In­vestors help fund hous­ing goal

Foun­da­tions and a bank among those kick­ing in $8.6M for home­less pro­gram.

The Denver Post - - DENVER & THE WEST - By Jon Mur­ray

Sev­eral phil­an­thropic foun­da­tions and a na­tional bank are among eight in­vestors that will kick in $8.6 mil­lion to start and run a Den­ver pro­gram aimed at hous­ing up to 250 of the city’s most chron­i­cally home­less peo­ple.

The iden­ti­ties of the in­vestors were among new de­tails, along with some slight fi­nan­cial re­vi­sions, when the city re­leased the con­tract last week for its un­usual “so­cial im­pact bond”-funded pro­gram. The city says it’s only the ninth such ar­range­ment in the na­tion us­ing that pri­vate fund­ing model.

The pro­gram faces cru­cial City Coun­cil votes Mon­day night.

The new sup­port­ive hous­ing pro­gram would draw money from the up­front in­vestors and other sources, in­clud­ing rental vouch­ers and the state’s Med­i­caid pro­gram. The city then would re­pay the fun­ders in part af­ter doc­u­ment­ing sav­ings in crim­i­nal jus­tice and other costs that par­tic­i­pants now rack up an es­ti­mated $7 mil­lion or more a year in city-paid costs as they cy­cle through jails, detox and the city-run emer­gency room.

Re­pay­ment would be based on the ex­tent of the gains and sav­ings, with higher per­for­mance en­abling them to earn back up to $11.4 mil­lion — or as low as $2.6 mil­lion, if the pro­gram falls far short of its goals.

North­ern Trust Co., a Chicagob­ased bank with a lo­cal of­fice, would pro­vide $3 mil­lion over the pro­gram’s five years. An­other $1.7 mil­lion would come from the Hous­ton-based Laura and John Arnold Foun­da­tion.

North­ern Trust is one of three in­vestors that would be re­paid

based on pro­gram par­tic­i­pants’ suc­cess re­main­ing in one-bed­room apart­ments pro­vided by the city’s part­ners, the Men­tal Health Cen­ter of Den­ver and the Colorado Coali­tion for the Home­less. The oth­ers are the Den­ver Foun­da­tion and The Pi­ton Foun­da­tion, both lo­cally based and set to pro­vide $500,000 each.

The Arnold Foun­da­tion is among five in­vestors that would be re­paid based on the re­duc­tion in ex­pected days spent in jail by par­tic­i­pants.

Other in­vestors in that group are the Colorado Health Foun­da­tion (pro­vid­ing $1 mil­lion); the Ben and Lucy Ana Wal­ton Fund at the Wal­ton Fam­ily Foun­da­tion ($1 mil­lion); the New York-based Non­profit Fi­nance Fund ($434,695); and the Liv­ing Cities Blended Cat­a­lyst Fund ($500,000), part of an or­ga­ni­za­tion es­tab­lished by large foun­da­tions and banks to in­vest in ur­ban pro­grams.

Sev­eral coun­cil mem­bers said they like the setup, which trans­fers much of the fund­ing risk to the in­vestors, as one of sev­eral po­ten­tial up­com­ing city ef­forts on homelessness.

“I think it’s an ab­so­lutely worth­while en­deavor, and I would cer­tainly like to see this move for­ward,” coun­cil pres­i­dent Chris Herndon said Fri­day about the pro­gram.

But Kevin Flynn, whose south­west Den­ver district is set to re­ceive one of the large new de­vel­op­ments hous­ing par­tic­i­pants, is among a few mem­bers who have asked re­peated ques­tions about how it would work, the fi­nanc­ing struc­ture, im­pact on neigh­bor­hoods and lo­gis­tics. The lat­ter in­cludes whether too many of the sub­stance abuse and men­tal health ser­vices pro­vided for res­i­dents would be off-site.

“I can’t vote yes right now,” Flynn said, with lin­ger­ing con­cerns and some ques­tions not an­swered to his sat­is­fac­tion.

Based on pre­vi­ous stud­ies of sup­port­ive hous­ing, the city has set a goal of 83 per­cent of par­tic­i­pants stay­ing in the pro­vided apart­ments at least a year and spend­ing 40 per­cent fewer days in jail.

That would qual­ify the fun­ders for a to­tal $9.6 mil­lion in re­pay­ment, or an 11 per­cent over­all re­turn. But they could earn more — as much as a 32 per­cent re­turn on the to­tal in­vested — if the pro­gram is more suc­cess­ful.

The con­tract is with the Cor­po­ra­tion for Sup­port­ive Hous­ing and En­ter­prise Com­mu­nity Part­ners, both non­prof­its that will co­or­di­nate the pro­gram. The coun­cil also will vote Mon­day on a $937,500, six-year eval­u­a­tion con­tract with the Ur­ban In­sti­tute and lo­cal re­search part­ners to track out­comes and sav­ings.

The pro­gram, un­der dis­cus­sion for more than a year, has taken on re­cent ur­gency as city of­fi­cials have pushed the coun­cil to vote af­ter a short re­view pe­riod for the con­tracts.

Out­go­ing Deputy Mayor Cary Kennedy, also the city’s chief fi­nan­cial of­fi­cer, says co­or­di­na­tors want to launch the pro­gram and re­cruit the first par­tic­i­pants soon to take ad­van­tage of about 20 units in a newly built Coali­tion hous­ing pro­ject. The bulk of the units would be com­pleted in 2017.

Coun­cil­man Wayne New, who also has probed the deal in re­cent weeks, said he likely would vote yes.

Ea­ger sup­port­ers in­clude Al­bus Brooks, who rep­re­sents most of down­town. He says he sup­ports “pri­vate-pub­lic part­ner­ships like th­ese that have such a pos­i­tive im­pact on our most vul­ner­a­ble cit­i­zens.”

An­other is at-large mem­ber Robin Kniech, who is look­ing for­ward to in­ten­sive pro­gram eval­u­a­tion.

The pro­gram is “only one step among many that we need to take” on homelessness, she said. “But it’s a very im­por­tant first step.”

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