilotprogram.69Theprogramalso
includedtenant-basedvouchersforclientswhometcertain
criteriaandwantedtomovetootherhousinginthefuture.
JRCoandFortunewereabletoaccessthispilotthrough
workingcloselywithHPD.Section8fundingwascriticalto
CastleGardens'financialfeasibilityastheproject-based
subsidywastiedtotheapartment,andthereforeprovideda
rentalincomestreamaslongastheprogramlastedandthe
apartmentwasoccupied.UnderSection8,Fortunewouldbe
paidthedifferencebetweenthe30%ofincomethatatenant
wouldpayandthemarketrent.TheSection8subsidy
requiredthat48unitsbedesignatedforelderlyordisabled
individuals:35ofCastleGardenssupportivestudios;andthe
13supportivefamilyunits.TheNY/NYIIItenantsmeet
thesecriteria,andNY/NYIIIfundingpaysfortheirCase
Managersaswellasotherservicecosts.
AsFortuneraisedcapitalfunding,itsimultaneouslyplanned
forhowitwouldfinanceCastleGardens'operatingand
servicecostsonanongoingbasis.Keytothefinancial
feasibilityofoperatingCastleGardenswerethebuilding's
greenfeatures.Asdescribedabove,thebuilding'sgreen
featuresaredesignedtoreduceutilityusageandcostsbyat
least20%comparedtoastandardbuilding.
Justasdesignandfinancingoptionsinterplay,development
fundraising,designandongoingfundinginformeachother.
Forexample,projectedoperatingdeficitscanbecapitalized
inthedevelopmentbudget(assomefundersrequire)or
separately.66Or,aswasthecasewithCastleGardens,
supportiveservicesfundinginformedunitsize,quantityand
design.Fortune'svisionforthelargeservicespaceitwanted
informeddesign,andithadtoconsiderhowitwouldafford
tostaffthoseservices.Asaresultoftheforgoing,budgeting
foroperatingandsupportiveservicesshouldbeginearly.
Fortunewasabletofundoperatingandsupportiveservices
by,asitdidcapitalfunding,creativelycombiningdifferent
fundingsourcesandstayingtruetocorevalues.Fortune
fundsthebuilding'snon-serviceoperatingexpenseswithits
rentalincome(paidbytenantsandsubsidies);andexpects
therenttogenerateenoughsurplusoverthecostofoperating
expensestoprovidesomesupportiveservicefunding.
Tenantsintheaffordablehousingunitspayrentaccordingto
incomeformulasassociatedwithlow-incometaxcredits,as
discussedinSection6,andFortunereceivesrentalsubsidies
forallofthesupportivehousingtenants(discussedinthis
section).KeysupportiveservicefundingcomesfromaNY/NY
IIIcongregatehousingcontract67wonthroughcompetitive
bid,providinghousingandservicestohomelessformerly
incarceratedindividualsandfamilieswhomeettightly
65 CSHToolkit.
67
CastleGardensobtainedfundingfromtheNYCDepartmentofHealthand
MentalHealth(DOHMH)fortheNY/NYIIICongregateSupportive
Housing-OptionIVprogram(NY/NYIII),acompetitivegrantofferedby
NewYorkCityinpartnershipwithNewYorkState.NY/NYIIIOptionIV
fundscasemanagementforthesupportiveservicesfor“[h]omelesssingle
adultswhohavecompletedacourseoftreatmentforasubstanceabuse
disorderandareatriskofstreethomelessnessorshelteredhomelessness
andwhoneedsupportivehousingtosustainsobrietyandachieve
independentliving.”FortuneanticipatedNY/NYIII-eligibleindividualsto
findtheirwaytoCastleGardenseitherthroughthesheltersystemorthe
Academy.CastleGardens'13familysupportiveunitsarealsosupported
byNY/NYIIIunderOptionV,toserve“[c]hronicallyhomelessfamilies,or
familiesatseriousriskofbecomingchronicallyhomeless,inwhichthe
headofthehouseholdsuffersfromasubstanceabusedisorder,a
disablingmedicalcondition,orHIV/AIDS.”Fortuneaddedtheadditional
criterionthattenantsorahouseholdmemberalsobeformerlyincarcerated.
