State of Washington Department of Commerce — Letter to Ms. Sarah Bannister, Secretary of the Senate (June 6, 2023)
Summary
This letter from the Department of Commerce, dated June 6, 2023, is addressed to the Secretary of the Senate and the Chief Clerk of the House of Representatives and attaches a report by the Corporation for Supportive Housing (CSH) on housing operations and tenancy support services. The report responds to Section 128, subsection 114 of the 2021-23 biennial operating budget (Chapter 297, Laws of 2022), which provided $170,000 for fiscal year 2022 and $130,000 for fiscal year 2023 for an analysis of operations, maintenance and tenant supportive services costs. CSH reported a lack of sufficient revenue for operations and services, and recommended a dedicated source of ongoing revenue and maximizing Medicaid reimbursable services.
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“State of Washington Department of Commerce — Letter to Ms. Sarah Bannister, Secretary of the Senate (June 6, 2023).”
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STATE OF WASHINGTON
DEPARTMENT OF COMMERCE
1011 Plum Street SE PO Box 42525 Olympia, Washington 98504-2525 360-725-4000
www.commerce.wa.gov
June 6, 2023
Ms. Sarah Bannister, Secretary of the Senate
312 Legislative Bldg.
PO Box 40482
Olympia, WA 98504-0482
Mr. Bernard Dean, Chief Clerk of the House of Representatives
338B Legislative Bldg.
PO Box 40600
Olympia, WA 98504-0600
Re: Washington state investments in affordable housing projects, including permanent
supportive housing (Sec. 128(114) of the 2021-23 biennial operating budget)
The Corporation for Supportive Housing’s (CSH) report titled “Washington State Investments in
Housing Operations and Tenancy Support Services – Cost Projects and Program Enhancements”
is attached. The report is in response to Section 128, subsection 114 of the 2021-23 biennial
operating budget (Chapter 297, Laws of 2022):
$170,000 of the general fund—state appropriation for fiscal year 2022 and $130,000 of the
general fund—state appropriation for fiscal year 2023 are provided solely for the department
to perform an analysis of the property operations and maintenance costs and tenant
supportive services costs for affordable housing projects that receive funding from the
Washington housing trust fund. The projects to be analyzed must include, but are not limited
to, permanent supportive housing and youth housing taking into consideration housing
projects that have been in service for a sufficient time that actual costs can be determined.
The analysis shall include a categorized overview of the expenses and fund sources related
to the maintenance, operations, and supportive services necessary for the affordable housing
projects to be successful in housing the intended population, as well as identify other
available funding sources for these costs. The analysis must also explore the timing and
alignment challenges for pairing operational and supportive services funding with the initial
capital investments, and make recommendations relating to any benchmarks that can be
established regarding future costs that would impact the operating budget, and about the
state's role in planning, support, and oversight to ensure long-term sustainability of these
projects. The department may hire a consultant to conduct this study. The department shall
report its findings and recommendations to the office of financial management and the
appropriate committees of the legislature by December 1, 2022.
The goals of the study are:
• Conduct a categorized overview of expenses and fund sources related to the maintenance,
operations, and supportive services necessary for the affordable housing projects to be
successful in housing the intended population, as well as identify other available funding
sources for these costs.
• Explore the timing and alignment challenges for pairing operational and supportive
services funding with the initial capital investments and make recommendations relating
to any benchmarks that can be established regarding future costs that would impact the
operating budget and the state’s role in planning, support and oversight to ensure the
long-term sustainability of these projects.
In its review, CSH offered key findings and recommendations in areas that focused on a lack of
sufficient revenue to support the operations and services of the new supportive and youth
housing pipeline that is being or will be funded with state capital funds. Recommendations to
address this gap include increased collaboration with local funders, maximizing Medicaid
reimbursable services such as Foundational Community Supports, and a dedicated source of
ongoing revenue for housing operations. In addition, CSH recommended reducing administrative
burdens and measuring housing stability rates, tenant satisfaction, and racially equitable
outcomes. Lastly, CSH recommended consistency amongst all of Commerce’s supportive
housing investments by utilizing the same eligibility criteria.
CSH used data from the Web-Based Annual Reporting System (WBARS) 1 and from dozens of
organizations’ applications for, and expenditures from, the Permanent Supportive Housing
Operations Maintenance Services (PSH-OMS), and analyzed the operations and maintenance
costs for affordable housing projects financed by the Housing Trust Fund. Appendix B is a
summary of its data analysis. CSH identified several challenges with the data reported to
Commerce, specifically the significant variation between the expenses reported in the PSH-OMS
application/budget and the WBARS reporting system.
Based on its analysis, CSH recommends setting two statewide application benchmarks beginning
in 2023:
• Up to $17,000 2 per unit/per year for operating and maintenance costs of supportive and
youth housing.
• Up to $10,0002 per tenant/per year for supportive services costs. Because of the lack of
consistency in the data reported to Commerce, CSH recommends building upon the FCS
Medicaid annual estimated fee-for-service rate, assuming the Health Care Authority will
conduct an annual rate study projecting a rate of $10,000 per tenant/per year.
We appreciate CSH’s findings and recommendations, as they will help improve the processes
and state programs and lead to more equitable delivery of state resources and, in turn, more
1
WBARS is an online reporting system co-administered by the Housing Finance Commission and Department of
Commerce. Capital funding recipients report annual data about the people/households benefiting from the funded
projects, as well as their property operations, maintenance, and supportive services expenses.
2
In addition, the report recommends allowing for an estimated 3% inflation factor for operating costs in
applications.
equitable availability of PSH-OMS. Commerce has identified some assumptions and
recommendations where our perspectives differ or additional research and/or clarity is required.
For example, several recommendations are focused on reducing the administrative burden on the
housing operators, which we generally support with some caveats.
• Issue 15-year commitments: Commerce is committed to continuity and sustainability
for operations, maintenance and supportive services for projects already awarded OMS-
PSH. Our contracts will need to be renewed each biennium and awards will need to be
conditional on funding availability, as funding streams for PSH-OMS fluctuate based on
recording fee revenues and biennial legislative appropriations.
• Annual invoice expense reconciliation, instead of monthly: Commerce will explore
strategies to reduce administrative burdens while maintaining responsibility for ensuring
accountability for public resources. Commerce staff currently track invoice
inconsistencies and irregularities from contractors and identify training and technical
assistance strategies to reduce the administrative burden on our contractors.
• Cost analysis and recommended benchmarks: Commerce agrees with CSH’s
recommendations that clarification of the definitions of the cost categories and ensuring
consistency among all contractors is needed. Commerce is coordinating with local
funders and contractors to ensure cost category definitions are consistent and planning for
a more streamlined and standardized budget and data collection. Commerce is interested
in implementing the CSH recommended benchmarks for operations, maintenance and
services on a pilot basis for the 2023-25 biennium, and will ensure more robust collection
of data and expenditure information to record these costs accurately. The first step in this
process is issuing consistent definitions for budget line items and cost categories. More
analysis and evaluation will occur at the end of the biennium to determine the impacts of
these benchmarks before committing to a permanent implementation.
Some of the strengths of the CSH report are identifying and encouraging strategies that leverage
and increase partnership with local funders and Medicaid reimbursement for tenancy support
services. For example, CSH recommended utilizing Foundational Community Supports
(Medicaid reimbursable supportive housing services) to the greatest extent to stretch PSH-OMS.
The report also identified Chapter 214, Laws of 2021 (ESSHB-1277) funds as a new revenue
stream that will support project-based vouchers in PSH units. Commerce supports both of these
recommendations and is closely coordinating with other state agencies, local funders and
community organizations to implement these efforts.
Commerce recently restructured its divisional organization and created a PSH-dedicated unit
within its newly formed Housing Division. The Office of Apple Health & Homes and Permanent
Supportive Housing is charged with sustaining, expanding and improving the quality of PSH
across the state. Within this new unit, several initiatives are underway to bring PSH-focused
strategies to fruition. For example, a newly formed PSH Advisory Committee will provide
feedback from the community and people with lived experience on the expansion and quality of
PSH and the Apple Health & Homes Initiative, which aligns housing stock with supportive
services through Foundational Community Supports. The Office is also collaborating closely
with the Health Care Authority, the Department of Social and Health Services, and local funders
to promote consistency and collaboration across the state.
