Los Angeles County "Just-in-Reach" Project

Last updated Tuesday, October 17, 2017

Quick Facts

Over a five-year period, the Just in Reach (JIR) PFS will connect homeless, frequently incarcerated individuals in LA County Jail to jail in-reach services and, ultimately, to 300 permanent supportive housing slots. The goals of JIR PFS will be to improve the overall health and well-being of participants, and to increase public and private collaboration to improve the lives of some of the most vulnerable LA County residents with a focus on two metrics of success: reduced rates of re-incarceration and ending the cycle of homelessness. Currently, the project is in a pilot phase which launched in July 2016.

Analysis

  • Market Overview

    • Year Launched
      2017
    • Service Delivery Term (Years)
      4
    • Motivation for Project
      PFS financing provides a new platform to share the incredible systems change story of LA County while strengethening public-private partnerships that produce measurable positive impact. In addition, the County is interested in exploring performance based contracting beyond PFS.
    • Project Objective(s)
      Create 300 supportive housing slots for individuals with histories of homelessness and involvement with the LA County criminal justice system. This will result in improved outcomes for participants - namely, reduced jail recidivism, increased housing stability, and reductions in net costs to public systems.
    • Individuals Served
      300
    • Geography
      Los Angeles County
    • Issue Area
      Homelessness; Recidivism
    • Initial Investment ($ millions) [Note 2]
      10
    • [2] This category captures the initial private investment raised to support the project that has the potential to be repaid if the project achieves its pre-determined outcomes. Many projects, particularly those in the supportive housing and health arenas, leverage existing public resources, such as subsidized housing and health insurance, to achieve program impact; the value of these resources is not included in these dollar values but are discussed in more detail in Sections 7, 8 and 9 of this report.
  • Project Partners

    • Service Provider(s) [Note 1]
      Los Angeles County Department of Health Services Intensive Case Management Providers [Note 17]; Brilliant Corners [Note 18]
    • Payor(s) [Note 2]
      Los Angeles County; U.S. Department of Housing & Urban Development; California Board of State and Community Corrections
    • Transaction Coordinator(s) [Note 3]
      CSH
    • Evaluator [Note 4]
      RAND Corporation
    • Validator [Note 5]
      RAND Corporation
    • Project Manager [Note 6]
      CSH; National Council on Crime & Delinquency
    • External Legal Counsel [Note 7]
      Gibson, Dunn & Crutcher
    • Technical Assistance Provider(s) [Note 8]
      Third Sector Capital Partners; CSH
    • [1] Delivers program interventions to target population over the course of the PFS contract
    • [17] The Los Angeles County Department of Health Servicies Intensive Case Management Providers include the Amity Foundation, The People Concern (formerly LAMP), SSG-HOPICS (Project 180), and Volunteers of America Los Angeles.
    • [2] Makes payments when pre-determined outcomes have been met
    • [3]Roles and responsibilities may include: design and structure of PFS project and financing model; capital raise; stakeholder management; on-going performance management
    • [4] Design and implement plan for determining whether outcomes have been met
    • [5] Verify accuracy of data used in evaluation plan, or evaluation plan itself
    • [6] Intermediary during service delivery phase, and/or fiscal sponsor for project funds
    • [7] Provide assistance in drafting, reviewing and negotiating PFS contracts
    • [8] Provide support and expertise to project stakeholders in the project development and/or project implementation phases
  • Evidence and Program Design

