NEW YORK, July 24, 2024 — Today, Community Solutions announced it has secured $135 million to close out the CS Large Cities Housing Fund, a first-of-its-kind social impact private equity fund that provides crucial housing resources to individuals exiting homelessness and middle-income individuals. The Fund represents an important advancement in the work to secure more affordable housing and address the challenge of homelessness in the United States. It has attracted some of the largest social impact investors in the nation, ranging from health systems to banks to private foundations.
“This Fund will fundamentally change how cities address homelessness and the affordable housing crisis,” said Dave Foster, President of BDP Impact Real Estate, a partner of Community Solutions that manages the Fund and its properties. “By leveraging private capital, this model will diversify how affordable housing is developed, which will be quicker and more efficient than traditional financing mechanisms.”
Since launching in 2022, the Fund has acquired 1,155 apartment homes in six cities that are part of the Built for Zero movement to solve homelessness and housed over 270 individuals exiting homelessness. The Fund aims to acquire more than 2,500 housing units; half of the units will be permanently dedicated to people transitioning out of homelessness, including veterans and people experiencing chronic homelessness.
Innovative fund to more quickly create housing for people exiting homelessness
The Fund’s innovative design allows for investors to generate a responsible return on their investment while providing a tangible social benefit. Units acquired by the Fund are leased in direct partnership with the local homeless response system in each community. Ultimately, half of the units in the Fund portfolio will be reserved for individuals exiting homelessness and half will be preserved as workforce affordable housing.
The Fund’s unique financing model bypasses the many shortfalls associated with constructing new affordable housing, including excessive costs and slow delivery that are responsible for a severe lack of affordable rental housing in the United States. By relying on private capital, this approach provides units in a fraction of the time and at a much lower cost. This model is unique because it brings housing directly to the system that serves people experiencing homelessness. It can be used as an effective tool by communities to measurably reduce homelessness, while at the same time preserving existing units of affordable housing.
Unlike many other housing funds, this model is designed to create permanently affordable housing. Once investors’ capital is returned, the properties will transition to nonprofit ownership to ensure they continue to serve the mission of addressing homelessness and preserving affordable housing.
“We need fresh ideas for providing and preserving the homes required to make homelessness rare and brief. The Fund demonstrates the role that social impact investors can play as part of an organized housing system aimed at results,” said Rosanne Haggerty, the President and Chief Executive Officer of Community Solutions. “These targeted investments are measurably reducing homelessness.”
The Fund is backed by a wide range of investors including Kaiser Permanente, UnitedHealth Group, The Leon Levine Foundation, Truist, Ford Foundation, Wells Fargo, IWP Family Office, The Frances and Benjamin Benenson Foundation, and Woodforest National Bank, as well as a John D. and Catherine T. MacArthur Foundation grant awarded to Community Solutions.
Housing linked directly to homeless response systems
The Large Cities Housing Fund’s innovative model makes its apartments available directly to local homeless response teams. In most cases, people experiencing homelessness can move in within 90 days after the Fund acquires a property, rather than waiting years for developers to create new housing.
Built for Zero trains homeless response teams how to gather real-time, by-name data on everyone experiencing homelessness in their communities. Close partnerships with these teams ensure that after the Fund acquires a property, half of the units are leased to individuals experiencing homelessness as natural vacancies occur. The remaining 50% of homes are kept “workforce affordable,” holding rent accessible to low and middle-income workers. By increasing direct access to units, communities can quickly connect prospective tenants to new homes and provide them with the necessary resources and assistance to remain stably housed.
“Two of the biggest challenges communities face in solving homelessness are the lack of affordable housing dedicated to people exiting homelessness and the complexity of housing systems that delay the placement of people into available homes. This Fund, coupled with our Housing Systems support that streamlines the housing matching process, solves for both these issues, enabling communities to convert existing properties into permanently affordable housing in a way that is faster and more adaptable than many traditional approaches allow,” said Nadine Maleh, the Principal of Housing Systems at Community Solutions.
Cities are already using the model to accelerate their response to homelessness. In Jacksonville, Fla., properties acquired by the Fund were responsible for 27% of housing placements for veterans exiting homelessness last year. The Fund’s properties, coupled with housing systems’ support, are already having an impact on Jacksonville’s housing system overall. In the first quarter of 2024, Jacksonville had nearly the highest housing placement rate in the past four years.
In addition, the Fund has raised more than $30 million from several groups that have made or pledged targeted investments in specific communities, including Amazon Housing Equity Fund, Northern Trust, Trinity Health, Alliance Healthcare Foundation, BQuest Foundation, Baltimore Community Foundation, Community Foundation for Northeast Florida, The Home Depot Foundation, and The Harry and Jeanette Weinberg Foundation.
