NEED FOR CHANGE: Cost-Efficient Solutions to Homelessness

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1 NEED FOR CHANGE: Cost-Efficient Solutions to Homelessness The Financial Benefits of Permanent Housing for the Homeless of Anchorage White Paper September 2008

2 Need for Change: Cost-Efficient Solutions to Homelessness The Financial Benefits of Permanent Housing for the Homeless of Anchorage Summary Anchorage Homelessness Thirty percent of Anchorage s homeless population is chronically homeless. This small percentage s continual use of public and emergency services contributes to the majority of municipal homeless costs. Critics of current methods used to end homelessness argue that the use of public and emergency services only manages the homeless problem as opposed to taking the necessary steps to solve it. The Community Service Patrol (CSP) Transfer Station, the location where individuals who are a danger to themselves or others as a result of drug or alcohol use are brought to by the CSP, costs the Municipality of Anchorage $1,342,736 in % of total services for that year were utilized by 150 chronically homeless individuals, accounting for $805, of the total expenditures. In 2008 Anchorage has seen a 13% increase of the chronically homeless population, and as a result community costs are spilling over from the Transfer Station to other emergency services. Many individuals have alarmingly high blood alcohol content, resulting in ambulances, trips to the emergency room, detoxification and time in correctional facilities. The Municipality of Anchorage spent $2,783,169 in emergency services used by the chronically homeless population alone in On top of this 33% of the homeless population in 2008 consisted of households with dependent children. Due to long waiting periods for rental vouchers, many homeless families must move from shelter to shelter while waiting for permanent housing. Housing First Housing First calls to provide easily retainable permanent housing and case-management for the homeless population as opposed to managing the homeless through institutional costs, such as shelters, public services and emergency services. Economic studies have shown providing permanent housing for the chronically homeless population significantly reduces the costs of homelessness. The application process must be simple and expedited, tenants are not required to complete any treatment prior to obtaining housing, and few conditions of tenancy exist that exceed normal rental conditions. Once tenants receive an income of any kind, a portion must be put toward a percentage of their rent. The fair-market rent price for a one-bedroom apartment in Anchorage is $738 a month, or $8,856 a year. The annual salary for a case-worker in Anchorage is $65,000 a year, or $5,416 a month. If a case-manager was divided amongst 10 individuals, the cost would be $6,500 per client per year. Providing permanent housing and permanent case-managers would cost a total of $1,280 a month. An individual who stays at the Transfer Center costs the Municipality up to $2,356 a month, an individual who is incarcerated costs $3,030 a month, and an individual at the Brother Francis Shelter costs $495 per month. Homeless persons are also hospitalized more often than housed individuals. Each day spent in the emergency room costs $1,750. Monthly totals for homeless individuals are much more expensive than housed individuals, with Housing First saving the Municipality substantially each year. Program Results Housing First programs have been initiated in cities across America including Denver, which saw a 36% decrease in its chronically homeless population, Portland, which saw a 70% decrease, Minneapolis, New York City, Philadelphia, San Francisco, Chicago and Seattle. These programs have also been initiated on a state level in Rhode Island and Massachusetts. Rhode Island saved $424,272 in public and emergency services over the period of one year after housing 48 participants, and Massachusetts has saved $1,465,128 housing 133 homeless individuals. Studies at the University of Pennsylvania s Center for Mental Health Policy and Services Research tracked the costs of homeless individuals for two years while they were living on the streets and then two years once they received housing. The study found that permanent housing created an annual savings of $16,282 per person by reducing their reliance on public services. 72% of these savings resulted in a decline in the use of public health services, 23% from a decline in shelter use, and 5% from reduced incarceration. Public and emergency services for homelessness cost the Municipality of Anchorage greatly. By providing increased permanent housing and case-workers to the chronically homeless population, Anchorage will see a savings of $12,916 per year per person housed. These are savings that add up quickly. Support is needed to encourage the continuation of the Housing First Model in Anchorage to ensure that municipal spending on homelessness is as cost-efficient as possible. Recommendations (Detail refer to page 6) 1. Removing zoning barriers 2. Inner Agency Team 3. Homeless Coordinator/Project Manager 4. Affordable Housing Incentives 5. Review and Target of Municipal Grant Resources 2

