What to know about Nashville mayor's $50M homelessness response proposal

Nashville's Council will decide Tuesday whether to allocate $50 million in one-time federal funds to address homelessness.

The four-pronged approach backed by Mayor John Cooper's administration includes:

• $25 million in low-cost loans for developers to bring units of deeply affordable housing online quickly

• $9 million to support temporary housing

• $9 million toward housing-first supportive services

• $7 million in competitive grants to incentivize landlords and developers to relax barriers to housing

The requests depend on a large portion of Nashville's remaining American Rescue Plan dollars and cannot move forward without approval from Metro Council.

The council deferred their vote in August saying they wanted more details on the sizable expenditures. As originally presented, the requests lacked information on cost projections, funding duration, accountability mechanisms and sustainability after the federal funding is spent, council members said.

Affordable housing & rent trends:Money Mailbag: Affordable housing, average rent and building incentives in Nashville

Treatment of homeless people:Homeless people are ignored or kicked around in Tennessee | Opinion

Consultants said granting the full $50 million will help the city create a system that is more likely to qualify for and secure additional funding from various federal sources.

Cooper pressured the Council to approve the allocations in their entirety in a news conference on Sept. 22. Multiple local organizations who serve people experiencing homelessness and several people with lived experience being unhoused in Nashville signed a letter Wednesday urging Council to approve all four resolutions.

Council members stated during a work session Thursday that they are not against spending these funds to address homelessness. They wanted clarity on where the money is going to ensure it is used in the best way possible and with accountability measures.

Here's what to know about each request.

$25 million for low-cost loans for affordable housing units

Housing for people who are chronically homeless or making 30% or less than the Area Median Income ($25,500 for a family of three) is the hardest to create due to the mix of funding sources and subsidies required, Metro Housing Director Angie Hubbard said.

This $25 million request would power the Affordable Housing Gap Financing program, which would offer low-cost loans through the Metropolitan Development and Housing Agency to create new rental units. Gap funding like this can help existing projects overcome setbacks like inflated construction costs and bring units online in six to 18 months, according to consultant Stacy Horn Koch.

Cooper's administration estimates this funding could help create up to 120 new units guaranteed to be affordable for 20 to 30 years. Eligible residents would be paired with these units through coordinated entry, a process required by the United States Department of Housing and Urban Development (HUD) that prioritizes individuals deemed most vulnerable and connects people to services appropriate to their needs.

If the funding is approved by Council, MDHA will request applications from developers. Applications would be scored by a team and deliberated by MDHA's board. Selected projects would go through an extensive review and underwriting process before a loan is granted.

Repayment schedules, terms and interest rates would be determined case by case, and some projects may be eligible for a forgivable loan. Horn Koch said the preference is that these loans be repaid, creating income that can then be reinvested into homelessness response.

MDHA would receive $1.25 million in management fees (5% of the overall funding allocation) to administer the program and monitor compliance for at least 20 years.

Council members questioned why this program would be better than using the $25 million to build affordable units on city land.

Horn Koch said the loan program would allow units to come available for tenants quicker because cost analyses and environmental reviews for existing projects would already be complete. It would also create scattered affordable housing, regarded as a best practice over concentrating the housing in one development.

Previous coverage:Nashville mayor urges council to approve $50M for homelessness response

Council member Courtney Johnston proposed a substitute resolution to be considered Tuesday that:

• outlines a reporting process and Metro Council oversight

• allows the program to issue up to $5 million in forgivable loans

• requires Metro Department of Finance approval of the finalized program

• stipulates unused funds as of Dec. 31, 2023, will be transferred to the Barnes Affordable Housing Trust Fund

• allows MDHA to receive a 5% administration fee for each underwritten loan and states MDHA may use up to 20% of the total estimated administrative allocation for start-up costs

Council member Freddie O'Connell proposed an alternative substitute that would allocate $10 million to the loan program and $15 million to the Barnes Fund.

$9 million to support temporary housing

People experiencing unsheltered homelessness in Nashville experience homelessness for an average of five years and two weeks before finding permanent housing, according to Homeless Management Information System Manager Hannah Cornejo-Nell.

The $9 million request would expand the use of hotels and mobile housing navigation centers to house people as they wait for permanent housing placement.

This request initially included funding for the creation of 50 "microhomes" on city property, an idea that has since been scrapped in favor of "exploring the use of microhomes" as an option to expand Mobile Housing Navigation sites.

Nashville currently has two Mobile Housing Navigation sites run by Community Care Fellowship. This funding would expand that program to seven sites.

It would also expand the city's partial use of the former Rodeway Inn at 95 Wallace Road for temporary housing to include the entire hotel. The Salvation Army would provide on-site program staff and contract with a third-party firm to provide security (that contract would require Council approval).

Combined, the efforts could provide up to 1,000 temporary beds by fall 2023.

An amendment proposed by Johnston would add accountability measures and proposed costs for security and services at the Rodeway Inn units. An amendment proposed by Kyonzté Toombs provides more details of the plan.

$9 million toward housing-first supportive services

The city would use this $9 million to contract with a nonprofit health care partner to provide mobile, 24/7 services to people experiencing homelessness.

Services would include:

• mental health

• addiction treatment

• referral to health services and reconnection with family and community groups

• assistance with housing and benefits applications

The city has a request for proposals ready to issue to begin the competitive grant process should Metro Council approve the funding.

The money would fund up to nine Assertive Community Treatment teams that would serve up to 100 individuals each. The teams would work with hospitals, police and the business community to accept referrals and provide trauma-informed services through coordinated entry.

Officials are looking to braid in funds from Medicare, Medicaid and TennCare to bolster this program's reach. The American Rescue Plan funds would be disbursed in $3 million increments over three years with the idea that team staffing will start smaller and grow to full capacity, allowing flexibility for teams meet clients' service needs as they change.

An amendment proposed by Johnston adds reporting requirements and estimates 500 households will be served by December 2025.

$7 million in competitive grants to incentivize lower housing barriers

A final $7 million request would funnel $3 million toward the Low Barrier Housing Collective, adding a program manager and at least three housing navigators to the Metro Homeless Impact Division staff to work with landlords to provide permanent supportive housing.

This $3 million would also be used to:

• provide incentives to landlords to participate

• cover tenant security deposits

• fund minor repairs to locally-owned units

• provide one-time household grants for furniture

The remaining $4 million would be used for competitive grants issued by MHID for support services to create additional low-barrier, housing-first programs that would operate through coordinated entry.

An amendment proposed by Johnston states:

• any contracts awarded must be approved in a separate resolution by Metro Council with at least 21 affirmative votes

• Metro Social Services will provide monthly and quarterly reports on outcomes

• the program will serve an estimated 300 households by December 2025

Responses to Council Questions on Homelessness Investment by USA TODAY Network on Scribd

This article originally appeared on Nashville Tennessean: What to know about Nashville's $50M homeless response proposal