Iowa needs more affordable housing with supportive services. Why is it hard to meet demand?

CEDAR RAPIDS — Before she aged out of the foster care system when she turned 18 years old in June, Nevaeh Johnson couldn’t wait to live on her own.

Johnson was adopted when she was born and lived with that family until age 14, but she “wasn’t getting treated the right way after so long and needed to escape.” She stayed with a friend for several months before ending up in the loving hands of her foster mom, Valerie, in April 2020. Valerie helped Johnson get her first car and job, and taught her everything she needed to know about life.

Preparing for her 18th birthday, she’d been looking for apartments and called Foundation 2 Crisis Services’ hotline for help. When she did, she jumped at the chance to secure one of five new rental units dedicated to youth aging out of foster care in Cedar Rapids Brickstone, a new $12.2 million, four-story affordable housing development in Oak Hill Jackson.

Staff set her up with the Iowa Aftercare Services Network, which provides services statewide to eligible people ages 18 to 23 who have aged out of foster care, so she can meet regularly to discuss future goals or connect with other resources. With Foundation 2’s help, she now has free internet access and is seeking energy assistance — a huge help in an economy that’s straining household budgets, she said.

“It feels amazing,” said Johnson, who pays $510 a month for rent. “I get my own peace and quiet. It’s what I’ve always wanted my entire life. I told myself that when I turned 18 I would get my own place and I managed to do that. I feel really accomplished.”

The new 44-unit facility from Des Moines-based Hatch Kiernan Galloway Development opened in December at 627 Sixth St. SE in a core Cedar Rapids neighborhood — a step toward filling the community’s need for more affordable housing. Services are available on-site to support those tenants through a partnership with Foundation 2.

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Thirty-four units are reserved for tenants at or below 60 percent of the area median income. According to Iowa Finance Authority, $39,780 is the most a one-person household can make to qualify for this housing. Ten units are marked for tenants at or below 30 percent of area median income.

The facility is one of few in the Corridor offering that deep of a subsidy on rent to tenants, despite the fact that in Iowa, the need for rental housing geared toward those earning 0 to 30 percent of the area median income is one of the greatest areas of demand. The state projects a shortage of 55,219 rental units serving that income bracket by 2030.

Supply chain constraints have improved since COVID-19 upended production across the globe, said Debi Durham, director of the Iowa Finance Authority and Iowa Economic Development Authority. But those problems persist while the cost to finance projects is a tall hurdle for developers facing high interest rates and construction costs.

Demand for this housing grows as local officials and nonprofit service providers are moving away from shelters — a temporary fix to support those experiencing or at risk of homelessness — in favor of housing.

But to keep these populations housed, residents need wraparound services and sometimes intensive case management. Housing alone isn’t always enough. They often need mental health and substance use resources, financial literacy, job coaching or other supports.

Local governments and nonprofit service providers are partnering to meet the rising demand to support residents who are most at risk of housing instability. They’ve spearheaded innovative solutions and creatively used funding to break the barriers that remain to offering both the physical housing space and the staff to help the most vulnerable residents thrive.

Construction challenges

Holly Vonderohe, 56, moved to Cedar Rapids in 2017 to take a part-time teaching job at Taylor Elementary School after she was laid off from her job in Oklahoma City and no longer had a reason to stay there. She was getting by with part-time work, but had no full-time prospects.

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Now, she works 40 hours a week as a receptionist making $15.50 an hour, but with student loans and a car that recently died, she said it can be hard to make ends meet.

Vonderohe lives in the Oak Hill Jackson Brickstone on Sixth Street SE and pays $630 a month for rent. On top of that, she has a car payment and sometimes buys groceries on her credit card. She’s tried to get food stamps, but she makes too much to qualify. Still, as she put it, “I’ve seen the cheapest and I don’t want to live there.”

“It’s downtown close to the things that are going on. When things are happening — different seasons, activities — you’re right there and it’s nice to be a part of it and not be reminded, ‘You live in the poor neighborhood.’ People don’t know that,” Vonderohe said of Brickstone.

As much as she appreciates the quality of her own home, she wonders why there aren’t more truly affordable places to live in the area.