3 The majority of financial costs from homelessness come from a small fraction of the homeless population. Research shows that the majority of the homeless population remains homeless for only 1-2 days and makes little use of emergency services. Only a small percentage is semi-permanent and continually relies on emergency services. It is the use of these services that attributes to the majority of municipal costs incurred a result of homelessness. Of the homeless population in Anchorage, 30% are considered to be chronically homeless 1. Though the chronically homeless group forms the smallest portion of the overall homeless population, they are responsible for the majority of municipal homeless costs. Homeless families with dependant children constitute another 33% of the homeless population. Though they do not cost the Municipality as greatly as the chronically homeless, the lack of stability that comes from homelessness has substantial effects on the families. II. The Housing First Model The Housing First Model has been applied successfully over the past 15 years in communities across the nation to help bring an end to chronic homelessness. The United Way of Rhode Island initiated the Housing First Model in late 2005, providing scattered site apartments and congregate housing for 50 chronically homeless individuals. As opposed to managing the chronically homeless through institutional costs such as shelters, public services, and emergency services, the United Way of Rhode Island provided supportive service costs of $9,500 and housing subsidies of $5,643 over a period of one year. By doing so, a total of $424,272 was saved in public systems 2. Once housed individuals had access to medical, mental health, substance abuse treatment, vocational training, and life-skill resources. Use of these services is not a condition to retain housing, however, as the program s goal is to keep tenants in permanent housing situations. Providence College Professor of Sociology Eric Hirsch and Roger Williams University Professor of Anthropology Irene Glasser note that: cost savings can only be realized if clients remain in their new homes. A return to a life in the street or in shelters is destructive to the client s health, mental health, and level of social integration. And it dramatically increases the costs to the government and taxpayers due to increased use of health, mental health, corrections, and shelter facilities 2. Once tenants begin to receive income from benefits or employment, a portion of their income is applied to their rent. Housing First requires tenants to easily receive and retain their housing. Three important components exist to ensure this: A simple application process that allows people to be housed expeditiously. Numerous site visits and excessive documentation before housing is not required. Tenants are not required to participate or complete treatment prior to obtaining structured housing. Intensive case management will be available once housed. Conditions of tenancy must not exceed the normal conditions under which a leaseholder would be subject. Extensive research has shown that Housing First projects throughout the country have lead to the following outcomes: Housing First projects have lead to high rates of housing retention. o The state of Massachusetts maintained an 89% retention rate of all homeless individuals participating in their Housing First Program 12 Tenants in Housing First projects improved their health, employment, and self-sufficiency by accessing medical care, employment resources, mental health and substance abuse treatment as well as other supportive services 3

4 o The Housing First Program in San Francisco projects that 80% of participants received health care services and mental health treatment, 56% engaged in substance abuse treatment, 65% participated in financial management education, 51% received assistance in applying for benefits, and 41% engaged in employment service, even though it was not required 13. Vast reductions in the use of emergency response systems (police, fire and EMT services) and in detoxification beds. o Studies show permanent housing reduces the use of all emergency services by 60%-80% by chronically homeless individuals 3. Per person, Housing First projects costs less than the cyclical utilization of the emergency systems. o The state of Massachusetts saved $11,016 annually per homeless person housed in public services in III. Current Costs of Homelessness in Anchorage Critics of current methods to end homelessness argue that emergency services frequently used by the chronically homeless manage the problem as opposed to taking necessary steps to solve it. Individuals living outside of permanent housing used increased emergency services, which in 2006 cost the Municipality of Anchorage greatly. According to the Anchorage Community Service Patrol (CSP) Transfer Station there are chronic inebriates in Anchorage, 5 most of whom are chronically homeless. Under Alaska Statute Title 47 the Municipality of Anchorage and their contractor Purcell operate the CSP for individuals who are a danger to themselves or others as a result of drug or alcohol use. Vans operated by the CSP pick up chronic inebriates in Anchorage and transport them to the Transfer Station, located in the Anchorage Jail Complex. 