Featuring Jason Shaplen

Join Kurt for a conversation with Jason Shaplen, the Chief Strategy Officer for Community Health Center in Connecticut, one of the nation’s largest federally qualified health centers (FQHC) providing healthcare to low-income families. Jason has a rich history in affordable housing and is passionate about the linkage between housing and health. Kurt and Jason talk about the new face of homelessness, why it has grown into such an enormous crisis, and the impacts on health and health equity. More importantly, they discuss solutions. Listen to the conversation.

Kurt 

So, Jason, thanks for joining us here this afternoon.

Jason 

Thank you for having me.

Kurt 

Maybe tell us a little bit about your background and what you’re doing now.

Jason 

My background is a little bit of a “Jack of all trades and master of none.” I have spent my career moving in and out of private sector and government and the not-for-profit world, hopefully bringing a little bit of experience of each to the other. For the last 20 years, I’ve been working exclusively in the not-for-profit world, and most of that, almost all of that, in homelessness, running some of the nation’s largest homeless organizations in New York, New England, and Los Angeles. About a year and a half ago, I moved into healthcare, serving low income healthcare folks.

Kurt 

So, you have a unique perspective with the deep history on homelessness and housing and how it affects healthcare. Who needs housing? How has homelessness changed over the years?

Jason 

You know, you’ve nailed the question right out of the box. It really has changed. We used to think of homelessness as defined, sort of, by the ‘Bowery Bums’ in New York City, people with mental illness and substance abuse and sitting there, you know, drunk on sidewalks, and to be sure, mental illness and substance abuse is still a very prevalent, outsized portion of homelessness, far outsized in the homeless population from the general population. But the face of homelessness has really changed. It is more often than not, now, not driven by mental illness and substance abuse. It’s purely economics, people who simply can’t make their life work. And I can certainly go into that in more detail. But the face of homelessness has changed. And I’m not sure housing has caught up with that reality.

Kurt 

So, there’s a strong poverty component — people who are unemployed — or does it also affect people who are working?

Jason 

It’s both. Again, you’ve nailed it right out of the gate. On the poverty side of it, there are actually two measures of poverty. Both official, both census driven. One is called the official poverty measure, although they’re both official, and one’s called the supplemental measure of poverty. The latter, the SPM, supplemental measure of poverty, actually only started about 11, 12 years ago, 2009. And it’s designed to be a more accurate portrayal of poverty. It takes into account things like cash benefits, such as social security or public assistance, things like SNAP, TANF, it takes into account unemployment insurance, and it also takes into account non-discretionary spending, things we have to spend money on such as taxes and medical expenses. And there is a difference between the two. So, for instance, when you look at the poverty numbers, and you look at people who are living at the poverty line, or below, in the country today, the official poverty number, not the supplemental measure, is 34 million people are living at poverty or below. The supplemental measure is actually 38.2 million. But that really jumps because you know, that poverty number is still a very, very low number. Really, when we talk about housing, we talk about poverty, we should be talking about people who live either in poverty or near poverty, which is within 50% of the poverty line, or even 100% of the poverty line. And so, when you look at people who live either in poverty, or within 100%, of the poverty line, the official poverty number will tell you, that’s 85, 86 million people in the country. The supplemental measure of poverty is 126 million. 40 million more. And when you look at that supplemental measure of poverty, which is a more accurate measure, you’re looking at almost 40% of the country. Almost one out of two people living either in poverty, or within 100% of the poverty line. And you know, that means when you’re in 100% of the poverty line, it means you’re one incident away from being in poverty, you’re one illness away, you’re one accident away, you’re often one car repair away, you’re one domestic violence incident away. And so those are the numbers we really should be looking at. And they’re pretty shocking, you know, after a decade of, more now, of strong economic growth, we have almost one out of two people, 40% of the country, living in poverty or near poverty, and those are the people who are getting really, really squeezed on housing. And just finally there, you know, it’s even worse because the rates for the disenfranchised, for blacks, for Latinx population, are twice the rate of whites.