We thank CSH for its ongoing collaboration and comprehensive report. We view this analysis as
a key starting point in ensuring the state’s expansion and sustainability of PSH. Research
continues to emerge on the effectiveness of PSH in addressing homelessness for individuals with
complex health and behavioral health needs when it is part of a robust continuum. PSH is
growing rapidly, and partnerships with national experts such as CSH are gratifying and ensure
that support, technical assistance, research and expertise are available to housing providers.
For current PSH-OMS projects it is clear, as a result of this report, that a more robust and
consistent data collection system to capture budget/expenditure definitions, tenant demographic
information and outcomes, and qualitative and quantitative research is needed to sustain and
improve the quality of PSH in our state as additional investments are made to meet the needs of
complex individuals. As significant investments into this model have occurred throughout the
last several years and as Commerce moves forward with our dedicated efforts to expand and
improve the quality of PSH throughout out state, we must also continue to refine the PSH model
for consistency and widespread understanding of what PSH is and what PSH is not. PSH is a
specific model rooted in research with a set of principles. Commerce will work with local
funders and housing providers to ensure consistency in the model is adhered to as PSH continues
to improve and expand. This consistency will also contribute to knowing the true costs of
providing PSH for future cost modeling exercises and state-level budgeting.
Respectfully submitted,
Melodie Pazolt
Managing Director
Office of Apple Health & Homes and Permanent Supportive Housing
Housing Division
Department of Commerce
Washington State Investments in Housing
Operations and Tenancy Support Services
Costs Projections and Program Enhancements
for investing in affordable housing operations and tenancy support services
Introduction
This report was commissioned by the Washington Department of Commerce “Commerce” to fulfil the
requirements of State of Washington Budget Proviso, 2021-23 Biennium Operating Budget, ESSB Section
129 (114). The report is organized in three parts and contains three detailed appendices.
Part I: Purpose and Goals Appendix A: Stakeholder Engagement
Part II: Findings & Recommendations Appendix B: Data and Analysis
Part III: Proposed Program Guidelines Appendix C: Funding Sources and Projections
Part I: Purpose and Goals of the Budget Proviso and Scope of Work
1. Stated purpose of Washington’s investments in affordable, supportive, and youth housing:
a. Ensure Washington residents who are experiencing chronic homelessness have quality
housing and services.
b. Reduce institutional burdens (healthcare and criminal justice).
c. Improve individual outcomes.
d. Contribute to a systemic financing approach that provides:
i. continuity and assurance for housing providers,
ii. flexibility for shifting and targeting funds, and
iii. continual practices for quality improvement.
e. Contribute to a more thriving state.
2. Purpose of the study: The stated purpose of the study is to inform meaningful structural reform
in the administration of the state’s permanent supportive housing (PSH)- OMS program to meet
the goals above. Deliverables in the consultant’s scope of work included:
a. Identify and investigate the financial operating deficits experienced by permanent
supportive housing providers that may lead to deferred maintenance, understaffed
facilities, and other issues contributing to inadequate housing for residents.
b. Help the state of Washington evaluate the operating and service costs for the provision
of supportive housing, and model the projected growth of these costs given the existing
pipeline and anticipated revenue sources.
c. Propose benchmarks and best practices for the operation of these programs.
d. Collect and analyze data from the housing trust fund (HTF) and other public funders to
estimate the production of supportive housing in the next five years.
e. Evaluate the applicability of various revenue sources that enable supportive housing
projects to thrive.
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Part II: Findings and Recommendations
CSH conducted this study in collaboration with Commerce, a Commerce-identified workgroup (see
Appendix A for members), our subcontractor ECONorthwest, and other interested stakeholders. CSH’s
findings and recommendations draw on the input of these entities, data supplied by Commerce, and
best practices identified in CSH’s work across the country. Commerce noted that while the focus of the
Budget Proviso is on supportive housing, youth housing and other affordable housing should be part of
the analysis. Following are CSH’s key findings and recommendations.
Key findings and recommendations:
1. There is insufficient revenue to support the operations and services of the pipeline of
new supportive and youth housing funded with state capital funds. Addressing this deficit
will require collaboration with partner public funders, maximizing the state's Foundational
Community Supports (FCS) program, and a dedicated source of ongoing revenue for
housing operations.
2. Commerce should reduce adminstrative burdens associated with monthly invoice
reconciliation and redirect staff time to measuring outcomes of the state's investments in
housing and tenancy support services. Measuring housing stability rates and tenant
satisfaction, disaggregated by race, will also help to ensure raciallly equitable outcomes.
3. To meet its goals of reducing chronic homelessness and costly, unnecessary
institutionalization, the state should use the same eligibility criteria and tenancy support
services definition for all its investments in supportive housing.
Additional findings and recommendations are organized in the following three categories.
A. Cost Analysis and Recommended Benchmarks
B. Revenue Sources and Cost Projections
C. Program Administration and Outcomes
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A. Cost Analysis and Recommended Benchmarks
Topic Findings Recommendations
1. Address The costs of front-desk staffing, 24/7 Operating costs on applications should
challenges staffing and housing milieu services include all industry standards for operating
related to provided on behalf of all tenants in housing, including front desk staffing, 24/7
cost an apartment building are not staffing and housing milieu services
categories. defined as operating costs or provided on behalf of all tenants in a
services costs in the Commerce housing development. (While providers
application or provider budgets, might employ individuals with services
resulting in unclear application backgrounds in these roles, these costs are
guidelines, uses of funds and clearly distinguished as those that are part
expense forecasting. of managing an apartment building.)
Tenancy-sustaining services should be
distinguished in project budgets as those
that address the housing stability and well-
being of individual tenants.
2. Housing Operating subsidies are the “O&M”- Set a state-wide application benchmark for
operating operating and maintenance operating costs of $17,000 per unit per year
cost subsidies- in OMS. They pay the for supportive and youth housing and
analysis and difference between tenant rents $10,000 per unit per year for all other
funding and the cost of operating a housing affordable housing beginning in 2023.
benchmarks development. Providers with costs anticipated above these
benchmarks should be required to request
Commerce seeks to set cost an exception prior to applying.
benchmarks for operating costs.
Allow for an estimated 3% inflation factor
Commerce reimburses operating for operating costs in applications.
costs based on actual expenses.
Benchmarks provide parameters for Use these benchmarks to model the cost of
OMS applications and are a tool for operations for the state’s capital pipeline
projecting future program expenses. ongoing.
Sources to inform recommended CSH does not recommend setting cost
benchmarks included extensive benchmarks based on geography because
project application and reporting Commerce and all other public funders of
data from Commerce based on operating subsidies reimburse only for the
geography, Commerce-designated actual gap between tenant rents and the
populations, two service models, cost of operating a housing development
size of buildings, fair market rents, and because costs vary within geographies.
and public housing agency (PHA) Establishing geographic cost benchmarks
payment standards. will create unnecessary administrative
(See Appendix B for details.) burden that will not change funding
amounts.
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3. Tenancy Tenancy support services are the “S” The state should have one rate for tenancy
support in OMS. They help tenants get support services regardless of the
services housed, stay housed, and thrive in department reimbursing these costs.
cost their communities.
analysis and This rate should be informed by the costs of
funding Commerce seeks to establish a cost employing staff at professional-level salaries
benchmark benchmark for tenancy support to administer services at supportive housing
services in PSH and Youth housing. fidelity levels of one staff person to every 15
households served. They should also cover
The Washington State Health Care supervision and other program expenses.
Authority (HCA) also pays for
tenancy support services. Set a benchmark for supportive and youth
housing tenancy support services costs of
HCA’s program (FCS) pays $6,720 $10,000 per tenant per year beginning in
per person per year with a provision 2023.
for additional funding for individuals
in need of more services. (See Allow for an estimated 3% inflation factor
Appendix B for details.) In response to for services costs in applications.
provider concerns that this rate is
insufficient to pay professional When the HCA’s FCS rate study is
wages to recruit and retain staff and completed, Commerce should adopt the
deliver effective services, HCA will same rate of reimbursement for OMS
soon be conducting a Medicaid tenancy support services. HCA and
reimbursement rate study. Commerce should work together to
establish a regular schedule of reviewing
Application and reporting data rates to account for changes in costs.
supplied by Commerce were
insufficient to extrapolate total
services costs within the OMS
portfolio. (See Appendix B for details.)
The CSH services budgeting tool
calculated annual expenses of
$10,000 per household per year for
tenancy support services in
Washington. (See Appendix B for
details.) Workgroup members
indicated this amount is generally in
line with actual costs.
