Permanent supportive housing (PSH) is designed to serve the nation’s most vulnerable and disadvantaged people, including those experiencing chronic homelessness, who are living on the fringes of mainstream society. Most of these individuals and families are challenged by chronic health conditions, social isolation, and deep poverty. Many are people with disabilities and members of racial or ethnic groups that have historically experienced discrimination and exclusion.
As reaffirmed by the U.S. Supreme Court, neither prejudice nor expediency permits the isolation of such vulnerable people as “incapable or unworthy of participating in community life.” The Court’s 1999 Olmstead decision found the unjustified segregation of people with disabilities in institutions, rather than community settings, to be a form of unlawful discrimination.1 The Court’s 2015 decision in the Inclusive Communities Project case reaffirmed the integration mandate at the center of the Fair Housing Act.2 Yet, the levers of government are not always aligned to facilitate the integration of marginalized people into communities. Increasing the availability of PSH and rapidly connecting individuals to available units is a key piece of the strategy of the U.S. Interagency Council on Homelessness (USICH) to end chronic homelessness by 2017 (Burt et al., 2014; USICH, 2017a). However, the committee heard and saw evidence that the inherently difficult and complex mission that PSH providers serve is rendered more challenging by a series of program and policy barriers. These barriers undermine
1Olmstead v. L.C., 527 U.S. 581 (1999). In the landmark Olmstead decision, the Court interpreted the Americans with Disabilities Act (ADA) and a regulation issued by the U.S. Department of Justice requiring public entities to “administer services, programs, and activities in the most integrated setting appropriate to the needs of qualified individuals with disabilities.” 28 C.F.R. § 35.130(d).
2Inclusive Communities Project v. Texas Department of Housing and Community Affairs, 576 U.S. ___, 135 S. Ct. 2507. The ICP decision upheld disparate impact liability under the Fair Housing Act, 42 U.S.C. § 3604, in a case alleging the segregative siting of Low Income Housing Tax Credit properties in minority areas of the Dallas region, and the exclusion of these affordable housing properties from predominantly white neighborhoods.
the efforts of providers and policy makers to bring PSH to the scale that would be necessary to reduce chronic homelessness or make it “brief and rare.”
At its core, PSH is an affordable housing program and faces barriers common to affordable housing that leave millions of the nation’s poor unhoused or unstably housed in units that are unaffordable, substandard, or both (Steffen et al., 2015, Section 1). The distinguishing feature of PSH is that it offers residents an array of services intended to promote housing retention while also meeting other social and health needs. As a result, PSH providers face the challenge of working across silos in a fragmented policy environment.
As part of its charge, the committee was asked to identify the “key policy barriers and research gaps associated with developing programs to address the housing and health needs of homeless populations.” As discussed in previous chapters, the committee found that there is no substantial published evidence that PSH improves health. Nonetheless, PSH increases an individual’s ability to remain housed, and that plausibly alleviates a number of conditions that negatively impact health, such as exposure to extreme elements or lack of refrigeration for medications, etc. The committee describes below the key policy and program barriers to bringing PSH and other housing models to scale to meet the needs of those experiencing chronic homelessness.
FRAGMENTED AND UNCOORDINATED FUNDING SOURCES, POLICIES, AND PRIORITIES
PSH is a multidisciplinary approach that cuts across the traditionally disparate and disconnected systems involved in providing housing and health care-related services. There is no single funding source or set of policies for PSH. Providers often must pool or braid together funding from multiple federal agencies, including at least two different offices within the Department of Housing and Urban Development (HUD), the Department of Health and Human Services (HHS) and its Center for Medicare & Medicaid Services (CMS), and the Low Income Housing Tax Credit (LIHTC) program operated by the Treasury Department. The Department of Veterans Affairs (VA) is also involved if veterans experiencing homelessness are the target population.
Providers must also often navigate at least three levels of government: federal, state, and local. Even at ground level, providers must obtain funding, approvals, and various forms of cooperation from multiple local agencies such as the local Continuum of Care consortium that allocates HUD funding for homeless services, county health and social service departments, local public housing authorities (PHAs), and zoning and permitting authorities.3 Some of these local
3 According to HUD: Some states use “authority,” some use “agency,” and some use “commission.” Regardless of the term, a PHA is the body that administers public housing. HUD refers to a public housing “agency” as any entity in a state, county, that is “authorized to engage or assist in the development or operation of low-income housing under the US Housing act of 1937.” See: https://www.huduser.gov/portal/glossary/glossary_p.html.
agencies operate at a city level, others at a county or regional level. States are also involved as their housing finance agencies allocate LIHTC, the primary source of capital funding for affordable housing.
All of these agencies operate within silos and policy frameworks that are not aligned and often speak a different policy language. Each is governed by different, and sometimes conflicting, statutes and regulations. Even their databases are incompatible. Many of the other challenges and barriers described more specifically below are exacerbated as providers, who are often underfunded nonprofit agencies, attempt to navigate this complex and fragmented landscape. To illustrate, Box 7-1 considers a simplified hypothetical situation.