Kurt 

 That’s shocking. So, 40% of the country is homeless or housing unstable, as we would call it within the Carrot Health data. And I think, what you just touched on, the racial component, we’ve published some data on that recently here in Minnesota, where we’re headquartered. The housing unstable population affects the black, the BIPOC community, at a three times higher rate than it does the white community in Minnesota. Is that typical in your work?

Jason 

Sure, of course, you know, and I realized I didn’t touch on your employment numbers a little while ago, but happy to go back to that if you want. But when you are housing unstable, it is directly tied to health outcomes, directly tied to health outcomes. When you look at homelessness, and again, I spent almost 20 years in the field of serving the homeless, medical illness or healthcare is directly tied to homelessness, both the reasons people become homeless, reasons they can’t get out of homelessness, or reasons they fall back into homelessness. And some of those numbers are also brutal. I mean, you when you look at HIV/AIDS, for instance, in the homeless population, three to six times, as you pointed out, three to six times the rate of people who are not homeless, and diabetes, and TB, and wounds, and things like that — these are definitely outsized in the homeless population.

Kurt 

So, when people aren’t housed, or they’re in an unstable housing situation, what happens, as a family, that impacts their health? What are the sort of things that you see that are different than the housed population?

Jason 

When people aren’t housed, and you look at families, as you just said, for instance, children who are homeless — the statistics are all over the place — but generally, they’re sick four times more often than children who are not homeless, they have three times the rate of behavioral or emotional problems, twice the rate of learning disabilities, and I’ve even seen some statistics out there that say, if you are a homeless child in high school, less than 25% of you graduate.

Kurt 

That’s shocking. So, clearly, the fact that we have 40% of the country in this category is really exacerbating our health crisis, right? It’s causing more illness by the fact that people aren’t housed in a stable situation.

Jason 

100% true. Whether it’s medical issues, or behavioral, or mental health issues, sometimes it’s a cause of homelessness. Sometimes it’s the result of homelessness. And very often, it’s a barrier to getting out of homelessness. So, there’s a direct correlation between homelessness and healthcare, or housing and healthcare. And you know, what we haven’t even touched on are adverse childhood experiences, and how that shows up later in life for children who are homeless when they’re children. And that’s what’s so devastating about all of this, because you realize that when a 3- or 4- or 5- or 7-year-old child is homeless, in many ways, not universally, not 100% by any stretch of the imagination, but we are starting that child out with two and a half strikes against them. They’re either going to grow up into poverty, they’re going to grow up into homelessness, or worse yet, in some cases, they’re not going to make it into adulthood. And even if they do, the trauma of having been homeless as a child, and the adverse childhood experiences that come from that, stay with them, decades after they were homeless.

Kurt 

You told me a story along those lines about some intergenerational homelessness that you observed. What does that look like?

Jason 

Well, you know, and that’s exactly what we’re getting at. If you are a child who is homeless, and you look at the stats that I just told you about, I mean, who are we kidding? When less than 25% of you graduate from high school, when you have three times the rate of behavioral and emotional problems, twice the rate of learning disabilities, and are sick four times more often, you’re going to grow up either into poverty or in homelessness. And we see that in the homeless world. I used to run a program that had both a single women’s shelter and a family shelter. Different programs. And it wasn’t uncommon at all for someone to come in and say, ‘I was here as a child and now I’m back here with my child, as a mother and a child.’ That was very common. And it wasn’t even uncommon, and not quite as common as what I just said, but it wasn’t uncommon to occasionally see a single grandmother in our single women’s shelter, her daughter and her granddaughter in our family program. Three generations. And you think, we’re just perpetuating the cycle of poverty, intergenerational poverty, and intergenerational homelessness. We all know about intergenerational poverty. It’s also intergenerational homelessness if we don’t actually tackle these underlying causes of homelessness, and if we don’t deal with the impacts of people who are homeless very quickly, especially with children and families.