68
Section8isusuallyabenefittoindividualswhomeetcertain
qualifications:“[t]heSection8HousingAssistanceprogramwascreated
bytheHousingandCommunityDevelopmentActof1974toassistlower
incomefamiliesinobtainingadecentplacetoliveatarentthattheycan
afford.Underthisprogram,theNewYorkCityHousingAuthority
(NYCHA)administersacitywideSection8HousingChoiceVoucher
ProgramthatisthelargestSection8voucherprograminthenationwith
morethan96,481activeSection8tenantsandover29,000owners
currentlyparticipatingintheprogram.NYCHApayspartoftherenteach
monthdirectlytothelandlordforaneligiblefamily,whichhasbeen
givenaVoucher,inaccordancewithregulationsoftheUnitedStates
DepartmentofHousingandUrbanDevelopment(HUD).HUDprovides
thefundingfortheSection8HousingChoiceVoucherProgram.”
69 ThisHPDrentalassistanceisseparatefromtheHPDcapitalfunding
mentionedabove.
66 CSHToolkit.“HowtoPrepareaSupportiveHousingOperationsBudget.”
34
“CaseManagershelpresidentsidentifyandachievetheir
goalsandmeettheirneedsthroughtheprovisionofaccessto
variousservices.ACaseManageraddressesthephysical,
psychologicalandsocialsneedsofthepersonandhelps
him/hertomaintainhousing.”
cruciallifelineofsupportandaccesstoessentialservices.
Theareaalsohassignificanthealthchallenges.The
communitiessufferingfromthehighestasthmaratesasa
resultofpollutionandtoxicwastearethesamecommunities
thathavethehighestratesofincarcerationinNewYorkCity.
AsFortuneconsidersitsservices,itisattunedtotheneedsof
itssupportiveresidents,itsaffordableresidentsandthe
greaterHarlemcommunity.
Additionally,aCaseManagerwillnegotiate,advocate,inform,
coordinateandserveasaliaisontootherprofessionalsand
serviceprograms.SomeofthelinkagesCaseManagers
accesstohelppeoplemeettheirgoalsincludeeducation
programs,vocationalprograms,medicalproviders,
entitlementcenters,advocacygroups,daytreatment
programs,psychotherapistsandpsychiatrists.”70
TheCastleGardensServiceCenteropenedinJanuary2011
andisopenyearroundonweekdaysfrom9am-8pm,
Monday-Thursday;andfrom9am-5pmonFriday,withsome
availabilityoneveningsandweekends.Thesatellite
substanceabusetreatmentclinicofferseveninghours(3pm11pm),alongwith24/7counselorcoverage.
Fortune'ssupportiveserviceplanningfortheCastleGardens
CommunityLivingCenter(CLC)continuesafterCastle
Gardens'doorsopened.Fortune'svisionistoprovideabroad
arrayofneededservicesinits20,000squarefeetservice
spaceinHarlemtoservehomelessformerlyincarcerated
individualsandlowincometenantsresidinginthebuilding,
alongwithotherformerlyincarceratedindividualsfromthe
surroundingcommunityinneedofservicesandsupports.
Designingandobtainingfundingfortheseservicesisan
ongoingprocessandtheneedsofthecommunityarevast.
CastleGardens'WestHarlemcommunity(Community
District9)isoneoftheneighborhoodsidentifiedbycriminal
justiceexpertsascontainingseveral“milliondollarblocks”
wherecriminaljusticespendingonresidentsexceeds$1
millionannually.71
On-siteprogrammingisbeingintroducedinstagesin
responsetoFortune'sformalassessmentofindividualclient
needs,ongoingcommunitymeetings,needsofbuilding
residents,andavailabilityoffunding.Allbuildingresidents,
regardlessoftheircriminaljusticehistories,haveaccessto
theCLClibrary,a14-stationcomputerlab,andcommunity
meetingspaces.
