Every year, 160 or so young New Yorkers over the age of 21 age out of the city’s foster care system. A lack of quality housing makes it difficult to lay a foundation for adulthood. Without housing support and resources, many face homelessness, unemployment and mental health issues.
A new report calls for the seeding of a blended-finance fund to finance the development of up to 800 safe, quality and integrated homes for youth exiting foster care over five years. The Fair Futures Housing Fund would leverage government rental subsidies, philanthropic grants and private capital from mission-driven and impact investors.
The report, “Housing Justice for Young People Aging out of Foster Care in New York City,” was published by New York-based nonprofits The Center for Fair Futures and The Children’s Village, as well as HR&A Advisors, a New York-based employee-owned real estate development and public policy consulting firm, and Los Angeles-based public benefit corp. Good River Partners, which aims to finance the development and acquisition of housing for youth that are living in or exiting foster care.
There is no funding source today designated for the development of housing for young people aging out of care, according to the report. It’s not just New York. “We’ve now studied the interplay of private financing and foster youth housing very deeply in California, Texas and now New York,” Daniel Heimpel of Good River Partners, one of the authors of the report, tells ImpactAlpha.
“What we’re seeing is the underlying thesis holds true, that youth exiting foster care have a set of subsidies that are distinct and apart from the Section 8 affordable housing framework that a lot of impact investors are used to in the affordable housing space.”
Such public rental subsidies can sustain private investment, says Heimpel, especially when “matched with public capital to generate returns, albeit modest, but returns where mission-oriented investors who don’t only think in terms of grants could be involved in these projects.”
Youth-led housing finance
The Center for Fair Futures has assembled an advisory board of 17 housing design fellows, all of whom have experience in the NYC child welfare system. Cheyanne Deopersaud, one of the fellows, struggled to find reliable supportive housing when she aged out of the foster care system at 19 years old.
“When I came home every night, after being a full-time student and working two jobs to sustain myself, I would find mice in my apartment,” she says, “and [I would] hear them eating through the Sheetrock and cabinets to get to my food and snacks at night.”
Last year, Deopersaud surveyed 62 of her peers who had been or are currently living in supportive housing, the report cites. About half of them were dealing with rodents, roaches and other pests; at least a third of them experienced frequent power outages and safety hazards like mold and broken fire escapes.
The Fair Futures Housing Fund would work in partnership with an experienced housing fund manager to invest in housing for youth like Deopersaud, who as a housing design fellow, will help manage the fund.
“If philanthropy and mission-driven investors are willing to seed a Fair Futures Housing Fund, which can provide patient capital to close financing gaps while still delivering 2% – 10% returns,” the report concludes, “we will have a real opportunity to accelerate housing production and manage this fund’s equity toward the quality standards that our Housing Design Fellows have articulated.
The Center for Fair Futures led an advocacy effort two years ago that set aside $30.7 million in public funding from the NYC government’s annual budget for helping foster youth navigate through education and career opportunities.
Foster care bipartisanship
Nearly half of transition-aged foster youth had experienced homelessness at least once before they turned 26. In NYC, of the 429 youth 18 and over who aged out of foster care in 2022, 31% had to stay in a foster or group home because they had no other housing options.
The report suggests that local, state and federal government subsidies must work in collaboration with other sources of capital to create a comprehensive housing solution for youth aging out of foster care. It points to master rental subsidy agreements, a third-party leasing strategy through which foster youth-focused organizations and agencies can take on the responsibilities of the primary tenant of housing units, sub-leasing them to youth aged out of foster care.
Government housing subsidy programs targeting foster youth have strong bipartisan support, which can help attract private funding sources, says Heimpel.
The bipartisan-backed Fostering Stable Housing Opportunities Act, signed into law by former president Joe Biden as part of the 2021 Consolidated Appropriations Act, provides housing vouchers for foster youth aging out of care to prevent homelessness during their transition to adulthood.
“History is no indicator of the future, but I think it’s safe to say that foster care issues have always been largely bipartisan,” Heimpel says.
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