Kurt 

Going back to your earlier comment that many families in that 120 million are one financial crisis away from being homeless, right, they’re in an unstable situation, they don’t have enough savings to weather a layoff or an illness. So clearly the last 12 months, the pandemic is making this worse, even though we’ve put some moratoriums on paying rent and so forth, those debts are going to come due, right? So, this is just accelerating rapidly.

Jason 

You know, yes, we are. We are holding off a tidal wave. But that doesn’t mean it’s not a tidal wave that’s going to eventually hit. Today, 38 million U.S. households, one in three, struggle with housing costs that jeopardize their financial security. 16 million households already pay more than 50% of their income for housing. Already do that. There are 30 to 40 million renters. That’s 30 to 40% of all renters, who as of December 2020, were at risk of eviction. That’s a tidal wave that is going to come and hit. The moratoriums are absolutely necessary. They’re critical. They’re important, they are holding off a disaster. But it doesn’t mean that if you were at risk of eviction in September because you owed $3,000, you now owe $6,000. The moratorium is not getting rid of the fact that you owe $6,000, it just means you can’t be evicted until COVID has ended, or January or February, depending on when the moratorium ends in your state. Once the moratorium ends, that debt is still there, and those evictions are going to come. I think we are looking at a wave of evictions coming at us. And again, when you look at the people who are both unable to pay rent on time or have slight or no confidence in their ability to pay rent on time, here are some of those numbers. One quarter of Black renters, one quarter of Latinx renters, one quarter of renters with children, are already unable to pay their rent on time. Those are July numbers. So probably north of there now. Four out of 10 African Americans, five out of 10 (one out of two) Latinx renters, and four and a half out of 10 renters with children already have slight or no confidence in their ability to pay rent on time, meaning they’re about to fall into that unable to pay category. And in both of those two sets of numbers, again, Black and Latinx renters are twice the rate of whites and renters with children are twice the rate of renters without children. So, it’s a disproportionate impact on how this is hitting the country. The moratoriums are great. But I want to make sure we put it in perspective. All that means is those people are going to become homeless, are going to get evicted, when COVID isn’t an issue. That means they’re just going to be evicted in a normal bad situation, and that’s very important that’s not happening in the midst of COVID. But it’s not solving the underlying problem of housing. And, again, the impact on healthcare, diabetes, heart disease, things like that. It just means they won’t happen in the middle of a pandemic. They’re still going to happen.

Kurt 

Right. Yeah, exactly. We’ve established that this is a massive problem and it’s growing rapidly, and there are incredible downstream impacts to health and employment and family and other things, just by virtue of being homeless or housing unstable, and it affects almost half the country — somewhere between a third and a half of the country — and of course, that the pandemic is making this worse. So clearly, this is a problem. So maybe let’s shift a little bit to what do we do? Why isn’t there enough housing? Why is it too expensive?