TheCLC'scoreon-siteprogramscurrentlyinclude:
Inaddition,CastleGardens'residentsandothersfromthe
surroundingcommunityalsofacehighunemployment,low
literacylevels,low-qualityhousingstock,andlowavailability
ofsocialservicesoptions–makingtheCastleGardensCLCa
» One-on-onecasemanagementtoensure
thatsocialservicesneedsaremetandto
trackclientprogress.
»
» Lifeskillstraining,suchasangermanagement,
safesex,andhealthyliving.
»
Computerliteracyskills,suchasbasicand
intermediatecomputer:MicrosoftOffice,Internet
usage,basicPCtroubleshooting.Fortunepursued
thisprogrammingtoaddressthedigitaldividethat
itsresidentsandneighborsfaceandtoincrease
participants'employmentprospects.
»
Video/mediaproductionandcreativewriting.
Inadditiontocorecomputerskillstraining,the
ComputerLabCoordinatorconductsan11-week
videoproductionclasswherestudentscreate
personalized,shortdocumentaries.Thestudents
learnhardskills,includingbasicvideocamera
use,storyboardandscriptdevelopment,and
lightingandvideoeditingskills,alongwithsoftskills
suchasprojectplanningandteamwork.
Licensedsubstanceabusetreatmentand
relapsepreventionprograms,includingclinical
casemanagement,individualandgroupcounseling,
andrecoverysupportservices.
Photo:LarryBercow
71 DataavailableatJusticeMappingCenter,www.justicemapping.org.
70 CSHToolkit.RoleoftheCaseManager.
35
» Farmfreshfooddistributionandnutrition
educationGivenhealthandwellnessindicatorsin
WestHarlem,thisprogrammingiscritical.
affordablehousingfundedthroughlowincomehousingtax
creditshasstrictrequirementstoensurethattheapartments
areinfactrentedbyindividualsinneedofaffordable
housing.ThemajorityofFortune'ssupportiveunitsrequired
thatindividualsmeetNY/NYIIIcriteriaandHPDSection8
criteria.Further,individualshadtobematchedto
apartmentsbasedonfamilysizeand,totheextentpossible,
preferenceonparticularunit.Fortunebeganthelease-up
processinDecember2009.
CLCclientsalsocanaccessadditionalservicesatFortune's
mainservicecenterlocatedinLongIslandCity,Queens,
including:employmentservices,hardskillstraining,adult
literacyandGEDclasses,alternativestoincarceration,
recreationandfood,healthservices,mentalhealthservices,
andlifetimeaftercaresupportsandservices.Fortune
conductedabaselineassessmentofthenewresidentsof
CastleGardens,andisconductingaoneyearfollow-uptosee
theimpactofresidencyonneedsatarrivalandtoidentify
theareasofunmetneeds.Fortunealsoholdsregular
communitymeetingstoobtainfeedbackandprogramideas
fromresidents.BasedonwhatFortune'sstaffmembershave
learnedthusfar,Fortuneplanstolaunchawidearrayof
initiativesatCastleGardensandthroughoutFortuneto
promotesustainability,eco-friendlyvalues,healthynutrition,
greenjobstraining,andenvironmentaljustice.Castle
GardenswasalsoapprovedasaNewYorkCityDepartment
ofProbation(DOP)targetedNeighborhoodOpportunity
Networks(NeON)communitysite.TheNeONisanetworkof
communityorganizations,governmentagencies,local
businesses,andcommunityresidentsfocusedonconnecting
probationclientswholiveinthetargetneighborhoodto
opportunities,resources,andservices.
See the CSH Toolkit Section III.B. for
links to the following materials:
Sinceitsopening,Fortunehascontinuedtoraisefunding
fromprivateandgovernmentsourcesforsupportiveservices
atCastleGardens.FortunealsoembarkedonaCapital
Campaign–atimelimitedfundraisingcampaigntargetedto
raisemoneyforCastleGardens.Fundshavebeenusedfor
suchcapitalneedsasbuildingtheservicecenter'sinternal
staircaseandpurchasingneededtechnologicalequipment,as
wellasforinitialfundingforsupportforsocialserviceswhile
additionalfundsarebeingraised.
