When Kaiser Permanente last month announced it would commit $200 million to address homelessness in areas it serves, the huge health care provider served notice that the private sector is recognizing that housing insecurity is both a pressing health problem and a significant drag on economic growth in key parts of the country.
The money is a start, and it is expected to produce a return that will allow more so-called “impact investments” in years to come. More significant, perhaps, is the expression of concern that Kaiser has shown. Serving 12 million members, and with $65 billion in annual revenues, the California-based nonprofit is a major presence from coast to coast. Its network of Kaiser Foundation hospitals and other health services operate in California, Washington, Oregon, Hawaii, Colorado, Georgia, Maryland, Virginia and the District of Columbia.
Kaiser’s example may encourage other companies to join in the quest to provide more housing for low-income people, a movement that’s gaining traction in a new program called Mayors and CEOs for U.S. Housing Investment.
Assessing the Problem
The dimensions of the homelessness problem are outlined in a fact sheet on the Mayors/CEO website. More than half a million people experienced homelessness on any given night in 2017, it reports. About 1.5 million people used homelessness services, including emergency shelters, in 2016.
The fact sheet observes that the most common contributing factor is people’s inability to find housing they can afford. “Today 11 million extremely low-income households pay at least 50% of their income toward housing,” it says, “putting them at great risk of instability and homelessness. Confounding factors ...include chronic health problems, domestic violence and systemic inequality.”
Impact investing has grown in recent years, as investors seeking to improve the world have looked to generate a measurable, beneficial social or environmental impact alongside a financial return. Kaiser’s program recognizes that housing is important to people’s well-being and health, as Bechara Choucair, Kaiser Permanente’s chief community health officer said as the company’s program was unveiled on May 18.
“Many of the communities we serve are grappling with some of the highest rates of housing insecurity and homelessness in the United States,” Choucair said. “As a family physician, I’ve provided medical care to the homeless, and have seen first-hand the impact that living without a home can have on someone’s health. To improve the health of an entire community we must step beyond the four walls of our hospitals and medical offices to help those most in need. We hope this national commitment to impact investing in housing stability will inspire other companies to share the responsibility of this critical issue growing in the United States.”
Because impact investing does require a decent financial return, it is unlikely that the projects Kaiser backs will offer direct homelessness services, such as temporary shelters. Kaiser, of course, will not be the sole investor in the housing projects, which necessarily will rely on other sources of capital as well. Kaiser has other programs ranging beyond housing to address the health needs of the very poor.
Federal funding will surely be part of the mix, even if the Trump administration reduces subsidies for low-income housing programs. Housing advocates are hoping to create a new federal program that would marry the resources of two Cabinet agencies—the Department of Housing and Urban Development and the Department of Health and Human Services—to address both the housing and the mental and other health needs of troubled families. It would be modeled after the successful HUD-VA Supportive Housing (HUD-VASH) program that has helped 90,000 homeless veterans in the past 10 years. Sen. Dianne Feinstein, a California Democrat who has long voiced deep concern about her state’s housing and homelessness problems, hopes to introduce legislation on the cooperative program before Congress’ summer recess.
A Paycheck Away
The nascent Mayors/CEOs housing initiative offers evidence that housing affordability is a major problem in many American communities.
So did the 2018 State of the Cities report released on May 30 by the National League of Cities. Its analysis of 160 major mayoral addresses this year showed that 39 percent included “significant coverage of housing issues.”
“Mayors across the United States recognize that there isn’t enough affordable housing to go around,” the report said. In response, it continued, cities are looking to mixed-use development that combines residential and commercial uses in the same buildings.
Mayor Mary Lou Pauly of Issaquah, Washington, is quoted as saying: “In the future, our growth will be redevelopment--adding density and moving away from single-story buildings and expansive surface parking lots, to mid-sized and mid-rise buildings that are designed for mixed use.”
The scope of the affordability crisis was outlined in state-by-state detail in a recent report from the National Low-Income Housing Coalition. As an analysis of the report by Curbed said, “of every 100 rental units nationwide, only 35 are available or affordable to extremely low-income renters (defined as households with incomes at or below the Poverty Guideline or 30% of area median income, whichever is higher). That number gets lower in many metros areas in the south and west.” In California’s huge market, only 22 percent of rental units are affordable for this population.