    • Service Intervention(s) Model and/or Type
      Permanent supportive housing
    • Evidence base for intervention
      Local performance data (via the Enterprise Linkage Project [note 16], Housing for Health, and the JIR 2.0 pilot project); NYC Fuse [Note 17]; NY/NY III [Note 18]
    • Has effectiveness of the intervention for PFS project target population been evaluated?
      Yes
    • Has the service provider provided this intervention previously?
      Yes
    • Is PFS project: Scaling an existing intervention by replicating at a larger scale? Demonstrating the effect of a new program model or combination of services? Transplanting an existing intervention(s) to a new target population and/or service delivery setting?
      Scaling; Demonstrating
    • [17] The New York FUSE initiative is a supportive housing intervention targeting frequents users of jails, shelters, and emergency room services. Data was gathered from administrative sources – the New York City Departments of Corrections and Homeless Services – as well as at intake and at interviews given every six months. Results showed significant declines in shelter usage by nearly 90% and declines in jail usage by 40% over two years. Clients reported fewer psychiatric inpatient hospitalizations as well as reduced illicit drug use and ambulance usage. Through reduced use of jails, shelters, crisis care health services, each individual housed through FUSE generated over $15,000 in avoidable public cost offsets. Available at http://www.csh.org/wp-content/uploads/2014/01/FUSE-Eval-Report-Final_Linked.pdf
  • Evaluation

    • Evaluation Design Methodology
      Success metric calculation; broader impact analysis (includes Propensity Score matching components)
    • Data Source(s) for Evaluation
      Service providers via the Department of Health Services; Los Angeles County Sherriff's Department; Enterprise Linkage Project
    • Outcomes Tied to Success Payments
      1) Housing retention at six months and twelve months; 2) Reduction in number of arrests using two year period following placement into PSH
    • Outcomes Tracked, Not Tied to Success Payments
      Service utilization
    • Length of Evaluation Period
      4.5 years
  • Service Provider Characteristics and Service Delivery

    • Single or multiple service providers?
      Multiple
    • Service provider type(s) (nonprofit, government, private)
      Nonprofit
    • Service provider OR site selection method
      Los Angeles County DHS Intensive Case Management Providers listed on the County's Supportive Housing Services Master Agreement List and the Flexible Housing Subsidy Pool Operator (Brilliant Corners)
    • Service Provider Experience with PFS Intervention
      All four identified providers have experience providing key components of the intervention (jail in-reach and PSH) and are participating in the demonstration phase of the intervention as of August 2016; in addition, Brilliant Corners has successfully administered the Flexible Housing Subsidy Pool since 2014
    • Referral Method for PFS Target Population
      Jail clinicians; Jail-In-Reach providers; Diversion Courts
    • Did the project have a ramp-up phase? (Y/N; brief description)
      Yes: eleven month ramp-up phase
  • PFS Contracting and Governance

    • Operational Oversight Structure [Note 1]
      Operating Committee includes Los Angeles County Department of Health Services, LA County Office of Diversion and Reentry, CSH, and NCCD
    • Frequency of meetings and/or reports
      Monthly
    • Executive Oversight Structure [Note 2]
      Executive Steering Committee includes Los Angeles County Department of Health Services, LA County Office of Diversion and Reentry, Los Angeles County Chief Executive Office, CSH, and NCCD
    • Frequency of meetings
      Quarterly
    • Investor role in project governance?
      Can attend Steering Committee meetings, but will only have purview over budget monitoring and early termination questions
    • Frequency of reporting to investors
      Quarterly
    • Non-standard Contract Termination Events [Note 3]
      1) Inadequate number of housing placements; 2) Inadequate levels of housing retention rates; 3) Higher levels of arrest rates than anticipated
    • Appropriations Risk Mitigation Strategy [Note 4]
      Funds allocated through regular budget process
    • [1] Committee or working group involved in regular and/or day-to-day monitoring of project progress
    • [2] Oversight and decision-making body for PFS project
    • [3] Events that allow stakeholders to exit their contractual obligations, beyond those typically found in loan agreements and contracts
    • [4] Means by which to mitigate risk that funding is not available for investor repayment
  • Investors