Inadequate and Unreliable Funding Streams for PSH
The fragmented nature of the funding for PSH is magnified by the fact that the amount of available funding is generally inadequate to meet the demand and need. Except for Medicaid, these funding sources are discretionary appropriations of the federal budget or the budgets of states and local governments and are therefore subject to strict budget constraints (such as sequestration) and significant fluctuations from year to year. As a result, many of the programs allocate funds through highly competitive application processes, making it difficult to plan through reliance on specific sources. Funding allocations, when awarded, often fall short of the true cost of delivering services, especially in light of the acute needs of clients and the complexity of service delivery.
While the federal government has traditionally been the primary source of funding for affordable housing, appropriations have declined since 1980. As measured in inflation-adjusted dollars, the federal government spent $2.9 billion less for housing assistance in 2015 than it did in 2004 (Mazzara et al., 2016). Only one in four households eligible for federal housing assistance receives that assistance. Thus, PSH providers operate in an affordable housing environment of scarce resources and competition for inadequate funding.
In recent years, both Congress and federal agencies have made the end of chronic homelessness and homelessness among veterans a national priority. New federal funding for additional housing vouchers has often been limited to special-needs programs that require partnerships with service providers, including the HUD-VASH program for homeless veterans, Housing Choice Vouchers for Non-Elderly Disabled,4 and the Family Unification Program for families involved in the child welfare system (Wilkins and Burt, 2012).5 However, according to the
4 As of April 1, 2010, the Notice of Funding Availability for Rental Assistance for Non-Elderly Persons with Disabilities was revised and delineated into two categories. Category 1 vouchers enable non-elderly persons or families with disabilities to access affordable housing on the private market. Category 2 vouchers enable non-elderly persons with disabilities currently residing in nursing homes or other health care institutions to transition into the community.
5 “The Family Unification Program (FUP) is a program under which Housing Choice Vouchers (HCVs) are provided to two different populations: (1) Families for whom the lack of adequate housing is a primary factor in: (a) The imminent placement of the family’s child or children in out-of-home care, or (b) The delay in the discharge of the child or
USICH, “[t]argeted homelessness resources alone are not adequate for ending homelessness” (USICH, 2015c, p. 14).
As a result, USICH is attempting to “leverage” funds from what it calls “mainstream programs” for ending homelessness. This includes HUD’s assisted programs (e.g., Housing Choice Vouchers, Public Housing, and Federal Housing Administration multifamily subsidized housing), as well as Medicaid (USICH, 2015c, p. 14; 2015b, p. 2). Without a substantial increase in appropriations for these federal housing programs, existing resources can be directed to one population only by disadvantaging other populations that policy makers and the public may view as having similarly compelling needs.
Nearly all PHAs face significant competing demands for a limited supply of housing vouchers. Some have thousands of people on waiting lists, and many have closed their waiting lists to potential applicants. When many low-income families, seniors, and people with disabilities have been waiting for years for housing assistance, some PHAs are reluctant to target their resources to PSH projects or to prioritize people who are homeless (Wilkins and Burt, 2012).
The think tank, Center on Budget and Policy Priorities reports that the number and share of families with children receiving federal rental assistance has fallen by more than 250,000 (13 percent) since 2004, and is at its lowest point in more than a decade, a result that it attributes, at least in part, to the shift in in federal priorities toward serving veterans and individuals with disabilities experiencing homelessness (Mazzara et al., 2016; USICH, 2015c). Shifting policy priorities may be counterproductive if they cause undesirable downstream impacts, such as increased homelessness and poor health or education outcomes among other populations. The USICH also has a goal of ending family homelessness by 2020. People in families are 34 percent of the sheltered homeless population (USICH, 2015c; Gubits et al., 2016; HUD, 2016c).
Homelessness among school-age children reached a record high of more than 1.3 million students in the 2013–2014 school year, falling slightly to 1.26 million in 2014–2015 (Gee, 2016; Mazzara et al., 2016; Doherty, 2017).6 Research highlighting the growing incidence and impact of housing instability and homelessness among families with children is receiving unprecedented attention (Desmond, 2016). However, it is critical to take into account the fact that the Department of Education has a broader definition of “homeless children and youth” (U.S. Department of Education, 2016) that leads to its higher number of homeless
children to the family from out-of-home care; or (2) For a period not to exceed 36 months, otherwise eligible youths who have attained at least 18 years and not more than 24 years of age and who have left foster care, or will leave foster care within 90 days, and are homeless or [are] at risk of becoming homeless at age 16 or older.” For details, see https://www.hud.gov/program_offices/public_indian_housing/programs/hcv/family.
children and youth. The broader Department of Education definition includes children in families that are sharing residences or “couch surfing” in its count of homeless students.
