Emily Richardson ’12Journal 1
This summer I am interning for the real estate department of Services for the UnderServed (SUS) — a nonprofit organization established in 1978, which provides support services for individuals with developmental disabilities, mental health issues, and HIV/AIDS. Supportive housing services account for the bulk of operations, but SUS also provides after-school programs, adult day habilitation programs, and employment services. Government funding is the primary source of revenue, which was approximately $90 million in 2010.
Real estate development is the driving force for SUS program development. SUS currently owns 38 properties — or approximately 600,000 square feet — and leases 700,000 square feet throughout the Bronx, Brooklyn, and Queens. From a long-term perspective, it is economically beneficial for SUS to own the real estate it utilizes. This is in part due to its tax-exempt status, which does not apply when leasing a space. However, in recent years leasing, more so than development, has enabled the expansion of SUS programs. While SUS currently has three residential developments in the pipeline, due to the nature of government funding, the gestation period for these developments is much longer than that of the private sector. To reduce the development timeline and effectively accelerate expansion, SUS needs to have a formal development strategy in place.
To better assess the funds required to operate and maintain new developments as well as its existing portfolio, SUS needs to bring information discipline to its real estate operations. Despite having well-defined methods for tracking funding, expenses, and confidential client data, there has been little formality in the aggregation of data for the real estate portfolio. With the goal of ultimately understanding internal capacity for expansion, I spent the first few weeks of my internship collecting data on the individual properties within the SUS portfolio. To collect the pertinent data, I worked with the CFO, the director of real estate, the director of maintenance, and two internal property managers. Examples of the data garnered include: physical building information, zoning information, real estate and facilities expenses, funding sources, existing financing, cost basis, and the number of clients served.
After touring several SUS properties, I have a better understanding of how the facilities operate and the capital projects underway. I also had the opportunity to see some of the SUS green initiatives, including urban gardens and cool roofs. SUS clients are encouraged to help maintain the gardens, which are a source of food for the clients. Another green initiative is the replacement of traditional black roofs with light colored roofs on an as needed basis.
As I move forward with creating a real estate development strategy, I will explore the possibility of SUS partnering with private developers and how to best capitalize on the Low-Income Housing Tax Credits (LIHTC).
Journal 2
The second phase of my internship revolved around creating playbooks for two of the SUS residential developments, each of which was partially funded through the syndication of Low-Income Housing Tax Credits (LIHTC). The goal of the playbooks is to detail internal know-how that could be analyzed and ultimately used during the planning phase of future developments. Each playbook details the development timeline, key players, construction change orders and overruns, partnership details, past and present funding and revenue sources, and other project-specific data points. To create the playbooks, I studied internal documents and interviewed internal parties.
Some aspects of the playbooks required that I first acquire background knowledge or interview internal constituencies. For instance, to detail the syndication terms of the LIHTCs, I first needed to learn how LIHTCs were allocated, calculated, and the government agencies involved in the process. Similarly, to concisely and accurately articulate the various forms of funding and revenue sources for each development, I needed to interview an internal properties specialist and conduct outside research.
On a slightly different note, during a recent site visit, I came to understand the importance of durability. There is a high turnover rate among clients, who are rough on the interiors and furnishings. The upfront premium associated with more durable materials payoffs in a relatively short period of time.
Journal 3
I spent the majority of the final phase of my internship researching additional funding sources for new ground-up, low-income and supportive housing as well as weatherization funding for rehabilitation projects.
In addition to this research, I met with a private developer to discuss the potential for partnering with SUS on two development projects. The developer has building expertise and extensive experience with affordable housing projects. The partnership agreement would allocate a specific number of apartment units to SUS and the developer would rent the remaining units per the affordable housing regulations associated with LIHTCs and other applicable funding sources. At the end of the fifteen-year regulatory agreement, SUS would assume ownership of the entire project and the private developer would essentially walk away.
Through a meeting with an outside consultant — who specializes in supportive-housing funding, operations, and development — I learned that the last two SUS developments were procured through working with city officials. However, since New York City has given away or sold almost all city-owned developable land, SUS must be more proactive in seeking out projects. Leveraging the expertise of a private developer will help alleviate some of this burden.
Another key consideration for future expansion will be proximity to other SUS facilities, as Medicaid funding will soon be allotted based on an agency’s presence in a certain area. Therefore, SUS should develop near their current sites.
I thoroughly enjoyed my summer at Services for the UnderServed. I learned a tremendous amount about the inner workings of a nonprofit agency, development processes, and the affordable and low-income housing sectors of real estate.