Jason 

Well, we can certainly come to that. And that’s the underlying question. But I think even you know, going into it, the context of what you just said is really important — the percentages, the ratios of people who are struggling. And the thing is, it’s not only people without jobs, yes, you know, when COVID hit in March of last year, at that point, there were 152 million jobs in the country. Today, we’re still 10 million shy of that. We lost 25 million jobs. We pulled back 15 but 10 million less jobs in the country, and the unemployment rate has also almost doubled from where we were. But it’s the long-term unemployment rate. And I’m going to come back to your question in just a second. That’s really worrisome in February 2020, long term unemployment, which is defined as meaning you’ve been unemployed — within the unemployment number — 27 weeks or longer. So, in February 2020, of the people who were unemployed, 19.2% have been unemployed for 27 weeks or longer. In December, that number had doubled to 37.1%. So, 37.1% of people who have been unemployed have been unemployed for 27 weeks or longer. And that long-term unemployment is a leading indicator of those eviction numbers or those at-risk of eviction numbers that we talked about and that’s the unemployed. But there’s also a flipside to that, Kurt. And that’s that even people who are working, even people who are working, can’t afford rent anymore, because of what you just talked about — affordable housing. Today, as I mentioned earlier, you know, homelessness used to be about mental illness or substance abuse. Now, it’s just increasingly about economics. You may not be mentally ill, you may not be substance abusing, you may not have a job. But you might also have a job. Very often, you have a job, but you can’t stop yourself from falling into homelessness, or getting out of homelessness. And that’s really sobering because the working poor have given way to the working homeless. Let me repeat that again, and just let it sink in. The working poor have given way to the working homeless. When I was running homeless programs, we meant workforce education programs, we had job vocational training programs, we had job placement agencies, all within the same, you know, set of companies. We had people who we were training in job sectors that were growing, they got jobs working 40 hours a week. And our average starting wage was 28% above the minimum wage. And there was no chance for them to get out of homelessness. There was no apartment that they could afford. So, think about that. We just said, do everything we tell you to, go get job training, go to the job placement service we offer, get a job, work 40 hours a week, don’t even make minimum wage — make 28% a month minimum wage. And they come back and say, ‘Well, what on earth do I need to do to get out of homelessness? Because I just did everything you told me to do.’

Kurt 

Wait. So, you’re saying if someone gets a job at $15 an hour, so they’re making $30,000 a year, they can’t they still can’t afford a house in many locations?

Jason 

Well, yes, exactly. And let’s look at that number really specifically. And I am going to take some of the higher cost areas to do this, but they’re illustrative. Take San Francisco, number one, number two high—cost area in the country, but it’s true in New York. It’s true in Stamford, Connecticut, it’s true in Minneapolis, where you are. The fair market rate for a studio apartment — and by the way, good luck finding an FMR, fair market rate apartment, good luck finding it — let’s just for the hell of it, pretend they exist, they cost $2,014 a month. In order for you not to spend more than 30% of your income on rent, you need to earn $38.73 an hour or $80,566 a year, or 2.6 times. 2.6. I get 28% more. 2.6 times the minimum wage. And that’s the FMR number. Let’s get real, the actual average rent and I happen to know that number is $2,461. For an average studio in San Francisco, you need to earn $98,500, just shy of that a year, you need to earn $47.33 an hour or 3.2 times the minimum wage. And gosh forbid, you are a family with two children — or one child. If you needed a two-bedroom apartment, the average rent is $4,377 a month. That’s very high, I understand. But this applies across the country. Your required income, just to spend 30% of your income on rent, is $175,000 or $84 an hour or 5.6 times the minimum wage. Now, yes, that’s a high-end situation. But this is illustrative of what’s happening throughout the country. You can earn way more than minimum wage and still not be able to afford rent.

Kurt 

So, all right, so in San Francisco, unless I make six figures as a single person, I’m housing unstable.

Jason 

Unless you make six figures, you are paying more than 30% of your income to rent. And that now starts to impact everything else you need in life, from clothing, to food, to medicine, to things like that, to insurance that’s not covered by work and all of that.

Kurt 

And if I’m a family, I need $175,000 a year income. Now, clearly, this is San Francisco. So, if I go to Omaha, or I go to, you know, some other — Minneapolis or some other town, does that get better? It must get better.