Given these kinds of trade-offs, it may be fiscally or politically difficult to increase the scale of PSH initiatives unless there is a substantially larger commitment of federal housing resources or state and local governments fill the gap. The Bipartisan Policy Center’s Housing Commission made such a proposal in 2013. The commission recommended that the United States transition to a system, similar to those of western European countries, in which households with extremely low incomes (at or below 30 percent of AMI) receive a housing allowance through a reformed Housing Choice Voucher program (BPC, 2013). The commission estimated the additional cost of its proposal at $22.5 billion (in 2012 dollars), noting that this estimate does not “take into account any potential savings resulting from fewer families becoming homeless or reduced health care costs” (BPC, 2013, p. 90). This recommendation for universal housing vouchers for the nation’s most vulnerable households received renewed attention after it was echoed in Harvard sociologist Matthew Desmond’s 2016 best-selling book and groundbreaking study of housing instability, Evicted: Property and Profit in the American City, in which he finds eviction to be a cause and not just a condition of poverty (Desmond, 2016). Eviction has become commonplace in low-income communities largely due to rising housing costs, stagnant or falling incomes, and a lack of federal housing assistance (Desmond, 2015). Given the complexity of the problem, a comprehensive solution to homelessness would require a much broader effort to reduce poverty.
The “Wrong Pockets” Problem
The various federal agencies and levels of government do not necessarily share the same incentives to expand PSH. The “business case” that has been made for scaling up PSH is an argument that net cost savings or offsets will accrue to the health care finance system, correctional system, and other sectors of the economy when high utilizers are provided with stable housing and the services they need to remain housed (Kertesz et al., 2016).7 For example, Kertesz et al. (2016) state that Housing First programs (see also Chapter 3) often cost $8,000 to $18,000 per year of housing, but produce returns on investment including partial offsets in the use of emergency medical and judicial services and the creation of a more welcoming community for commercial development. Assuming the anticipated savings are realized, however, the fragmented nature of the governmental funding for PSH also presents a classic “wrong pockets” problem that impedes policy solutions. A wrong-pockets problem occurs when an entity, typically a government agency but sometimes another interested actor such as a health care
provider, opts not to invest in a cost-saving program because it will not directly benefit from such an investment.
HUD and the Treasury Department shoulder the costs on the housing side of the PSH ledger. But HUD and Treasury do not share in the cost savings if PSH results in reduced emergency department use or jail stays for the high utilizers among people experiencing chronic homelessness. HUD’s budget is subject to the caps on the discretionary side of the federal budget and cannot easily be expanded to scale up PSH.
Much of the anticipated savings to the federal government resulting from PSH would accrue to Medicaid, an entitlement program with a budget that can more readily expand to accommodate eligible recipients and covered costs. Those cost savings might be reinvested in the development of PSH, where they might result in additional cost savings and return on investment. But Medicaid does not fund the construction or operation of housing facilities (Wachino, 2015). At the same time, if a housing facility offers significant services that are nursing, medical, or psychiatric in nature, and is limited to residents with mental or physical disabilities, it risks being deemed a hospital, nursing home, sanitarium, life care facility, or intermediate care facility. Therefore, it may be disqualified from receiving LIHTC to pay for the capital costs of the housing (IRS, 2025, 2016; Tegeler et al., 2015).
Medicaid Funding and PSH
Medicaid is a potentially important funding source for at least a portion of the costs of PSH, particularly in covering the supportive services that people with disabilities or complex health conditions need to achieve housing stability and access the care they need to live in community settings. As described below, although federal funds cannot cover rent or the capital costs of constructing or renovating housing, states have options of authorities and programs they can use to include services, including housing-related services, as Medicaid benefits and to obtain federal matching funds for these covered services. It is important to note that there is a great degree of variability in terms of the types of services offered by each state; certain services provided to clients in one state may not be covered in another state.
Prior to the expansion of Medicaid eligibility as part of the Patient Protection and Affordable Care Act (ACA), many people experiencing homelessness, including people with complex health conditions who often had co-occurring substance use disorders, found it very difficult to establish eligibility for Medicaid. Low-income adults were eligible to enroll in Medicaid only if they also met categorical eligibility requirements, meaning that they must be pregnant, a custodial parent of an eligible child, disabled, a senior, or a member of another categorical eligibility group defined by law and state policy. This is still true today in states that have not expanded eligibility as authorized by the ACA. It should be noted that having a substance use disorder is not considered a disability for purposes of establishing categorical eligibility for Medicaid.
In states that have expanded Medicaid as authorized by ACA, eligibility is no longer based on meeting categorical eligibility, such as having a documented disability, being pregnant, or being a senior. Instead the primary eligibility criterion is having income lower than 138 percent of the federal poverty line. With this change, a large number of adults who experience homelessness have become eligible for Medicaid based on their incomes, without having to demonstrate that they have qualifying disabilities.
The Supreme Court Olmstead decision (see earlier in this chapter) has been described as both an opportunity and a challenge (Burt et al., 2014). Since the 1999 decision, CMS and state Medicaid officials have focused more attention and resources on efforts to expand the availability of home and community-based services linked to housing for people with disabilities who have been living in institutional settings (Burt et al., 2014). Those efforts align with the goals of reducing homelessness, as some individuals with disabilities are chronically homeless and at risk of institutionalization, but it can also intensify competing demands for scarce resources (Burt et al., 2014; HUD, 2013b). However, CMS has taken the position that federal Medicaid funds cannot be used to provide “federal financial participation (FFP) for room and board in home and community based services,” a bar that precludes the use of Medicaid to fund rental assistance or the capital costs of housing construction or rehabilitation (Bamberger, 2016; HUD, 2013b).8 State-share Medicaid funds, however, can be used to pay for housing. The state of New York, for example, is using state-share Medicaid funds for an ambitious project to invest in permanent supportive housing (Doran et al., 2013).