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B. Revenue Sources and Cost Projections
Topic Findings Recommendations
1. Work with Commerce staff are concerned that All public funders are the gap funders of the
all other its status as a “gap funder” makes it difference between tenant rents and the
public impossible to know if local cost of operating affordable housing. They
funders of jurisdictions are maximizing their must work together to strategically fill this
operating investments in operating and gap and ensure providers have the revenue
subsidies services before Commerce covers they need to successfully operate housing.
and the gap.
tenancy In 2023, Commerce should initiate an
support CSH researched all other existing integrated funding process with all other
services to sources and amounts of annual public funders of operating subsidies and
weave operating and services funding and tenancy support services in the state to
together identified the following: U.S. weave their sources together at the system
available Department of Housing and Urban level at the following milestones:
public Development (locally allocated) • Milestone 1: At the time capital
funding at Continuum of Care: approximately applications are received and awards are
the system $500,000-$1M state-wide, King made: Commerce is in the practice of
level. County: $2.5M, City of Seattle: $3.5- communicating with partner funders at
4.5M, and Snohomish County: up to this milestone.
$300,000. (See Appendix B for details.) • Milestone 2: At the time of first
application for OMS and when providers
Tenancy support services providers place their units in service: CSH has
often link their clients to ancillary introduced Commerce to the King
services such as nursing care, County combined funders of operating
personal care, and substance use and services. Commerce will observe
disorder and mental health services, King County’s process in 2022, and both
which may or may not be provided jurisdictions have indicated an interest
in the apartment building where the in collaborating in 2023.
person lives. These services are not • Milestone 3: At the time OMS contracts
paid by OMS. are being renewed each year/biennium.
• Milestone 4: At the time of review of the
Commerce is interested in helping annual Web-Based Annual Reporting
tenancy support services providers System (WBARS) submittals and Annual
braid their efforts with those of CPA Audits.
ancillary service providers for
seamless service delivery and Commerce could explore ways to support
integrated supports. partnerships between tenancy support and
ancillary service providers and encourage
funders of ancillary services to increase their
funding of those services.
OMS should not pay for ancillary services,
and the funding providers receive for
ancillary services should not be part of the
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Commerce OMS application or WBARS
reporting requirements.
Resources for ancillary services should not
be stretched to pay for tenancy support
services because they have defined
purposes that tenants need in addition to
tenancy support services.
2. Existing Public funders generally estimate The following projections estimate the
Revenue that a housing development will annual cost of operating subsidies and
Sources and begin needing operating subsidies services funding for the 2,857 units in the
Projected and services funding two years after current capital pipeline and the projected
Costs of the its capital award because of the time OMS portion of these costs.
Capital it takes to buy, build, and/or (Please see Appendix C for model assumptions and
Pipeline rehabilitate housing. details.)
Commerce reports that the state 2023
and other public funders have New units opening: 879
awarded capital financing for the Total operating & services need: $21M
creation of 1,757 units of PSH that Estimated OMS portion: $13M (61%)
will be in need of OMS when they
open over the next two years. 2024
New units opening: 878
Commerce estimates the remaining Cumulative new units in operation:1757
capital funds this biennium will Total operating & services need: $43M
produce an additional 1100 units of Estimated OMS portion: $26M (60%)
PSH.
2025
In 2022, Commerce reported that it New units opening: 550
allocated the last of its currently- Cumulative new units in operation: 2,307
available OMS funds to new Total operating & services need: $59M
projects. Estimated OMS portion: $35M (60%)
The only potential new source to be 2026
allocated to these units is the New units opening: 550
project-based rental assistance Cumulative new units in operation: 2,857
associated with ESSHB 1277, which Total operating & services need: $75M
Commerce is working now to Estimated OMS portion: $45M (60%)
implement. This source is estimated
at $53M annually, and 60% of Because the ESSHB 1277 funds are the only
revenue is directed to PSH and other known source of potential operating and
housing efforts. (Predicting revenue services support for the capital pipeline,
from this and other document Commerce should work with counties to
recording fees is difficult due to dedicate these funds to the PSH pipeline of
fluctuations in the real estate units opening over the next four years.
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market.) Counties have the right of *A dedicated source of ongoing revenue for
first refusal to manage these funds. housing operations and services is needed
for the current capital pipeline and should
Commerce also suggested that be right-sized to align with future
existing PSH programs in the state appropriations of capital funds.
should be explored for their
potential to support the capital Please see Appendix C for an overview of
pipeline. two state supportive housing programs
identified by Commerce as having the
potential to align with the capital pipeline.
3. Increase Commerce and HCA report that FCS, For every $20M in new funding
FCS the state’s largest program for appropriated for OMS, the state and its
utilization investing in tenancy support partner public funders could house and
to stretch services, is currently underutilized. serve 1,397 households.
OMS and This program is primarily paid for by
partner the federal government. If this same appropriation were paired with
funder FCS covering 75% of services costs, the state
dollars ESSB 5693, page 128, Line 14 and its partner public funders could house
further for describes provider grants as an and serve 2,034 households, a 46% increase.
housing eligible use of funds under the AHAH
operations. Act. Achieving this increase in FCS utilization
would require significant investments in
provider capacity-building in 2023 and 2024
and would not be likely be realized until
2025.
The funds associated with ESSB 5693 page
128, line 14 should be invested in a robust
provider capacity-building initiative to
increase FCS utilization.
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C. Program Administration and Outcomes
Topic Findings Recommendations
1. Consistently Washington State has adopted All state agencies administering supportive
apply statutes and corresponding housing capital, operating, and services
pertinent funding streams to promote best funding should draw from the following
statutes and practices in PSH. statutes and programs and work together to
programs to all administer supportive housing with one
PSH If fully funded and consistently clear set of eligibility criteria, a common
investments. applied, these policies position tenancy supports service model, eligible
the state to make a significant uses, outcomes, and measurements.
impact in reducing chronic • Permanent Supportive Housing
homelessness and unnecessary definition: RCW 36.70a.030(19)
institutionalization. • Apple Health and Homes (AHAH) Act:
RCW 74.09 parts 885, 886, and 888, RCW
43.333.184, RCW 43.330.181, and related
budget appropriations.
• Foundational Community Supports (FCS):
WAC 182-559
• Revenue for rental assistance and
housing stability services: ESSHB 1277
• Supportive Housing Advisory Committee:
SHB 1727
2. Establish OMS Some guidelines for the OMS CSH has developed a set of recommended
Program program are imbedded in draft Program Guidelines for key portions of
Guidelines. contracts, but there is not yet a the OMS program based on findings and
set of comprehensive written recommendations in this report, which can
Program Guidelines. be found in Part III.
Commerce has clear Program CSH recommends that Commerce work with
Guidelines for its Independent the new State Supportive Housing Advisory
Youth and Young Adult Housing Committee to adopt final Program
Programs and the Community Guidelines prior to its 2023 funding rounds.
Behavioral Health Rental
Assistance program.
3. Bring the With the creation of AHAH, *In order to ensure state investments in
investments in Commerce now has two different supportive housing achieve the goals of
supportive approaches to investing OMS budget proviso and the AHAH Act, the state
housing from funds in supportive housing. should consistently apply its well-defined
multiple state tenant eligibility criteria and tenancy
agencies and AHAH directs investment toward support services model to all of its
programs into supportive housing projects that investments in supportive housing and
alignment to use state-specified eligibility measure the outcomes of these
ensure desired investments consistently. (Medicaid
outcomes. eligibility should continue to apply only to
the FCS program.)
8
criteria and a clearly-defined Commerce should apply the state’s
tenancy support services model. 1 commitment in AHAH to “by and for”
Current OMS investments have providers to all OMS investments.
undefined and overlapping
eligibility criteria and service These changes should apply to all future
models for supportive housing. allocations of Commerce capital funds,
This makes it impossible for the operating, rental assistance, and tenancy
state to know whether it is support services for supportive housing.
investing in quality supportive
housing that will meet its goals of Changes to bring Commerce’s existing
reducing chronic homelessness portfolio of self-identified PSH into
and unnecessary alignment should be implemented upon
institutionalization. contract renewal and unit turnover. Some
providers will require time and technical
AHAH directs at least ten percent assistance to make these changes, and each
of its funding to organizations that should work with Commerce to establish a
serve and are substantially work plan and timeline for doing so.
governed by (“by and for”)
individuals disproportionately
impacted by homelessness and
behavioral health conditions,
including Black, indigenous, and
other people of color, lesbian, gay,
bisexual, queer, transgender, and
other gender diverse individuals.
