In a Hostile Housing Landscape, Solutions Emerge to Support Home-Based...

Child Care

In a Hostile Housing Landscape, Solutions Emerge to Support Home-Based Child Care Providers

By Emily Tate Sullivan     Jul 27, 2023

In a Hostile Housing Landscape, Solutions Emerge to Support Home-Based Child Care Providers

This article is part of a series about the housing challenges home-based child care providers face.

Destinee Hodges decided last year that she was ready to open her own business.

The Las Vegas resident has worked in child care since moving her family to Nevada seven years ago. She earned promotions with ease, eventually landing a job as a child care center director.

But Hodges found, over the years, that she could not make a living in that role. After she requested and was denied a raise, she took on extra jobs, a sacrifice that she says was necessary to support herself and her two kids.

For a while, the single mother had been feeling like she was hitting a wall. She’d maxed out her pay. The number of jobs she was working had become unsustainable. In the back of her mind, she’d always held onto the idea of someday opening a home-based child care program. If she could open a full-capacity child care business, she could nearly double what she’s earning as a center director.

“When you’re somewhere for too long and feel like you can no longer grow, it’s time to do something different,” Hodges explains.

There’s just one problem: In Nevada, as in most other states, opening an in-home child care program is not a simple process.

For Hodges, who rents an apartment, there are two massive hurdles. First, she has to move into a single-family home to become eligible for a child care license in her state. Then she would need signoff from the landlord and homeowners association.

But last year, Hodges decided it was time to try. Long ago, she set a personal goal to open a home-based program by age 35. At 32, she felt there was no time to waste.

In November 2022, she enrolled in a 12-week training course through Wonderschool, a child care marketplace, to learn the basics of licensing, health and safety regulations, and running her own child care business. Then Hodges started searching for a house to rent.

She began working with a real estate agent — a teacher at her daughter’s school — who Hodges said struggled to grasp what she was pursuing and why. A child care program? Inside the house? No landlord is going to go for that, he told her.

He was right. Every time Hodges’ real estate agent brought up her plans to property owners, they backed out. It went on like that for several months.

“Things were moving slow, and I wasn’t getting anywhere,” she says, describing how impatient and irritated she was becoming with the whole process.

“I couldn’t find a house. I was doing everything I could, but it didn’t matter. I couldn’t be a licensed provider if I didn’t have a house.”

She had just about given up hope when she received a fortuitous phone call in June: Hodges had a house, if she wanted it. It was spacious, affordable and, after some landlord-led renovations, would be perfectly suited to both her family and her business. The landlord, in this case, was more than amenable to her plans to open and operate a child care program out of the property.

Before finding her perfect fit, Hodges, like many other current and potential child care providers across the United States — a group that is overwhelmingly women and disproportionately people of color — had to navigate a housing environment that can feel hostile to those who are interested in caring for and educating young children in their homes. But some bright spots are emerging.

As the child care crisis has worsened, the scope and impact of these housing challenges have become more apparent to those in positions of power, prompting the creation of public-private partnerships, new pathways to homeownership and policy reform.

From the establishment of “child care-friendly landlords” in Nevada — a new program that Hodges will be among the first to use — to the construction of low-cost homes earmarked specifically for home-based providers in Colorado, projects are underway to offer a salve to providers struggling to find and afford adequate housing.

These efforts, in turn, are intended to increase the supply of child care slots in critically underserved areas. They’re also aimed at improving the economic stability of providers like Hodges — who is eager to move into the home that will shelter both her family and her new business.

“If words can describe it, I feel like I’m a person that never gets lucky. But right now, I just feel lucky,” Hodges says. “I’m one of the first ones selected? I’m ecstatic.”

Creating a ‘Child Care-Friendly Landlord’ Program

Nevada, like the rest of the country, experienced a child care crisis during the height of the pandemic. The field had lost thousands of licensed providers. Families couldn’t find care and, as a result, were missing work.

Yet the health crisis also presented an opportunity to devise creative solutions. Nevada had money available to spend through COVID-19 relief funding — if leaders could act quickly, before access to the federal dollars expired on Sept. 30, 2023.

One of the ways Nevada’s leaders hoped to address the dearth of child care was through a statewide partnership with Wonderschool, a sort of one-stop shop that helps aspiring and existing home-based child care providers navigate licensing requirements. Bring on Wonderschool, leaders thought, and the state’s child care supply would soon begin to expand.

