Santa Cruz Community Health Center (SCCHC) is a Federally Qualified Health Center (FQHC) and a HRSA-designated Healthcare for the Homeless provider. SCCHC’s origins date to 1974, when a group of students at the University of California Santa Cruz started a women’s health collective, which later evolved into SCCHC’s first site, Santa Cruz Women’s Health Center, providing women and children with primary care, behavioral health, prenatal care, and family planning services. In June 2012, SCCHC became an FQHC, and in May 2014, in response to the expansion of Medicaid under the ACA, SCCHC opened its second site, the East Cliff Family Health Center.
By 2020, SCCHC’s East Cliff health clinic had reached capacity, and SCCHC’s management began to plan construction of a new 20,000 square foot, two-story health center to replace it. The new clinic would provide medical, behavioral health and specialty care, with a focus on pediatrics and those experiencing homelessness. To respond more effectively to immense community need, the new clinic would be part of a larger project on a 3.7-acre site that would bring not only medical care, but also dental services and affordable housing to Live Oak.
With strong community support, SCCHC conducted a very successful capital campaign for the new clinic, raising almost $12MM against SCCHC’s total project cost of $18.5MM. Given the high cost, it was determined that New Markets Tax Credits would be highly beneficial to the economics of the transaction. However, despite serving large numbers of low-income patients, including a large proportion of unhoused patients from an adjacent neighborhood, the project site was no longer located in a NMTC-eligible census tract per the 2020 census. Unable to qualify the project through typical real estate eligibility tests but recognizing SCCHC’s financial gap and the needs of its patient population, PCDC qualified the project using the Targeted Populations test: at least 50% of gross income of the project would be derived from patients who are Low Income Persons (LIPs), defined as a person whose income is not more than 80% of the area median family income. For several years prior to the project, SCCHC tested its patient population on its own to ensure that it could meet the Targeted Populations Test.
In March, 2022, PCDC closed on a $10MM NMTC allocation and a $2.0MM source loan supporting the transaction.