Denver Permanent Supportive Housing Pay for Success

The Challenge

Many of Denver’s homeless individuals interact frequently with interventions that are costly and ineffective, including jail, detox, and emergency care. The city sought to provide these chronically-homeless individuals with permanent, more effective support.

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The Project

As part of the Permanent Supportive Housing Pay for Success initiative, the GPL helped Denver identify the most costly chronically homeless individuals who were also involved with the criminal justice system and provide them with safe, secure, long-term supportive housing.

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The Innovation

The City is building 160 new units and using 90 existing units to provide supportive housing to over 250 chronically-homeless individuals. A five year randomized control trial of the program will be one of the longest and most rigorous studies of supportive housing in the country.

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The Challenge:

Homelessness, particularly for those who struggle with mental health and substance abuse, continues to challenge cities across the country, and Denver is no exception. Many of Denver’s homeless individuals interact frequently with interventions that are costly and ineffective, including jail, detox, and emergency care. Safe, secure, long-term supportive housing is perhaps the best treatment for homeless individuals suffering from behavioral health conditions. For many governments, however, it is often one of the hardest solutions to fund.

The Project:

The GPL worked with the City of Denver and several project partners to develop comprehensive systems for funding and building permanent supportive housing for the chronically homeless high-utilizer population. The major project components included:

  1. Identifying and targeting the highest utilizers of the criminal justice system. The project began by tracking the top 300 utilizers of the county court system over a five-year period who were also experiencing chronic homelessness. These individuals interacted frequently with the court system due to citations involving public nuisance, public consumption of alcohol, trespassing, and low-level drug offenses. On average, this group was responsible for over 17,000 days in jail per year. The project later built a larger eligibility framework that includes over 2,000 individuals with similar characteristics.

  2. Providing supportive housing and treatment services to the high-utilizer population. The project is based on a proven model that combines the approaches of Housing First with a modified Assertive Community Treatment (ACT) model of intensive case management. Services within the program include supportive housing, case management, crisis intervention, substance use counseling, mental health treatment, peer support, skills building, connection to primary care, connections to jobs, and various other services identified as appropriate to the client’s goals.

  3. Paying on outcomes of housing stability and reduction in jail-bed days. Housing stability and reduction in jail-bed days were identified as target outcomes for the project. For housing stability, the City pays for each day a participant spends in housing minus the number of days spent in jail. For reduction in jail-bed days, the City makes payments based on the percentage reduction seen between participants and non-participants over three years.

  4. Evaluating the program’s impact with a randomized control trial (RCT). A five-year process and impact study of the supportive housing program is being conducted as part of the project. Supportive housing slots are allocated by a lottery, as there are more eligible participants than housing slots. The lottery structure enables the use of an RCT, which will seek to rigorously measure the impact of the program.

The Innovation:

In addition to expanding supportive housing and community-based treatment services, the Supportive Housing project pioneers important innovations. The project:

  1. Implements one of the country’s largest, most rigorous evaluations of supportive housing. Few evaluations of supportive housing go longer than two years. With the use of an RCT and at least 250 participants over five years, the evaluation will be one of the longest, largest, and most rigorous evaluations of the impact of supportive housing. This evaluation will provide valuable lessons that can inform similar programs in Denver and across the country.

  2. Creatively used a program-related investment (PRI) to fund a pilot phase. The Denver project tested a new approach to funding a pilot phase through the use of a program-related investment (PRI). A PRI is essentially a low-interest loan, and can be a more attractive alternative to grants for philanthropic foundations. The Laura and John Arnold Foundation provide the project with a PRI to cover a six-month pilot period. During this period, the foundation’s investment is at risk if the pilot phase fails. Otherwise, the investment rolls into the larger project where the foundation is repaid based on achievement of jail reduction outcomes.

  3. Used Pay for Success (PFS) contracting to commit project partners to shared outcomes. The project was structured through a Pay for Success contract that held the provider accountable for meaningful outcomes including reduction in jail days and housing stability of participants. The City committed to pay on these outcomes should they be achieved, and funders provided financing to allow the provider to enter into a performance-based contract that offset payments until success was demonstrated through a rigorous evaluation.

  4. Combined multiple financing sources to construct new housing units as a part of the project. The project combined Pay for Success financing with a much larger comprehensive housing initiative that included close to $50 million in other resources (capital construction through Low-Income Housing Tax Credits, Medicaid, project and tenant-based vouchers, etc.). This is the first PFS project to include the construction of new housing units, as 160 new units are being constructed to serve the targeted high-user individuals. The construction demonstrates how a PFS structure can allow for a community to come together in a relatively short period of time to house a vulnerable population.