But in spring 2022, as providers in Nevada began to participate in the 12-week Wonderschool Academy, a theme emerged.

Though they had the interest to start their programs, most lacked the housing they needed to become licensed child care providers or expand their existing businesses.

“Housing is really a huge barrier for so many of these providers,” says Crystal Johnson, the child care systems improvement coordinator for the Nevada Division of Welfare and Supportive Services (DWSS).

Since March 2022, more than 190 people have completed the Wonderschool Academy in Nevada, according to a spokesperson with DWSS. If not for housing barriers, many of them could care for up to a dozen children each.

Some providers live in properties that do not meet the state’s licensing standards. Apartment and condo buildings, as well as many townhouses and duplexes, are not eligible because of rules governing outdoor play space and fencing.

Single-family homes are generally more expensive to rent, and a lot of people who work in — or want to work in — the early care and education sector are low-income, Johnson explains. Many can’t just move from their apartment into a licensable rental house, nor are they in a financial position to buy a house that would meet state licensing requirements.

“They’re kind of stuck,” Johnson explains.

This deters some individuals from providing care at all. Others choose to provide care as a registered but unlicensed family, friend and neighbor (FFN) provider, a status that means they can only watch up to four children and that they receive lower reimbursement rates from the state’s subsidy program. Currently, the state reimburses FFNs at 75 percent the base rate of licensed home-based child care providers.

There are FFNs who function very similarly to licensed child care providers, says Natalie Renew, director of Home Grown, a national organization working to improve the quality of and access to home-based child care. Many FFNs have completed background checks, health and safety training, professional development and more.

“They don’t own their homes, but other than that, they look like what we would want providers to look like,” she says.

Other providers who completed the Wonderschool Academy rent properties that the state would approve for home-based care, but their landlords won’t sign off. A few own homes that are eligible, but their homeowners associations have declined their requests. Landlords and HOAs are reluctant to give the go-ahead to prospective in-home providers, worrying about damage to their property and the perceived increase of noise and traffic in the neighborhood.

“Every week I receive distraught calls from potential providers who cannot move forward in licensing to operate because their HOA will not allow it,” says Darcy Heath, manager of Wonderschool’s New Supply program in Nevada, in a written statement to EdSurge.

Heath described a registered nurse whose HOA barred her from opening a specialty program that would cater to medically fragile children, a vulnerable population that most center-based settings do not have the skills or resources to support. She also recalled a new mom who was hoping to open a program caring for infants. Instead, she earns income by working a night shift, and then comes home to care for her own child during the day.

“It’s been very, very gut-wrenching,” Johnson says of hearing providers’ stories over the last year. “They’re just kind of at their wits’ end. … It’s disheartening because you see their passion, you see their drive, you see what they want to do.”

The Wonderschool team, along with DWSS, tried different approaches to get landlords and HOAs to come around. They wrote letters showing the income potential of home-based providers. They made a flier explaining why child care was good for Nevada, which they distributed at housing conferences and to real estate agents, HOAs, landlords and property managers. Heath spoke directly to skeptical landlords and to an HOA board member.

“We knew we had to do something, because we had this great opportunity with the COVID relief funding,” Johnson says. “It kind of felt like a once-in-a-lifetime opportunity.”

The team at DWSS, conscious of the looming expiration date on the funds, “searched high and low” last summer, Johnson says, before learning about a promising national initiative that was just getting underway. To expand child care options, Mission Driven Finance, an impact investment firm, was planning to use a mix of private and public capital to purchase, renovate and then rent homes to providers through a program called Care Access Real Estate (CARE).

In effect, the firm says, they are creating a “child care-friendly landlord.”

By October, leaders in Nevada had decided to bring the model to their state, calling their version, which pools private money with COVID-19 relief funding, CARE Nevada. Officially launched in February, the program is administered by DWSS, Mission Driven Finance and the Children’s Cabinet, a statewide early childhood nonprofit.

As of January, 40 licensed family child care providers (who can serve up to six children) and 33 licensed group family child care providers (who can serve up to 12) were operating in Las Vegas and surrounding Clark County, a sprawling area with a population of nearly 2.3 million. The goal of CARE Nevada is to acquire 40 properties by the end of 2024, effectively doubling the supply of in-home child care slots in the county.

