Bringing Out the Better Angels
By Mark Fogarty
6 min read
Dominium Pro Bono addresses homelessness
Jeff Huggett enjoyed doing pro bono development work on a project to house the homeless in St. Paul, MN, recently. How much? So much so he decided to quit his job, become a consultant, and work on those kinds of developments full time.
His employer, Minneapolis-based owner, manager and developer Dominium, “Tried to talk me out of it,” he recalls. “Then they said, ‘why don’t you do that for us?’” And, they put all the staffing and administrative help he might need at his service.
Huggett, vice president and project partner at Dominium, now is in charge of Dominium Pro Bono, one facet in a very active giving program at the affordable housing specialist. The others are the Dominium Foundation, which gives away $1 million per year, employee volunteering, both singly and in teams, and salary checkoffs to supply emergency money for employees caught up in disasters, like hurricanes. Dominium is the fourth-largest affordable housing firm in the country, according to Huggett, and now owns and manages 30,000 units in more than 20 states.
The pro bono effort got started when lender/investor U.S. Bank, which was working with Catholic Charities of St. Paul and Minneapolis on a $40 million project for the homeless called Higher Ground, approached Dominium about the possibility of an in-kind donation for the $75 million second phase, the Dorothy Day Residence and St. Paul Opportunity Center. (The two are adjacent to each other and will be connected by a skyway.)
“They said to us, ‘how about you donate some development services for Phase Two?’” Huggett recalls. “My managing partner, Paul Sween, said, ‘How about we do all of this one for free?’”
The work took two years, Huggett says, and he found himself giving more and more time to the project. “I ended up liking it more and more,” he says of the second phase, which closed last December and is scheduled to be completed by late summer/early fall of next year.
Residents will be “persons experiencing long-term homelessness. There will be a lot of studios and single-room occupancy units. Not a lot of families,” he says.
Dominium used the Low Income Housing Tax Credit for the residential part of the project (177 supportive housing units) and the New Markets Tax Credit for the commercial side (the “Opportunity Center” for services like meals, medical and dental and separate space leased to Ramsey County). U.S. Bank was the investor and syndicator for $13 to $14 million of tax credit equity. The Minnesota Housing Finance Agency put up a similar amount in Housing Infrastructure Bonds. “That’s basically a zero percent loan,” Huggett says. BMO Harris Bank was the construction lender.
Catholic Charities Rallies the Community
Catholic Charities organized a substantial private fundraising campaign, he notes. “Catholic Charities did quite a job of bringing all parts of the community together. State HFA, general obligation bonds from the state for the Opportunity Center, a capital grant from Ramsey County, a TIF loan from the city of St. Paul and a $40 million capital campaign with Fortune 500 companies, like Best Buy, Target, EcoLab. Even the CEOs offered their personal money. Everybody put their money where their mouth was.”
Richard Johnson, vice president and chief financial officer of Catholic Charities, which has a $50 million operating budget and serves more than a million meals a year, says, “We’ve been at this for 150 years. We are a leader at solving poverty, creating opportunity and advocating for justice in the community.”
The group began its homelessness outreach in 1981, when they opened a daytime drop-in center. It evolved into an overnight facility where those experiencing homelessness slept on mats on cold, concrete floors. As demand for services grew over time, it became obvious that this effort was not enough.
Then, Johnson says, “Mayor Chris Coleman of Saint Paul started a task force on homelessness. We came out of there with a plan, a two-phase complex to address the issue.”
Phase One was the now-completed $40 million Higher Ground St. Paul project, which has 193 permanent housing units and a new shelter that can house up to 320. In addition to the shelter, working homeless men can move to “pay-for-stay” beds at $7 per night. Catholic Charities will rebate them up to $500 toward their first month’s rent or a damage deposit when they transition to permanent housing, which can be in the complex or offsite, says Johnson.
Higher Ground also contains a “medical respite” unit where people experiencing homelessness can recover after they have been released from a hospital stay.
To start construction on Phase Two (total cost about $75 million), Catholic Charities tore down the old Dorothy Day Center (named for the head of the Catholic Worker Movement, which had a big focus on helping the homeless) and acquired other properties to build the 170,000 square foot project (Phase One adds another 110,000 sf) with its 177 additional permanent housing units and Opportunity Center.
Long-Term Aim
While the finished project may put a dent in St. Paul’s homeless situation, it won’t fully prevent it or end it, which is the long-term aim of Catholic Charities.
“There is an ongoing demand,” acknowledges Johnson. Last winter, Ramsey County (where St. Paul is located) opened a 50 bed “winter safe space” shelter. Catholic Charities staffed the space. “We filled that place every night,” he says, and the county plans to expand it to 65 beds this winter.
In addition, Metro transit light rail used to operate 24 hours a day and was used by those experiencing homelessness as a de facto shelter. The ending of the 24-hour service means 200 to 250 more people will be seeking shelter. “It’s a sad situation,” he says. Ramsey County data show that in 2017 there were 1,438 homeless people in the county –more than twice Dorothy Day’s capacity when completed. But it will be a great start.
The ambitious project has tapped into a large reservoir of local energy and good will, with people volunteering their time and money and asking to be called back for any further projects like this one.
“It has attracted peoples’ better angels,” says Dominium’s Huggett, as well as sparking the creation of the firm’s Pro Bono unit.
Now, with Dominium Pro Bono actively looking at two or three other projects, Dominium is targeting ten percent of its development work to be free.
Why so much? “We should be a leader in our industry,” Huggett says. “This came from that idea.”
He says the ten percent goal didn’t come from religious tithing practices, but does quote a little Scripture to illustrate Dominium’s mindset: “From whom much is given, much is expected.”
Financing for Higher Ground St. Paul (Phase One)
Private Capital/Equity……………………………………. $4,500,000
Loans……………………………………………………………… $2,300,000
State Housing Infrastructure Bonds,
General Obligation Bonds, DEED…………………. $23,370,000
Low Income Housing Tax Credits,
New Market Tax Credits,
Federal Home Loan Bank………………………………. $8,700,000
Story Contacts:
Jeff Huggett, Vice President and Project Manager
Dominium Pro Bono, Minneapolis
[email protected], 763-354-5605
Richard Johnson, Chief Financial Officer
Catholic Charities of St. Paul and Minneapolis
[email protected], 612-204-8500