Oftentimes, there’s a common pool of large developers — usually from out of state — and sometimes local nonprofit developers who are financially able to build these facilities, said Ellen McCabe, executive director of the Housing Trust Fund of Johnson County. When new entities try to pursue a project, she said they typically are surprised by “how hard it can be because you must layer many different sources of funding.”

Even the most subsidized housing, if the developer successfully cobbles together funding, doesn’t always come with the needed services to help tenants, McCabe said. It's especially hard for developers to make these facilities pencil out with the rising costs of labor and materials, along with high interest rates and land prices.

“It really does take the community and the state to partner with developers to make these projects cash flow at the end of the day and keep the rent at a level that families and individuals can afford,” Durham said.

In Cedar Rapids, the city has successfully used multiple grants including ARPA dollars to bring new units online. Crews are nearly done rehabilitating the former Colonial Center building at 1500 Second Ave. SE into “The Heights,” a 25-unit affordable housing development opening this year.

It will serve those earning 80 percent or less of the area medium income, and 15 of the units are earmarked for those earning 50 percent of the area median income. The city will turn over the property to HACAP to own and manage, and also offer supportive services.

Community Development Director Jennifer Pratt said it’s typically not feasible for developers to build housing that’s deeply subsidized to serve the lowest-income residents, “even if we turned over with no debt” and even when onetime funding is available such as federal American Rescue Plan Act funds.

“When you're getting no rent, you can't keep the lights on, keep maintenance going,” Pratt said. “You have to have additional resources to even run … It does have to be leveraged with other resources.”

With this population, Pratt said the city turns to voucher programs. According to Pratt, Linn and Benton County have approximately 1,000 housing vouchers that can be used for properties such as Brickstone.

Jessica Andino, executive director of the Johnson County Affordable Housing Coalition, said even many low-barrier units are not affordable. Since Iowa lawmakers barred cities from restricting source-of-income discrimination — allowing landlords to reject tenants who are using vouchers — Johnson County officials said that even when there are available units, they’ve seen more individuals struggle to find housing and an increase in unsheltered homelessness.

“There is a price associated with having unfavorable rental, criminal, or other history and much of this history is not the fault of the individuals who are needing affordable housing,” Andino said.

For developers to make the public investment in supportive services that can transform lives, Jack Hatch, principal of HKG Development and a former Democratic state lawmaker, said it takes more time and money than most developers want to give while remaining profitable enough to satisfy investors.

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Since the U.S. Housing and Urban Development Department pulled out of construction in the late 1900s and shifted subsidies to vouchers, private and nonprofit developers stepped in. The federal government awards low-income housing tax credits to states to administer.

In the absence of government intervention in housing stock, Hatch said any developer needs major investments from large corporations or other sources to borrow less money and ultimately offer lower rates to tenants.

“We have this chosen business model where we want to do more than just have an apartment,” Hatch said of his company. “We want to help people and it’s that simple. But our model also includes the services necessary to succeed.”

‘Housing first’ approach

For chronically homeless individuals who need intensive case management to stay housed, the “housing first” approach is gaining traction in Iowa after two Iowa City developments operated by nonprofit Shelter House successfully piloted permanent, supportive housing.

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Lauded as “transformative,” local partners say the facilities were possible because of community buy-in and support from the Iowa Finance Authority in launching this housing model in the state.

The three-story building at 501 Southgate Ave., adjacent to Shelter House, provides no-barrier housing for 36 people and opened in June 2022. The first, Cross Park Place, opened with 24 units in 2019 at 820 Cross Park Ave., south of Highway 6. Both properties are for individuals as a gap remains for families reliant on supportive services.

“Housing first” is an approach that provides stable housing for those experiencing chronic homelessness and then addresses behavioral, mental health or substance use issues. For those living in these spaces, there is no housing they can afford to live in, Shelter House Development and Communications Director Christine Hayes said.

“We’re correcting for a market failure, a housing failure, sometimes a criminal justice failure,” Hayes said. “ … When you can’t change hearts and minds, you just have to find the money and make it happen yourself.”

Shelter House provides on-site case management at the facilities and clinic space for physical and behavioral health practitioners to meet with tenants. Participation in services is voluntary. Case managers also may arrange transportation for tenants’ off-site appointments.