More recently, CMS released an information bulletin outlining “Coverage of Housing-Related Activities and Services for Individuals with Disabilities” (Wachino, 2015). Focusing specifically on individuals experiencing chronic homelessness, individuals with disabilities, and older adults needing long-term support services, the bulletin describes how “certain housing-related activities” can be reimbursed via Medicaid. These activities include housing transition services, housing- and tenancy-sustaining services, and state-level housing-related collaborative activities. The purpose of the bulletin is to assist states in identifying housing-related activities and services that can be built into a state Medicaid plan as an optional benefit (states may also request a waiver to cover the provision of these services). The bulletin states that consistent with statute, “CMS does not provide Federal Financial Participation (FFP) for room and board in home and community based services, but can assist states with coverage of certain housing-related activities and services.”
Several states have used Medicaid funds creatively—either through a CMS demonstration program or through the Medicaid waiver authority—to provide housing-related services and activities. Washington State, for example, uses
8 In a recent JAMA opinion piece, Bamberger (2016) questioned the assertion that paying for housing is outside of CMS’s authority, stating “I have been unable to find any regulations or laws to support this claim.”
demonstration program funding from the Money Follows the Person demonstration toward housing-related transition and sustaining services. Waivers have been used by Iowa, Michigan, North Carolina, Wisconsin, Nebraska, Ohio, and Louisiana to cover housing transitions and housing stabilization.
States are taking action through their waiver requests to expand coverage for a portion of the costs of PSH by paying for housing-related services. For example, New York State’s 2012 Medicaid 1115 waiver request that originally included the creation of a Medicaid Supportive Housing Expansion Program.9 Over a 5-year period, the state proposed reinvesting $150 million in anticipated Medicaid savings each year to finance “an integrated solution for both housing and health care needs” that would be cost-effective and further the Americans with Disabilities Act (ADA) and the Supreme Court’s Olmstead mandate. Of this amount, $75 million per year would be dedicated for capital funding to increase access to supportive housing, an amount that the state estimated would create 600 new units per year and 3,000 units over the 5-year period of the waiver. In addition, the state would dedicate $75 million per year of “state-only” Medicaid dollars, some of which would fund rental subsidies. The supportive housing would be targeted to high users of Medicaid services among populations that include adults experiencing chronic homelessness who are physically disabled, suffer from mental illness and/or substance abuse, or are living with HIV/AIDS. In support of this request, the state cited potential savings of $16,281–$31,291 in annual Medicaid costs for every individual served, or $142 million–$273 million annually (New York State Department of Health, 2012). This proposal was not, however, included in the waiver request approved by CMS in 2014, leaving New York to reinvest state-only Medicaid funds into supportive housing for high-cost Medicaid beneficiaries (CSH, 2014b).
States may request a waiver in order to use Medicaid funds to pay for some housing-related services in PSH and/or use optional state plan benefits to cover these services. These services, which are described in CMS’s 2015 informational bulletin, can be broadly defined to include a host of “Individual Housing Transition Services” and “Individual Housing & Tenancy Sustaining Services” that support the individual in being a successful tenant in his or her housing (CSH, 2016a; Wachino, 2015). It includes pre-occupancy services, such as performance of a client needs assessment, assisting with the housing search and application process, identifying resources to cover a security deposit, moving expense and other costs, at the front end of the tenancy. Post-occupancy, it includes services that can resolve or mitigate problems that might threaten the client’s housing stability, such as intervention to prevent eviction, assistance resolving disputes with landlords or neighbors, linkage to community resources, help with annual income recertification, and continuing training in landlord-tenant rights and responsibilities.
States that have pursued optional benefits to facilitate Medicaid reimbursement for services have found these challenging to design. For example, they have
9https://www.health.ny.gov/health_care/medicaid/redesign/supportive_housing_initiatives.htm. Accessed September 29, 2017.
reported fragmentation in terms of implementation or indicated that services may be more limited for those programs that are client centered, including PSH programs. As a result of these challenges, states may seek Medicaid waivers in an effort to have more flexibility to use Medicaid financing for housing-related services. Obtaining Medicaid waivers to pay for housing-related services has also been very challenging for states; some states have had to drop these provisions from waiver proposals or significantly scale back or narrow eligibility for waiver services, among other issues. As described previously, CMS notes that states that pursue waivers or optional benefits cannot receive FFP for room and board, except in limited cases, and as such are not eligible for federal matching dollars spent on housing.
Other challenges include difficulty in determining how and who can bill for the services provided in supportive housing projects. States have significant latitude to define the types and qualifications of providers that can participate in their Medicaid programs as well as where care may be delivered (HHS, 2014). This can pose a challenge because PSH service providers may meet their state’s qualifications for certain covered services, but not others, or they may not be qualified to deliver Medicaid-reimbursed services. Many states have additional policies regarding benefits and provider qualifications for services to address a variety of medical, mental health, and substance use needs, which may contribute to fragmentation and challenges in Medicaid-reimbursing PSH programs.