150 chronically homeless individuals accounted for 60% of total Transfer Station expenditures in 2006, or $805, As this problem increases in Anchorage and the chronically homeless population rises, community costs are spilling over from the Transfer Center to other basic emergency services. Many individuals have alarmingly high Blood Alcohol Content levels resulting in ambulance trips to emergency rooms. Spillover costs from this problem in Anchorage in 2006 are as follows 4 : CSP/Transfer Station: $1,342,738 Department of Corrections: $96,186 Pathways to Sobriety Program: $651,941 Anchorage Police Department: $424,098 Ambulance Services: $267,000 To further break these costs down, each individual use of these services cost as follows: A night at Catholic Social Services Brother Francis Shelter - $ A night in the CSP-Transfer Station - $76 4 A night in Jail or Prison - $101 5 A day in an emergency room bed - $1,750 6 A day in a detox bed - $285 7 According to the Anchorage Homeless Count conducted in January 2008 by the Municipality of Anchorage Homeless Management Information System (HMIS), there were 989 HUD recognized homeless households throughout the municipality. Of this there were 661 individuals, 300 of which were considered chronically homeless, showing a 13% increase since Thirty percent of Anchorage s HUD recognized homeless population can be considered chronically homeless. It is this population that accounts for the majority of municipal costs resulting from homelessness. With Anchorage s chronically homeless population increasing yearly costs to the community will increase as well. There is also a correlation between a lack of permanent, stable housing and serious health concerns. In general, homeless persons experience extremely poor health. A study by the Boston Health Care for the 4

5 Homeless Program tracked 119 homeless persons over a five year period and found they accounted for 18,384 emergency room visits and 871 hospitalizations. The study showed the annual health care cost for individuals living on the street to be $28,436, compared to $6,056 for housed individuals. Harsh elements and climates, poor diets, and exposure to numerous communicable diseases at shelters all lead to poor health. Boston Health Care for Homeless Program: Health Care Costs Cost per year Housed Individual Homeless Individual # of Individuals According to the US Department of Housing and Urban Development (HUD) the fair market rental price for a one-bedroom apartment in Anchorage is $738 a month, or $8,856 a year 10. The annual salary for a casemanager in the Municipality of Anchorage is approximately $65,000 a year 11. If a case-manager is divided up by 10 clients, the cost is $6,500 per client per year. Providing permanent housing and a permanent case-manager for one chronically homeless individual would cost $15,356 per year. Those who are continually homeless incur the following monthly costs: $2,356 per month for staying at the Transfer Station $3,030 per month while incarcerated $495 per month at the Brother Francis Shelter 3 An individual spending 6 months at the Brother Francis Shelter ($2,970 total), 3 months at the Transfer Station ($7,068 total), and 3 months incarcerated ($9,090 total) would incur a yearly cost of $19,128. With the addition of 6 trips to the emergency room and detoxification per year, that cost increases by $12,210 to $31,338 per year. Not including hospitalization fees, providing permanent housing and care would save the municipality $3,772 a year per homeless individual housed. Including 6 emergency room and detoxification visits, the Municipality would save $15,982 per year per individual. Costs of Homelessness, vs. Housing First Amount per year $3,500,000 $3,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 $ # of individuals Housing First Homelessness Homelessness w/ hospitalization 5