» SampleMarketingPlan
» IdentifyingProspectiveSupportive
HousingTenants
» SampleApplicationforSupportiveHousing
» LegalConsiderationsDuringScreening
andIntake
» SampleApplicantScreeningProtocol
» RejectionCriteriaforSupportiveHousing
» Andmore.
SECTION 6.3 Castle Gardens Affordable
Housing Units Lease-Up
CastleGardensisfundedbylow-incomehousingtaxcredits,
andFortunehadtofindindividualswhometincome
eligibilityguidelinesunderthatprogram.Maximumrentis
taggedtoacertainpercentageofareamedianincome,with
theassumptionthatindividualscanaffordtopay30%of
theirincomeonrent.MostoftheaffordableunitsatCastle
Gardenswere,accordingly,rentedtoindividualsearning
60%orlessoftheareamedianincomeandmaximumrent
wasbasedontheaforementionedaffordabilitystandard.74
Otheraffordableunitswouldhouseindividualswith
project-basedSection8ortheirownSection8eligibility,
whichrequiredaseparateprocessandrentalstandard,and
allowedfarlowerincome.
SECTION 6.2 Castle Gardens Lease-Up
Introduction
AstheCastleGardensconstructionprocessprogressed,
Fortunehadtothinkabouthowitwouldleaseupthenew
apartments.Whileaseeminglysimpletaskonitsface,asCSH
explains,“[t]hegoalshouldbetomakethetimefromwhen
thecontractorcompletesthebuildingandsecuresa
certificateofoccupancytofulloccupancyasshortas
possible.72Thisprocessincludes,amongothersteps,
“finalizingrent-upprocedures,verifyingmarketingand
tenantselectionrequirementsofgovernmentfunders,
initiatinganyrequiredadvertisingoroutreachsoasnotto
delayrent-up,anddeterminingwhetheritispossibleto
preselectorpre-screentenantsinadvance.”73
Inadditiontoincomeeligibility,federalhousingfunding
requirescompliancewithaFederalAffirmativeMarketing
Plan,andCastleGardens'fundingthroughtheDepartmentof
HousingPreservationincludedfederalfunding.TheFederal
72 CSHToolkit.“NavigatingtheConstructionPeriod.”
AsCSH'sadvicesuggests,financingstructuresarebasedon
timelinesthatanticipaterentalincomebyacertaindate.
Further,Fortune'sfundingcamefrombothaffordableand
supportivehousingsstreams,therebycreatinganincreased
complexityofmarketingandtenantrequirements.The
73 CSHToolkit.“NavigatingtheConstructionPeriod.”
74 ProformaSummary:AffordableHousing+FortuneSupportiveHousing+
FortuneProgramSpace,”TheFortuneSociety
(LastUpdated:December23,2008).
36
AffirmativeMarketingPlanrequirestheownersto“make
goodfaitheffortstoprovideinformationandotherwise
attracteligiblepersonsfromallracial,ethnicandgender
groupsinthehousingmarketareatoensurethatgroups
unlikelytoapplyforthehousingareinformedofits
availability.”Thefederalregulations(24CFRSection
511.10(m)requiredocumentationoftheseefforts.
Finally,Fortunewantedtoensurethatitstenantshadthe
qualificationstobestabletenants.Losingtenantswould
meanhavingtofindnewresidents,whichtakestimeandcan
temporarilyreducerentalincome.Therefore,leasingup
affordablehousingcanbeacomplexprocess,andFortune
enlistedanexpert,"C",tomanagelease-up.Cwas
responsiblefor:
» Verificationoffinancialeligibility;
» Conductingstandardbackgroundchecks;and
» Consideringapplicant'shistoryofresponsibly
payingrentandconformingtoallaspectsofalease.