Doing so requires both vetting applicants and buying homes. To find strong candidates, the program assesses people’s experience in early care and education, commitment to operating a group family child care program and willingness to reserve slots for those who use the state’s child care subsidy program, which serves families who earn up to 85 percent of the state’s median income. To find properties that fit providers' needs, a real estate team at Mission Driven Finance looks for homes that, among other characteristics, have a large family room that can be dedicated to child care and a separate living space for the provider’s family, Johnson shares. Importantly, the team is avoiding homes with HOAs.

True to the spirit of Vegas, there’s also a bit of chance involved. If Mission Driven Finance buys a home that fits the bill for, say, five qualified providers, the providers are entered into a random draw for who receives it.

From conception to launch, Johnson shares proudly, the CARE Nevada program came together in less than a year. After completing a multi-step application and matching with a home, Hodges was one of the first to receive a lease through CARE Nevada.

Destinee Hodges at CARE Nevada House
Destinee Hodges, second from left, with her two kids and close family friends outside her new house. Photo courtesy of Mission Driven Finance.

Markesha West, who’s been providing care to four children as an FFN since August 2022 because her HOA has blocked her from operating a licensed child care program, is the only other person who has been matched with a house so far.

“I’m just overwhelmed with excitement,” West shares. “It’s just ideal. Everybody I show, they’re like, ‘Oh, my God, I can totally picture a day care there.’ I think it’s the best space for me to be effective with the children.”

An Out-of-the-Box Idea

In Colorado, a small nonprofit housing developer, Rural Homes, is piloting a strategy that aims to address the twin crises of affordable housing and available child care.

In the rural southwestern part of the state, working families have been priced out of most properties anywhere near Telluride — a historic mountain resort town that attracts the mega-rich — and the enclaves surrounding it. That includes the old mining town of Ouray, sometimes referred to as the “Switzerland of America” for the 13,000-foot peaks that surround it.

As the housing market boomed and tourism soared after the pandemic, many landlords in the area opted to sell their properties or turn them into short-term rentals. In Ouray, 44 percent of housing units were vacant as of 2021, according to federal data, a designation that includes houses whose owners have a primary residence elsewhere and those that are being used as vacation rentals.

This trend has contributed to a shortage of affordable housing for locals. Teachers, nurses, firefighters, police officers and service workers, the people who can make the difference between a tourist town and a thriving community, are having to decide whether to commute over an hour each way to work, crossing sometimes-treacherous mountain passes to do so, or leave the place they’ve built a life.

The resulting outflux of community members — in some cases, people whose families had been in the area for generations — is what Rural Homes is hoping to slow with the construction of new workforce housing. But the group learned that if they really want to see families stay, they would need to address child care in tandem with housing.

Bright Futures, a nonprofit dedicated to improving conditions for children and families in southwestern Colorado, conducted a community survey of Ouray County in early 2022. The group knew the county was facing a severe shortage of child care slots — only 55 are available to the 158 children under age 5 living there — but feedback from families revealed the impact of the deficit.

Nearly half of respondents said that starting a family either caused them to leave the workforce or prevented them from reentering it. About 80 percent of families said their current child care arrangement doesn’t meet their needs, according to Valentina Estrella, the Rural Homes early childhood coordinator at Bright Futures. Another 53 percent said child care options available to them didn’t align with their work schedules.

“This issue is just as important [as] affordable housing,” one parent wrote. “The combination of the two might force us to move away from the county all together.”

That’s why Rural Homes got involved. Typically, “we’re hyper-focused on building homes,” says project manager Sheamus Croke. “But then we kept hearing from different nonprofit partners and local partners such as Bright Futures, that there’s a parallel crisis of child care that goes with housing.”

Using donated land and low-cost, modular construction, Rural Homes builds single-family homes and then sells them to families living below 120 percent of the area median income for even less than they cost to build. All houses built and sold by Rural Homes are under deed restrictions, a mechanism used to preserve the affordability of houses that are sold below market values by restricting how and to whom they can be resold.

The nonprofit has completed a 24-home project already in Norwood and is currently finalizing 14 homes on a second site in Ridgway. Now it is turning its attention to Ouray, with 22 homes planned. Two are earmarked for home-based child care providers.

The houses are manufactured in a factory located about 180 miles northeast of Ouray. Each house — two- or three-bedroom units, usually — is shipped in two separate boxes, Croke says, then reconstructed on site before a roof and porch are built. The two houses reserved for in-home child care programs will be shipped in three boxes. That third box will contain a “bolt-on” portion of the home — a designated space for child care that is separate from where the family will spend their time.

