Last Thursday, Project HOME's Vice President for Public Affairs and Strategic Initiatives Laura Weinbaum traveled to Harrisburg to offer testimony about homelessness and public policy to the Pennsylvania House Democratic Policy Committee. She makes a compelling argument for public policies that support proven programs that can help end homelessness. We reprint her testimony here.
I’d like to talk a bit about permanent supportive housing, which we believe is the single most effective strategy for both addressing homelessness and preventing it from recurring, especially among single adults. To create new permanent supportive housing requires three types of funding: capital, operating, and services. I’ll talk specifically about three streams of funding in these areas – the Low Income Housing Tax Credit (capital), housing subsidies (operating), and Medicaid (services). I’ll also talk about the benefits of permanent supportive housing – its effectiveness, the cost savings it can achieve, and the economic and fiscal impacts of development and operations.

Background
Let me start by framing this issue. While we do often refer to people who are homeless, I’d propose that homelessness is in some ways a fictional construct. People become homeless due to the fallout of other systems – mental health, addiction services, prisons, foster care, education, income supports – and part of our job is to make those systems work better and hold them accountable for the people who fall out of their care. Homelessness only emerged fairly recently, as the gap between public benefits and/or minimum wage employment and housing costs grew rapidly (see chart).[1]
Recognizing these challenges, we believe that permanent supportive housing is the way to break the cycle of homelessness and poverty. The first key goal of our current strategic plan comprises a three-part strategy to prevent and address chronic street homelessness – first, address a list of roughly 1,000 individuals who have lived on the streets the longest; second, pilot a program for youth (the fastest-growing segment of the chronic/street homeless population); and third, create programming for people who are addicted but seeking employment as a route to recovery. Our chronic street homelessness effort involves a partnership with Pathways to Housing, Bethesda Project, and Horizon House, and has already reaped the benefits of these partners’ varied approaches: about 45 percent of our target population – the roughly 1,000 individuals collaboratively identified as the “longest stayers” on the street – is indoors and about 22 percent are now living in permanent housing.
As noted in a recent analysis by Feather Houstoun, “Best Practices In The Financing And Management Of Permanent Supportive Housing,”: “Housing tax credits provide a virtually essential foundation to the development of permanent supportive housing, but sponsors of such housing still face daunting financial challenges to successful completion of such housing. The low incomes of prospective residents means that the full capital cost of the units must be covered so that the development has no debt or mortgage to service. Ongoing operations and maintenance must be covered by tenant rents and rental subsidies. Supportive services must be funded through state and federal behavioral health programs.
The need to fully cover development costs has produced many innovative combinations of public and private grants, private equity, and donations. City and state authorities increasingly recognize that while investments in permanent housing do not provide a conventional “return on investment,” the avoided costs in public health and criminal justice systems warrant public expenditures to house individuals that would otherwise rack up substantial costs.[2]“


Capital: Leveraging the Low-Income Housing Tax Credit
The Low Income Housing Tax Credit, administered by the Pennsylvania Housing Finance Agency (PHFA), is the single most crucial tool in financing affordable housing for vulnerable people in Pennsylvania. The report cited above by Feather Houstoun points to the vital role tax credits play in that process. The Pennsylvania Housing Finance Agency, under the leadership of Brian Hudson and his capable team, has been an integral partner in our work and has supported and challenged us to help us grow.

Perhaps as important, our analysis found that the sources of Project HOME’s capital funding are as diverse as its partners and its beneficiaries – two percent federal, 11 percent state, 23 percent city, 40 percent investor equity, and 24.4 percent donations and other sources (see chart at right). As noted in an analysis by Econsult[3], “Estimating the Local Economic and Fiscal Impacts of Project HOME,” total government investment of $38 million in our capital projects over 20 years has been leveraged into $106 of investment – almost $1.80 in other funding for every government dollar invested.
Government investment is a key catalyst in providing housing for Pennsylvania’s most vulnerable citizens, but also an economic engine, generating jobs, property taxes, and better neighborhoods.
Operating: Good Programs (Supported by Subsidies) Make Good Neighbors
We are excited to have the Philadelphia Housing Authority, under the leadership of new Executive Director Kelvin Jeremiah, work towards a goal of creating 6,000 new affordable housing units through partnerships with public, private, nonprofit, and publicly minded organizations. PHA has already issued a new RFP reflecting a priority to serve “at-risk” populations, including people who are veterans, homeless, disabled, and youth aging out of foster care, among others. PHA is also focusing on connecting residents to work and helping them to move out of PHA to make room for new residents, through partnerships. By providing subsidies to individuals and also organizations, PHA continues to be a crucial partner in the effort to end homelessness.
In order to ensure that our residences are facilities of choice, and facilities that are good neighbors, we have to ensure the safety, cleanliness, stability, and attractiveness of our buildings. Our operating budgets build in long-term sustainability of all of our projects, requiring significant subsidy commitments which enable us to be good neighbors.

