Press Release, October 2017

Photo of RCH Staff


Contact: Anne Molgaard, Chief Operations Officer 707-463-7833 |

Local Agencies Team Up to Build Supportive Housing for Mentally Ill Homeless

Ukiah, CA – On September 20, after years of planning and coordination, Rural Communities Housing
Development Corporation (RCHDC) was awarded more than $8 million in funding from the Low-Income
Housing Tax Credit (LIHTC) program to build permanent supportive housing for low- income, seriously
mentally ill homeless people in Ukiah. Construction on the 38-unit apartment building is scheduled
to begin in March 2018.
Since 2015, when Mendocino County Health and Human Services selected RCHDC to develop affordable
housing for this population, RCHDC has been collaborating with funders and service providers to
leverage $1.3 million in seed money from the California Mental Health Services Act to build this
$10.6 million project.
According to RCHDC CEO Brad McDonald, one of the most important partners in this project has been
Community First Credit Union (formerly Mendo Lake Credit Union). To apply for LIHTC funding, RCHDC
needed a partner who could help RCHDC acquire $1.3 million in Affordable Housing Program funds
through the Federal Home Loan Bank of San Francisco. As a member institution, Community First
Credit Union made this possible. “We are extremely pleased that we could help RCHDC obtain the FHLB
funding. Community First is a federally designated Community Development Financial Institution --
we focus on serving underserved populations and making our community a better place to live and
work. Safe and affordable housing is a top priority,” said CEO Todd Sheffield.
RCHDC, a local nonprofit serving Northern California with a mission to provide affordable housing
for low-income families and the elderly, has more than 40 years of experience developing affordable
housing, providing property management services, helping low-income individuals become homeowners,
and building community. “They were the perfect partners for Willow Terrace,” said HHSA Director
Tammy Moss Chandler, naming the project.

RCHDC CEO Brad McDonald said, “Willow Terrace is an outstanding example of local government working
closely with public partners towards a solution for a very complex problem in our community. It
will offer housing for the chronically mentally ill and homeless, providing wrap-around services
through HHSA and other service providers. The project really exemplifies the significance of
‘housing first’ as a solution for homelessness.”
As often happens with complex projects like this, RCHDC encountered several challenges, according
to project manager Mike Pallesen. The team spent 21 months identifying an appropriate site, for
example. “Usually, land is donated for these types of projects,” he explained. Without donated
land, the funding was more difficult to acquire. To enable the project to move forward, RCHDC sold
a piece of property it owned, discounting the property to RCHDC’s 1984 purchase price of $120,000
rather than selling it for its current appraised value of $420,000.
The project also faced some political hurdles, with local business owners expressing concerns to
county supervisors about potential problems that could arise from having a nearby housing complex
for mentally ill residents. When community members learned that Ukiah already has several such
housing units, and disturbances are less frequent there than at other apartment complexes, their
worries faded, according to RCHDC Development Director Ryan LaRue.
LaRue continued, “In addition to providing better care for this population, the Willow Terrace
project will likely save taxpayers money. The apartment complex will include small residences,
group rooms, a garden, and a community area where residents can support each other and receive
mental healthcare services onsite. When residents receive the treatment they need, whether it’s
therapy, medication or other types of support, they are less likely to require expensive resources
like law enforcement, emergency first responders, and hospital emergency care. With its supportive
services, Willow Terrace uses both a compassionate and an economically sound approach.”
The funding for the project is enough to pay for construction and it includes a capitalized
operating subsidy reserve of $2.7 million to supplement rents, allowing the facility to be
economically viable for 20 years. The site is located near County Health and Human Services and
Redwood Community Services, so service providers are conveniently close, and RCHDC will provide a
full-time, onsite manager who will live there to provide additional assistance.

“We see this as a model development,” McDonald said. When RCHDC was awarded the Mendocino County
project, they had just finished a similar project in Humboldt County—Arcata Bay Crossing, the first
project of its kind in the state. Willow Terrace incorporates refinements on the Humboldt County
project, and could be used as a prototype for cost-effective housing for the severely mentally ill
Pallesen explained, “We were able to leverage funds so that for every dollar we brought to the
table, we received seven dollars to build the project—using tax credit financing for permanent
supportive housing is a great way to get these projects built.”
With tax credit financing, investors buy income tax credits in qualified properties that have
received state allocation, creating cash equity for owners that reduces project development debt
burden. In exchange, the owner agrees to rent a specific number of units to qualified tenants at
specified rents, usually below-market.
The RCHDC team noted that this project will provide housing for almost 40 people, which is a great
start, but it does not eliminate the homeless problem in Ukiah or Mendocino County. McDonald said
he hopes Measure B passes because it will provide additional income for county mental health
services. RCHDC supports the county’s desire to work with community partners to provide more mental
healthcare services and to further reduce homelessness.
Pallesen expressed enthusiasm about the Willow Terrace project and wanted to be sure the public is
aware that RCHDC uses local contractors whenever possible. “Right now, the architect is going like
crazy. We have local contractors lined up, and we’re excited to get this project off the ground.”