At AHIC’s 2024 Fall Affordable Housing Summit, the session titled "Permanent Supportive Housing: Navigating Challenges and Optimizing Success" brought together experts to discuss the growing role of Permanent Supportive Housing (PSH) in addressing homelessness and housing instability. The panel, moderated by Deborah DeSantis, President of CSH, featured industry leaders including Debbie Burkart, Managing Director of Supportive Housing at National Equity Fund; Michael Dehmler, Managing Member at CSD Housing; and Daniel Malone, Executive Director of DESC. These experts explored both the successes and the challenges associated with PSH developments, while also sharing best practices for ensuring the long-term viability of these projects.
The discussion focused on the evolving landscape of PSH, the operational hurdles involved in running these projects, and strategies for maintaining financial sustainability. The speakers also addressed some recent setbacks in the industry and outlined lessons learned that could guide future PSH efforts.
What Is Permanent Supportive Housing?
The session began with a discussion on the definition of Permanent Supportive Housing (PSH) and the various forms it can take. Daniel Malone provided a clear explanation of PSH as rental housing designed for people who have experienced significant challenges, such as chronic homelessness or severe mental illness, and who require comprehensive support services to succeed in maintaining housing stability. This form of housing is not just about providing a roof over someone's head; it includes robust services such as mental health care, substance use treatment, and case management.
Malone noted that PSH has evolved over time, and the term "supportive housing" has often been used inaccurately. He emphasized that true PSH focuses on housing stability for people with high needs, coupled with intensive services designed to help residents manage their conditions and lead more independent lives.
Debbie Burkart added that one key characteristic of PSH is that it removes barriers to entry—like requiring tenants to be sober or employed before they can move in—while ensuring that the housing is permanent and residents are supported over the long term.
The Complexity of Financing PSH Projects
One of the most significant challenges in developing PSH is the complexity of financing. PSH projects often require multiple layers of funding, including federal Low-Income Housing Tax Credits (LIHTC), project-based Section 8 vouchers, and Medicaid funds for the services component. Debbie Burkart explained that LIHTC is crucial for the housing portion of PSH developments, but it is rarely enough to cover the full cost, especially when services are factored in.
Michael Dehmler from CSD Housing provided insights into how developers can navigate the complex financial structures needed to make PSH projects viable. His firm has developed 23 PSH projects across New York, each requiring careful coordination between various funding streams, including state and local government subsidies and private investment. Dehmler emphasized the importance of understanding how different funding sources interact, particularly when it comes to securing sustainable service funding, which often comes from Medicaid or other healthcare programs.
The panelists also noted the importance of partnerships between housing developers and service providers. These partnerships are essential for ensuring that service funding is available and that services are delivered effectively. For example, DESC, under Malone’s leadership, operates as both the housing developer and the service provider for its PSH projects, allowing for greater coordination and integration of services.
Operational Challenges and Staffing
Once financing is secured, PSH projects face significant operational challenges, particularly when it comes to staffing and service delivery. Daniel Malone highlighted the difficulty of finding and retaining qualified staff, a challenge that has been exacerbated by the COVID-19 pandemic. High staff turnover can lead to inconsistent service delivery, which can negatively impact tenants' stability and outcomes.
Malone shared that DESC has responded to this challenge by significantly increasing wages for their entry-level staff, raising starting pay to $30 per hour. This increase was made possible through a multi-year effort to secure additional funding from local government sources, including pandemic relief funds. According to Malone, this wage increase has stabilized staffing levels and improved service quality in their PSH projects.
Michael Dehmler echoed Malone’s concerns about staffing, noting that in many PSH projects, service providers are contracted separately from property management teams. This can create challenges in communication and coordination. Dehmler stressed the importance of ensuring that service providers are integrated into the project from the beginning and that both property management and service teams work closely together to support tenants.
Lessons Learned from Industry Setbacks
The panel also addressed recent industry setbacks, including the struggles faced by two prominent PSH organizations: Skid Row Housing Trust in Los Angeles and Heartland Housing in Chicago. Both organizations have been in receivership due to financial and operational difficulties, providing important lessons for the entire PSH sector.
Debbie Burkart explained that these organizations were early pioneers in PSH, but they encountered problems with aging properties and insufficient service funding. Many of the buildings developed by these organizations in the 1980s and 1990s were not designed to accommodate the high needs of their tenants, and the lack of ongoing maintenance funding led to deterioration.
Additionally, the financial models used by these early PSH projects did not account for long-term capital needs, such as building repairs or upgrades. Burkart emphasized the need for PSH developers to plan for long-term sustainability by building in sufficient reserves for capital improvements and ensuring that service funding keeps pace with tenants’ needs.
The failure of these organizations highlights the importance of maintaining strong leadership and governance structures. Burkart pointed out that both Skid Row and Heartland experienced significant turnover in leadership, which contributed to their decline. She suggested that PSH developers must pay close attention to governance, ensure board members are well-equipped to oversee complex projects, and invest in staff to retain institutional knowledge.
The Importance of Data and Outcomes
Another key takeaway from the session was the role of data in demonstrating the effectiveness of PSH. Daniel Malone noted that DESC has invested heavily in research partnerships to measure the impact of their PSH projects on tenants' health outcomes and overall well-being. These studies have shown that PSH not only improves the quality of life for tenants but also reduces public costs by decreasing the use of emergency services, hospitals, and jails.
By tracking outcomes such as reduced emergency room visits and improved mental health, PSH developers can make a strong case for continued funding from both government agencies and private investors. Debbie Burkart added that data is crucial for proving that PSH is an effective solution for homelessness, particularly when seeking support from policymakers and funders who may be unfamiliar with the model.
Overcoming NIMBYism and Engaging Communities
Community resistance to PSH developments—often referred to as NIMBYism (Not In My Backyard)—remains a significant barrier in many areas. Both Michael Dehmler and Daniel Malone shared their experiences navigating community opposition. Dehmler noted that while some communities are more accepting of PSH than others, many still harbor misconceptions about the people who live in supportive housing.
Malone emphasized that education and engagement are critical to overcoming NIMBYism. DESC has successfully worked with local government and community organizations to explain the benefits of PSH and to demonstrate that these developments reduce homelessness and improve community safety. He pointed out that once a PSH project is up and running, opposition often fades, as communities realize that PSH residents are good neighbors who contribute to the community.