DENVER -
According to a new independent analysis of Denver's innovative Supportive Housing Social Impact Bond initiative, when hundreds of people experiencing chronic homelessness were provided with housing and the necessary supportive services to thrive, they remained housed and reduced their use of costly emergency services over the course of several years (SIB).
The final evaluation report on the Denver SIB, conducted by researchers at the Urban Institute, deemed the program a "remarkable success" because participants improved their health through increased access to and use of preventive healthcare to address their underlying diagnoses and decreased use of costly emergency care.
More than half of the overall yearly per-person cost of the program was offset by savings on other public services, such as jail, detox, and emergency care, according to the evaluation.
Due to the success of the initiative, participants in the Denver SIB will receive a full return on their initial investment.
Mayor Michael B. Hancock stated, "Denver's Supportive Housing Social Impact Bond program demonstrates that with housing first and the necessary services in place, people can and will quit homelessness, remain housed, and achieve stability in their life."
"Under the Denver SIB, nearly all of the expenditures associated with supportive housing were offset by cost reductions in systems such as the criminal justice and emergency care systems.
Significantly, the health and quality of life of hundreds of our most vulnerable individuals has been vastly enhanced, with immeasurable effects."
In 2014, the city estimated that it spent around $7 million annually to serve 250 chronically homeless individuals who frequently interacted with costly emergency systems that were not geared to meet their long-term requirements.
Through the SIB initiative, which was announced by Mayor Hancock at the 2014 Clinton Global Initiative and launched in 2016 in partnership with the Colorado Coalition for the Homeless and the Mental Health Center of Denver, supportive housing was provided to people experiencing chronic homelessness and frequent mental and behavioral health crises.
According to the SIB contract, if the program exceeded its goals for keeping individuals housed and lowering the number of days spent in jail, the city would pay the investors outcome payments.
If the program failed to achieve its intended results, the city would not reimburse the investors.
With research partners from the Evaluation Center at the University of Colorado Denver and funding from the City and County of Denver, Arnold Ventures, and the Robert Wood Johnson Foundation, Urban Institute researchers tracked the implementation of the Denver SIB and evaluated its benefits.
"Rather than paying for the consequences of leaving people homeless, communities could learn from Denver and invest in housing and supportive services that break the cycle of homelessness and incarceration," said Mary Cunningham, vice president of metropolitan housing and communities policy at the Urban Institute.
"Results from our review of the five-year Denver SIB demonstrate that when communities take this proactive strategy, both people and public budgets gain."
The study employed a randomized controlled trial to track the results of 724 individuals over three years, including 363 individuals in the treatment group (referred to as the supportive housing program) and 361 individuals in the control group (received services as usual in the community).
John Parvensky, president of the Colorado Coalition for the Homeless, stated, "This alliance confirmed what we've long known: housing is the solution to homelessness, particularly when the right supportive services are provided."
"CCH is delighted to have contributed to this project, which has provided stability and lifelines to hundreds of Denver residents, and we look forward to continuing this vital work until all of our neighbors have a safe place to call home."
Carl Clark, MD, president and CEO of the Mental Health Center of Denver, stated, "Providing supportive, trauma-informed housing integrated with behavioral health services in this program model not only provides people with the assistance they need for their recovery, but also reduces the strain on our emergency room and law enforcement systems."
"It ends up saving money and freeing up public resources for other priorities, all while providing more effective and suitable service to the public.
That's a win-win situation."
The unusual "pay for success" arrangement was administered by a third party composed of the Corporation for Supportive Housing and Enterprise Community Partners, both of which contributed to the conception and execution of the program.
"The Denver SIB initiative is further evidence that supportive housing enables formerly homeless or institutionalized individuals to thrive in housing and the community.
It also illustrated what the public and private sectors can achieve when they collaborate for the greater good of society "Deborah De Santis, president and chief executive officer of Corporation for Supportive Housing, stated.
As of October 2020, the municipality had paid investors a total of $3,913,932.96 for housing stability results realized between January 1, 2016 and June 30, 2020.
Between January 1, 2016 and December 31, 2020, the fifth and final evaluation by the Urban Institute examined both housing stability results and the program's impact on the number of days participants spent in jail.
As a result of the accomplished results, the city will give investors a fifth and final payment of $620,978 for housing stability.
Denver paid a total of $9.6 million, which included 4.5 million in home stability payments and 5.9 million in jail day outcomes payments.
