Providence in Providence

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6 min read

Amos House provides food, shelter and jobs

Even on the coldest New England-winter days, there is a steady, long line outside the soup kitchen at Providence, Rhode Island’s Amos House. When it was founded in 1976 in the city’s Upper South neighborhood, where a third of the residents live in poverty, Amos House planned to serve 30-50 meals per day. But now the demand has grown to 500-800 meals per day. The dining room was no longer able to accommodate the community’s needs and Amos House fought for nearly ten years to replace it. This May, the doors opened to the new brick and masonry building with a dining hall that could accommodate 125 at one time, making it the largest soup kitchen in Rhode Island, as well as space upstairs for the extensive menu of counseling and job-training services the social service agency provides and a third floor of administrative offices. This newest $7.5 million addition to, what has grown into, a 14-building campus was funded by local charitable giving, as well as New Markets Tax Credits allocated by the Massachusetts Housing Investment Corporation and bought by Bank of America Merrill Lynch.

“This has been a life-changer for us,” says Eileen Hayes, President and CEO of the nonprofit social services provider.

A thorough and innovative agency
From the small soup kitchen conceived by founder Eileen Murphy, Amos House has grown into an innovative agency devoted to the poor, the homeless and the addicted in the Divine City, founded in 1636 by Roger Williams, a religious exile from the Massachusetts Bay Colony. Named after the prophet Amos who focused on social justice and is credited with writing the Book of Amos, Amos House now provides daily meals, recovery based shelter, supportive housing, vocational and literacy training, and prescription drugs. It provides housing for 165 men, women and children nightly. Its creative programs include culinary and carpentry training and mother/daughter reunification.

Financing expansion
The nonprofit has worked to create its new home since 2007, when it hired an architect and started a $6 million capital campaign, seeking to provide $5 million to create a new building plus another $1 million to create an “endowment” to provide services.

Early on, the respected nonprofit received one of the last “earmarks” from the U.S. Congress. In 2010, Senator Jack Reed (D-R.I.) wrote a grant for $730,000 for Amos House into the federal budget. Years before, as a young lawyer, Sen. Reed did pro bono work for Amos House.

“They told me to use the earmark within five years,” says Hayes. It took almost five years before Amos House could close on its financing and use the money. “We didn’t draw on the earmark until 2014.”

Amos House also gathered $2 million in contributions and pledged contributions from individuals and foundations, including $750,000 from Champlin Foundations, $250,000 from Citizen’s Bank Foundation, $200,000 from Providence Journal Charitable Foundation and $150,000 from Ocean State Job Lot.

Nearly 100 individual donors also contributed, including $45,000 from the staff of Amos House. More than half of that staff were once homeless themselves, before being helped by the nonprofit’s programs. The board members for Amos House pledged another $200,000.

As time passed and Amos House raised money, the cost of the development also expanded – to a total of $7.5 million.

The nonprofit explored New Markets Tax Credits (NMTCs) to fill the gap in its budget. Amos House partnered with Massachusetts Housing Investment Corporation (MHIC), a community development entity with enough NMTC allocating authority to generate NMTCs from $7.5 million in qualified equity investments. That would generate $2.9 million in NMTCs.

Bank of America Merrill Lynch agreed to pay $2.5 million for the tax credits, or 85 cents on the dollar, which counted towards the qualified equity investment. “That was pretty much the market price at the time,” says Andrea Daskalakis, Chief Investment Officer for MHIC.

BofA was an ideal partner for this particular NMTC transaction, because the bank has had a long relationship with Amos House. “They grabbed at the opportunity, and they will continue to support the organization,” says Daskalakis.

However, not all of the $2 million in donations counted towards the qualified equity investment, since not all of the pledges had been paid yet.

The nonprofit still had to find $3.4 million to close the deal to build Amos House. If they could come up with just another $1 million in qualified equity investment, the Boston Community Loan Fund would provide the rest with a $2.4 million bridge loan.

Amos found the investment it needed in June 2014, when the Rhode Island Housing and Mortgage Finance Corp. committed to provide a $1 million homelessness grant.

“It was very unusual for them,” says Hayes. “and it was the game changer for us.”

Amos House now had its total of $7.5 million in qualified equity investments.

However, the nonprofit had already spent $914,000 of its contributions on soft costs, like fees for its architects. To include those expenditures in the NMTC transactions, BofA provided a one-day loan of $914,100. That money, along with all the other qualified equity investments, flowed through the NMTC entities and generated tax credits according to the IRS rules for the program.

The deal closed in October 2014, and construction began on the new building soon afterwards.

Building a new home
The new building rose right next to Amos House’s old dining hall, filling the parking lot and coming right up to the edge of the other building. The big windows of the new dining hall looked out on the old walls of the original dining hall, which continued to welcome the community to eat together until the new building was ready to serve its first meal in May 2016.

“We only interrupted our food program for one week,” says Hayes.

Amos House then demolished the old dining hall in April, working carefully to take down the old building without damaging the new dining hall a few feet away.

“There were hundreds of people watching the old building come down and lots of tears,” says Hayes.

Amos House is not finished building. The nonprofit is planning a second phase of new development, including the rehab of a four-family house – known as “the Blue House” – where Amos House used to provide social services. Now that its new office space has opened in its new building, Amos House can turn its old “Blue House” into four units of additional, newly-renovated supportive housing.

Sources of Funding
$2.5 million, New Markets Tax Credit investment, Massachusetts Housing Investment Corporation, syndicated to Bank of America Merrill Lynch

$2.4 million, Boston Community Loan Fund (bridge loan, construction financing)

$2 million, contributions from individuals and foundations

$1 million, Rhode Island Housing Finance Agency (homelessness grant)

$730,000, U.S. Congress, federal earmark