    • Senior Investor/ Lender and Total Senior Investment ($MM)
      United Healthcare ($7)
    • Subordinate Investor/ Lender and Total Subordinate Investment ($MM)
      The Conrad N. Hilton Foundation ($3)
    • Deferred Fee Source and Total Deferred Fees ($MM)[Note 1]
      None
    • Recoverable Grant Source and Total Recoverable Grants($MM)[Note 2]
      None
    • Non-recoverable Grant Source and Total Non-recoverable Grants ($MM)[Note 3]
      None
    • Guarantor and Guarantee ($MM) [Note 4]
      None
    • Illinois Dually-Involved Youth Project
    • [1] Deferred fees are delayed payments for the services provided by service providers, transaction coordinators and/or project managers. Deferred fees are one way of structuring projects so that more stakeholders have a financial interest in ensuring project success.
    • [2]Philanthropies can use either their regular grant making protocols, or protocols for program-related investments (PRIs), to contribute to PFS capital stacks. If a foundation does not use a PRI, their investment may be structured as either a loan or a recoverable grant. The distinction between the two is in the expectation of repayment. A loan, even if from a philanthropic source, is expected to be repaid, and structured accordingly. A recoverable grant does not bear the same expectation of repayment.
    • [3] Non-recoverable grants are traditional grants contributed to capital stacks; if the project is successful and generates full repayment, the non-recoverable grants can remain with the service provider or project manager, or be recycled by the original funder.
  • Basic Repayment Structure

    • Initial Investment ($Millions)
      10
    • Maximum Repayment Funds Committed by Payor ($Millions)
      11.5
    • Full service delivery term (years)
      4
    • Full repayment period (years)
      4.5
    • Interim outcomes reported? Tied to payments?
      Yes/Yes
    • Sustainability/ Recycling of Funds
      Success payments made by the County will recycle back into the intervention to cover program costs; the maximum success payment allocation is $14.90, with only $11.5M of that available to investors as repayment; the rest is recycled into the program to support operations
  • Detailed Repayment Terms

    • Interest
      5% (senior); 2% (subordinate/PRI); 0% (subordinate/PRI) [Note 13]
    • Trigger for initial repayment of principal [Note 1]
      Six month housing stability (base case is 92%)
    • Threshold for full repayment of principal
      There are several scenarios in which investors will receive full repayment of principal. One scenario in which this could occur is: 70% housing stability at 6 and 12 months assuming 80% of the cohort has 2 or fewer arrests post PSH placement
    • Threshold for full repayment of principal plus maximum success payments
      There are several scenarios in which investors will receive full repayment of principal. One scenario in which this could occur is: 92% housing stability at 6 months, and 90% housing stability at 12 months assuming 80% of the cohort has 2 or fewer arrests post PSH placement
    • Repayment timing
      Year 4.5
    • Return to Investor [Note 2]
      15% maximum
    • Success Payment to Other Stakeholders? [Note 3]
      None
    • [13] The Conrad N. Hilton Foundation is investing $1.5 with a 0% interest rate and $1.5 with a 2% interest rate. The entire $3 investment is from the Foundation's Program Related Investment (PRI) resources.
    • [1] Initial repayment does not equate to full principal return. Investors may recover only part of their principal if projects do not meet a certain level of success.
    • [2] There is no standard methodology for calculating investor return. These numbers are what is publically reported, and comparing from one project to another may not be an apples-to-apples comparison for the reason of potentially different calculation methodologies. Calculation methodologies may be provided in investor agreements, which are not available publically and were not available for this report’s analysis.
    • [3] Success payments for other stakeholders such as project managers and service providers create a financial incentive for project success.
  • Project Costs

    • Project Development Costs Not Covered by PFS Capital Raise
      Feasibility analysis; evaluation design; transaction structuring
    • Funding source(s) for project development costs, if any
      The Conrad N. Hilton Foundation; The James Irvine Foundation
    • Project Implementation Costs not covered by PFS Capital
      ~$11 for: intensive case management services; move-in costs; evaluation; project manager costs; capacity building
    • Funding sources for implementation costs not covered by PFS capital
      LA County General Funds; Whole Person Care; HUD-DOJ PFS Demonstration Grant; BSCC PFS Grant