Historically, California has funded privately contracted, for-profit service providers to develop and operate group homes for individuals with developmental disabilities. However, this can leave these 'community care facilities' at risk of closure if an operator retires or goes out of business.With the closure of several of the state's developmental centers and the relocation of clients into community-based settings, more individuals with disabilities are living in group homes. Given these circumstances, the South Central Los Angeles Regional Center, which administers the provision of services for individuals with disabilities, sought to acquire care facilities once, to ensure they serve individuals with disabilities in perpetuity. To do so, a nonprofit controlled affiliate, Friends Community Housing, was established to acquire, renovate, manage, and lease group homes to individual service providers. This model, now promoted by the state, provides stability for vulnerable and medically fragile individuals and allows them to age in place. But Friends Community Housing lacked access to the capital needed to acquire and extensively renovate 10 separate houses for ADA-equivalent accessibility and onsite services.Given this unique asset class and lack of market comparables, no banks would lend to Friends Community Housing.