6 IV. Homeless Family Housing Though the chronically homeless are most visible, homelessness affects many families throughout Anchorage. According to the Alaska Housing Trust, 1,600 people in families with children are homeless on any given night. The Anchorage Homeless Count taken in January 2008 concluded that 33% of Anchorage s HUD recognized homeless population were households with dependent children. The Alaska Housing Trust reports that there are 4,000 Alaskan households on waiting lists for permanent public housing programs. Of these 4,000 households most are families with children. The current waitlist for vouchers is extremely long, forcing homeless families to move from shelter to shelter while waiting on available permanent housing. In the 2005 school year 1,702 students, grades K-12, were homeless at one time. This homelessness creates instability that effects family life and can also affect school performance and the health of the child. In the past ten years, the cost of a single family home in Anchorage has increased by over 100%, while median family income has increased by 38%. As the costs of living in Anchorage increase, more and more families will be at risk of homelessness. According to the Alaska Housing Trust, current federal programs are not adequately focused on housing for the poorest Alaskans, and current programs are not well connected to support services. An increase of Housing First programs would benefit families by providing the housing stability and permanent support they need. V. Housing First Success Stories Studies show that supplying permanent housing and permanent case-managers to the chronically homeless cost less than the cyclical use of public and emergency services. Housing First programs have been successfully established in Denver, Minneapolis, New York City, Philadelphia, San Francisco, Chicago, Seattle and Portland. In 2007 Denver announced a 36% decrease in chronic homeless 8, while Portland has seen a 70% decrease since initiating the program in Every chronically homeless individual that the Municipality of Anchorage can provide permanent housing for will significantly reduce emergency service costs. This has been demonstrated in Housing First programs like the United Way of Rhode Island, which saved a total of $424,272 in public services 2. The state of Massachusetts Home and Healthy for Good: A Statewide Pilot Housing First Program, found that each permanently housed individual saved the state $11,016 per year 12. Both programs also noted a significant drop in the use of emergency services once the individual was placed in housing. Studies by the University of Pennsylvania s Center for Mental Health Policy and Services Research tracked the cost of 5,000 homeless individuals in New York City for two years, as well as their cost once they were housed for two years. The study found that permanent housing created an annual savings of $16,282 per person by reducing their reliance on public services. 72% of these savings resulted in a decline in the use of public health services, 23% from a decline in shelter use, and 5% from reduced incarceration. VI. Recommendations/Conclusion On any given night in anchorage, over 1,000 individuals and families are homeless. On any given night, the citizens of Anchorage spend thousands of dollars to ensure the safety and health of the homeless. If the issue of homelessness in Anchorage is not managed fiscally and socially, the numbers and costs will continue to rise. No one individual or agency will have a positive impact on the homeless issue in Anchorage. It will take the partnership of everyone, in every sector of our community to come to together to have a true and lasting impact. Anchorage s 10-year plan is nothing but words on paper without partners like the Municipality of Anchorage, the 40 plus social service providers, individual citizens, state government and other stakeholders. The Municipality of Anchorage is in a strategic position to influence how our community addresses the homeless issue. The first and most vital step the Municipality took was the development of our 10-year 6

7 plan on homelessness. With the journey to the end being so far, there are many more steps for the Municipality can take that will help mobilize our community around the issue. As one of our core partners of the Anchorage Coalition on Homelessness, we ask the Municipality of Anchorage to implement the following strategies to help us effectively implement our 10-year plan: 1. Remove Zoning Barriers Current wording in Title 21 greatly limits the development of programs that serve the chronically homeless and hard to serve populations. A revision of Title 21 that creates a more inclusive approach versus a not in my back yard would be of great benefit to the development of permanent supportive housing. Currently, permanent supportive housing projects are likely to be zoned as CCRC s or Habilitative Care projects which require conditional use permitting. Changes to the group living definitions would result in the support of more Housing First projects. Housing First is the most cost-efficient program to cut municipal expenditures incurred due to chronic homelessness and the most expeditious way to permanently house homeless families and individuals. 