50affordableapartments,butHudsonHousingwatchedthe
lease-upwithconcerntoseeifthiswastrue.
Asamatteroffulldisclosure,prospectivetenantswerefully
informedbothverballyandinwritingaboutthemixof
tenantsinthebuilding.InFebruary4,2010,partially
throughthelease-upperiod,SherryGoldsteinreportedto
theBoardthatCastleGardenshadreceivedover900
applicationsforaffordablehousing;andonly15individuals
hadlookedatthemixedresidencyofthebuildingandchosen
nottoapply.
ThiswasatestamenttothehardworkFortunehad
undertakeninworkingwiththecommunitytoworkthrough
“notinmybackyard”resistance.Thisminimalturnawayrate
andthelargenumberofapplications–atotalofabout2,000
intheend–werealsoatestamenttotheneedforaffordable
housing,andC,asoutsideconsultant,assuredthat
apartmentswereawardedinafairandsystematicway.
Applicationswereconsideredintheorderreceived,screened
forincomeeligibilityandthenforotherfactors.
Cwasalsotoconductcriminalhistorychecks;however,
FortunelearnedthatC,accordingtoindustrypracticefor
companiesthathandleaffordablehousinglease-upfor
developments,screenedoutindividualswithcriminal
recordsinthefirstinstance,andallowedthemtoappealthat
decision.Forvaluesreasons,andbecauseofitsexpertisein
servingindividualswithcriminalrecordsandits
commitmenttoprovidingservicesforthisgroup,Fortunedid
notwantthisstandardusedforCastleGardensandleft
candidateswithcriminalhistoryintheapplicantpooltobe
judgedforsuitabilityonanindividualbasis.
Fortunemadeitsvaluesclearinitsmaterials:
“Wearelookingforresponsible
tenantswhowanttobepartofa
community,whowillhelpanelderly
neighborcarrygroceries,whowill
giveasmileanda“welcomehome”to
someonenewlyreleasedfromprison
andlivingintheAcademy,whois
lookingforagoodplacetoputdown
rootsandcallhome.Ifyouthinkthat
soundslikeyou…ifyouthinkthatthis
isabuildingthatyouwouldliketo
liveinandacommunitythatyou
wanttobeapartof,wewelcomeyou
toapplyforanapartmentin
thisbuilding.”
TheFortuneSociety'sDavidRothenbergCenterforPublic
Policycontinuestoadvocateagainstaffordablehousing
practicesthatroutinelyscreenoutpersonswithcriminal
justicehistoryratherthanjudgingthemindividuallyonthe
meritsasisdonewithotherapplicants.
SECTION 6.4 Castle Gardens Supportive
Housing Units Lease-Up
(MemorandumfromFortuneSocietytoTenantApplicants.
SeeExhibitAforfullletter.)
CalsosupportedFortuneinleasingupthesupportive
housingapartments,aprocessguidedbythesupportive
housingfundingstreamsdescribedaboveunderSection6.1.
Fortuneanticipatedthatanumberofsupportivehousing
clientswouldtransitionfromtheAcademytoCastleGardens,
andbeganreviewingAcademyresidentsforCastleGardens
readinessasearlyasDecember2009.75
Originally,HudsonHousing,thesyndicatorofthetaxcredits,
hadsignificantconcernsaboutthemixedtenancyplanned
forthebuilding,worryingthatFortunemighthavedifficulty
inleasinguptheaffordableunitsbecauseofthesignificant
populationofformerlyincarceratedandformerlyhomeless
tenantswhowouldbelivingthere.
Supportivehousingclientswould,therefore,bereferred
fromFortuneandfromtheNewYorkCityDepartmentof
HomelessServicesifeligibleforNY/NYIIIhousing.All
supportivehousingapplicationswouldbereviewedforthe
Partoftheirduediligenceinvolvedsitevisitsandextensive
investigationofFortunebeforecommittingtosyndicatethe
taxcredits.JoAnnePage,Fortune'sCEO,predictedthatCastle
Gardenswouldhavenodifficultyinfindingapplicantsforits
75 FortuneSocietyBoardMeetingMinutes(December21,2009)
37
following:
» Verificationofhomelessstatus;
» Reviewofcriminalhistory,includinganin-depth
interviewwithFortune;
» Credithistoryandotherindicatorsofrehabilitation
andstability;and
» NY/NYIIIeligibilitycriteria,whereapplicable.
