How Denver Tackled Homelessness While Saving Money

Editor’s note: An earlier version of this story misstated the number of people eligible to participate in the Denver program.

DENVER — Walter Boyd had been homeless before. But when he started sleeping in the temporary homeless shelter at the National Western entertainment complex here, it felt like he’d hit a new low.

He’d lost his job sorting trash at a recycling facility. He was in so much pain from scoliosis that he could barely walk. He’d been in and out of jail. His marriage was all but over. Oh, and it was April 2020, and a global pandemic was underway. “I was overwhelmed,” said Boyd, 54.

Boyd’s luck was about to change, however. His name was on a list of unhoused Denver residents eligible for immediate housing assistance, mental health treatment and other support through a city program aimed at people who lack housing and have been arrested multiple times in the past three years.

The program, which provides what’s known as permanent supportive housing, has housed over 280 struggling people since 2016 and reduced city spending on police, jail, ambulance and detox services, found a July study by the Urban Institute, a left-leaning Washington, D.C., think tank.

The Denver study proves that highly vulnerable people living on the street will accept housing and, with help, stay housed for the long term. That’s good news at a time when homelessness is rising nationally and service providers say more people experiencing homelessness appear to be suffering from mental illness.

But the study also shows that the work isn’t easy. It requires a skilled team, funding and political will—all longtime barriers to expanding permanent supportive housing in Denver and in other places.

Permanent supportive housing isn’t a new idea. The federal government spent $1.71 billion funding such housing in 2020 alone. There are now 179,569 such beds nationwide for people experiencing homelessness and physical or mental disabilities, quadruple the 2007 total, according to federal statistics.

Yet more people still need help than there are beds available, advocates for people experiencing homelessness say.

“There was never enough money directed toward supportive housing to meet the demand,” said Deb De Santis, president and CEO of the Corporation for Supportive Housing, a nonprofit that invests in and advocates for supportive housing. The nonprofit was founded in 1991 with help from a grant from The Pew Charitable Trusts. (Pew also funds Stateline.)

De Santis said her organization was created in part because policymakers had closed psychiatric hospitals and other institutions in the second half of the 20th century without sufficiently funding community-based care. “We haven’t come very far,” she said. “We still don’t have adequate services in communities to support people.”

Many states are now beefing up investments in affordable housing and rental assistance, thanks to better-than-expected state revenues and money from the American Rescue Plan Act, a federal COVID-19 relief bill signed into law in March. Some states and cities are buying hotels and motels and converting them into affordable housing, for instance.

The housing piece of the Denver program was paid for with federal and state housing vouchers. The other services were paid for by Medicaid and a contract called a social impact bond.

Under the contract, private investors lent the city $8.6 million, with the understanding that the city would repay the money only if program participants stayed housed for at least a year and spent at least 20% fewer days in jail. If participants spent more time in housing, and less time in jail, investors would get additional money.

Denver ended up saving so much money on emergency services that it repaid investors $9.6 million.

The partnership was first announced by Denver Democratic Mayor Michael Hancock in 2014, at a time when the Obama administration, many city leaders and impact investors were embracing social impact bonds. The theory was that private investors could help fund services that, while likely to save taxpayer dollars in the long run, were expensive in the short run.

Now that the contract has proved support services save money, Denver officials are prepared to invest in such services without involving the private sector, said Britta Fisher, Denver’s chief housing officer. Although the social impact bond contract ended in December, officials chose to keep funding services through the end of this year (the city passed an annual budget).

The city also is ramping up funding for permanent supportive housing. Denver has spent $15.89 million to build about 270 additional units, all now either under construction or in the planning phase, according to Derek Woodbury, communications director for Denver’s Department of Housing Stability.

Although years of research shows that housing people without any preconditions and offering them assistance pays off, some conservatives still disagree with that approach. They say that in some cases, supportive housing should require residents to be sober.

“If you’re running a housing development where it’s widely understood that people are using [drugs] … putting someone in that environment who has had a rocky past but is trying to move up, is trying to move on to his sobriety, is really bad for that person,” said Stephen Eide, a senior fellow at the Manhattan Institute, a free market think tank based in New York City.

Homeowners also sometimes have pushed back against plans for new supportive housing complexes, or become impatient with such a slow, labor-intensive strategy for reducing homelessness, affordable housing advocates say.

After all, even as more housing units are built in a given area, the number of people experiencing homelessness can be rising even faster.

“When neighbors and businesses are seeing encampments growing across the street from them, or down the street from them, they scratch their head and say, ‘What do you mean this is a success?’” said John Parvensky, president and CEO of Colorado Coalition for the Homeless. The nonprofit provided services as part of the Denver program.

‘A Housing Program, Looking for Me?’

Typically, people experiencing homelessness who have little to no income must apply for government housing subsidies and wait until a voucher becomes available. The Denver program, which was set up by the city, the Urban Institute and a host of private sector partners as a randomized controlled trial, didn’t work that way.

