A new housing development in Arizona checks off a lot of special-feature boxes. It has built-ins, must-haves and amenities, including a fabulous pool. Planning and design have “live, work, play” written all over it.
The price will be right, of course. Affordable housing development partners, including the state’s Medicaid program (AHCCCS), health care insurers, non-traditional lenders and LISC Phoenix, will make sure of that.
The design and activation of the new Home Matters Arizona Fund is the important new development in Arizona affordable housing. The fund is a model for increasing affordable housing and improving health outcomes through innovative public policy, cross-sector collaboration and leveraging resources.
Arizona’s health care and community development sectors designed and activated a unique $100 million fund to create more and better affordable housing. The goal is to build additional units that strategically addresses the social determinants of health for Arizona Health Care Cost Containment System (AHCCCS) members and provide opportunities for low-income residents to live well in the essential, equitable senses of the term.
“Eighty percent of a person’s health outcomes are tied to something other than clinical visits or clinical status,” Jami Snyder, director of AHCCCS, said. “Housing is one of a myriad of factors that can contribute to poor health outcomes if in fact individuals are not able to stabilize in housing. What is great is that health plans (that contract with AHCCCS) recognize that as well.”
But knowledge and individual effort among AHCCCS providers alone couldn’t begin to put a dent in the estimated 200,000 affordable housing units needed in Arizona. AHCCCS has a budget of $30 million for rent subsidies for members, but there often is no unit available or units are located where there is limited access to what the member needs.
About two years ago, representatives of LISC Phoenix, the Federal Reserve Bank of San Francisco and Vitalyst Health Foundation began community conversations about how to address the affordable housing crisis. The tools in place weren’t strong enough to make a difference in creating healthy communities with excellent affordable housing opportunities.
Those talks began about the same time AHCCCS implemented a contract provision that required health plans to reinvest 6 percent of their annual profits in their communities. Health plans embraced the idea to commit half of their community reinvestment dollars into what’s now called the Home Matters Arizona Fund for grants that support projects that meet criteria related to social determinants of health. This year that fund contribution is about $2 million.
In addition to the grants, health care companies that do business in Arizona -- Aetna, Dignity Health, CVS Health and United Healthcare – have added $35 million to the fund for a new debt pool of low-interest financing for affordable housing projects that help meet health goals. The fund, which is managed by LISC Phoenix, is expected to attract additional capital. A steady stream of new housing units combined with the AHCCCS rent subsidy will be a powerful combination in Arizona.
“The insurers could have taken the easier path of simply donating their required contributions to nonprofits,” said Terry Benelli, executive director of LISC Phoenix. “Instead, they set a higher standard. They came together to thoughtfully consider how their money could have more impact, leveraging their own contributions with their competitors.”
“They didn’t need to put their money together; they didn’t need to come together and make this decision,” said Terry Benelli, executive director of LISC Phoenix. “They could have all taken the 6 percent they’re required to give back to the community and directed it to various nonprofits.”
Leveraging resources in a coordinated effort adds affordable housing units that meet the needs of their members. They will be located in walkable neighborhoods where residents have easy access to public transportation that leads to job centers, education opportunities, medical care and healthy food choices.
Joselyn Cousins, who manages community development field work at the Federal Reserve Bank of San Francisco, said the fund is the result of due diligence and evidenced-based decision-making that works for Arizona and could be replicated elsewhere.
“This was a perfect example of how a number of sectors came together, building on the success of what's been achieved in other places, to develop a solution to a housing issue impacting low-income residents,” said Cousins, who was part of the initial talks that led to the fund. “It’s definitely a win-win situation when we see partners from across different sectors collaborate in a very intentional way to address an issue. It takes commitment from a variety of partners to make successful change happen.”
Successful change should help avoid repeating a history of building affordable housing units near industrial areas or on the outskirts of town where there are limited resources for residents and minimal opportunities for exercise or recreation.
The aligned strategy of the statewide fund, with its focus on social determinants of health and with a healthy community framework, not only will help address the affordable housing shortage but will encourage affordable housing development that serves health plan members in ways that help reduce unnecessary use of emergency departments and reduce the number of hospitalizations.
“So, in order for a developer to be able to access these funds they have to be able to provide a vision of how they’re creating a home for somebody, not just creating a solution to put them in a housing situation,” said James Stover, Medicaid president at Arizona Complete Health. “I think that the difference (with this approach) is that it’s really looking at creating communities as opposed to just creating housing units for people to live in.”
Lorry Bottrill, CEO of Mercy Care, said the fund’s application review committee hopes to select the first, shovel-ready project in October. The goal is to award funding to a project every quarter.
Bottrill said she is excited about what the fund will do for housing and individual and community health outcomes in Arizona.
“Individually, as one plan, we can have impact,” Bottrill said. “But when we start combining all this together and get insight from others, learn about other communities and other needs, I just really think the value is going to be amazing.”
Cousins of the San Francisco Fed said she’s optimistic the new fund will grow, and the successful model created in Arizona will be replicated in other states.
“I’m excited that the housing fund has now come to fruition and that all the partners are committed,” Cousins said. “It’s taken years to develop it, but it was only possible because of dedicated stakeholders like LISC and the health sector folks. Community partners in Arizona are all about making things happen and getting the job done.”