I was initially very disappointed when the site at 630 Riverside Drive was not acquired by the city for the use as a school. Now I am proud to serve on the community advisory board for the Society and am pleased to have it hard at work in the district. The Fortune Society has proven to be a sensitive neighbor and an asset to the community. Honorable Robert Jackson City Council Member District 7 Community Board 9 Strengthening The Community Fabric: Achieving a Triple Bottom Line in West Harlem
JP Morgan Chase Community Development Competition April 25, 2006 The New School Milano: The New School For Management and Urban Policy Parsons: The New School For Design Not For Profit Partner: Fortune Society Strengthening The Community Fabric: Achieving a Triple Bottom Line in West Harlem
Our Goal: Achieve the Triple Bottom Line First Bottom Line: Bankability & Profitability Second Bottom Line: Community & Societal Benefits Third Bottom Line: Environmentally Sustainable Exterior View of Building Proposal Strengthening The Community Fabric: Achieving a Triple Bottom Line in West Harlem
Fortune Society Programs Counseling Services Education Career Development 30-year old nonprofit Advocates for incarcerated individuals Provides services to ex-offenders Annual budget of $13.4 million 175 employees (70% are ex-offenders) 5,000 ex-offenders served each year Highest job retention rate & highest wages Alternatives to Incarceration Substance Abuse Treatment Health Services Peer Education Family Services Housing Drop-in Services Recreation/ Food Aftercare Services Strengthening The Community Fabric: Achieving a Triple Bottom Line in West Harlem
National Model: Effective Re-Entry Programs Clients of Fortune Academy NY State annual prison budget $2.1 billion $37,000 annual cost to house a prisoner 6.7 out of 10 return to prison within a year Fortune cuts this in half Strengthening The Community Fabric: Achieving a Triple Bottom Line in West Harlem
National Model: Housing for Ex-Offenders 2002 -- Opened Fortune Academy Castle Cost $7.8 million Successful $1,000,000 capital campaign Fortune Academy Castle Strengthening The Community Fabric: Achieving a Triple Bottom Line in West Harlem
National Model: Building Community Trust Creation of community advisory board Clear policies Screening process Prohibiting sex offenders Daily drug tests Public Service Campaign Strengthening The Community Fabric: Achieving a Triple Bottom Line in West Harlem
Fortune s Need: Financial Sustainability Program Rich & Cash Poor Problems No funding for components of holistic approach Contract payments do not cover costs Pattern of slow reimbursement Consequences Vulnerable to funding cuts Limited unrestricted funds Inability to build cash reserves No growth capital Former Client Presently Employed by Fortune Strengthening The Community Fabric: Achieving a Triple Bottom Line in West Harlem
Neighborhood Context: Manhattanville Median income is $24,585 vs. $57,485 for Manhattan Unemployment rate exceeds 20% 34% of residents living under the poverty line Largest number of children living in poverty Community Board 9, Manhattanville Strengthening The Community Fabric: Achieving a Triple Bottom Line in West Harlem
Community Needs: Manhattanville Head Start Only 1 in 5 children have access to Head Start Strengthening The Community Fabric: Achieving a Triple Bottom Line in West Harlem
Community Needs: Manhattanville Head Start Housing Parking Only 1 in 5 children have access to Head Start 1990-2001 -- 195 new units 2001 -- no new COOs 2003 -- 252 (3%) of 8,400 new/rehab units in CB 9 Vacancy rate of 1.7% vs. 3.9% for Manhattan Only 7% of private parking available to neighborhood residents Strengthening The Community Fabric: Achieving a Triple Bottom Line in West Harlem
Options Considered Sell the Land Develop Market Rate Housing Vacant Land Build Affordable Housing Affordable Housing Strengthening The Community Fabric: Achieving a Triple Bottom Line in West Harlem
Financing Challenges Residential New HOP Tax-Exempt Bonds HPD MIRP HHAP Tax Credits Total Development Costs $25,080,343 Parking Taxable Bonds / Conventional Loan Early Head Start/ Commercial Grant from Borough President & City ACouncil Green Construction NYSERDA Enterprise Predevelopment Grant Chase Award Strengthening The Community Fabric: Achieving a Triple Bottom Line in West Harlem