SECTION 6.5 Castle Gardens Building
Management
AstoryaboutCastleGardensduringlease-upprovidesan
illustrationofthetoneandcultureofthebuilding.Withthe
buildingalmostatoccupancyandThanksgivingaroundthe
corner,TheFortuneSocietyreceivedadonationofturkeysto
distributefortheThanksgivingholiday.Fortunereceived
moreturkeysthanithadplannedfor,anditschallengewasto
findfreezerspacefortheturkeyssotheywouldnotdefrost.
SherryGoldstein,ChiefofStafftoFortune'sCEO,askedChris
Carney,CastleGardens'newsuperintendent,tofindstorage
spacefortheturkeysinthefreezersofanyofthevacant
apartmentsforafewdaysuntiltheyweredistributed.On
December1,asChriswasconductingamove-inapartment
inspectionwithoneofthelasttenantstomoveintoCastle
Gardens,hegottotherefrigeratorandopenedthefreezer
doortofindtherewasstillaturkeyinthefreezer.Thetenant
wassurprisedandstartedcryingwithhappinessthatshe
wasevenbeinggivenaturkeywithhernewapartment.
SuperintendentChrisCarneydidnothavethehearttotell
heritwasamistakeandletherkeeptheturkey.
Again,Fortunewasveryinvolvedinreviewingscreening
decisions,especiallywhenaboutindividuals'criminal
history.Forbothaffordableandsupportivehousingclients,
JoAnnePage,BarryCampbell(specialassistantatFortune),
SherryGoldstein,StanleyRichards,andJRCowereinvolved
inreviewingapplicantfiles.
Basedonpastexperience,JRCoadvisedFortunetostrongly
staffthelease-upprocessinordertomeettiming
requirements.Thesupportivehousinglease-upprovedtobe
challengingbecauseofthetwo-partparallelgovernment
processesrequired:themajorityofindividualshadtofirst
qualifyaseligibleforNY/NYIIIservicesfundingandthenbe
referredforHPDeligibilityasdisabledfortheSection8pilot.
Thisprocedurepresentedtighttimeframes:NY/NYIII
eligibilitylapseifindividualsdidnotendupinhousing
withinacertaintimeframeandHPD,whichheldbriefings
forSection8,hadacertainscheduleforrequiredpre-lease
tenantbriefings.
Asdemonstratedbythisstory,theCastleGardens'
superintendenthasbeenintegraltomanagingCastle
Gardensandinsettingthecultureandtoneaspiredtoby
Fortune.Fortunegoesoutofitswaytohirestaffwhocome
fromthesamebackgroundsandhistoriesasitsclients,
Fortune'sSeniorVicePresidentofPrograms,Stanley
Richards,playedakeyroleinidentifyingformerly
incarceratedhomelessapplicantsforCastleGardens
eligibility.StanleyRichardswassupportedbyBarry
Campbellandclients'counselors.ChiefofStaffSherry
Goldstein,withsupportfromBarryCampbell,ledthe
process.TheyinterviewedFortuneclientsandDHSreferrals
forNY/NYIIIsupportivespots.Fortuneassistedapplicants
toobtainidentificationandfilloutapplicationsinorderto
navigatethecomplexandoftendauntingeligibilityprocess.
Throughitsrelationships,diligenceandassignmentofa
significantportionofSherryGoldstein'sleadership,Fortune
wasabletoworkwithHPDtoprocessindividualsthrough
theSection8eligibilityprocessquickerthanusual.For
example,onAugust13,2010,anHPDbriefingwasheldon
siteatFortune–aprocessthat,totheknowledgeofthose
involvedinthelease-up,hadneverbeforebeendonebyHPD.