Even if the services are reimbursable, having an appropriate administrative structure to bill, as well as the appropriately licensed staff, can be a challenge. Many PSH providers started as affordable housing or human services organizations and are not licensed or qualified to deliver Medicaid services (Thiele, 2014), or they may not meet the requirements established by their state or by managed care organizations to obtain Medicaid reimbursement for the services they deliver (Buitrago, 2016).10 Medicaid payment rates for PSH services are not always adequate to cover the costs of the care plus the added administrative burden. In a survey of PSH programs in Illinois, providers reported that it was not cost-effective to take on the administrative costs entailed in billing Medicaid for housing-related services unless the PSH also offered clinical mental and behavioral health services in-house (Buitrago, 2016).
Despite these challenges, leveraging Medicaid may make it possible to bring PSH to greater scale, and to reach homeless and at-risk persons with housing
10Buitrago’s (2016) study, a survey of Illinois PSH providers, found that 50 percent of PSH providers were currently Medicaid billers, and 35 percent had considered becoming a Medicaid biller or partnering with one. But many of the PSH providers surveyed, especially the smaller organizations, lacked “the organizational capacities, such as administrative and clinical staff, electronic medical records and billing software and requisite policies and procedures to handle the burdens of administering Medicaid billable services.” In addition, providers had to become certified to provide services in two areas, mental health and substance abuse, and to bill Medicaid separately in these two areas, in order to make the full range of services available to their clients. Providers may also have to contract with the managed care organizations in which their residents are members.
before chronic homelessness takes a greater toll on their health outcomes and the overuse of public services. To accomplish this, it appears necessary to streamline the approval of waivers that seek to use Medicaid to pay for housing-related services.
Market and Regulatory Barriers That Impede Scalability of PSH
Affordable housing efforts, PSH included, face a formidable array of barriers aside from the challenges of assembling financing. The two primary models for providing PSH units—scattered-site and single-site multifamily buildings—both face barriers (Community Strategies Institute, 2016).
Market Barriers to PSH
In many housing markets, the high cost of acquiring land or property for the development of PSH aggravates the impact of already limited affordable housing resources and limits the ability of providers and government agencies to scale up the response to homelessness. Even when suitable properties are available at a feasible cost, developers of PSH may not be able to assemble the complex financing required quickly enough to compete with other potential buyers in overheated real estate markets. As might be expected, cities with robust job growth and real estate prices also tend to have the largest number of individuals and families experiencing homelessness: New York, Los Angeles, Seattle/King County, San Diego, the District of Columbia, San Francisco, San Jose/Santa Clara County, Boston, Las Vegas, and Philadelphia (HUD, 2016c).
Local Regulatory Barriers to PSH
The availability and cost of development is also determined by the policy decisions of government. PSH projects are challenged to work within an array of local zoning and development regulations that disproportionately limit affordable housing and drive up its costs. These local policies can include beneficial environmental protections or health and safety measures, but as recognized by presidential administrations from George H. W. Bush to Barack Obama, “[i]n community after community across the country, local governments employ zoning and subdivision ordinances, building codes, and permitting procedures to prevent development of affordable housing” (Advisory Commission on Regulatory Barriers to Affordable Housing, 1991; White House, 2016).
Twenty-five years ago, HUD Secretary Jack Kemp and President George H. W. Bush’s Advisory Commission on Regulatory Barriers to Affordable Housing estimated that “exclusionary, discriminatory, and unnecessary regulations constitute formidable barriers to affordable housing, raising costs by 20–35 percent in some communities” (Advisory Commission on Regulatory Barriers to Affordable Housing, 1991). More recently, President Obama noted that local barriers to housing development intensified from 1970 to the present, particularly in high-growth
metropolitan areas (White House, 2016). It is widely recognized by economists and federal officials across the political spectrum that local barriers to new housing development slow the permitting process, artificially increase the cost of developable land, and limit the efficacy of government housing assistance programs (Advisory Commission on Regulatory Barriers to Affordable Housing, 1991; BPC, 2013; White House, 2016).
The regulatory barriers are steepest for new construction of PSH and affordable housing in the form of multiunit apartments on a single site. Exclusionary zoning policies commonly restrict multifamily housing to a small number of locations within a jurisdiction, often requiring approval of elected officials. These policies result in an artificial shortage of land zoned to permit affordable housing, including PSH (American Planning Association, 2003). As described by the American Planning Association (2003), PSH may be further restricted by covenants and special permitting requirements: “Such permitting requirements restrict the type and frequency of services provided on site, the proximity of the supportive housing to other similar projects, and impose[s] additional special limitations on density or number of units that exceed those of the zoning district classification” (American Planning Association, 2003).
Regulatory barriers to PSH and other forms of affordable housing may violate the Fair Housing Act if they have the intent of excluding persons from a locality or neighborhood because of their membership in a protected class, or if they have that effect without a legally sufficient justification. As examples of policies that may have a discriminatory effect, the U.S. Department of Justice (DOJ) and HUD cite local laws prohibiting low-income or multifamily housing and minimum floor space or lot size requirements that increase the size and cost of housing, absent a legally sufficient justification (HUD and DOJ, 2016).