“Nobody stabilizes when they're on the street,” Hayes said. “How do you stabilize to be able to get housing while you're still outside and while you're still in crisis?”

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This allows their nervous systems to calm so that their bodies adjust to the security of having a home base without requiring that they participate in services. Yet, Hayes said 100 percent of tenants opt in to these supports.

It didn’t take long for Shelter House to see an impact.

A study that began before Cross Park Place opened identified four individuals in Johnson County and revealed that frequent users of services including jails, hospitals, shelters and detoxification facilities cost taxpayers more than $2.1 million combined from 2010 to 2014. Based on the first year of the facility being operational, there was a decline in costs to $1.26 million including housing and services, meaning it cost less to house these individuals with the resources they need.

“Without having housing, you don't have a stable base for individuals, families or even the community to build upon, so it is really a baseline to overall opportunity and opportunities for achievement,” said Andino, a Ph.D. candidate at the University of Iowa College of Public Health studying the health and well-being impacts of housing.

More money for services?

Local housing officials say these wraparound services are the key to keeping people in stable housing, but funding the staff positions to administer supportive services in an ongoing basis remains a challenge.

Linn County Community Outreach and Assistance Director Ashley Balius said nonprofit landlords and housing providers may seek typically short-term grants and other sources to fund staff. But to permanently secure such a role, Balius said this funding generally has to come from the state or federal government because it’s difficult to sustain solely with money from the community.

J’nae Peterman, Waypoint’s housing services director, said the red tape typically attached to federal funding can be restrictive. She said it’s not conducive to serving a high-need population as it forces them to collect medical documentation and prove they’re chronically homeless. Less restrictive funding would help so nonprofits could, for instance, request $60,000 to hire a case manager with benefits to oversee this population.

“The only ongoing grants are federal grants, so where it gets tricky is who funds that?” Peterman said. “How do you get that unrestricted funding that's guaranteed, that you're able to get more each year so that you can account for cost of living raises for your staff and then also make sure that they're paying them well enough to stay and do that really hard, intensive work?”

That has generally left nonprofits to turn to local governments or funding entities such as United Way for financial support.

A recent influx of federal funding has come in rare form — without many strings attached — and allowed local officials flexibility to test new options. Linn County contracted with Waypoint to use $2.7 million in federal Emergency Rental Assistance funds on prevention services. Funds can be used until Sept. 30, 2025, when the COVID-19 pandemic-era program sunsets.

“Our hope is to be able to show the state how effective this funding is and how it works, reduce eviction rates to reduce the need for emergency shelter intakes, so that we can continue funding housing supports and putting money towards those preventive measures,” Peterman said.

Hatch, similarly, suggested the state boost dedicated funding toward wraparound services to incentivize developers to offer them as part of their affordable housing facilities.

Durham, the Iowa Finance Authority director, didn’t say whether she’d seek new state money to go toward these services, but said current funding would continue as “the need is not getting any less in our communities for these kinds of projects.”

Johnson, the Cedar Rapids Brickstone resident, appreciates the opportunity she got to live somewhere affordable but still high quality, with her own balcony and in-unit washer and dryer. But she hopes to see more people like her given the same chance to break the barriers keeping them from finding a suitable place to live.

“I would love to see more of this,” Johnson said. “In this economy where not a lot of people can make ends meet … you can make a lot of money, but you can still struggle with bills a lot.”

Iowa Ideas In-Depth Week Explores Homelessness in Iowa

Iowa Ideas, a project of The Gazette, is hosting a free, virtual In-Depth Week series called Homelessness, Feb. 12-16. It’s an exploration of homelessness and affordable housing in Iowa.

The week features five sessions, held 12-1 p.m. each day. Full session descriptions, including a list of panelists, and registration can be found at iowaideas.com. Here is the week’s schedule:

• Monday: Homelessness and Vulnerable Populations in Iowa

• Tuesday: Supporting Homeless Populations with Unique Circumstances

• Wednesday: Stitching the Patchwork of Homelessness Resources Together

• Thursday: Housing for Vulnerable Populations

• Friday: Policymaking to Protect Housing as a Human Right

Comments: (319) 398-8494; marissa.payne@thegazette.com