4. Include and BIPOC-led organizations and Commerce should:
invest in those providing culturally-specific Continue to seek and apply technical
organizations services are largely missing from assistance (TA) and support in its review of
led by and decision making tables regarding and changes to policies to be inclusive and
serving OMS policy and program work. supportive of BIPOC-led and culturally
primarily specific agencies.
Black,
Learn from BIPOC and culturally-specific
indigenous,
agencies to inform the work of establishing
and other OMS Program Guidelines and provide TA to
people of color them about Commerce programs they may
(BIPOC). have historically not been able to access.
Contract directly with “by and for”
organizations to build wealth and capacity in
these organizations.
Create incentives for larger, more
experienced BIPOC led/culturally specific
organizations to mentor smaller ones.
1 AHAH has two fewer eligibility criteria than FCS and does not require Medicaid eligibility.
9
Learn from BIPOC led/culturally specific
organizations about how to elevate their
work to address disparities in housing and
provide tenancy support services for
communities of color. Share learnings with
mainstream (often white-led) organizations.
5. Streamline the The current approach to monthly The proposed Program Guidelines in Part III
process of invoice reconciliation creates of this report shift invoice reconciliation to
expense substantial administrative burden an annual process and include audits every
reconciliation for Commerce staff and two years. Commerce should explore
to shift staff providers, which impedes the allowing project expenses for providers to
time to state’s ability to measure the hire a certified public accountant (CPA) to
tracking outcomes of its investments.
conduct a single site audit to ensure proper
outcomes.
reconciliation.
6. Begin to track The state does not track the * Commerce should begin tracking housing
basic tenant outcomes of its OMS stability rates and tenant satisfaction
outcomes of investments. disaggregated by race as noted in AHAH as
investments. soon as possible and make course-
corrections as-needed to ensure more
equitable and successful tenant outcomes.
7. Align Contracts for OMS are limited to Allow Commerce to make 15-year funding
Commerce two-year terms due to the commitments for OMS and all other
operating and biennial nature of appropriations. operating subsidies and project based rental
rental assistance, subject to appropriations.
assistance Providers are held to affordability
commitments covenants of 40-75 years with
with their capital funders, including
accountability Commerce.
periods of
capital
investments.
1
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PART III- Proposed Permanent Supportive Housing – Operating,
Maintenance, and Supportive Services (PSH – OMS) Program
Guidelines
It is standard for Commerce programs to have dedicated guidelines to ensure that programs run as
efficiently as possible. Detailed guidelines provide transparency in the program for both Commerce and
grantees. CSH recommends creating written program guidelines for the OMS program similar to those
that exist for more established programs such as the Community Behavioral Health Rental Assistance
Program (CBRA) and the OHY for Housing Programs (Independent Youth Housing Program and Young
Adult Housing Program).
In this section, CSH offers draft proposed Program Guidelines focusing on Program Eligibility, Program
Operations, Eligible Activities and Costs, Grantee Monitoring, and Recommended Appendices based on
the findings and recommendations in this report. CSH recommends that Commerce work with the
Supportive Housing Workgroup established under SHB 1724 to finalize the OMS Program Guidelines.
1
1
Program Guidelines
1. Definitions
1.1. Housing operations –
All costs associated with the day-to-day operation of housing. These include, but are not limited
to: administrative costs, utilities, maintenance, security, taxes, and insurance expenses as well
as personnel costs, which can be designated as on-site and/or off-site property management
and maintenance services. Front desk, 24/7 staffing, and milieu services that are provided on
behalf of all tenants in a building are housing operating costs. While providers might employ
individuals with services backgrounds in these roles, these costs are clearly distinguished as
those in support of managing an apartment building.
1.2. Tenancy Support Services –
Also known as “Community Support Services” in the Apple Health and Homes (AHAH) program –
Definitions, RCW 74.09.885, and consistent with services defined in the Foundational
Community Supports program – WAC 182-559-100, means: active search and promotion of
access to, and choice of safe and affordable housing that is appropriate to the client’s age,
culture, and needs and ongoing supports to assure ongoing successful tenancy. These services
include:
A. Conducting a functional needs assessment to identify the participant's preferences related
to housing (type, location, living alone or with someone else, identifying a roommate,
accommodations needed, or other important preferences), and to identify the participant's
needs for support to maintain community integration. This includes what type of setting
works best for the client, assistance in budgeting for housing and living expenses, assistance
in connecting the client with social services to assist with filling out applications and
submitting appropriate documentation to obtain sources of income necessary for
community living and establishing credit, and in understanding rights and requirements of
tenancy.
B. Assisting clients to connect with social services to help with finding and applying for housing
necessary to support the client in meeting their medical care needs.
C. Developing an individualized community integration plan based upon the assessment as
part of the overall person-centered plan.
D. Identifying and establishing short and long-term measurable goal(s), and establishing how
goals will be achieved and how concerns will be addressed.
E. Participating in person-centered plan meetings at redetermination and revision plan
meetings, as needed.
F. Supports and interventions according to the person-centered plan.
G. Service planning support and participating in person-centered plan meetings at
redetermination and revision plan meetings as needed.
H. Coordinating and linking the client to ancillary services including:
a) Primary care and health homes
b) Substance use disorder treatment providers
c) Mental health providers
d) Medical, vision, nutritional and dental providers
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e) Vocational, education, employment and volunteer supports
f) Hospitals and emergency rooms
g) Probation and parole
h) Crisis services
i) End of life planning
j) Other support groups and natural supports.
I. Entitlement assistance including assisting clients in obtaining documentation, navigating and
monitoring application processes and coordinating with the entitlement agency.
J. Assistance in accessing supports to preserve the most independent living, including skills
coaching, financing counseling, anger management, individual and family counseling,
support groups, and natural supports.
K. Providing supports to assist the client in communicating with the landlord and/or property
manager regarding the participant's disability (if authorized and appropriate), detailing
accommodations needed, and addressing components of emergency procedures involving
the landlord and/or property manager.
L. Coordinating with the client to review, update and modify their housing support and crisis
plan on a regular basis to reflect current needs and address existing or recurring housing
retention barriers.
M. Connecting the client to training and resources that will assist the client in being a good
tenant and lease compliance, including ongoing support with activities related to household
management.
Community support services must be provided in an integrated setting of the client's choice; and
in a manner that ensures the client's individual rights of privacy, dignity, respect, and freedom
from coercion and restraint.
1.1. Ancillary services –
Tenancy support service providers often link their clients to ancillary services such as nursing
care, personal care, substance use disorder, and mental health services, which may or may not
be provided in the apartment building where the person lives. OMS does not pay for ancillary
services. Resources for ancillary services are not requested on Commerce applications or
reports, nor are they considered sources of tenancy support services funding.
1.3. Permanent Supportive housing (PSH) –
RCW 36.70A.030 (19)"Permanent supportive housing" is subsidized, leased housing with no
limit on length of stay that prioritizes people who need comprehensive support services to
retain tenancy and utilizes admissions practices designed to use lower barriers to entry than
would be typical for other subsidized or unsubsidized rental housing, especially related to
rental history, criminal history, and personal behaviors. Permanent supportive housing is
paired with on-site or off-site voluntary services designed to support a person living with a
complex and disabling behavioral health or physical health condition who was experiencing
homelessness or was at imminent risk of homelessness prior to moving into housing to retain
their housing and be a successful tenant in a housing arrangement, improve the resident’s
health status, and connect the resident of the housing with community-based health care,
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treatment, or employment services. Permanent supportive housing is subject to all of the
rights and responsibilities defined in chapter 59.18 RCW 2.
2. Program Eligibility
2.1. Grantee Eligibility –
Grantee must own or master lease multifamily rental housing projects and have received
capital funding from the Washington State Housing Trust Fund, or from another public capital
funding source. Supportive services may be provided by the grantee, or a third party non-
profit service provider, provided the grantee and third-party services provider can
demonstrate they are operating under an executed memorandum of understanding.
2.2. Tenant Eligibility
2.2.1. Eligibility for Housing –
To be eligible to live in OMS-funded housing, tenants must have incomes at or below 30% of
the area median income.
