The Criminal Justice program will serve over 225 high-risk, high-need criminal offenders over six years using First Step House’s evidence-based REACH program. The REACH program will provide participants with tailored, evidence-based therapies, short-term housing support, and case management. These services will address criminogenic risks tied to recidivism, substance abuse, and mental health services. At the target impact level, the program will generate 26,800 fewer days in jail or prison and 225 fewer arrests and the County will make $5.95 million in success payments.
- Year Launched2017
- Service Delivery Term (Years)5
- Motivation for Project74% of high-risk offenders in Salt Lake County return to the criminal justice system within 4 years and on average spend over a year incarcerated during that time. Incarceration alone is not a solution. It is costly and the County jail already operates at full capacity. Additionally, the problem is worsening: over the past decade, Utah's prison population has grown by 18 percent.
- Project Objective(s)Provide risk-need informed behavioral health treatment, housing, and case management services to 225 formerly incarcerated adult males in order to lower the rate of recidivism and help these individuals recover stable lives
- Individuals Served225
- GeographySalt Lake County, UT
- Issue AreaRecidivism
- Initial Investment ($ millions) [Note 2]$11.50 (between two projects) [Note 4]
-  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.
-  The Salt Lake County Homes Not Jail and REACH programs are part of a single initiative that is pioneering a model to combine Pay for Success projects.
- Service Provider(s) [Note 1]First Step House
- Payor(s) [Note 2]Salt Lake County, Utah
- Transaction Coordinator(s) [Note 3]Third Sector Capital Partners
- Evaluator [Note 4]The University of Utah Criminal Justice Center
- Validator [Note 5]None
- Project Manager [Note 6]Community Foundation of Utah (Fiscal), Sorenson Impact Center (Programmatic)
- External Legal Counsel [Note 7]Dorsey & Whitney, LLP
- Technical Assistance Provider(s) [Note 8]None
-  Delivers program interventions to target population over the course of the PFS contract
-  Makes payments when pre-determined outcomes have been met
- Roles and responsibilities may include: design and structure of PFS project and financing model; capital raise; stakeholder management; on-going performance management
-  Design and implement plan for determining whether outcomes have been met
-  Verify accuracy of data used in evaluation plan, or evaluation plan itself
-  Intermediary during service delivery phase, and/or fiscal sponsor for project funds
-  Provide assistance in drafting, reviewing and negotiating PFS contracts
-  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 TypeRecovery, Engagement, Assessment, Career and Housing (REACH) program: Risk-Need-Responsivity model
- Evidence base for interventionResearch studies conducted by Andrews and Bonta, Carleton University controlled experiments, and University of Utah Criminal Justice Center
- Has effectiveness of the intervention for PFS project target population been evaluated?Partly [Note 13]
- Has the service provider provided this intervention previously?No
- 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?Demonstrating
-  The components of the REACH model have been evaluated individually.
Service Provider Characteristics and Service Delivery
- Single or multiple service providers?Single
- Service provider type(s) (nonprofit, government, private)Nonprofit
- Service provider OR site selection methodRFP
- Service Provider Experience with PFS InterventionThe REACH program is a new program that was designed by First Step House utilizing evidence based program models the organization had conducted individually; this is the first time in Salt Lake County that a program is targeted towards criminogenic needs and integrates services to address those needs
- Referral Method for PFS Target PopulationVoluntary enrollment; Adult Probation and Parole will maintain a list of eligible individuals based on pre-sentence investigations and will share this eligibility list with First Step House twice monthly
- Did the project have a ramp-up phase? (Y/N; brief description)Yes: five month ramp-up phase and six month pilot period; grant-funded
PFS Contracting and Governance
- Operational Oversight Structure [Note 1]Operating Committee includes The Road Home, First Step House, Salt Lake County (2 representatives), project manager, special purpose vehicle, and independent evaluator
- Frequency of meetings and/or reportsTwice per month during pilot period, once per month for remainder of contract
- Executive Oversight Structure [Note 2]Executive Committee includes The Road Home, First Step House, Salt Lake County, project manager, and funders
- Frequency of meetingsMonthly during pilot period, every two months for remainder of contract
- Investor role in project governance?Investors have one voting member on the Executive Committee who votes on behalf of all investors; the PFS contract specifies voting matters that require "funder consent" which will require each individual investor to vote
- Frequency of reporting to investorsQuarterly
- Non-standard Contract Termination Events [Note 3]1)Pilot Failure; 2) Non-appropriation of funds; 3) Failure to launch both projects by drop date [Note 9]
- Appropriations Risk Mitigation Strategy [Note 4]Annual deposit in PFS Escrow Fund
-  Committee or working group involved in regular and/or day-to-day monitoring of project progress
-  Oversight and decision-making body for PFS project
-  Events that allow stakeholders to exit their contractual obligations, beyond those typically found in loan agreements and contracts
-  The SLCo PFS contract includes automatic termination events, presumptive termination events, and optional termination events.
-  Means by which to mitigate risk that funding is not available for investor repayment
- Senior Investor/ Lender and Total Senior Investment ($MM)Northern Trust; Ally Bank; QBE Insurance ($3.4 total)
- Subordinate Investor/ Lender and Total Subordinate Investment ($MM)Sorenson Impact Foundation; Sorenson Family Foundation; Living Cities ($1.2 total)
- Deferred Fee Source and Total Deferred Fees ($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]Eccles Foundation; Noorda Foundation; Miller Family Foundation; Zions Bank; Synchrony Bank; Nonprofit Finance Fund; Ally Bank; County Escrow ($1.46 total)
- Guarantor and Guarantee ($MM) [Note 4]None
- Illinois Dually-Involved Youth Project
-  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.
- 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.
-  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 ($Millions)5.38
- Maximum Repayment Funds Committed by Payor ($Millions)11.33
- Full service delivery term (years)5
- Full repayment period (years)6
- Interim outcomes reported? Tied to payments?Yes (treatment engagement hours)/Yes
- Sustainability/ Recycling of FundsNone specified
Detailed Repayment Terms
- Interest5% (senior); 2% (subordinate); paid quarterly
- Trigger for initial repayment of principal [Note 1]Any difference between treatment and control group on payment metrics
- Threshold for full repayment of principalBetween 20% and 25% impact on days incarcerated
- Threshold for full repayment of principal plus maximum success payments1) 35% reduction arrests; 2) 35% reduction in days incarcerated; 3) 25% impact on employment; 4) 66.4% treatment engagement
- Repayment timingInterest paid throughout, principal paid at Q19 and Q24
- Return to Investor [Note 2]8.26% (senior); 12.04% (subordinate)
- Success Payment to Other Stakeholders? [Note 3]Yes: Service provider and project manager
-  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.
-  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.
-  Success payments for other stakeholders such as project managers and service providers create a financial incentive for project success.
- Project Development Costs Not Covered by PFS Capital RaiseTransaction coordinator fees
- Funding source(s) for project development costs, if anySalt Lake County; Sorenson Impact Foundation; Living Cities
- Project Implementation Costs not covered by PFS CapitalNone
- Funding sources for implementation costs not covered by PFS capitalNone