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We’re starting a project that tracks all 65 recommendations of the Mayor’s Housing Affordabilty and Livabilty Agenda (HALA) Committee. As I’ve mentioned (and been derided for) the HALA document has gone from a pile of wonky idea and policies to a slogan being used to push Mandatory Inclusionary Zoning (MIZ). So far, the only recommendation getting a big push. But hopefully by taking a deeper look at the actual recommendations will help remind people what HALA actually is; a bunch of recommendations, not a housing panacea waiting for a vote by the City Council. And there are ideas we should look at like Social Investment Bonds (SIB):

In the weedy parts of the HALA document is a recommensation R.10 to

Explore a Social Impact Investing Model for Housing in Seattle The City should use the opportunities of significant regional growth in private venture capital activities to convene stakeholders to explore local opportunities for Social Investments in housing. This can include the use of social impact investments and social impact bonds. Social Impact Bonds use private investments to implement or expand prevention and early intervention social programs. Private investors can earn a financial return if programs achieve desired goals, as demonstrated by third party evaluators, and potentially reduce future government expenses for the target populations. Other jurisdictions have explored or piloted Social Impact Bond models that address various issues, including chronic homelessness, homeless children and jail recidivism. Social Impact Investments are usually loans provided by social investors to nonprofit organizations. Unlike grants and donations, these are loans which organizations repay and use to create real social impact. They can be used for a host of purposes, including capital investments.

This is a very compelling idea nobody is talking about — and they should be. Private investment goes into housing homeless people, and if there are savings to the City from providing less services, the investors are paid back with the savings. One project, like Downtown Emergecy Service Center’s (DESC) 1811 Project comes to mind. The agency housed people who previously were homeless and drinking enough to wind up in the Emergency Room many nights of the year. Housing these people meant savings to the County. How much money saved? From my blog post from 2009 cited above:

In total, participant costs fell from $8 million per year in the old way of doing business to about $4 million per year during the study period. In other words, the program reduced taxpayer expenses by about half.

Seattle could try this approach for building housing on City owned land, something that has been resisted because of worries about using the City’s credit. A SIB program would make that argument moot.

Have these kind of investment models been tried? London has a program to use this investment strategy to help house 800 people who were sleeping outside find steady housing solutions.

The 800 people have extra needs – perhaps mental health issues or family problems – that require intensive, time-consuming support from frontline workers, which is what the investment will pay for.

Investors are putting up the money to pay for the scheme’s running costs. The Greater London authority will reimburse investors according to the results – paying out once a homeless person can be shown to have remained in a stable tenancy for more than 12 months, and once there is evidence that he or she is proving to be less of a burden on the NHS.

 Is it working? A report on the project is mixed and it’s probably best described as “too soon to tell.” But initially

Both providers [getting SIB proceeds] have exceeded their targets, continuing the performance of the first year. At that time, the outcomes related to entry to accommodation only. At the time of this report, there are outcomes relating to sustainment and these too have (almost all) been exceeded.

 The SIB concept actually expands resources and rewards success with private resources rather than raising the price of all housing to fund a few hundred rent restricted units. Now if we could just someone at the City to work on this rather than inflationary mandates that might trigger law suits.