2.2.2. Eligibility for Services -
To be eligible for OMS-funded tenancy support services, a person must meet at least one of the
following six eligibility criteria:
1. Be a homeless person (as defined in RCW 43.185.010) with a long-continuing or
indefinite physical condition requiring improvement, stabilization, or prevention of
deterioration of functioning, including the ability to live independently without
support and have at least one of the following five risk factors:
a. Be a homeless person at the time of the eligibility determination for the
program and have been homeless for 12 months prior to the eligibility
determination; or
b. Have been a homeless person on at least four separate occasions in the three
years prior to the eligibility determination for the program, as long as the
combined occasions equal at least twelve months; or
c. Have a history of frequent or lengthy institutional contact, including contact
at institutional care facilities such as jails, substance use disorder or mental
health treatment facilities, hospitals, or skilled nursing facilities; or
d. Have a history of frequent stays at adult residential care facilities or
residential treatment facilities.
2. Be assessed as likely eligible for, but not yet enrolled in, a medical assistance program
to the severity of behavioral health symptom acuity level which creates barriers to
accessing and receiving conventional services.
3. Be assessed by a licensed behavioral health agency to have a behavioral health need
which is defined as meeting one or both of the following criteria:
a. Having mental health needs, including a need for improvement, stabilization,
or prevention of deterioration of functioning resulting from the presence of a
mental illness.
2
Washington State Legislature, “Definitions,” https://app.leg.wa.gov/rcw/default.aspx?cite=36.70a.030
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b. Having substance use disorder needs indicating the need for outpatient
substance use disorder treatment which may be determined by an assessment
using the American society of addiction medicine criteria or a similar
assessment tool approved by the authority.
4. Be assessed by the department of social and health services as needing either
assistance with at least three activities of daily living or hands-on assistance with at
least one activity of daily living and have the preliminary determination confirmed by
the department of social and health services through an in-person assessment
conducted by the department of social and health services.
5. Have frequent turnover of in-home caregivers as defined by WAC 388-106-0040,
where within the last twelve months the client utilized three or more different in-
home caregiver providers and the current placement is not appropriate for the client.
6. Have a predictive risk score of 1.5 or above. See WAC 182-557-0225.
3. Program Operations
3.1. Program Commitment –
If awarded OMS funding, grantees will receive award letters noting 15-year commitments
subject to actual and sufficient revenues and/or appropriations.
3.2. Process –
At the time of application, Commerce requires a project to submit a 15-year operating pro-
forma and a 15-year service pro-forma that uses the same template as the WBARS report
format. For projects already in operations, documentation of the two previous years’ budget
actuals that were used to determine the trend are required. Commerce, in collaboration with
local funders of operating and services, will use this information to determine the projected 15-
year gap of operating and services funding after tenant rents. Every applicant is required to
submit both an operating and services budget even if they are only request funding for one
portion. This is to ensure there is ample funding for both operations and services even if
Commerce will not be providing funding.
In addition to proformas, applicants will be required to submit:
• Certification that the grantee will use OMS eligibility criteria to determine who will be
eligible to occupy the housing they are creating and receive the services they are
providing.
• Certification that the grantee will provide services consistent with the OMS definition of
tenancy support services.
• Number of tenants anticipated to receive FCS-funded tenancy support services, plans
and targets for increasing this number if less than 90% of tenants served, or explanation
of barriers to doing so.
• A completed service plan with all elements outlined in the template.
• Tenant move-in dates for existing projects (This information is captured in WBARS and
might not be necessary to capture in the application or yearly reporting.)
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Commerce will review all application material in concert with other public funders to determine
the gap in revenue. If a project’s operating expenses exceed $17,000 or service expenses
exceed $10,000 the project will be required to seek pre-approval to submit an explanation of
extraordinary expenses. Projects may seek pre-approval by submitting a draft budget, using
Commerce’s application, and providing narrative explaining extraordinary expenses. Each line
item of the application should be addressed in the narrative. If a project is showing significant
variations from year to year, Commerce will request additional information.
Each year grantees will submit their operating and service budget for upcoming fiscal year. If
the budget indicates a gap, Commerce will determine the yearly award based on the gap for
operations and services in concert with other public funders. If the project does not show a gap
for the year, the project will not receive funds but will still be required to document that they
are operating supportive housing, and the project will still be considered under contract with
OMS for the remainder of their 15-year award period.
At the beginning of each program year Commerce will compare the annual budget submitted
and the original 15-year proforma. If significant inconsistencies exist between what was
projected and the actual request, Commerce will notify the grantee. This will allow Commerce
to evaluate their original award amount and refine its portfolio spending projections.
3.3. Disbursements –
Project will receive half of their approved gap award on or before day one of their fiscal year.
Grantees are required to submit an invoice to Commerce requesting funds. All submitted
invoices must include monthly voucher detail and any other report that Commerce may
develop. Invoice vouchers may not be paid until the report(s) is received and verified.
Commerce may require a grantee to submit additional detailed source documentation for any
charges. The grantee must maintain copies of all reimbursement requests and backup
documentation. Records that disclose all costs charged to the Commerce grant must be
maintained 3.
After six months, the project will receive the second half of their budgeted gap.
3.4. Fungibility –
If a project is awarded an operating and service award they are permitted to “flex” up to 10% of
their total OMS award between their operating and services budgets, upon request. This is to
allow for maximum flexibility for the project and help with unexpected expenses. It is still
essential that projects keep expenses and revenues on the specified budget for reporting
purpose. For example, if a project has significant turnover due to a successful “Moving On”
program, it might incur more operating and maintenance costs than budgeted. A successful
Moving On program could also indicate that tenants are stable and service costs might be lower
than expected. Having the flexibility to move 10% of the total award from the service budget to
3
Washington State Department of Commerce, “OHY Guidelines for Housing Programs (Independent Youth Housing Program and Young Adult
Housing Program)”, https://www.commerce.wa.gov/wp-content/uploads/2021/09/hau-ohy-housing-programs-guidelines-07.01.2021.pdf CSH
recommends that OMS – PSH staff review and implement approaches used by established Commerce programs to develop the necessary
internal controls that significantly reduce the burden of reviewing and processing invoices, back-up documentation, and vouchers.
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the operating budget allows the grantee to manage their project financials without unnecessary
administrative burden to the provider or Commerce.
3.5. Data Requirements –
All programs receiving OMS funding are required to report into WBARS.
3.6. Best Practices (CSH recommends that evidence-based and best practices are standardized
across Commerce’s programs to the extent possible and suggests referencing the OHY
Guidelines for Sections 2.5.2 -2.5.5. and including details for the following housing and service
approaches.)
3.6.1. Housing First
3.6.2. Participant Centered Services
3.6.3. Trauma Informed
3.6.4. Harm Reduction
3.6.5. Culturally Responsive
4. Eligible Activities and Costs
4.1. Operating Expense Benchmark –
Based on the findings from CSH’s report commissioned by Commerce to fulfil the requirements
of State of Washington Budget Proviso, 2021-23 Biennium Operating Budget, ESSB Section 129
(114), per unit operating expenses are benchmarked at $17,000/year beginning in 2023 with a
3% annual inflation factor. If a projects per unit operating expenses exceeds this amount, the
applicant or grantee must seek pre-approval from Commerce to apply. Information on the pre-
approval process is found in 3.2 of these Guidelines.
4.2. Allowable Operating Costs –
Allowable operating costs should align with
line items for operations in WBARS. Front As Commerce considers the
recommendations made by TDA
desk staff, 24/7 staffing, and milieu services
Consulting regarding cash-flow contingent
should be included in the operating budget
loan payments, CSH fully supports
and not the service budget as they are implementing uniform definitions of
essential to the running of the building and operating expenses and cash flow to
not attributable to individual tenants. ensure consistent application by owners
and auditors.
Service expenses should not be included in
Additionally, CSH supports system
the “other” category. Applicants should
updates to WBARS to align the uniform
include their “other” costs in specific “other”
definitions to reporting. As uniform
line items such as; miscellaneous definitions are created, CSH strongly
administrative expenses and miscellaneous recommends that 24-hour, front desk, and
operating and maintenance expenses. milieu services staffing remains an
Applicants should be required to submit operating expense.
notes on any other line item.