2. Inner Agency Team The issue of homelessness impacts nearly all the Departments within the Municipality. When one department addresses one aspect/issue related to homelessness, other departments/services are impacted causing a domino affect sometimes leading to more issues. It is essential that Departments are in communication and working towards a common goal. This includes the Office of the Mayor, Department of Parks and Recreation, Anchorage Police Department, Fire Department, Department of Health and Human Services, and Department of Neighborhoods. Currently, Diane Disanto in the Mayor s Office performs this role unofficially and is often the central contact for multiple Departments. However, Department s often communicate through her instead of directly with each other on collective goals or actions. 3. Homeless Coordinator/Project Manager The issue of homelessness is vast and involves hundreds of partners throughout Anchorage and the State. The Anchorage Coalition on Homelessness has limited resources available to coordinate projects that have a lasting impact. A Homeless Coordinator/Project Manager would establish consistency and oversight of the 10-year plan, assemble community leaders to implement action items identified in the plan, clearinghouse for information for service providers and public, follow trends and best practices, public outreach and assured effective use of services/resources. Currently, the Department of Neighborhoods has a grant from the Alaska Mental Health Trust Authority for a part time staffer that will end in the summer of The Coalition feels that this position has been effective in the implementation of the Plan and more could be accomplished with additional project management support. 4. Affordable Housing Incentives One of the key components of the 10-year plan is to ensure current stock and the development of new affordable housing. Without affordable housing, there will be no place for the homeless to live. The Municipality can have a major role in this area by offering developers incentives to build affordable housing. Incentives are given to developers who include a minimum percentage of affordable housing in their developments. Affective incentives used by other communities are: (1) reduction in permitting costs, (2) faster permitting process, (3) sale of municipality land at a reduced cost, or (4) infrastructure like sewage, sidewalks, or street lighting is covered by the Municipality. 5. HUD Entitlement Grants/Other Funding The Coalition asks that as many Municipal resources as possible be targeted at homelessness, particularly, housing first programming. This includes the State of Alaska Human Services Matching Grant operated for the Municipality by the United Way of Anchorage. Funding sources from the Department of Neighborhoods Emergency Shelter Grant Program, Community Development Block Grant Funding, and Home Investment Partnership Program. In 2008 the Department of Neighborhoods funded a local Tenant Rental Assistance Program with Catholic Social Services. However, this program has not yet gotten off the ground because funding is needed for the supportive services. The Coalition would like to continue to see programs such as Tenant Based Rental Assistance continue to be funded. Currently, there is a 3-4 year wait for Section 8 vouchers in Anchorage. The development of a local Tenant Based Rental Assistance program could 7

8 provide over a 100 additional vouchers to Anchorage residents. Programs such as this one have been difficult to implement because the Department of Neighborhoods needs $250,000 in match of State or local resources to the HOME funds ($1M) received from HUD. INDEX 1 Anchorage Homeless Count, January 2008, Municipality of Anchorage Homeless Management Information System. 2 Interagency Council on Homelessness, E-Newsletter, 20 Episodes in Ending Homelessness, Cost Benefit Analysis and Consumer Satisfaction: Results from Philanthropic Investment to End Chronic Homlessness in Housing First RI. 3 A Place to Live Not a Place to Go: Solutions for Ending Chronic Homelessness in Anchorage, August 2007, Melinda Freemon. 4 The Chronic Inebriate Problem in Anchorage: Brief Overview, July 2,2007, Russell Webb. 5 State Prison Expenditures 2001, U.S. Department of Justice, James Stephen Estimate from Providence Hospital Estimate for a detox bed at the Salvation Army s Cithroe Center. 8 Interagency Council on Homelessness, E-Newsletter, In the Cities: Denver Posts Latest and Largest Reduction in Chronic Homelessness with 36% Decrease. June 20, Interagecny Council on Homelessness, E-Newsletter, In the Cities: New Data Emerges on Results and Costs. August 28, HOME Investment Partnerships Program, Alaska Rent Limits Estimate from RurAL CAP Homeward Bound. 12 Home and Healthy for Good: A Statewide Pilot Housing First Program, Massachusetts Housing and Shelter Alliance. June S. Barrow, G. Soto, P. Cordova, Final Report on the Evaluation of the Closer to Home Initiative, Corporation for Supportive Housing