People become homeless for many reasons: addiction, health and mental health challenges, domestic abuse, inadequate educational and employment opportunities, and previous institutionalization (prison, hospital, foster care, etc.) BRC works with our clients on all these needs. But regardless of their path into homelessness, the path out for most is a home they can afford.
The first step for many BRC clients is finding employment. Graduates of our workforce development program find jobs with an average wage of $11/hour, or $20,000/year on a full-time basis. Following a long held rule of thumb that rent should not exceed 30% of earnings, their rent should not exceed $500/month.
In NYC, that is just about impossible. For decades, the Federal Section 8 rental subsidy bridged the gap between the rent and what someone could afford. And because the subsidy never expired, it was frequently used to help finance the development of low-income housing; thousands of units in NYC alone. Since Sequestration, Section 8 has effectively vanished, and the production pipeline of low income housing has declined dramatically.
New York State and New York City have tried to fill the gap but these subsidies were limited to only a few years and then expired, thus they did not spur development of new housing. Instead, they increased demand without increasing supply. For homeless people in shelters, housing options have become fewer and less secure. Their choice is to rent apartments they can’t afford, find roommates who may not be responsible, or rent rooms without the protection of a lease.
For our clients, and our City, the consequences have been devastating. Data from the Mayor’s Management Report show fewer exits, longer stays and higher rates of recidivism. Clients cannot afford to leave, and a shelter system that depends on throughput is overwhelmed. To meet its legal obligation to provide temporary housing, the City has been opening shelters at a rapid rate, usually by leasing facilities from private developers whose objective is, by definition, to make a profit.
At BRC, we watched this crisis unfold before our eyes. To help the city meet the need we opened more shelters, leasing buildings from private developers. The rent we paid covered the developer’s costs to acquire, build or renovate, and finance the facility, their overhead, and of course their profit.
Having developed housing, we began to wonder if there was a way to cut out the middleman and turn the City’s need for shelter into a way to also solve the housing crisis. Rather than create wealth for private developers, could we use the same shelter contract to create housing for low-income people?
It took us less than a minute to connect the dots and realize we had found a way to subsidize the rents on apartments for our low income clients looking to move out of shelter, but only able to afford $500/month. And, if we could guarantee that we would provide this subsidy on a recurring basis, we could use these funds to leverage the financing and development of new units of low-income housing, expanding the supply of this desperately needed and scarce resource.
So that’s what we have done.
Rising up in the Bronx, at 233 Landing Road, visible from the Major Deegan Expressway, with views of the Harlem River, is the first of what we are confident will be many such projects: a mixed-use facility that combines a brand new, purpose-built, 200-bed homeless shelter downstairs, and 135 new units of permanent housing affordable to low-income people upstairs (rents on the 111 studios will be less than $500/month). We are using the surplus income generated by the shelter part of the building, resources that a private developer would take as profit, and re-investing it into the housing part of the building, covering the operating deficit that traditionally would have been met by Section 8. It is a simple and elegant approach; capturing the shelter developer’s profit and re-investing it into low-income housing.
The BRC model provides safe, secure and legal housing that low-income people in shelters can afford. Taken to scale, this model could create thousands of units of low-income housing and clear up the backlog in the shelters. It can help the city decrease the size of the shelter system and close down decaying and unsafe facilities where no one should have to live.
This is just one example of how BRC thinks about the issues and creates innovative solutions. I welcome your feedback on this and other subjects. Thank you for your interest and support of BRC, and the people we serve.