Despite the official recognition of the discriminatory nature of many exclusionary zoning and other land-use regulations, these barriers are part of the landscape with which PSH providers must commonly contend (HUD and DOJ, 2016). For example, a PSH study in Boulder, Colorado, comprehensively surveyed zoning classifications maintained by local municipalities and concluded: “The zoning and land use classifications used in the communities reviewed present some constraints for those who would try to develop new PSH units in the communities. In most cases, the limitations on the placement of multifamily properties, coupled with scarcity of land ready for this type of development, will continue to make it challenging to find feasible sites in most communities” (Community Strategies Institute, 2016, p. 26).11
Providing additional funding may not be enough to scale up PSH unless state and local governments, especially those in overheated markets, reduce unnecessary regulatory barriers and otherwise make available developable properties. In 1991, President Bush’s Commission on Regulatory Barriers to Affordable
11 In its site visits to Denver, Colorado, and Santa Clara County, California, the committee also heard reports from providers about protracted delays in obtaining sites and necessary local approvals.
Housing put forward a package of 31 recommendations for federal, state, and local governments and private action for regulatory reform, including zoning reform, streamlined permitting processes, legal review of regulatory barriers, conditioning receipt of federal funds on implementation of barrier removal strategies, and enforcement of anti-discrimination laws (Advisory Commission on Regulatory Barriers to Affordable Housing, 1991, pp. 9–17). These recommendations, few of which were implemented, remain relevant today and provide a starting point for action by all levels of government. In fact, many of the same principles echo throughout the 10 calls for action set out in the 2016 Toolkit for Housing Development (White House, 2016).
NIMBY (Not-in-My-Backyard) Opposition to PSH
As discussed in greater detail elsewhere in this report, community opposition to the development of affordable housing for low- and moderate-income households is commonly referred to as the NIMBY syndrome (Iglesias, 2002). This local opposition is an underlying motivation in many cases for the imposition of regulatory barriers (Advisory Commission on Regulatory Barriers to Affordable Housing, 1991). The American Planning Association notes that housing providers typically encounter “intense neighborhood opposition” even when they reuse existing housing stock and agree to make payments in lieu of taxes to support local infrastructure. Many developers view local opposition as the second most important barrier to the development of affordable housing after insufficient subsidy (Iglesias, 2002, p. 79).
Discrimination Against Persons Using HUD Housing Choice Vouchers
Housing Vouchers have become a critical tool for meeting the goal of ending veteran, chronic, and family homelessness (White House, 2016). Many localities are helping individuals experiencing homelessness to identify suitable units on the private market if they have a federal housing voucher. Some localities are master-leasing units and placing tenants in them. In either situation, services are provided to the occupants living in these private units.
The advantage of using the private market is that no development time or capital funding is needed. The units are rented at their market cost, sometimes below market when a large number of units in the same building are rented for a prolonged period of time by a responsible party, such as a nonprofit service provider or a government entity. To the extent that units exist on the private market to rent, they can be quickly accessed to provide supportive housing.
With advantages come disadvantages. The private housing market exposes people experiencing chronic homelessness using vouchers to housing discrimination. Landlord refusal to accept vouchers is prevalent nationwide, especially where strong real estate markets and regulatory barriers constrain the supply of rental housing and increase competition among renters. In this environment, persons experiencing homelessness and PSH providers find it extremely difficult to
use vouchers to secure housing on the rental market (Community Strategies Institute, 2016, p. 18). Homeless service providers in Boulder, Colorado, describe “frustration with finding units for their clients,” because landlords increasingly refuse to take the vouchers. As a result, “many households who are able to secure a Housing First or transitional housing rental assistance voucher often have to turn them back because they are unable to find a unit to live in” (Community Strategies Institute, 2016, p. 18). Many cities and 12 states have laws that prohibit discrimination against voucher holders, but these laws are the exception rather than the rule (PRRAC, 2016).
Increased reliance on the Housing Choice Voucher program to make progress in ending or preventing homelessness may not be feasible without making this protection more uniform and universal. Similarly, the effectiveness of emerging models that aim to better integrate social needs and clinical care, such as the CMS Accountable Health Communities model, are compromised when services identified by providers are not available in the community or are not able to operate effectively to improve health.12 Laws barring discrimination against voucher holders are among a series of policy solutions that could enable vouchers to be used more effectively and efficiently (Miles et al., 2017).
Geographic Mismatch and Lack of Local Accountability
Local governments are on the front lines of the housing and homelessness crisis. Even when federal funding is involved, the delivery systems that support affordable housing programs, such as HUD Continuum of Care services for people experiencing homelessness and public health, are generally carried out at the municipal or county government levels. Often communities attribute homelessness in their midst to “outsiders,” when in fact most of the homeless population is local (see Parker and Dykema, 2013, for evidence that individuals experiencing homelessness are actually less mobile than the general state population). Thus, there is an underlying mismatch between the geographic scope of homelessness and the fragmented delivery system, with a resulting lack of accountability. Each locality may have its own priorities, making coordination across municipalities more difficult.