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4.3. Tenancy Support Service Cost Benchmark -
Based on the findings from CSH’s report commissioned by Commerce to fulfil the requirements
of State of Washington Budget Proviso, 2021-23 Biennium Operating Budget, ESSB Section 129
(114), per unit service expenses are temporarily benchmarked at $10,000/year, pending the
outcome of a rate study for FCS services being conducted by HCA. If a projects per unit service
expenses exceeds this amount the applicant or grantee may seek pre-approval from Commerce
to apply. Information on the pre-approval process is found in 3.2 of these Guidelines. Once the
HCA rate study is completed, Commerce will set rates for reimbursement of tenancy support
services at the annual equivalent of FCS rates, taking into account likely FCS exception
payments.
4.4. Allowable Tenancy Support Service Costs –
Allowable tenancy support services include any services that support tenants in moving into
housing and maintaining their tenancy as defined in 1.2 and program expenses delineated in
Appendix D. Expenses associated with ancillary services are not eligible for OMS funding. Their
revenue and expenses should not be included in the budget for tenancy support services.
Providers of supportive services may be staff of the property owner or manager, or a third-
party non-profit service provider operating under a memorandum of understanding with a
property owner or manager.
5. Grantee Monitoring
5.1. Financial Monitoring –
At the end of each year, grantees are required to report their actual costs into WBARS or
another predetermined format if timing does not allow for WBARS use. Commerce staff will
verify that the PSH-OMS subsidy disbursed did not exceed the actual gap by more than 10% of
the award amount. If it is determined that a project received more than 10% of the actual gap,
the second disbursement of the following year will be reduced by that amount. For example, if
a project estimated gap is $100,000 but the actual gap was determined to be $85,000. The
project’s second disbursement of the next year will be reduced by $5,000.
Project Gap Award: $100,000
Project Gap Actual: $85,000
10% of the Award Amount: $10,000
Amount Allowed for the project to retain: $100,000 - $10,000 = $90,000
Amount the second disbursement will be reduced by: $90,000 - $85,000 = $5,000
Every two years, projects will be required to complete a Single Site Audit of their project by a
Certified Public Account, to ensure proper reconciliation of this program. The cost of the audit
is an eligible cost of this program. Project will be required to submit the audit to Commerce for
review.
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5.2. Outcome Monitoring –
Within 30 days of fiscal year end, grantee is required to submit:
• De-identified tenant move-in and move-out dates and duration.
• Move-out reasons.
As required under the AHAH Act, Commerce (in
• Annual tenant satisfaction survey results coordination with HCA) should establish metrics
• Policies and procedures that demonstrate and collect racially disaggregated data related
use of the state’s OMS eligibility criteria to the program's supportive housing outcomes
for projects referred to as supportive to inform quality improvement initiatives and
housing. to help ensure that supportive housing
• Other outcomes recommended by the addresses disparities in outcomes that may exist
state supportive housing workgroup, for communities of color.
including BIPOC providers and people with
lived expertise.
6. Recommended Appendices – (CSH recommends creating the following documents or templates to
provide standardization in required documents)
6.1. Service Plan Template
6.2. Documentation of Eligibility
6.3. Tenant Income Documentation
6.4. Yearly Operating and Service Budget Template (aligned with WBARS)
Timing Considerations:
Details about the timing of this program are omitted from these proposed Guidelines because of the
multiple considerations around weaving funding with local sources. Items that will need to be further
researched and addressed include:
• Projects’ current fiscal year for auditing purposes
• State fiscal year
• Integration of funding with local funders
• WBARS reporting requirements
ABOUT CSH
CSH is the national champion for supportive housing, demonstrating its potential to improve the lives of
highly impacted individuals and families by helping communities create over 335,000 homes. CSH
funding, expertise, and advocacy have provided $1 billion in direct loans and grants for supportive
housing across the country. Building on over 30 years of success developing multi and cross-sector
partnerships, CSH engages broader systems to fully invest in solutions that drive equity, help people
thrive, and harness data to generate concrete and sustainable results. By aligning affordable housing
with services and other sectors, CSH helps communities move away from crisis, optimize their public
resources, and ensure a better future for everyone. Visit us at csh.org.
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Appendix A: Stakeholder Engagement and Racial Equity Impact Assessment
a. Commerce Identified Study Workgroup Members
Commerce identified the following group of stakeholders for CSH to consult with during the project.
Name Organization Topic
Cacey Hanauer Tacoma Housing Authority Youth Housing
Anna Strahan King County Funder
Flo Beaumon Catholic Charities Housing Services Western WA PSH
Andy Silver Vancouver Housing Authority PSH
Rhonda Hauff Yakima Neighborhood Health Services PSH
Steven Miller Volunteers of America PSH
Lauren Fay Downtown Emergency Services Center PSH
Joe Thompson Mercy Housing Senior & Affordable Housing
Yi Zhao Plymouth Housing PSH
b. Stakeholder Engagement Process
CSH's engagement started when Commerce assigned a workgroup to work with us on the project. We
were given the names and organizations of members and asked to meet with them periodically during
the course of the study. CSH and Commerce met with the workgroup four times during the course of the
study. CSH also met with the members of the work group individually throughout the study and engaged
many other stakeholders to inform our research.
October and November 2021
CSH met with each work group member individually to discuss the project and process and learn
more about the members’ expectations.
December 2021
The first workgroup meeting covered:
o Background and Overview of Process, including the data provided by Commerce and our
approach to analysis.
o Introduction to CSH’s racial equity impact assessment (REIA), which included questions for
external partners to consider and discuss.
o General workgroup discussion to gather qualitative information for analysis, input and
feedback on approach.
CSH presented to the Policy Advisory Team a similar presentation to the first workgroup but
shorter.
Appendix A page 1
February 2022
The second workgroup meeting included:
o Update on the cost analysis to date
o Reflections on Demographic Data & Racial Equity (data previously sent out)
At the request of Commerce, CSH met with Coastal Community Action Program and learned
about their success in utilizing FCS to serve more than 600 people, the largest number of people
served in any community in the state.
CSH attended the State Supportive Housing Provider Network.
These meetings provided CSH opportunities to present our work with this project to a broader
audience of supportive housing providers. In addition to the group stating that they were glad
that this effort was happening, feedback we received is that they primarily wanted to stay
informed on our process so we attended periodically until the group closed for the summer.
March 2022
CSH met with work group members individually. Topics discussed included:
o Broadening feedback, through surveys primarily, and including a few conversations,
particularly organizations that focus on serving BIPOC. What questions would they include
in a survey? Who would they advise to include?
o Discussions on previous meetings.
o Discussion on the race equity approach. How could this project improve equitable,
supportive housing outcomes for BIPOC? REIA introduction attached as well as graphs and
notes on data analysis.
o ECONW (the data analysts that are working with us), reached out to understand/review
some of proformas, operating, and service budgets to add to their data.
Collecting qualitative approaches to come up with recommendations on the analysis based on
consistency.
April 27, 2022
The third workgroup meeting included:
o Review of themes from individual work group meetings
o Proposed survey questions for providers who are not on the work group
o Review of CSH’s Racial Disparities and Disproportionality Index (www.csh.org/data)
o ECONorthwest’s updated analysis, including a tool they created
o A discussion on additional data points
May- August 2022
CSH continued to have individual discussions with workgroup members. Questions to work
group members for discussions included:
o Do you operate supportive housing projects that you don’t apply to OMS for funding?
o Do you have revenue sources for operating or services that you don’t/can’t put into the
OMS application? And why? For example, FCS funding.
o Are there expenses in your OMS funded projects that you can’t include in the applications?
o Do you have projects funded by the HTF O&M program? Do you have SH projects funded
by the HTF O&M program?
Appendix A page 2
o Do you report in WBARS?
o Are there any line items that should be added or expanded on in the excel application?
o Can you describe what costs and personnel costs are included in the Property Management
line items?
o How do you distinguish between on-site and off-site PM services?
o Is there confusion around what are allowable operating and service-related costs?
o What would help make the application process more straightforward? (more explanation
in the application, a training on the application)
o How do you determine/budget for caseload size?
o What revenue sources are in your operating budgets?
o What revenue sources are in your service budgets?
o Do you utilized FCS funds?