Inasixhourmarathonsession,52leasesweresignedtostart
onAugust15.
Consult the CSH Toolkit for Links
to the following Materials (and
more) about Property
Management in Supportive
Housing:
» RolesofthePropertyManagerand
AssetManager
» KeyPrinciplesforCoordinating
PropertyManagementandSupportive
ServicesinSupportiveHousing
» PropertyManagementandSupportive
Services:RolesandResponsibilities
andAreasofOverlap
» FormsofPropertyManagementin
SupportiveHousing
» SupportiveHousingPolicyand
ProceduresManual
» ManagementPlanOutline
Partofthereasontoworksohardtoqualifytenantsandto
signleasesquicklywasdrivenbytheneedtomeettiming
requirementsandtogetrentalincomeflowing,butpartwas
alsodrivenbySherryGoldstein'spersonalcommitmentto
havingfamiliesmoveinbeforethenewschoolyear.Castle
Gardens'GrandOpeningoccurredonSeptember15,2010
andwasattendedbymanyofCastleGardens'newly
housedtenants.
38
believingthattherolemodelingandculturalcompetency
thattheybringtothejobgreatlyincreasestheireffectiveness
andthatoftheorganization.76
buildinginternally.Phippsoverseesphysicalmaintenance,
financialadministrationandcompliance;andhasadditional
staffatthebuilding.
ChrisCarneyisaformerFortuneclientandgraduateofthe
Academywhostudiedtolearntheskillsneededtobe
superintendentofagreenbuildingandwashiredforthejob.
AsFortunelearned,ittakestimefornewstaffandresidents
tosettleintoanewbuilding,andChrisCarneynotonly
solvestheproblemstraditionallyaddressedbya
superintendent,butalsoservesasananchoratCastle
Gardens.Hehasdemonstratedaprofessionalismandability
tosolveandidentifyproblems;andbringstohisjob
knowledgeoftheclientpopulation.Thisculturalcompetency
hasbeeninvaluableatCastleGardens,withitsdiversityof
tenantsandmultiplicityofneedsincludingthoseoftenants
whoarelivingindependentlyforthefirsttimeintheirlives.
Administrationandcomplianceismadeparticularlycomplex
becauseofthevaryingandsignificantreportingrequirements
associatedwithCastleGardens'manyfundingsources;
PhippsprovidesFortunesupportinmeetingthese
requirements.
AsCSH'smaterialslinkedinthissectionexplore,ongoing
managementincludespropertymanagementandsupportive
serviceselements,withoverlappingtasks.Fortunehasthe
followingstaffatCastleGardens,reportingtoitsSeniorVice
PresidentofPrograms,StanleyRichards:(SeeOrganizational
ChartinExhibitB)
Inadditiontothesuperintendent,CastleGardens'
managementrequiresadditionalstaff.TheFortuneSociety
chosePhippsHousesServices,Inc.,(“Phipps”)tomanagethe
buildingthroughanRFPprocess.Fortunehaddecided,after
askingexpertsandbasedonitscapacityandexpertise,to
hireamanagementcompanyratherthanmanagethe
76
Fortuneconsiderssuchhiringabestpracticeandhaswrittenamanual,
EmployingYourMission:BuildingCulturalCompetencyinReentry
ServiceAgenciesThroughtheHiringofIndividualsWhoAreFormerly
Incarceratedand/orinRecovery,”whichdetailsFortune'sbeliefinthe
importanceofhiringculturallycompetentstaffandprovidesguidance
fordoingsoeffectively.Today,attheFortuneSociety,55%ofstaffhavea
historyofincarcerationand/orareinsubstanceabuserecovery;78%are
personsofcolor;and25%arebilingual.
» AssociateVicePresident;
» SeniorDirector.supervisestwoCaseManagers,
ClinicalSocialWorkerandManagerof
ResidentialServices;
» TwoCaseManagersandoneClinicalSocialWorker;
» ManagerofResidentialServices,supervisesthree
ResidentialAidTeamLeaders;and
» ResidentialAids.ThreeResidentialAidTeam
LeadersandsixResidentialAids.
