Ted, a 47-year-old Arlingtonian, earned less than $10,000 per year as a mailroom clerk. Yet, like most of his peers who also suffer from severe mental illness, he wanted to live independently.

His prospects of finding rental housing in Arlington were bleak until he encountered Douglas Peterson and Martha Paschal, the masterminds behind the Arlington Project for Affordable Housing's Project Hope pilot program.

APAH is a nonprofit organization that provides housing for low- and moderate-income county residents. Though Peterson and Paschal had long worked in the area of affordable housing -- for those unable to afford the $1,550 average rent for a one-bedroom apartment in the county -- they had not focused on housing for the mentally ill.

"These clients would never even have qualified for our income levels," said Peterson, executive director of 12-year-old APAH.

Most of APAH's housing is geared toward residents earning 50 percent of the county's median income -- for example, a family of four making less than $52,200 a year. By comparison, the average severely mentally ill person generally earns 10 percent to 20 percent of the median income. More than 70 percent, such as Ted, earn less than $10,000 a year. Many of those people are capable of independent living but are forced to choose group or state homes because they cannot afford housing on their own. Such housing comes at a high cost to taxpayers as well as to the independence of the residents, who are often sent to state facilities far from friends and family.

In an effort to solve the dilemma, Arlington County's Department of Human Services invited several nonprofit housing providers to submit solutions for independent housing for selected high-functioning mentally ill clients. APAH went to work.

"We felt we needed to be responsive to this segment of the population," Peterson said.

The result was Project Hope, the only proposal that met state requirements. The pilot ran successfully from June 2001 to June 2002 and is now a state program under the Department of Mental Health, Mental Retardation and Substance Abuse Services.

Under the pilot, five mentally ill residents were successfully moved from state-run facilities into affordable rental units in four of APAH's 11 rental communities in the county. The program cost $231,000 to implement but saved taxpayers more than $450,000 in its first year, officials said. That is because it costs about $100,000 a year per client to keep an individual in state housing, compared with about $8,000 per year in rental units. The program implementation money, Section 8 rent subsidies and Arlington County housing grants combine to make the rents affordable for Project Hope participants.

The program earned Peterson and Paschal kudos earlier this month from the county's Department of Human Services, which awarded Peterson a Special Project Award.

"I'm humbled by getting an award for doing the right thing," Peterson said.

This is Arlington's first effort to provide nonrestrictive housing for severely mentally ill residents, said Jane Burr, the county's coordinator of homeless services.

In its search for a workable model, the county reached as far as Philadelphia's 1260 Corp., a public housing authority that works with the Philadelphia Office of Mental Health to provide housing for the mentally ill. Lacking its own public housing authority, Arlington County was eager to work with APAH.

"APAH was willing to partner with us," Burr said. "We're extremely grateful to them."

Project Hope provides mentally ill people who are functioning at healthy levels with a way to get back into the mainstream and establish a rental history, officials said. None of the clients pose danger to their communities, and all had previous experience living independently, they said. The carefully selected Project Hope participants "are stabilized, do quite well and want to live independently," Burr said.

One Project Hope participant was living in an APAH's rental community when she stopped taking her medication and had to be hospitalized. The management company, Paradigm Management, had no idea where she had gone or why her rent went unpaid and was forced to evict her, said Paradigm property manager Matthew Olson.

In a typical low- or moderate-income subsidized rental community, "with that kind of blot on her rental history, she would never have gotten back in," Paschal explained.

But as a Project Hope participant, the woman was able to return to another Paradigm property. She is the leaseholder, while her Program for Assertive Community Treatment (PACT) -- a team of mental health professionals and nurses -- serves as the guarantor, Olson said.

Olson said Paradigm was surprised to learn that the resident had been hospitalized for mental illness.

"She had never been a problem," Olson said. Now with the support of her PACT counselors, "her neighbors don't even know she is in the program," he said.

For Project Hope participants, Paradigm Management replaced the three typical qualification requirements (credit history, rental history and income level) with a careful screening process supported by the human services department. The five successful participants rent one-bedroom apartments at five properties at steeply discounted rates and receive daily to weekly visits from their PACT teams.

In the first 18 months of the program, there have been no problems with any of the five residents, whose average age is about 55, Peterson said.

That is generally the age at which parents of the severely mentally ill become concerned about care for their children once they are gone. Project Hope is one solution to the "What will happen after I die?" question that plagues those parents, officials said.

The state increased the funding for Project Hope to a one-time sum of $231,000 to include as many as 18 clients over a period of 15 years, Burr said.

"I see this as a long-term relationship for APAH," said Paschal. "Arlington is a community that needs to take care of its own."

Olson agreed. "We plan to continue to support APAH and make [Project Hope] happen."

All of Paradigm's 15 Arlington properties contain some percentage of affordable housing -- a general term used to describe any portion of rental housing discounted to those not earning the area's median income. Nine of these properties are APAH properties.

With Arlington's highly desirable location and businesses, "if there were no programs like APAH's, the free market would very soon price out lower-income households," Olson said.

For now, Project Hope is a step toward solving the housing problems for some of those earning the lowest incomes in the county. Peterson said he plans to continue working to make housing affordable available to those county residents and others who work hard to make ends meet.

"It's just the right thing to do," he said.