Sources and Uses Sources Primary Mortgage: New HOP, Tax-Exempt Bonds Second Mortgage: New HOP HPD MIRP Homeless Housing Assistance Program (HHAP) Low Income Housing Tax Credits (LIHTC) Taxable Bonds/Conventional Loan Grants from Borough President & City Council NYSERDA Enterprise Predevelopment Grant Chase Award Uses Land Acquisition Construction Cost Soft Costs Project Management Fee Total Sources Total Uses $12,694,507 $2,370,000 $385,000 $2,839,980 $4,530,856 $1,385,000 $500,000 $250,000 $100,000 $25,000 $25,080,343 $2,150,232 $17,569,079 $4,503,688 $857,344 $25,080,343 50.6% 9.4% 1.5% 18.1% 11.3% 5.5% 2.0% 1.0% 0.4% 0.1% 100% 8.6% 70.0% 18.0% 3.4% 100% Strengthening The Community Fabric: Achieving a Triple Bottom Line in West Harlem
Debt Terms Debt Source New HOP New HOP (2nd Mortgage) HPD MIRP HHAP Taxable Bonds Interest Rate 6% 1% 1% 1% 7.5% Term 30 yr. 30 yr. 30 yr. 30 yr. 30 yr. Total Debt Service Annually $1,057,079 Strengthening The Community Fabric: Achieving a Triple Bottom Line in West Harlem
Revenue Sources Residential Commercial Parking Strengthening The Community Fabric: Achieving a Triple Bottom Line in West Harlem
Residential Income Income Group Percentage of Area Median Income # of Units Total Monthly Rent (Year 1) Middle-Income 80-100% 47 $77,670 Low-Income 60% 11 $11,633 Homeless - 21 $23,956 Gross Monthly Rent Gross Annual Rent $113,259 $1,359,108 Strengthening The Community Fabric: Achieving a Triple Bottom Line in West Harlem
Revenue Year 1 Year 2 Year 3 Year 10 Residential Income $1,359,108 $1,399,881 $1,441,878 $1,773,328 Commercial Income $273,520 $281,726 $290,177 $356,882 Parking Garage Income $60,000 $60,000 $60,000 $69,458 Total Revenue $1,624,503 $1,670,757 $1,718,371 $2,102,703 Strengthening The Community Fabric: Achieving a Triple Bottom Line in West Harlem
Cash Flow Year 1 Year 2 Year 3 Year 10 Before Tax Cash Flow $158,562 $188,461 $219,067 $463,686 Debt Coverage Ratio 1.15 1.18 1.21 1.44 Break-Even Ratio.90.89.87.72 Internal Rate of Return 18.5% Strengthening The Community Fabric: Achieving a Triple Bottom Line in West Harlem
Sensitivity Analysis Assumption IRR Break Even (Occupancy) Adjustments Current 18.5% 90% n/a Reduced HHAP funding (50%) 14% 90% Increase subsidies Decrease land price to $1.6M Interest rates Increase by 1% 13% 96% Increase subsidies Decrease land price to $2.0M Increase subsidies Construction Costs Increase by 10% 10% 90% Decrease land price to $1.2M Strengthening The Community Fabric: Achieving a Triple Bottom Line in West Harlem
Returns to Fortune- Creation of Endowment Year 1 Year 2 Year 3 Cumulative 10- year Total Savings on Rent $229,320 $236,200 $243,286 $2,628,897 Sale of Land (Yr. 0) $2,150,232 $0 $0 $2,150,232 Developer s Fee $2,040,000 $0 $0 $2,040,000 Parking Sales $750,000 $750,000 $0 $1,500,000 Cash Flow $158,562 $188,461 $219,067 $3,055,610 Endowment Earnings $107,512 $139,500 $177,000 $1,700,733 Total Revenue $5,435,625 $1,314,161 $639,353 $12,776,269 Strengthening The Community Fabric: Achieving a Triple Bottom Line in West Harlem
Benefit to Society: Marginal Rate of Recidivism Additional Unrestricted Annual Program Revenue Additional Individuals Served Annually National Recidivism Rate Recidivism Rate for Fortune s Program Difference Attributed to Fortune Numbers Attributed to Fortune Annually Cost of One Year of Incarceration in NYS Total Investment Over 10 Years Savings for Society Over 10 Years $400,000 200 67% 37% 30% 60 $37,000 $4,000,000 $22,200,000 Strengthening The Community Fabric: Achieving a Triple Bottom Line in West Harlem
Our Goal: Achieve the Triple Bottom Line First Bottom Line: Bankability & Profitability Second Bottom Line: Community & Societal Benefits Third Bottom Line: Environmentally Sustainable Exterior View of Building Proposal Strengthening The Community Fabric: Achieving a Triple Bottom Line in West Harlem
Community Support 21 st Century Foundation Broadway Housing Communities Brother Sister Sol Congressman Rangel Councilman Jackson Education for Creative Development Edwin Gould Services for Children and Services Enterprise Foundation Harlem Congregation for Community Improvements Harlem Dowling West Side Center J & L Enterprises K. Kenyatta Punter & Associates Manhattan Borough President Scott Stringer National Research Defense Council Non Profit Finance Fund NYSERDA Rising Wolf Garage, LLC. SoBRO Saint Mary s Episcopal Church West Harlem Environmental Action West Harlem Group Assistance Works in Progress Exterior View of Building Proposal Strengthening The Community Fabric: Achieving a Triple Bottom Line in West Harlem