FortuneexpectsstaffingatCastleGardenstocontinueto
evolveasitsservicecenterisbroughttoscaleandit
introducesprogramsbasedoncommunityneedandfeedback.
39
Fortunehasalsoseenthewaysinwhichtheprojecthas
helpeditmeetsitsorganizationalgoals.Fortunewasableto
meetits“triplebottomline”:
SECTION 7. Conclusion
Asthistoolkitdescribes,developingasupportiveand
affordablehousingprojectisasignificantinvestmentof
organizational,andinparticularmanagementtime.Creation
ofCastleGardensconsumedmuchofthetimeandenergyof
Fortune'sCEOforfiveyears,drewheavilyonvarious
membersoftheExecutiveandlinestaffatdifferentstages,
deeplyengagedtheagency'sBoardChairthroughoutthefive
years,anddrewonotherBoardmembers.However,The
FortuneSocietybelieves,withpassion,thatthereis
significantpay-offfororganizationsforwhichsuchaproject
isafit.Inadditiontothecreationofabeautifulbuildingthat
helpsFortuneachieveitsmission,theagencyhasbuilt
capacityinvariousways,includingstrengtheningitsBoard
anditsabilitytofundraise.
» HousingandsupportiveservicesforFortune's
servicepopulation;
» Afinanciallysustainablebuildingand
services;and
» Benefittothelocalcommunity.
Finally,whiletheprojectseemsdaunting–asocialservice
agencymayaskitselfwhatitcouldpossiblyknowabout
greenmaterialsselection,letalonehowtoraisethe
necessarycapital–itispossibletoopenthedoorstoa
supportivehousingdevelopment,andinanorderly,managed
way.Theheavyliftingofopeningapermanentaffordable
supportivehousingdevelopmentisdoneovertimeandin
incrementalstepsbyastrongteam.
CastleGardensprovidespermanent,
stable,healthy,affordableand
supportivehousingtolow-income
NewYorkers,manyofthemwith
criminaljusticehistoriesthatwould
makeaccessingsuchhousing
particularlychallenging.
Thismanualprovidessuggestionsonhowtomanagethis
process,andhowtoplansothatagencieshavetheright
externalandinternalteamsandprocessesinplace.
Warning:creatingsuchhousingisaddictive.Oncean
organizationexperiencesthemultiplebenefitsofsucha
projectandseesthehumanimpactofsafe,affordableand
supportivehousing,itishardtostopatjustone
residence…ortwo….
MomentssuchastheCastleGardensfirstThanksgivingstory
occurdaily,andFortuneiswarmedtowitnessCastle
Gardens’residentsblossominthisenvironment.
Photo:DavidY.Lee
40
EXHIBIT A: Tenant Letter
41
Exhibit B
The Fortune Society, Inc.
Castle Gardens
Organizational Chart
Associate
Vice
President
ofHousing
Managerof
Residential
Services
Residential
Aid
TeamLeader
Residential
Aid
Residential
Aid
Residential
Aid
TeamLeader
Residential
Aid
Residential
Aid
42
Clinical
Social
Worker
Senior
Director
ofHousing
Property
Manager
Case
Manager
Case
Manager
Residential
Aid
TeamLeader
Residential
Aid
Residential
Aid
ABOUT THIS TOOLKIT
This toolkit tells the story of how The Fortune
Society, a New York City based non-profit that
provides reentry services to individuals with
criminal justice histories, developed Castle
Gardens, a mixed use affordable and
supportive housing development in West
Harlem to serve its clients and the
local community.
The toolkit explains how The Fortune Society
achieved its triple bottom line of housing and
supportive services for Fortune s client
population; financial sustainability; and benefit
to the local community.
Covered in the toolkit are the following
development phases:
»
»
»
»
Pre-Development Planning
Project Financing
Construction
Moving In
The Fortune Society, 29-76 Northern Boulevard, Long Island City, NY 11101 | www.fortunesociety.org | 212.691.7554