September 2022
The fourth workgroup meeting included a full verbal summary of the report broken into two
segments. Because the report was in draft form, Commerce asked CSH not to present the
findings and recommendations in writing.
o Program Enhancement Recommendations
o Operating and Service Benchmark Recommendations
October 2022
CSH presented to the Policy Advisory Team
This presentation was an abbreviated verbal presentation of key report findings and
recommendations.
c. Race Equity Impact Assessment
The RFP for this cost study did not include elements related to racial equity. CSH’s proposal to
Commerce, we proposed to conduct a Racial Equity Impact Analysis (REIA) to ensure that racial equity
would be addressed as part of the study. The REIA is a tool CSH developed to use internally to identify
current and potential racial inequities when we work with government partners, providers and
communities. Commerce liked this idea and included it in CSH’s scope of work. CSH then created an
external version of the REIA for Commerce staff to consider in their work, and developed a list of
questions for the work group, which we sent to the workgroup and Commerce two months in advance
of our first discussion on the topic. The questions included:
o Is there potential for harm and/or unintended consequences against historically
disadvantaged identities (BIPOC, LGBTQ+, disabled, etc.) from this work? If so, what is it?
o Who would benefit in the short-term and long-term? How?
o How will this project raise awareness about racial inequity?
o What provision(s) could be changed or added to reduce/eliminate racial disparities and
advance racial equity?
o What are race equity success indicators and progress benchmarks?
o What should the cost study consider in terms of resources to address disparities?
Appendix A page 3
CSH received little to no response to these questions when they were sent out in advance and during
the workgroup meeting when they were first presented. CSH continued to have an agenda on racial
equity at all work group meetings. Feedback continued to be minimal from the group.
Due to the limited feedback or ability to delve into the REIA and a notable lack of diversity among
workgroup members, CSH initiated outreach to the following individuals and organizations to inform the
study.
• Josephine Tamayo Murray – Washington Communities of Concern Commission (Statewide)
• Derrick Belgarde and Virgil Wade – Chief Seattle Club (King County)
• Sean Hopps – Institute for Washington’s Future (Statewide)
• Drayton Jackson and Diana Sullivan – Homeless Poverty Management (Kitsap County)
These organizations were incredibly helpful in sharing their experiences, expertise, and desires for
changes to housing and services funding and technical assistance. CSH conducted discussions with each
of these groups, formulated our findings into draft recommendations, and received feedback on our
final report drafts related to BIPOC and “by and for” organizations. Feedback from these stakeholders
was incredibly helpful in forming the findings and recommendations that can be found in Part II B:3, Part
II C:3, and Part II C:4 of the final report. These recommendations were discussed with the workgroup
and the PAT and were met with few to no comments.
Appendix A page 4
Appendix B: Data and Analysis
A. Summary of Data Provided, Baseline Analysis, and Analysis of Commerce-identified
Indicators for Web-Based Annual Reporting Systems (WBARS) data
a. Summary of data provided and baseline analysis
WBARS is a reporting system used by most Washington public funders of multifamily housing to assist in
asset management. Data in WBARS reflect actual costs after they are incurred. Commerce does not
require recipients of PSH-OMS funding to report in WBARS, but the large majority do so.
Commerce provided CSH and ECONorthwest with the 2019, 2020, and 2021 WBARS data that had a
“SiteTypeName” “Alternate” or “Farmworker” removed for the analysis. ECONorthwest separated the
data into the three cohorts that are the subject of the study: PSH, Youth/Young Adult, and “Other
Affordable.”
Permanent Supportive Housing (PSH) Subset
A PSH subset was determined by individually matching projects from the Commerce-created “PSH Data
Inventory” to the WBARS data.
Youth/Young Adult Subset
The Youth/Young Adult housing cohort consisted of projects that self-selected a category of
Youth/Young Adult Housing. It was verified that no projects in the PSH cohort were included in the
Youth cohort.
Other Affordable Housing Subset
The Other Affordable housing cohort consisted of projects that had a “SiteTypeForSorting” of
Multifamily General or Multifamily Elderly. It was verified that no projects in the PSH cohort were
included in the Other Affordable cohort.
Data removed from the analysis
Per-unit expenses were analyzed for the operating and services data for projects that had costs greater
than $0. Projects that included the following descriptions under the “ProjectDescription” field were
removed from the sample because they did not meet the common criteria of multifamily, independent,
permanent, affordable housing.
2021 2020 2019
4 group homes serving young 4 group homes serving young
4 group homes serving young adults
adults adults
76 seasonal farmworker beds 76 seasonal farmworker beds 76 seasonal farmworker beds
As of 3.16.20 1 studio unit and 1 studio unit and 14 shelter
Assisted Living
14 shelter beds beds
Four bedroom group living with attached
Assisted Living Assisted Living
separate 1 bedroom apt
Four bedroom group living with Four bedroom group living
Group home for homeless immigrant &
attached separate 1 bedroom with attached separate 1
refugee family
apt bedroom apt
Appendix B page 1
Group home for homeless Group home for homeless
New construction youth center
immigrant & refugee family immigrant & refugee family
New construction youth center Seasonal/Migrant Farmworker Seasonal/Migrant Farmworker
Seasonal/Migrant Farmworker
Seasonal/Migrant Farmworker one site;
Seasonal/Migrant Farmworker one site; permanent
permanent farmworker one site
farmworker one site
Seasonal/Migrant Farmworker
Shelter and Transitional Shelter and Transitional Housing for
one site; permanent farmworker
Housing for Homeless Youth Homeless Youth
one site
Shelter and Transitional Housing Single family home Single family home
for Homeless Youth
Homeless youth shelter serving
Homeless youth shelter serving youth
Single family home youth ages 12-17 who have no
ages 12-17 who have no income.
income.
Homeless youth shelter serving Juvenile group rehabilitation Juvenile group rehabilitation center for
youth ages 12-17 who have no center for youth transitioning youth transitioning from incarceration.
income. from incarceration.
Final sample size used in analysis
The sorting of the data described above resulted in the following number of projects per housing type
subset per year.
Permanent Supportive Housing
• 2019: 78
• 2020: 77
• 2021: 77
Youth
• 2019: 23
• 2020: 24
• 2021: 20
Other Affordable
• 2019: 532
• 2020: 525
• 2021: 500
CSH and ECONorthwest analyzed WBARS data supplied by Commerce to determine the minimum, 1st
quartile, median, mean, 3rd quartile, and maximum per-unit operating and per-unit services costs of all
three housing types (PSH, Youth, and other Affordable) over three years. CSH has provided Commerce
with an Excel workbook that contains the 18 tables in this analysis. In light of the length of these
materials and the focus of this study on PSH, CSH has provided a summary of this analysis for PSH below.
Appendix B page 2
Analysis of PSH-OMS Operating Costs Overall (WBARS)
The total operating expenses for PSH were analyzed on a per unit basis. Between 2019 and 2021 there
was a 27.33% increase in total median operating expenses per unit. CSH and ECONorthwest analyzed all
three years, but due to this finding and that fact that these costs escalated at a higher rate than
proformas generally trend, CSH based application operating cost and modeling benchmark
recommendations on 2021 WBARS data only. The following chart provides a summary of reported per-
unit costs by year.
Missing Total
Min. 1st Qu. Median Mean 3rd Qu. Max. Vals Projects
Total Expenses Operating $ - $ 21,481 $ 211,120 $ 418,544 $ 750,922 $ 2,458,799 0 78
2019
Total Expenses Operating Per Unit $ - $ 6,506 $ 8,602 $ 9,024 $ 11,294 $ 33,334 0 78
Total Expenses Operating (No Zeros) $ 7,417 $ 32,290 $ 242,786 $ 429,558 $ 784,392 $ 2,458,799 2 78
Total Expenses Operating Per Unit (No Zeros) $ 495 $ 6,640 $ 8,745 $ 9,261 $ 11,364 $ 33,334 2 77
Total Expenses Operating $ 6,925 $ 46,545 $ 291,904 $ 516,105 $ 873,660 $ 2,690,632 0 77
2020
Total Expenses Operating Per Unit $ 2,308 $ 6,970 $ 9,639 $ 10,760 $ 15,199 $ 23,727 0 77
Total Expenses Operating (No Zeros) $ 6,925 $ 46,545 $ 291,904 $ 516,105 $ 873,660 $ 2,690,632 0 77
Total Expenses Operating Per Unit (No Zeros) $ 2,308 $ 6,970 $ 9,639 $ 10,760 $ 15,199 $ 23,727 0 77
Total Expenses Operating $ 7,530 $ 53,033 $ 326,505 $ 601,999 $ 910,862 $ 3,277,321 0 77
2021
Total Expenses Operating Per Unit $ 2,450 $ 7,858 $ 11,135 $ 12,804 $ 17,668 $ 30,042 0 77
Total Expenses Operating (No Zeros) $ 7,530 $ 53,033 $ 326,505 $ 601,999 $ 910,862 $ 3,277,321 0 77
Total Expenses Operating Per Unit (No Zeros) $ 2,450 $ 7,858 $ 11,135 $ 12,804 $ 17,668 $ 30,042 0 77
Analysis of PSH-OMS Tenancy Support Services Costs Overall (WBARS)
The total service expenses for PSH were analyzed on a per person basis. Unlike the WBARS operating
data, the service expense data did not align. There were many reasons for this. The total number of
projects reporting service expenses in WBARS ranged from 38 projects in 2019 to 43 projects in 2021.