Jason 

The numbers drop, but not to where they need to. Like I said, you know, at the homeless program that I used to run, we had people who were earning 28% (I’m going to do you know, from the bottom side up) we had people who were earning 28% above the minimum wage, you’d think that’s pretty good, and they had no chance of getting out of homelessness, they were nowhere close to being able to afford a studio in Stamford, Connecticut, nowhere close. And that’s true, you know, almost everywhere in the nation, you will see that even if you earned that minimum wage. And so, you know, here’s the dirty little secret. It’s devastatingly simple. To be housed, to afford housing, one of two things needs to happen. You either need to earn enough money to afford that house, that market rate house, or the market rate house has to drop in price, either the price of rent has to drop, or we have to pay more to get there. So, you know, we can talk about $15 minimum wages across the nation. And I think that’s a great start, and I’m all in favor of it. But still, literally unless we get to $20, $25 minimum wages in many of these places — and that’s going to kill business, that’s going to kill small businesses — unless we get to that, people can’t afford the rent, there’s this dislocation. So, either the people earn more so they can afford what the rent is, or their rent comes down so they can afford it on their existing salary. But if we don’t figure out how to fix that, we’re going to see more and more people struggling with homelessness and couch surfing or being housing unstable. And keep in mind when you are housing unstable, or if you are not yet evicted, and you are still in your house, but you know that you are not able to make the rent, you know, the eviction is coming, you don’t know how long it’s going to be or when it’s going to be — the stress of that alone, you know better than anybody at Carrot Health — the stress of that alone leads to hypertension, leads to heart issues, leads to mental health issues, and has a huge impact on health outcomes, which by the way, we then end up paying for on the healthcare system side of things.

Kurt 

Oh, absolutely. We, you know, we see it all day long in terms of the ability to manage your disease, the ability to take care of your health, the ability to, you know, go to the pharmacy and pick up your insulin and refrigerate it and take it on time. Like all of those things drop off dramatically when someone is in a housing unstable situation, let alone homelessness, and the costs to the health system are massive. So, alright, so there are two solutions, we can pay people more which probably, you know, you and I can’t affect today. Or we can provide housing at cheaper rates. How do we do that?

Jason 

That’s where we have to do it because even if you get to $15, it’s not the answer. You just saw that with some of the San Francisco numbers, but even in other cities, the ones you mentioned, you know, $15 and may not do it. The way we have to do it is make housing affordable by bringing down the cost of housing. And I do think there’s a way to do that. It has to go with getting what’s known as a capital stack. The financing, right? But here’s the other thing, you know, until we do that, what’s happening is really, it’s almost self-fulfilling, or truly debilitating to the system. When you think about someone who falls into homelessness, here’s what happens. They’re on the street or they come into shelter. Then they move into transitional housing. And then there’s this huge Grand Canyon-like jump that people are meant to make into affordable housing. And on the other end of that is market rate housing. The trouble is that gap between transitional housing and affordable housing, it’s too far for most people to jump. And here’s the other thing. Cities talk about building affordable housing. Right? We talk about affordable housing all the time. Here’s the dirty little secret about affordable housing. It is targeted to people earning 50 to 62, sometimes even 80% of what’s known as area median income, AMI. Sometimes an area median income — a city is within an area — so take Stamford, Connecticut, where I used to work. It’s surrounded by places like Greenwich, and New Canaan, and Darien — high cost of living, so people are homeless. The area median income can be one thing, but the city a median income is very different. So people who are at 50% of the area median income are actually 80% of Stanford’s median income, or city’s median income, which means when we talk about building affordable housing at 50 to 60%, you’re talking about building it where people have to earn 80% of AMI to afford it. That’s not many people are doing that. Not many people can afford that. And on top of which, when you’re earning 30% of AMI, 35% of AMI, 25% of AMI, those are the numbers closer to the minimum wage numbers. Even if I put you on a list for affordable housing, even if you wait two years to get off of it, three years to get off of it, when your time comes, guess what the landlord does. He jumps over you to the guy who’s making 50% of the area median income. Why? Because that person is more likely to make the rent. And if I want to be politically incorrect, the person probably looks right for the building. And what happens is they’ll find some way to jump over you — you had a credit card problem three years ago. Well, of course, I had a credit card problem three years ago, I’m homeless, I stopped paying my credit card bill before I stopped paying my rent. Of course, I do. So now they skipped over you, you can’t get into affordable housing. And now what happened? You’re stuck in the homeless system. And what we end up doing is we put you in after years of waiting, we’ll put you into permanent supportive housing, which is very expensive, cheaper than living on the street, very expensive. But the thing is, guess what? You don’t need permanent supportive housing. You just needed a place you could afford. You can afford $1,000 for rent; you just can’t afford $1,500 a month for rent. Does that make sense?