Instead, the Denver Police Department compiled a list of thousands of people who had been arrested at least eight times over three years, including at least three arrests when they had no permanent address. Over 720 of those people were randomly chosen to participate in the housing program.

Outreach workers at Colorado Coalition for the Homeless and the Mental Health Center of Denver—two nonprofits that had been hired to provide support services for this program—tracked down half the people on the list and offered them housing. The remaining people were considered a control group.

Boyd was shocked to learn someone was looking for him. “I was like, wait a minute, a housing program looking for me?” he said. “Most of them, you wait two or three years.”

He didn’t need any convincing to get in touch with Colorado Coalition for the Homeless and to start applying for a federal Section 8 voucher.

It took outreach workers over a month, on average, to track down each participant. Many weren’t using shelters and free clinics, as Boyd was. Some eligible participants initially assumed the housing offer was a joke, said JoAnn Toney, director of housing and residential services at the Mental Health Center of Denver.

Service providers eventually located 90% of the 363 eligible participants and housed almost all of them. Every participant was assigned a support team, comprised of experts such as case managers, social workers, nurses, psychiatrists and peer mentors who had experienced homelessness in the past.

Boyd now lives in a studio in Lakewood, a quiet Denver suburb. His two case managers each visit once a week. Colorado Coalition for the Homeless has helped him manage his scoliosis, gain federal disability benefits, start applying for jobs and file for divorce.

Support is crucial for people who’ve experienced chronic homelessness, Boyd said. “You can’t be on the streets [for] five, 10 years and put someone into housing and think everything’s going to be alright.”

Homelessness is a traumatizing experience, he explained. “There’s a lot of drugs, a lot of violence, a lot of crime.” People living in such an environment can stop believing they can do any better, he said. “Sometimes you just give up.”

Everyone assigned to the Mental Health Center of Denver through the program had a behavioral health need, Toney said, such as depression, a mood disorder or substance use disorder. Many were also in physical pain from old wounds that had never healed or chronic conditions that weren’t being treated.

The social impact bond funding allowed Toney’s team to do more to help, she said. The money could pay for program participants’ travel to job interviews, for instance. It also paid for novel therapies, such as robotic therapy dogs and cats that helped some participants stay calm in their new apartments.

Getting to Scale

Three years after entering the Denver program, 77% of participants were living in stable housing, the Urban Institute study found. And while support service costs ranged from $12,078 to $15,484 per person per year, depending on the service provider, about half the money was offset by lower city spending on police, court, emergency medical, ambulance and jail services.

The findings didn’t surprise service providers. “Just being in housing, they were not likely to be jailed for status, or what we call quality-of-life crimes—trespassing, urinating in public, just being in a place where they shouldn’t be,” Parvensky said. “That was a big part of the jail reduction success.”

Not everyone made it to the three-year mark. Twelve percent of participants died, a toll that reflects the shortened lifespans of people experiencing homelessness, the study said. Other participants left the program after struggling to manage their mental health or substance use disorders, Parvensky said.

And the cost savings may not be perfectly replicable. For one thing, Denver is both a city and a county, meaning it realized cost savings that would otherwise have been split between jurisdictions. Colorado’s largest city also has service providers with experience that other, smaller cities lack.

But service providers and investors involved in the Denver program say they hope it makes the case for funding interventions that, while costly at first, reduce emergency spending later. “This builds the evidence base,” Parvensky said.

Hancock, the mayor, has said he wants to almost double the city’s affordable housing fund with $28 million from the American Rescue Plan. Denver voters last year also voted to raise local sales taxes to pay for housing and homelessness services.

Efforts to expand affordable housing here and in other trendy cities must contend with rising rents and land prices. The average Denver apartment now rents for $1,651 per month and vacancies are at their lowest level in 20 years, according to the Apartment Association of Metro Denver, a trade group.

High housing demand has encouraged landlords to be picky and raise rents above what the U.S. Department of Housing and Urban Development considers a fair price, Parvensky said.

“We’re running into a shortage of housing units that will take housing vouchers—Section 8 vouchers, other supportive housing vouchers—because the housing market is so tight,” he said. “There becomes a limit to the number of people we can actually house unless we can build more housing units.”

Without continued funding from the city, Medicaid, and federal and state housing vouchers, many participants in the Denver program may end up on the streets again, he said.

Boyd’s studio costs $1,400 a month, far more than he receives through federal disability benefits. He’s looking for part-time work, but his options are limited because he doesn’t have a car and relies on public transportation.

He says that as a Bible college graduate with ministry experience, his current goal is to spread the word about the Denver program. He credits Colorado Coalition for the Homeless with getting him through a dark time after his mother died and he was too sick to travel to Detroit for her funeral. 

“They literally—they saved my life,” he said.