Econsult analysis noted that neighbors within ¼ mile of Project HOME sites have experienced a $24,000 boost in their sales price after Project HOME facilities have opened (see chart), resulting in nearly $11 million in new property taxes for the City and school district. We believe that Project HOME’s development has contributed to the neighborhood fabric in significant ways – anecdotally speaking, when the New York-based Shake Shack chose to come to Philadelphia and selected its new location, it chose to locate cattycorner from one of the largest affordable housing developments in Philadelphia, our 144-unit Kate’s Place development.
Finally, our operating expenditures have a ripple effect within the regional economy. In the five-county region, Project HOME’s $15 million in direct operating expenditures are estimated to generate an additional $15.8 million in indirect expenditures, resulting in a region-wide economic impact of nearly $31 million. This total economic impact includes $14.4 million in employee salaries and wages, supporting 417 total jobs.
Table 3.
Annual Ongoing Economic Impacts Attributable to Project HOME Operating Expenditures –
City of Philadelphia & Five-County Metropolitan Region
($ Millions and Total Jobs)
|
Description
|
City of Philadelphia
|
Five-County Region
|
|
Total Direct Operating Expenditures
|
$ 14.90
|
$ 14.90
|
|
Indirect & Induced Expenditures
|
$ 10.41
|
$ 15.76
|
|
Total Economic Impact
|
$ 25.32
|
$ 30.66
|
|
Total Salaries & Wages
|
$ 11.11
|
$ 14.41
|
|
Total Jobs
|
340
|
417
|
Source: Econsult Corporation (2011) Note: Total Economic Impact includes Total Salaries & Wages
All of these positive impacts are possible only with a level of funding that promotes excellent facility maintenance and operations appropriate to the neighborhood.
Services: Medicaid Plan Elements and Expansion Are Key
While we believe that housing, employment, education, and healthcare are all crucial to a person breaking the cycle of homelessness and poverty, we particularly believe that healthcare – both physical and behavioral – is essential to simply allowing a person to stay housed. We therefore are urging the Governor to add Pennsylvania to the list of 26 states are planning to pursue or leaning toward expansion of Medicaid (including eight states led by Republican governors). We believe this could be the single most important decision impacting people who are homeless for decades to come.
For people who are or once were homeless, healthcare is what enables them to stay housed. Without the physical and behavioral support to make healthy decisions, people are increasingly at risk of losing their housing and relying on much more costly – and less effective – systems of care for their supports. In light of this, we need to ensure that Pennsylvania’s Medicaid Plan includes as entitlements the following:
§ Psychiatric Rehabilitation Services (PRS) – PRS is a therapeutic service for individuals with mental illness, which supports independent living and may decrease the need for or shorten the length of stay in more costly inpatient, partial hospitalization, and day treatment settings. PRS emphasizes values such as consumer involvement, consumer choice, consumer strengths and individual growth potential, shared decision making as well as outcome accountability.
§ Health Homes – Health Homes are a way to coordinate care for people with Medicaid who have chronic conditions, by employing a “whole-person” philosophy. Health Homes providers will integrate and coordinate all primary, acute, behavioral health, and long-term services and supports to treat the whole person.
Some of these services are provided on-site at Project HOME already, and many more will be in our new Wellness Center, but we also provide many of these services through partnerships. Project HOME is in the process of becoming a Medicaid provider.
Integration: Housing Paired With Services
Just as weaving funding streams is what makes the finance work on our developments, weaving together services and housing are what make permanent supportive housing work – achieving success rates greater than 95 percent nationally. We propose that the state consider a model like Minnesota, in which funding streams for housing and services are coordinated through the Housing Finance Agency. In Philadelphia, the Office of Supportive Housing and Department of Behavioral Health work together to pair housing and services funds. We encourage Pennsylvania to think of ways to integrate these activities for the benefit of consumer and communities.
Conclusion
Housing itself saves lives, saves money, and creates a better opportunity – an analysis of dollars and cents is but one example of positive impact. The real impact on people’s lives is immeasurable. By investing in people, in their HOME (housing, opportunities for employment, medical care, and education), and challenging all of us, we create a greater good. Project HOME firmly believes that “none of us are home until all of us are home,” and that these positive impacts are perhaps best reflected not in the financial figures, but rather in the lives and contributions of the members of the Project HOME community.
Not so long ago, Mayor Nutter “tweeted” that Philadelphia will be the first American city to end homelessness, and we know that with support from people from all walks of life and all sectors, we can achieve that goal. Thank you for joining us on that quest, we look forward to working together.
[3] http://www.projecthome.org/pdf/news/204.pdf