Purpose-Built Homeless Shelter Development

For many years, the primary way to create a homeless shelter was for a not-for-profit operator under contract with the New York City Department of Homeless Services (DHS) to lease an existing building from a for-profit landlord. This made the operation of homeless shelters very expensive – often prohibitively so. A DHS contract term of at most nine years also made it difficult for the operator to secure traditional real estate loans, which are based on a 30-year mortgage. Moreover, few, if any, of the existing buildings were designed for housing, or providing services to, homeless residents.

In 2017, though, a change in DHS policy made it possible for not-for-profit organizations to secure 30-year contracts with DHS, which would include funding for debt service payments on financing for the acquisition and construction/rehabilitation of “purpose-built shelters.” These facilities are designed and programmed to specifically serve homeless persons and families. A 30-year DHS contract term makes these projects eligible for advantageous financing terms and allows not-for-profit organizations to acquire, construct, and operate shelters on an ongoing basis.

Hirschen Singer & Epstein LLP was instrumental in implementing the purpose-built model and in facilitating the development of new purpose-built, non-profit-owned and controlled homeless shelters throughout New York City. Our expertise in negotiating DHS contracts and structuring and negotiating the acquisition, construction and permanent financing for purpose-built shelters has led to the creation of thousands of new shelter suits in operation and/or currently under construction.

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