While some communities devote substantial resources to eliminating homelessness, other localities may be reluctant to cooperate in sharing responsibility for addressing affordable housing and homeless service needs in their jurisdiction, effectively forcing neighboring jurisdictions to bear more of the responsibility. Some localities have responded to homelessness by making it illegal to camp in public places or by clearing homeless encampments, effectively pushing out the people experiencing homelessness to other jurisdictions or consolidating them in lower-income or minority neighborhoods (USICH, 2012, 2015a; DOJ, 2015).
USICH notes that local laws criminalizing homelessness have proliferated in recent years.13
During its site visits, the committee heard anecdotal examples of the ways in which the lack of local accountability for meeting housing needs can present barriers to PSH and raise potential fair housing concerns. For example, in one region, the committee heard that some suburban municipalities were reluctant to zone to permit PSH to be constructed within their borders. It was reported that scattered-site PSH inventory tended to be located in neighborhoods with higher levels of crime and drug trafficking, hindering the process of recovery for PSH residents. One PSH facility had agreed to target admission to homeless “residents” of a particular section of the county in order to gain acceptance by the affluent surrounding community, paving the way for official approval of the project. Implementation of HUD’s Affirmatively Further Fair Housing rule may help to increase the accountability of local jurisdictions that receive HUD funds for meeting the needs of persons experiencing homelessness, who disproportionately are members of groups protected by the Fair Housing Act.14
Noting that states are in a unique position to address this mismatch, President Bush’s Commission on Regulatory Barriers more than two decades ago put much of the onus on states to ensure local accountability:
Foremost among State responsibilities is recognizing affordable housing as a State goal and public purpose for which the police power is delegated to localities. As such, the State has the responsibility to ensure that all localities, as well as the State itself, have comprehensive programs of barrier-removal and zoning reform. (Advisory Commission on Regulatory Barriers to Affordable Housing, 1991, p. 14)
CHALLENGES OF PROVIDING SERVICES TO RESIDENTS IN PSH
During its site visits the committee heard about the challenges of providing services to residents living in supportive housing. For supportive services to be successful, it is important to identify and train individuals willing to do this kind of work and to embrace the challenges of helping people who have many needs. Unlike most outpatient service providers, service providers to supportive housing programs need to be prepared to respond to problems that occur 24 hours a day, 7 days a week. In fact, key to placing persons who have formerly experienced homelessness in private-market or low-income housing is committing to the landlord that the service needs of the clients will be met. Working with landlords is essential, including helping landlord-tenant relationships, selecting landlords who are
13 For a description of those laws and alternatives, see https://www.usich.gov/tools-for-action/searching-out-solutions; https://www.usich.gov/tools-for-action/ending-homelessness-for-people-in-encampments.
trained to work with homeless populations, and providing support to those landlords to bridge those relationships.
Most nonprofit housing developers do not have the necessary expertise to meet the service needs of persons experiencing homelessness, and so need to partner with a service provider. The involvement of two different organizations (the housing agency and the service provider) helps to distinguish supportive housing, which is a form of independent housing, from residential treatment facilities. In independent housing, people can procure the services they need to stay safe in their homes, including nursing services. However, when the same agency provides both the bricks-and-mortar housing and the services, there is a potential risk that the roles of service provider and landlord charged with lease enforcement become confounded or that the program operates like a residential treatment facility, which may violate the PSH approach, especially with regard to rule enforcement. Thus, many organizations have structures (e.g., separate housing and services divisions), policies, and practices to prevent these problems. As a further consideration, the program may require an appropriate operating license. (Independent housing does not require a license). Thus, while having two different agencies involved in a supportive housing project distinguishes roles and guarantees appropriate expertise, it can cause problems with coordination, such as when a client is disrupting the lives of other tenants because of his or her substance use.
Coordination and logistical problems are greatest where the service provider is based in one location and the housing in another location or in multiple scattered locations. Market housing does not necessarily have the amenities that help retain persons in supportive housing, such as common rooms for activities, computer labs, and children’s areas. It can be harder to provide service in a private building especially if only a small number of units in the building are for persons who were formally homeless.
Even when services and housing are colocated in the same building, the voluntary nature of the services or the acute needs of some residents mean that individualized staff must work to engage tenants and motivate participation in services that support recovery and stability. For example, one program that had a medical clinic on the bottom floor spoke of having to go to clients’ apartments to accompany them to the clinic because they would not go on their own.
THE ROLE OF INNOVATION TO ACHIEVE PSH SCALABILITY
From the presentations that the committee heard, the answer to whether current models of supportive housing can be scaled up to meet the national goals of ending chronic homelessness is negative—not with the resources currently available and not unless substantial progress is made in reducing regulatory barriers and increasing coordination across agencies and levels of government. On the capital side, it takes too long and is too expensive to construct sufficient units of PSH given the usual development process and the housing market in most localities. Renting units on the private market, while the more viable strategy for achieving scale, is limited by the shortage of units available at affordable prices
and open to people with vouchers. It can also be costlier and complicated to provide supportive housing services in scattered-site environments, although this can be counterbalanced by the lower cost of housing (GAO, 2002).