The Fund currently owns properties in Baltimore, Charlotte, Denver, Jacksonville, Nashville, and Phoenix.
INVESTOR QUOTES:
“Kaiser Permanente knows that without a safe, stable place to live, it is nearly impossible to be or stay healthy. We are proud to continue to partner with Community Solutions to help create better health outcomes for more people, including military veterans, by going beyond the limits of traditional health care with programs and practices,” said John Vu, Vice President of Strategy, Community Health at Kaiser Permanente. “By bringing together the unique strengths of the health and housing sectors, we can strengthen neighborhoods, improve health, and help communities thrive.”
“It is our honor to invest $25 million with Community Solutions to advance health equity by reducing homelessness,” said Catherine Anderson, Senior Vice President of Health Equity Strategy at UnitedHealth Group. “We know that safe and affordable housing is key to health and wellness. We are eager to see all the good that comes from this collaboration with Community Solutions.”
The Leon Levine Foundation is committed to helping underserved individuals and families in our community reach self-sufficiency through both financial and philanthropic investment. “Housing is a critical component to that formula, and we’re proud to partner with Community Solutions in helping to eliminate the challenges that people experiencing homelessness face in these areas,” said Tom Lawrence, President and CEO at The Leon Levine Foundation. “We applaud the approach by Community Solutions in combining a focus on not only creating a financial solution but also pairing that solution with the expertise of nonprofit partners.”
“Through our 100&Change award, MacArthur chose to support Community Solutions’ Built for Zero strategy because of the high level of innovation and systems-level change their approach brings to the challenge of making homelessness rare, brief, and non-recurring.,” said Allison Clark, Associate Director of Impact Investments, MacArthur Foundation. “By dedicating $10 million of their award to the Large Cities Fund, Community Solutions has leveraged more than ten times the initial investment from a variety of impact investors in philanthropy, banking, and health care. Their creative approach to addressing what often is seen as an intractable problem provides hope for individuals and communities across the United States.”
“Access to affordable housing is essential to health and safety, financial security and thriving neighborhoods,” said Lauren Butler, Senior Vice President and Purpose Driven Impact Financing relationship manager at Truist. “We’re pleased to support Community Solutions and the novel approach it is using to increase the capacity and preservation of affordable housing for those experiencing homelessness in communities across the U.S.”
“Across America, millions of people struggle to make ends meet and lack access to safe, secure, and affordable housing. This is especially true for far too many veterans who have answered the call to serve this country only to experience chronic homelessness that feeds into a cycle of economic despair,” said Roy Swan, Director of Mission Investments, Ford Foundation. “However, as Community Solutions proves time and again, when community leaders, policymakers, and investors collaborate, change is possible. We’re proud to support their work to end homelessness for good.”
“Wells Fargo is pleased to provide flexible capital to Community Solutions as they work with partners to secure innovative, affordable housing solutions for the country’s veterans,” said Megan Teare, Managing Director, Wells Fargo’s Community Lending and Investment group. “With the Large Cities Housing Fund, Wells Fargo is adding another resource to the support we have proudly provided military veterans and their families for more than 160 years.”
“IWP Family Office is immensely proud to work with and support Community Solutions, providing creative and impactful housing solutions for veterans and others in need,“ said Charlie Willhoit, President of IWP Family Office. “Community Solutions’ openness to innovative thinking along with their courage to implement their ideas has created a massively scalable model that is already making meaningful, permanent community impacts by bringing together private capital, philanthropy, and public funding.”
“The Community Solutions Large Cities Housing Fund brings a fresh approach to the longstanding and urgent issue of veteran homelessness throughout the U.S. Woodforest National Bank is proud to be an early investor in this innovative fund model and supports the important work of ensuring those who served our nation have safe and quality housing,” said Noelle St.Clair Lentz, Senior Vice President, Impact Investing and Strategic Initiatives at Woodforest National Bank.
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About Community Solutions
Community Solutions is a nonprofit committed to making homelessness rare and brief. It leads Built for Zero, a network of more than 100 US communities using a data-driven methodology to improve local housing and homeless response systems and the impact they can achieve. To date, 14 communities have reached functional zero veteran and or chronic homelessness, a milestone for homelessness being rare and brief for a population. Learn more at www.community.solutions or follow us at @CmtySolutions.
About BDP Impact Real Estate
BDP Impact Real Estate is a social impact investment and development company headquartered in Philadelphia. They partner nationally with long-term investors to deliver transformative community-based development and affordable housing.
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