For all the buzz words and alphabet soup that come with developing affordable housing, often the largest driver of costs at an asset is overlooked —the residents. Even though the sectors of the United States economy are showing signs of recovery to pre-recession levels, those living in need of quality affordable housing are still struggling. Recently, the National Low Income Housing Coalition reported in its ‘Housing Spotlight’ that the number of households defined as extremely low income (at or below 30% of the area median income) actually increased from 9.6 million in 2009 to 10.3 million in 2013. This population made up 24% of all renter households in 2013 and was found to spend more than half their income on rent and utilities.
At these levels, any unplanned household expense such as an auto repair or medical emergency can wreak havoc on the family budget. It is at these times of crisis that a service-enriched housing model can do the most good. Working directly with the residents, Resident Service Coordinators (RSC) can provide programming and support that will help guide families out of crisis. Connections to short-term rent assistance, financial literacy programming, life-skills training and job placement assistance offer an opportunity for that resident to not only remain in their home, but also thrive long term in it.
However, service-enriched housing means more than just making services available to the residents. Truly understanding how an individual or family’s behavior is changing requires significant monitoring and tracking. It is no longer sufficient to only record an individual interaction, but a much broader net must be cast in order to draw relevant and accurate conclusions as to the effectiveness of the services being provided. For years Rainbow Housing Assistance Corp. (Rainbow) has tracked nearly 10 different budget expenditures within a community in order to assess the true positive financial impact that services can have. One example is Champion Townhomes in Houston, which deployed a service-enriched housing model and saw a 52.7% return on investment the first year and a subsequent additional 36.2% return the second year. These numbers were arrived at by looking at savings garnered due to a reduction in items such as vacancy loss, bad debt write-offs, legal fees involved in the eviction process, and actual costs of turning a unit. Occupancy numbers at this particular community also rose over 10 points to be sustained over 90%.
Setting this baseline for success here and at other communities across the country, the natural next progression is to increase penetration and engage more residents in the programming. With a focus on both a broader and deeper reach, the RSC at Champion Townhomes was able to increase programming participation and attendance by nearly 200%. This dramatic increase directly correlated to significant year over year reductions in vacancy loss, 7% at this one property alone. Another community in the same metropolitan area benefited from a 40% reduction in vacancy loss under the same effort in 2014.
Combined these types of numbers illustrate that the provision of a service-housing enriched model offers developers of affordable housing one of the best rates of return available. In fact, in some cases it can more than pay for itself over the term of a long-term agreement with a service provider. Apart from ensuring full regulatory compliance, resident services give owners and developers a catalyst for stable financial performance. When residents work with supportive service providers to get on a realistic path to self-sufficiency, they are more economically stable and become longer term residents. Thus, there is a clear correlation between the stability of the resident population and the financial health of the property. The data clearly shows that when communities provide supportive services, the asset as a whole benefits allowing it to remain in service and house individuals who need affordable housing.
Integrating service-enriched housing programs and services into a community provides the resources needed to advance the tenant’s social and economic skills, thus stabilizing the resident population. In turn, this will drive solvency of a community and improve the financial performance of an asset.
Flynann Janisse is the executive director of Rainbow Housing Assistance Corp., a nonprofit organization that provides service-enriched housing programs for residents of rental housing communities throughout the country.