Given this reality, the committee considered the need for new models of creating supportive housing if PSH is to be scaled to meet the national goal of ending chronic homelessness. Cities, such as Los Angeles, faced with an acute need to rapidly house large numbers of persons experiencing chronic homelessness have considered an array of innovative approaches. For example, the construction of PSH projects using prefabrication units has provided hundreds of units through a few notable projects, including the Star Apartments in Los Angeles.15 The implications of creating large numbers of such units clustered in a limited number of neighborhoods are unclear and illustrate the limitations of relying on innovation as a “work-around” in lieu of addressing the underlying barriers.
On one hand, this Los Angeles model recognizes the sense of urgency, as in a natural disaster, to house people quickly. Clustering would allow an efficient service design in which clinics or other service providers could provide needed services in an easily accessible place. If these units were placed on vacant land, there is also the potential advantage of placing them away from urban areas where drug use is extremely concentrated.
On the other hand, congregating large numbers of very-low-income persons, many of whom have mental health issues, drug addiction, and involvement in the justice system, in one particular location may lead to problems. In addition, it is far from the Olmstead mandate for community integration for people served and the commonly accepted goal of economically integrated neighborhoods. To the extent that this model could create a residential enclave segregated by race, ethnicity, gender, family status, disability status, or economic status, it would run afoul of the Fair Housing Act.
As described above, the committee’s assessment of the literature and other efforts indicate that there is no substantial evidence that PSH improves the health of people experiencing chronic homelessness. Accordingly, we have identified a number of barriers—including financing, policy, and regulations—that hamper the ability to scale up PSH and other housing models to meet the needs of individuals experiencing chronic homelessness. Funding streams and policy regulations for PSH are siloed and often impose substantive restrictions on how the funds may be used. This lack of coordination creates complications for combining or blending funds from different sources, and works against efforts to most efficiently use available funding. Although it is possible to combine funding streams, the restrictions on how different funding streams can be used can make the process quite complex. Accordingly, the committee recommends:
Recommendation 7-1: The Department of Housing and Urban Development and the Department of Health and Human Services should undertake a review of their programs and policies for funding permanent supportive housing with the goal of maximizing flexibility and the coordinated use of funding streams for supportive services, health-related care, housing-related services, the capital costs of housing, and operating funds such as Housing Choice Vouchers.
As discussed above, leveraging Medicaid may make it possible to bring PSH to greater scale, and to reach homeless and at-risk persons with housing before chronic homelessness takes a greater toll on their health outcomes and the overuse of public services. To accomplish this, it appears necessary to streamline the approval of waivers that seek to use Medicaid to pay for housing-related services.
Recommendation 7-2: The Centers for Medicare & Medicaid Services should clarify the policies and procedures for states to use to request reimbursement for allowable housing-related services, and states should pursue opportunities to expand the use of Medicaid reimbursement for housing-related services to beneficiaries whose medical care cannot be well provided without safe, secure, and stable housing.
In studies ranging up to 2 years, PSH has been shown to be effective in maintaining housing stability for most people experiencing chronic homelessness. Although the committee found no substantial published evidence that PSH improves health, PSH increases an individual’s ability to remain housed, and that plausibly alleviates a number of conditions that negatively impact health. However, there is a substantial and ongoing unmet need for PSH and a shortfall in the funding used to provide it (Culhane et al., 2002; Sylla et al., 2016). This gap is not filled by Continuum of Care and other programs addressing homelessness. Despite progress towards the goal of eliminating chronic homelessness, persons experiencing chronic homelessness made up 22 percent of the homeless population in January 2016 by HUD’s conservative point-in-time count. Thus, in an environment of static or declining discretionary budgets, federal policies should prioritize persons experiencing chronic homelessness for the limited supply of PSH, but not at the expense of downsizing other federal programs that support persons experiencing homelessness or at risk of homelessness. The committee recommends:
Recommendation 7-3: The Department of Health and Human Services and Department of Housing and Urban Development, working with other concerned entities (e.g., nonprofit and philanthropic organizations and state and local governments), should make concerted efforts to increase the supply of permanent supportive housing (PSH) for the purpose of addressing both chronic homelessness and the complex
health needs of this population. These efforts should include an assessment of the need for new resources for the components of PSH, such as health care, supportive services, housing-related services, vouchers, and capital for construction.
Finally, the construction of PSH is often hindered by regulatory barriers that make it more difficult and more expensive to address chronic homelessness. The committee reiterates the findings of the Advisory Commission on Regulatory Barriers to Affordable Housing from more than 25 year ago: Local land-use regulations that apply to the siting and construction of new housing present substantive barriers to expanding the availability of affordable housing, including PSH. State and local governments could take action to help to reduce unnecessary regulatory barriers to land use to streamline the development of affordable housing, including single-site PSH. To address another significant barrier to developing additional PSH, HUD could develop model regulations for expediting the siting and construction of single-site PSH. In addition, to eliminate barriers to the use of housing vouchers for scattered-site PSH, federal, state, and local governments could proactively use their anti-discriminatory enforcement authorities and their leverage over the terms of federal grants to incentivize grantees to eliminate barriers that make the programs less effective and efficient.