Rural Homes — Norwood Project
One of the manufactured houses in Norwood, Colorado. The houses reserved for home-based providers in Ouray will feature an additional "bolt-on" portion for child care. Photo courtesy of Rural Homes.

Bright Futures is responsible for identifying the providers who will own and operate child care programs from the two homes.

Estrella has begun outreach and recruitment for the first cohort of a required 12-week accelerator program for interested individuals, administered in both English and Spanish. The first 10 weeks cover the basics of building and sustaining a successful home-based child care business. The final two weeks provide support related to the homebuying process, including mortgage assistance and information about deed restrictions.

Before its houses are completed, Rural Homes typically runs a lottery. Candidates must pre-qualify for a deed restriction and mortgage, and they have to live and work in the community or have a job offer there. Advantage is given to first responders and public employees such as police officers, firefighters and teachers.

The Rural Homes Early Childhood Initiative, on the other hand, plans to use a selection process that includes a presentation of a business plan from applicants and a community-formed interview panel to determine which providers will own and operate the two family child care homes.

Though the sales price of houses fluctuate depending on the unit and project, the housing prices for the units in Ridgway, about 10 miles from Ouray, were just released and range from around $275,000 to just under $500,000. Comparable houses on the market in Ridgway, Croke notes, are selling for around $1 million.

The initiative, Estrella says, offers a “one-of-a-kind pathway to homeownership and greater economic stability for providers,” many of whom could not afford homes at market rates.

“More and more, we need issues like child care affordability and housing affordability to be locking arms, and I think that’s what is happening in Colorado,” Renew says. “It’s an important lesson for child care folks that we can do this.”

Two homes — and thus, two new child care programs — seems like a small number, but for the size of Ouray, “that’s a huge increase,” Croke says.

The Ouray housing development, which will likely be completed sometime in 2024, is not meant to solve the child care crisis in the region. It’s meant to show proof of concept and then, they hope, be scaled from there — in Colorado and elsewhere.

“We hope to use this model as a playbook,” Estrella says.

‘I Can’t Wait to See It Come to Life’

In Nevada, West is preparing for her move. She says her new home is spacious, with plenty of natural light. There’s a great big backyard with a pomegranate tree that she says is her favorite part.

The renovations will begin soon. Mission Driven Finance is replacing the floors, adding doors, upgrading the backyard to be more kid-friendly, and reconfiguring some of the common space to create separation between areas intended for the child care program and areas just for West’s family, which includes her husband and two elementary-aged daughters.

“I can’t wait to see it come to life,” West says.

Markesha West with her husband and two daughters visit their new home in Clark County, Nevada. Photos courtesy of Mission Driven Finance.

Both she and Hodges have been given approximate move-in dates of Sept. 1, once renovations are complete. Mission Driven Finance expects to close on four more houses in Clark County in the coming weeks. At the same time, the investment firm is focused on building out its footprint in San Diego County and, later this year, Detroit.

With a group family child care license, West will not only be able to care for three times as many children as she is allowed today, but she’ll be getting paid a higher rate for each child too.

Hodges, too, will see her income improve. During financial coaching she received through CARE Nevada, Hodges learned she’ll be able to stop working all of the part-time jobs she’s been juggling on top of her center director position and just focus on her home-based program and her own family.

“It will change things drastically,” says Hodges, who thinks a lot about how to be a good example for her kids and how to improve the quality of their lives.

Destinee Hodges at CARE Nevada House
Destinee Hodges, center, inside her new home with her two children (left) and her goddaughter (right). Photo courtesy of Mission Driven Finance.

She and her 15-year-old daughter each had an AirPod in their ears when Hodges answered the congratulatory call about the house match. They will be moving into a three-bedroom, two-and-a-half bathroom house along with Hodges’ 10-year-old son. When they went together to see it in person, Hodges says, “Everybody just fell in love.”

As part of the CARE Nevada program, providers will get discounted rent to start, and it will go up incrementally as they get licensed and get their feet under them. West will start out paying less for the new place than she pays now, she says, with a final amount that’s $95 per month more than her current rate.

After leasing the properties for two years, West, Hodges and other providers may have the option of purchasing their homes at a below-market rate.

“For many of these women,” Johnson says, “it's going to change the entire trajectory of their life, and that’s absolutely incredible.”

This is the third story in a series about the housing challenges home-based child care providers face. Read part one to learn more about the barriers, part two to get a glimpse inside one provider’s experiences, and part four to learn about new state laws aimed to help.

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