Kurt 

Yeah. So, let’s talk more about that gap. So, describe who can afford transitional housing and who’s that targeted to? And then what’s that missing piece between transitional and affordable?

Jason 

Well, a transitional housing shelter, essentially, transitional housing is you’re still in housing, it’s just you can be up there, in that kind of a program, for two years. On affordable housing, it’s not market rate housing, it’s you pay rent, you pay a set number, but it’s it is targeted typically for people, as I said, at 50% to 60% to 80% of the area median income. So if you are earning $20,000 a year, let’s say 20% of the AMI, and I’m earning $50,000, who do you think the landlord is going to take, even if you’re ahead of me on the list, they see you earning $20,000, they see me earning $50,000, they think I’m more likely to pay the rent, which is a reduced rent. But they think I’m more likely to pay the rent, they jumped over you, to me and people like you get left behind in the homeless shelter, even though you’re working. And you could have afforded rent, you just can’t afford the market rate. So, what we have to do is build deeply affordable housing.

Kurt 

So, you’ve done this before, right? You’ve gone in and you’ve built housing in that sort of middle gap area. You talk about getting the capital stack right. You’ve done this without outside capital without government funding. What does capital stack mean? And how do you address the problem here?

Jason 

Well, first of all, you start by thinking, who are we really trying to build housing for? And what we’ve called it, and it’s a new concept in affordable housing and recognizes it’s changing and addresses the changing face of homelessness, and it fills that devastating gap between transitional housing and typical affordable housing, we call it deeply affordable housing. And we’re targeting those people who are earning an income, they’re earning minimum wage to maybe 150% of minimum wage. And it’s the people in the 25 to 35% of area median income, rather than the 50 to 60%. So, it’s a different type of person we’re building the housing for. And the thing about deeply affordable housing that is sort of its genius is it addresses both the frontend and the backend of homelessness at the same time. It stops people from falling into homelessness because when they lose their apartment, take a single mom living in a studio with their kids. She’s paying $1,000 a month and all of a sudden, the landlord comes in and says, you know starting next month is $1,500 a month and the mom I’m clearing 100 bucks a month. I can’t afford that. You can have my 100 bucks, but you can’t, I don’t have the 1500. And she’s on the street. But if we built housing for her to $1,000, she wouldn’t be. That’s what this does is it stops people from falling into homelessness. And for that person who’s earning 25% to 50% of minimum wage working 40 hours a week, like I described, earlier, they did everything we told you, this is their way out of homelessness on the backend. To do it, you have to get the financing, right, the capital stack, right. So that you can build the building, and charge rents that are still just a third of what typical market rates would be. And we did this in Stamford, we built a building that is 46,000 square feet, 53 units in this building. But here’s the key. 26 of them were studios, but 17 of them were two bedrooms for families. And 10 of them were three bedrooms for families. And then we also thought, who are we talking about? We’re talking about a lot of single moms very often, sometimes single dads, but single moms, single parents in those two and three bedrooms, we built an early head start program in the building in the basement. So, there’s daycare on site. We got the capital stack right. So that we didn’t have to, in the end, we actually didn’t even have to take on debt to build this building, we were able to get it done through some private donations, financing, and something called fee in lieu money, I can speak to that in a minute. But you can take on debt — when we started building this building, we thought, we’re going to need to raise $3 million, we can finance $5 million of it, and with the rents that are coming in, we can pay that debt on the $5 million. The secret in doing this, though, is to keep your cost of construction as low as you can. Doesn’t mean it’s not a good-looking building — this building has beautiful floors, beautiful cabinetry, granite countertops, you know, it’s gorgeous. But we kept the price low, in part because we didn’t trigger what’s known as prevailing wages. When you take government money, you almost always trigger prevailing wages. There are some pockets where you don’t have to, but you almost always trigger prevailing wages. I built another building 200 yards away from this building I just talked about, it was only 36,000 square feet, I had no school and it was 40 studios and eight one-bedrooms. Much smaller. That building — and I owned the land — cost $17.5 million, without the land. Because we took government money, we triggered prevailing wages. The other building, the first building cost just under $8 million, of which $1.7 million was spent on buying land. So, triggering prevailing wages is not all that different, but a huge part of that. And when you keep that cost to build low, and you can find very low rates today, especially for this type of housing, because you can get Community Reinvestment Act money, and things like that. You can keep your rents low, even with debt. So, this building I was talking about, our studios cost $491 a month, instead of $1500 a month, the two bedrooms costs $735 a month, instead of $2,500 a month. And the three bedrooms cost just over $800 a month instead of$ 3,500 a month. And the building breaks even from day one. No vouchers, nothing.