Massachusetts is not among the neediest states—with 46 percent of rental units affordable to the poor, according to the Coalition report. But officials are highly concerned about housing availability. In a May 30 story about the persistent scarcity of affordable housing in Massachusetts communities, The Herald News, published in the coastal town of Fall River, reported that despite five decades of efforts to promote lower-income housing, “the problem persists today and is part of a larger housing shortage problem that Gov. Charlie Baker, a Republican, has called a crisis.”
“The big-picture risk is that we price our economy into a place where we can’t afford to grow anymore,” said Paul McMorrow, director of communications and policy at MassHousing, a quasi-public state agency,” told The Herald News. “We already know the average family, whether it’s renting or buying, has a hard time affording an average house, and that’s not a situation that’s sustainable over the long term. The workforce has to be able to afford to live.”
High housing costs are helping drive people out in some areas of the country. Indeed, eight of the top 10 counties with the highest median home prices witnessed negative net migration in 2017, according to a recent analysis from ATTOM Data Solutions.
Mayors and CEOs
But the company hasn’t provided much detail on how its new program will work. Route Fifty asked Kaiser Permanente’s communications staff questions about how the company’s funding would mesh with other sources of investment that would be needed for any major projects. We asked whether the projects would include upper as well as lower-income families. And we asked if the requirement for a financial return would preclude inclusion of homeless shelters in the projects. Replies to these questions included no details going beyond the company’s press release.
As to the timing, the company said: “These impact investments are expected to begin this year, and we anticipate they will take three to five years to deploy.”
Other corporate leaders are also beating the drums for more affordable housing. Home1 is one such effort--a website promising to put the affordable housing “crisis on the map, so that every politician in local, state and federal government needs to talk about it and work on fixing it.” Home1’s financial backing has come from the J. Ronald Terwilliger Foundation, the New York State Association for Affordable Housing, the Metropolitan Realty Group LLC and a variety of other real estate and investment companies.
A Big Political Issue?
Could this portend that housing affordability will be “the next big political issue,” as CityLab suggested in a recent headline?
If so, the Mayor & CEOs coalition could be one of its foundations.
The coalition has the active support of the National League of Cities, said NLC staffers Brooks Rainwater and Jim Brooks in a recent interview. They said that impact investing, seen in a variety of other sectors in recent years, is now moving into the housing field, and that Kaiser Permanente’s commitment could encourage other sources of capital to follow its lead. The company is “breaking new ground in bringing corporations to the table to help with what’s a very difficult problem,” said Rainwater. NLC members, Brooks added, are “consistently reporting that housing is an acute crisis.”
Mayors & CEOs effort has been underway only since January, noted the NLC staffers. The number of mayors who have joined the effort is nearing 20, including such big-city leaders as Keisha Lance Bottoms of Atlanta, Catherine Pugh of Baltimore, Muriel Bowser of Washington, D.C., Eric Garcetti of Los Angeles, Greg Stanton of Phoenix, Michael Hancock of Denver and Ted Wheeler of Portland, Oregon.
Mayors are expected to bring along local CEOs as partners, to help with financing and publicity for the effort. That is a work in progress, but the group’s website currently lists six partners: Airbnb, Sutter Health, GHC Housing Partners, the African American Mayors Association and Kaiser Permanente.
Brooks of the NLC said the group likely will build a “broader coalition nationwide” that could effectively make the case in Washington for more focused attention to the housing problem.
The political potential of the housing issue has been tested in Portland, where Wheeler was elected after promising that housing affordability would be his first priority. “And that is where we have focused our efforts in our first 18 months in office,” said Michael Cox, deputy chief of staff and director of communications for the mayor. The city council had declared a housing emergency in 2016, and Cox said the city has about 4,000 homeless, many of whom spend nights on the streets.
More broadly, said Cox in a recent interview, the city is “down about 25,000 affordable units from where we should be.” But Portland voters in 2016 passed a $258 million bond issue that will finance about 1,300 units, said Cox. It was the largest general obligation bond issue ever passed by Portland voters, and it attracted an impressive 62 percent of the vote. But it wasn’t big enough to make much of a dent in the problem, and so now Wheeler is hoping that his long campaign to address the issue will get another boost when voters in the Portland metro area will likely get a chance to consider another bond issue worth $650 million. The Portland Metro Council will vote on submitting the issue to the voters later this month.