How a Charlotte Nonprofit Links Landlords With People Experiencing Homelessness
How a Charlotte Nonprofit Links Landlords With People Experiencing Homelessness
By Jared Brey, Next City September 15, 2020
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According to Philip Payne, the developer and real estate investor who co-founded the Lotus Campaign in Charlotte, North Carolina, most private landlords are not the greedy, cutthroat people that many people imagine them to be. And there’s a short list of reasons why they hesitate to rent to people who have experienced homelessness — mostly related to concerns about people causing problems in apartment buildings or chronically failing to pay rent. To overcome those misgivings, the Lotus Campaign works with local landlords and homelessness service organizations to place in apartments individuals and families who have experienced homelessness or who are at risk of becoming homeless. At the outset, the two-year-old Lotus Campaign has paid participating landlords $1,000 per year for every unit they dedicate to the campaign. They also guarantee the rent and any damages for every tenant they accept through the program. In exchange, landlords agree to waive security deposits, credit checks, and employment records, and to give the Lotus Campaign and its partner organizations at least 30 days to try to work out any issues that arise before seeking to evict a tenant.
So far, Payne says, evictions haven’t even come up.
“What we want is access,” Payne says, speaking of apartments in private apartment buildings. “We just want you to open the door so we can dispel the myths of all the problems this is going to cause you.”
Payne started thinking about how the private housing sector could do more to address homelessness after helping to produce an Urban Land Institute (ULI) Advisory Services Panel Report on homelessness in Los Angeles in 2017. Along with Beth Silverman, a former ULI vice president and co-founder and chief operating officer at the Lotus Campaign, Payne began talking with fellow real estate investors and landlords in the Charlotte area about making units available for vulnerable tenants.
“What we agreed on was that you had to start trying different things, and you had to bring together unlikely allies in the solution, and you had to get them to start understanding each other’s languages,” Silverman says.
According to an impact report that the Lotus Campaign released last week, the group has so far helped house over 250 people in Charlotte, and 128 of them have since moved on to other housing or renewed their leases. Programmatically, it costs an average of $800 per person per year for the Lotus Campaign to get unhoused or vulnerable people into units and keep them there, according to the report. That amount covers costs like the $1,000-per-unit upfront payment, application fees, inspection fees, and renters insurance. And the cost per person is dropping, Payne says, as participating landlords start to “feel guilty” for accepting the $1,000 upfront incentive payment as they see that the tenants in the program are as reliable as everyone else, if not more so. Silverman says that the goal for tenants is that within two years they have moved on to longer-term housing and are paying their own rent — either with wages, housing vouchers (which many participating families use) or other types of income.
“It’s really the runway to helping folks get in a more financially stable place,” she says.
To be clear, the people who are housed through the Lotus Campaign do not tend to be chronically homeless, have extensive criminal records, or suffer from severe substance abuse issues. Around a quarter are in “imminent danger” of becoming homeless, and three-quarters have already experienced homelessness to some degree, Silverman says. But the organizations that work with the Lotus Campaign, such as Charlotte Family Housing, select individuals who are likeliest to be able to establish independence with some degree of help. Of the 250 tenants who have participated in the Lotus Campaign, according to Silverman, 51% are men, 48% are women, and 1% are transgender, while 33% are over the age of 55 and 20% are younger than 30. The tenant group includes 55 children. Additionally, 25% of the tenants are white, 72% are Black, and 1% are Latinx, Silverman says.
Partner groups such as Charlotte Family Housing, which helps families move from homeless shelters into stable housing, work with a lot of single mothers, says Pedro Perez, the group’s executive director.
“Homelessness is intersectional,” Perez says. “There are many causes of homelessnes and the homeless population is extremely varied. There’s a continuum. And we serve a particular sector of that population, which is working families that are experiencing homelessness.”
Private landlords tend to shy away from renting to people with spotty employment or housing records because “it’s not their job to be social workers,” Payne says. That’s why the Lotus Campaign requires its tenants to work with a service organization that can help make sure their non-housing needs are met. The group has also created a 24-hour hotline for landlords who experience problems with their Lotus tenants. And, Payne says, in the event that a landlord does want to remove a tenant, and the group can’t work out a solution in 30 days, the Lotus Campaign will not only stay out of the way of the eviction — a representative will actually testify in eviction court that the landlord tried to find alternatives with the tenant and wasn’t able to.
All of this is one aspect of the Lotus Campaign’s work — an attempt to show that people who have experienced homelessness can be housed in average, private apartments with little trouble and no government subsidy. It has relied in the early stages on donations and grant funding. But Payne wants to make the work self-sustaining. The group has started investing in housing rehabilitation projects, like a recent purchase of a 144-unit building that’s close to transit access and a lot of jobs, Payne says. It plans to set aside at least 20 percent of units in that building and future investments for tenants who have experienced homelessness, and at rents that are affordable to people earning 60 percent of area median income or less. The remainder are rented to people earning between 60 and 120 percent of median income, Payne says. The deals are financed like a more or less typical real estate transaction, with a small contribution from the Lotus Campaign, and the bulk of the money coming from equity partners and a loan. For its first deal, the campaign worked with an impact investment fund from New York, and Payne says that even with the mix of affordable and market-rate units, the investor and equity partners are expecting “essentially market rate returns.” The question driving the work, Payne says: “Is it possible to produce housing for this population without the use of government funds and without the use of exorbitant amounts of philanthropic contributions?”
Payne and Silverman want the campaign to expand, too. They’ve spoken with groups in 20 different cities, and say they are closing to launching another chapter in Sacramento. They hope the model is easily replicable outside of Charlotte.
“It’s about dispelling myths,” Payne says. “The myth that the private sector are evil and moneygrubbing, the myth that nonprofits and the government are stupid dogooders, the myth that homelessness really doesn’t affect me — it affects everything — and the myth that there’s just one solution.”
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