Shannon Nazworth, President & CEO, Ability Housing

Ability Housing works to address the housing affordability crisis in the Jacksonville area and throughout the state of Florida. Invest: spoke with Shannon Nazworth, President and CEO of Ability Housing, to get a sense of the challenges and opportunities in pursuing what her company provides.

How has the last year been in terms of main achievements and accomplishments for Ability Housing?

The last year has been phenomenal for Ability Housing. We completed a strategic plan in 2023,      and it is an aggressive one. The need for affordable housing has, of course, just grown exponentially, but there’s also a focus on it at the local and state level that we want to be part      of. As a nonprofit, we feel this is the time when we really need to create the capacity to access those resources because we own properties as affordable housing for the long term. That’s the only reason we own it: to provide affordability.

Part of our strategic plan is to create a revolving loan pool for us to use for predevelopment purposes. As an uncapitalized real estate company, we realized that if we are going to position ourselves to access state and local resources and have the maximum mission impact possible, we needed to create an internal resource, which we are calling the Ability Housing Affordable Housing Fund. We secured a Capital Magnet Fund (CMF) grant from the U.S. Treasury. It was matched with a $950,000 appropriation from the state, so we now have almost $5 million —      and are looking to leverage that with local investments here in Jacksonville, as well as in the Orlando and Tampa areas. We are looking for either impact investors or philanthropists who will bring the fund to $10.2 million so that we will have an evergreen resource for early development costs.

We currently access federal funding sources like the Low Income Housing Tax Credit (LIHTC) program, which is wonderful — but also competitive, and the underwriting process is lengthy. This timing challenge means we sometimes miss out on opportunities to better capitalized peers who have the cash on hand to move quickly.

Here’s an example of why that’s important. When all available cash is tied up in predevelopment activities — such as site acquisition, design, and securing permits — there is little room to maneuver. As a result, we sometimes have to pass on potential projects until the current ones are completed and the bulk of the predevelopment costs are reimbursed. If we’re looking at a property, it takes about $800,000 to $1million to get to the closing table if you don’t buy the land before closing on the financing. However, LIHTC deals are structured to include the total development costs, including reimbursing the bulk of pre-development expenses — so you get most of it back when permanent financing closes. We would put that money back into the fund and use it for the next project. This evergreen rolling fund will enable us to do more projects than we’re currently able to take on by addressing the upfront cash flow constraints while going through the underwriting process. That’s exciting, because we have already received firm and soft commitments to help get closer to our $10.2 million goal. When we do, that increases our capacity for the long term exponentially.

In addition, we have five projects in development. We broke ground in December 2023 on our first property in St. Johns County, and then earlier this year we broke ground on one here in Jacksonville and another one in St. Petersburg. We’re in the wind-down process of underwriting for another community here in Jacksonville that will begin construction this year, and we were also notified of an award for one in Orlando that will start construction next year.

Each of those are affordable housing projects, some of them with units set aside for families exiting homelessness. We’ve had a productive year, even though we were undercapitalized. Imagine what we could accomplish — how many more households and communities we could serve — if we had the capital to do more.

Our strategic plan is aggressive, but realistic. It’s focused on building our internal capacity as well as our impact, both from a real estate production standpoint, but also the impact on the residents and the community. Ultimately, for us, housing is the tool; not the end target. Our      goal is to positively impact our residents in the community. Having a strategic plan that      focuses on that and really leans in on that is wonderful.

Aside from the initiatives with the strategic plan and the revolving loan, how do you manage to keep the rents affordable?

Most of our housing production is designed to keep it affordable, especially for families exiting homelessness, seniors on a fixed income or persons with disabilities on a fixed income who have government support. The biggest resource we utilize is the low-income housing tax credit program (LIHTC), but we also have direct grants with the U.S. Department of Housing and Urban Development (HUD) to provide rental assistance for people exiting chronic homelessness. We have direct contracts with the City of Jacksonville, including a special pilot program we’re doing with them to help get chronically homeless individuals off our streets. The State of Florida has affordable housing trust funds that we tap into. There’s a lot of cobbling together: federal, state, and local resources so that you keep the housing affordable by not having debt service. That takes government support, especially when you’re trying to create units affordable to people earning 50%, 40%, 30% or even 20% or less of the area median      income.

In terms of all the multifamily development services you provide, which services are growing and where do you see the largest opportunities for growth?

I would say the largest opportunities for growth are both acquisition and new construction. Acquisition now is probably a little bit easier than it was a couple of years ago when the investors were heavily into the Jacksonville market and the Florida market in general. We were trying to acquire some property so we could keep them affordable, knowing that if investors bought them, they would increase the rents by several hundred dollars a month; we just weren’t able to compete with people and companies that could do cash purchases. Numerous units across Northeast and Central Florida were sold to investors and tenants, who then got $200-$500 or more a month in rent increases. That is one of the reasons we’re seeing an uptick in senior homelessness in both Jacksonville and the state of Florida. The housing costs have just exceeded their fixed incomes, and they’re out on the streets. One of the drivers is the housing market, which has thankfully calmed down. The opportunity to purchase is stronger now than it was a few years ago, but there are still higher interest rates. Looking for new construction opportunities or maybe distressed properties that we can rehabilitate back into quality housing is where our greatest opportunities are right now.

What steps are you taking in order to meet the standards of the Florida Green Building Coalition?

We’ve been working with them for many years, and we have even been platinum-certified by the Green Coalition. The properties we’re doing now will be certified by them. We really love working with FGBC, and it is something that we take seriously. Again, we’re going to own these properties for the long haul. We want them to be as efficient as possible. And if we can reduce the electricity costs and other utility costs for our tenants, that’s another way of making housing affordable. Anything we can do to add to the toolkit of how we create quality, affordable housing, we’re all in.