Kurt 

So you built that with half the cost, less than half the cost of a traditional development right next door, and were able to create rents, create more housing, create rents, that drop the price to the point where they’re affordable to people making 20 to 30% more than minimum wage. That’s incredible.

Jason 

It can be done. And it takes a look, it takes creativity, it takes innovation and takes collaboration. So, you know, the way we did this is we saw a plot of land. It happened to be on a dead-end street. We asked the city to discontinue the street because we were everything on the street at this point. There was this tiny little parking lot that the city owned next to it. And we said if you’re going to give us a street, why don’t you just give us the parking lot. And when we bought the bookend lot on the other side, we consolidated it into one package. We told the city, ‘If we’re going to build this for you, we’re not going to pay property tax. We’re taking all these people off the street and we’re not-for-profit. So, we don’t pay property tax.’ And, and the mayor looked at me said, ‘I’m losing money. I could make money on that.’ And I said, ‘Yes. And I could also put 125 people on the street, and that would cost you a lot more money, wouldn’t it?’ Well, he didn’t even finish the sentence when he said, ‘You’re right. We’ll do it.’ We got donations for $2.5 million, we put together some other kind of financing, but we could have taken on debt, or we could have taken on debt at a commercial rate. You go to a bank that has obligations to pay Community Reinvestment Act money, they have to give you low rates, they have to do this by law, they have to get a certain number of credits per year. And they do this by issuing low rates, and all of a sudden, you can put it together. But if I had built that building with government money, I would have had to pay a lot more for construction. And by the way, I want to be clear, this isn’t about, you know, driving people to the bottom who are building the building, right? We don’t want that. I’m just talking about the guy who holds a stop sign or something like that doesn’t need to make $60 an hour, to do that. I’m making up numbers. But you know, you don’t need to make those numbers. All we’re saying is don’t tie our hands. From all the other developers in town who are building with their own money or building with commercial money who are paying market rates for labor, just let us pay market rates for labor.

Kurt 

That’s that that makes a lot of sense. So, I could summarize this whole thread, it’s kind of sounds like there isn’t enough housing. And it’s too expensive, because there isn’t enough housing. And if we can just create more housing, more is more, the prices go down and we can make this affordable in a way that it hasn’t been historically. It’s been pricing more and more people out of the market.