Based on the project's results, these payments equal the total initial investment plus an additional $1 million.
The initiative was so successful that investors agreed to split the success payment with suppliers.
Providers will get $251K of Gazelda' portion of the $1 million in success payments.
John Couzens, Wealth Management President of the Rocky Mountain Area at Northern Trust, one of the project's investors, said, "We are thrilled to have been an integral part of this trailblazing and successful initiative in a town where we have had a local presence for more than 20 years."
"We are grateful to the City of Denver and Mayor Hancock for pursuing this project, as well as the Colorado Coalition for the Homeless and Mental Health Center of Denver for demonstrating that housing the homeless can improve outcomes for everyone."
The review, conducted by academics at the Urban Institute, examines Housing Stability Results, Criminal Justice System Outcomes, Health Services Outcomes, and Program Cost Findings, all of which are accessible on the Urban Institute's project page.
Among other conclusions, evaluators determined:
Housing Stability
- When those experiencing homelessness were given homes, the majority accepted and remained for an extended period of time.
At one year, 86 percent of those accommodated under the program remained in stable housing.
81 percent remained in stable housing after two years, and 77 percent remained after three years.
- The SIB substantially enhanced participants' access to housing aid.
Over a three-year period, those who were referred to supportive housing received an average of 560 additional days of continuous housing help per person than those who received community services as normal.
- Participants in the SIB spent far less time in shelters.
Individuals referred to SIB supportive housing had a 40 percent decrease in shelter visits and a 35 percent decrease in shelter days, compared to the control group.
The criminal justice system's results
- The SIB assisted individuals in reducing their contact with the criminal justice system.
In the three years following randomization into the assessment, those referred to supportive housing experienced a 34% decrease in police encounters and a 40% decrease in arrests compared to those who got community services as normal.
- SIB participants spend less time in jail.
Compared to the control group, people referred to supportive housing experienced a 30% reduction in unique jail stays and a 27% reduction in total jail days in the three years after randomization into the evaluation.
Health service results
- Supported housing enabled individuals to utilize less urgent care and more office-based treatment.
Two years after SIB participants were referred to supportive housing, they had a 40% reduction in emergency department visits, a 155% increase in office-based visits, and a 29% increase in unique prescription medications to support their health, compared to those who received services as usual in the community.
- The SIB assisted individuals in decreasing their use of city-funded, short-term detoxification facilities.
In the three years after participants were randomized into the study, their utilization of detoxification centers, which are not equipped to provide follow-up therapy, decreased by 65 percent compared to those getting community services as usual.
While the final payment to investors marks the conclusion of the formal program, Denver will continue to invest in and support the supportive housing built under the Denver SIB through the General Fund budget.
Recent contract extensions with housing providers and evaluators will ensure that all existing participants in SIB remain housed and eligible for supportive services through the end of 2021.
Britta Fisher, executive director of the Denver Department of Housing Stability, stated, "This research validates what we already know from our hard efforts to end homelessness: combining housing with services works, saves money, and we must do more of it."
"We are eager to incorporate these findings into future pay-for-performance initiatives as we continue to provide homes and services to those in need."
The partners involved in this program include:
- Colorado Coalition for the Homeless (Service Provider)
- Corporation for Supportive Housing (Project Manager)
- Enterprise Community Partners, Inc. (Fiscal Agent)
- Mental Health Center for Denver (Service Provider)
- Social Impact Solutions (Project Development)
- Urban Institute with local partner University of Colorado Denver (Independent Evaluator)
- Colorado Access (Managed Care Organization)
The investors involved in this contract include:
- The Denver Foundation
- The Piton Foundation
- The Ben and Lucy Ana Walton Fund of the Walton Family Foundation
- Laura and John Arnold Foundation
- Living Cities Blended Catalyst Fund LLC
- Nonprofit Finance Fund
- The Colorado Health Foundation
- Gazelda LLC
Additional Support Provided by:
- Harvard Kennedy School Government Performance Lab
- Colorado Division of Housing and Colorado Governor's Office
- Colorado Housing Finance Authority
- Denver Housing Authority
- Denver Crime Prevention and Control Commission
- Feasibility Grants: The Piton Foundation, Kaiser Permanente, The Denver Foundation, The Colorado Health Foundation, and the Rose Community Foundation
- Transaction Structuring Grant: Nonprofit Finance Fund and the Social Innovation Fund at the Corporation for National and Community Service