Jason 

100% correct. And here’s the thing, if we don’t do this, we put people into permanent supportive housing. And what are those three words in that statement, permanent housing, with supportive in the middle, the trouble is permanent supportive housing with the old face of homelessness, mental illness, substance abuse, other disabilities — to be sure we still need a lot of it. We need it for people who are mentally ill, who are substance abusers, who have other disabilities — who need it. But a large part of the people, the majority of people who are homeless today are not those who are mentally ill, substance abusing, or other diseases and disabilities. And yet, if we don’t build this type of housing, the only type of only way they can get out of homelessness is permanent supportive housing, which they don’t need, and which is really expensive. So, this same building that I just spoke about, if we had built in a permanent supportive housing for getting them back, that it would have cost a lot more to build, and the government would have had to pay for it. But just the ongoing subsidies that would have been necessary, if only half of the units in that building had a subsidy, not even the full building, if only half had it, over 20 years, that would have cost the government almost $11 million in ongoing subsidies instead of zero. And the way we built it, instead, it costs the government zero in ongoing subsidies, and it actually makes money for the not-for-profit, it actually makes almost $5 million over 20 years, which that not-for-profit uses to fund programs.

Kurt 

Well, and clearly, we’re not going to create permanent supportive housing for 120 million people in this country, right, that’s just not the direction we’re going down. We need to create a way that the market can fund housing that people can afford. And I think this is where this conversation is fascinating to me, because as we work with health payers and providers and employers and others who are all asking, how do we solve this problem for our members and our patients and our employees? In my mind, this model that you described is a great way for those entities to help intervene in their communities. Health insurance companies have money to invest in housing projects. I don’t think they know that it’s possible to do what you’re talking about. The same with self-insured employers. There are many employers that have employees in these wage categories, and their employees can’t find places to live. Well, that makes it really hard to recruit employees, it makes it hard to make productive employees and keep them, not to mention the healthcare costs that those individuals incur down the road. So, if we can create a way that they can pay for these things, and save money down the road from healthcare costs, everybody wins. And we can solve this housing crisis once and for all.

Jason 

You are absolutely right, you’re 100% correct. We need to figure out a way, first of all, to make housing affordable for people who are not in need of permanent supportive housing — the 10s and 10s of millions of people in that 125 million category that we just talked about. And there are pots of money, it’s just that people have not realized that the face of homelessness has changed. And when they do realize that, they’re still trying to apply the same old models to a different population. They’re applying affordable housing at 50 or 60%, or they’re applying permanent supportive housing. And they are using old models to try and fix a different face of homelessness, a changed face of homelessness. And there are ways to find answers outside of government. You nailed it. Health insurance companies, Kaiser Permanente in 2018 launched a $200 million fund, UnitedHealthcare a $300 million fund launched I think around 2011, Phantom $380 million, JP Morgan a $500 million commitment to corporate social responsibility in September 2018. And then there are, you know, from the banks, again, there’s also Community Reinvestment Act, where they have to get credit. And this is the way they get credit, they make loans, cheap loans, instead of at 3%. They do it at, you can get them at 1.5%. And that means you can take on a lot more debt to build that $10 million building, because it’s only costing you 1.5%, right. And if you can take on a lot more debt, you have to raise just a little bit more money, which you can raise from that healthcare company, or that corporate social responsibility initiative, or how about foundations, I mean, even just, you know, Jeff Bezos in 2018, you know, $2 billion, and he’s done a lot more since then. But $2 billion for affordable housing, how about deeply affordable housing. And then there’s tax credits, there are opportunity tax credits, there are low income housing tax credits, and even though those are tax credits, from the government, very often, those don’t trigger prevailing wages. There are pockets of government money, while most government money triggers prevailing wages, sometimes bonding money, sometimes tax credit money, sometimes 9% tax credit in the low income, housing tax credit programs don’t necessarily trigger prevailing wages. The trick is to not trigger prevailing wages. And you can do that by either tax credit foundations, healthcare companies, banks, and all of it will pay an ROI many, many, many multiples of what is invested in terms of savings on health outcomes down the road, short term, and even more long term when you’re talking about families and children.

Kurt

I love it. Jason, your passion and vision on this topic is superb, and it really just, it’s so energizing to see an actual solution to some of the things that we’ve been highlighting in the data for many years, and I hope we can continue this conversation. Thank you for joining us this afternoon.

Jason

It’s been a great pleasure. Thank you for having me.