The entire cohort would have allowed CSH and ECONorthwest to only analyze 48 - 55% of the projects’
service expenses in WBARS. Due to the relatively low number of project data for service expenses and a
workgroup/stakeholder reported lack of clarity about how to report services costs, CSH and
ECONorthwest found the data to be inconclusive in determining services cost benchmarks. The
following chart provides a summary of reported per-unit services costs by year.
Total
Min. 1st Qu. Median Mean 3rd Qu. Max. Missing VProjects
Total Expenses Service $ - $ - $ - $ 90,997 $ 160,730 $ 630,163 0 78
2019 Total Expenses Service Per Unit
Total Expenses Service (No Zeros)
$ - $ - $ - $ 2,156 $ 2,942 $ 31,508
$ 5,800 $ 52,673 $ 168,869 $ 186,783 $ 274,434 $ 630,163
0
40
78
78
Total Expenses Service Per Unit (No Zeros) $ 476 $ 2,012 $ 3,068 $ 4,425 $ 4,654 $ 31,508 40 77
Total Expenses Service $ - $ - $ 31,350 $ 110,097 $ 178,815 $ 534,362 0 77
2020
Total Expenses Service Per Unit $ - $ - $ 1,306 $ 2,512 $ 3,592 $ 21,849 0 77
Total Expenses Service (No Zeros) $ 3,449 $ 60,126 $ 153,199 $ 192,670 $ 326,694 $ 534,362 33 77
Total Expenses Service Per Unit (No Zeros) $ 45 $ 2,118 $ 3,320 $ 4,397 $ 5,075 $ 21,849 33 77
Total Expenses Service $ - $ - $ 39,253 $ 139,873 $ 247,154 $ 674,727 0 77
2021 Total Expenses Service Per Unit
Total Expenses Service (No Zeros)
$ - $ - $ 1,667 $ 3,069 $ 4,788 $ 17,734
$ 1,607 $ 74,136 $ 190,787 $ 250,470 $ 396,221 $ 674,727
0
34
77
77
Total Expenses Service Per Unit (No Zeros) $ 85 $ 2,604 $ 4,083 $ 5,496 $ 6,587 $ 17,734 34 77
Appendix B page 3
b. Analysis of Operating and Services Costs by Commerce-designated Populations (WBARS)
Application data were inconclusive regarding population due to duplication within designated
categories, lack of definitions, and undefined service models relating to evidence-based or best
practices. WBARS contains no further clarification of these issues so WBARS data were not further
analyzed. (See section B, b. for more information about analysis of applications by population.)
c. Analysis of Operating and Services Costs by Service Models
WBARS data provided included two categories of service models (PSH and Youth) and were analyzed as
noted above.
d. Analysis of Operating and Services Costs by Geography
Using the majority of criteria outlined in the Housing Trust Fund (HTF) Handbook Version 3-4-2021, CSH
and ECONorthwest analyzed the total operating and services expenses by geographic designations of
rural, urban, and King County Washington. Commerce does not define these geographies and instead
asks applicants to self-designate. Because of this, analysis of reported costs by geography required
creating a methodology for these designations.
The following criteria were used to determine rural projects.
1. Counties with a population of less than 90,000, except for those cities within these counties with
a population of greater than 25,000. For example, Franklin County except the City of Pasco, and
2. Counties with a population greater than 90,000 but less than 390,000 when more than an
aggregated 25% of that county’s population resides in one substantially contiguous
metropolitan area. In this case, the county, except the metropolitan area meeting this criterion,
would be considered Rural. For example: Yakima County except the City of Yakima.
The third criteria stated in the HTF Handbook and listed below was determined to be too subjective and
was not used.
3. Counties with a population greater than 390,000, but where the project is located in a
sufficiently remote location to be reasonably considered as not associated with an urban center.
For example: Eatonville, Pierce County. Applicants for projects thought to be in “Rural” areas
under this definition should contact HTF staff for an official determination prior to submitting an
application for funding.
The following criteria was used to determine urban projects:
1. An urban area or community is defined as any municipality with a population greater than
25,000 and which does not fall into the definitions of rural. Projects located within a
municipality with a population less than 25,000, but which is adjacent to a city deemed “Urban”
may be deemed functionally related to that city and therefore also deemed Urban. For example,
Brier, population 6,361, which is functionally related to the City of Lynwood. Also review the
Rural definition above.
Projects located in King County were categorized as King County.
Appendix B page 4
The following charts specify the number of reported projects by geography as designated above.
2021
PSH AFFORDABLE YOUTH
RURAL 3 70 0
URBAN 12 175 1
KING 54 148 15
N/A 7 103 0
CSH has provided Commerce with an Excel workbook that contains the 32 tables in this analysis,
including data breakdowns of costs by operating and services as reported. In light of the length of these
materials and the focus of this study on PSH, CSH has provided a summary of this analysis for PSH below.
Total Operating and Services Costs by Geography
Median 3rd Qu.
Urban: Total Expenses Per Unit $13,349.31 $22,325.31
Rural: Total Expenses Per Unit $12,949.04 $26,667.08
King: Total Expenses Per Unit $16,594.28 $25,204.20
e. Analysis of Operating and Services Costs by Age of Housing Developments
CSH and ECONorthwest concluded that analysis based the age of housing developments was
inconclusive due to the uncertain nature of when projects had capital improvements. This information
might be available in capitalized needs assessments or funding records that demonstrate rehabilitation
funding, which CSH would be happy to look at in more detail with Commerce.
f. Analysis of Operating and Services Costs by Size of Housing Developments
CSH and ECONorthwest analyzed the total operating and service expenses by size of housing
developments. The projects were disaggregated by number of units in four categories: 1-25 units, 26-50
units, 51-125 units, and more than 126 units.
The following charts specify the number of reported projects by size of development as designated
above.
2021
PSH AFFORDABLE YOUTH
1-25 UNITS 35 193 15
26-50 UNITS 17 195 1
51-125 UNITS 22 94 0
126+ UNITS 2 14 0
CSH has provided Commerce with an Excel workbook that contains the tables in this analysis. In light of
the length of these materials and the focus of this study on PSH, CSH has provided a summary of this
analysis for PSH below.
Appendix B page 5
Total Operating and Services by Size of Housing Development
Median 3rd Qu.
0-25 Units: Total Expenses Per Unit $12,748.89 $22,761.80
26-50: Total Expenses Per Unit $14,137.62 $22,064.72
50-125: Total Expenses Per Unit $22,684.58 $26,278.46
126 +: Total Expenses Per Unit $15,720.20 $18,253.44
B. Summary of Data Provided, Baseline Analysis, and Analysis of Commerce-identified
Indicators for Consolidated Applications data
a. Summary of data provided and baseline analysis conducted
All application data provided by Commerce were for PSH-OMS in single-site and integrated housing
developments. Population categories in the application data did not specify whether or not PSH-OMS
projects were designated as “Youth Housing.” While three projects identified as specifically providing
housing and services for youth, all other projects that might serve youth would have been included in
broader categories such as “multiple special needs.”
CSH and ECONorthwest analyzed the per-unit operating and services expenses for projects in the 2020-
2021 data sets that had costs greater than $0.
We then created percentages of the sub-population categories that each applicant is required to
designate.
• Multiple Special Needs
• Behavioral Illnesses
• Chronic Mental Illness
• Developmental Disabilities
• Physical Disabilities
• Substance Abuse Issues
• Traumatic Brain Injuries
• Veterans
• Young Adults (18-24)
• General (Other) Populations
We also associated each project with a city to understand the spatial distributions of costs in operating
expenses and services.
CSH is providing Commerce with a workbook summarizing 2021 operating and services costs reported in
applications by line item but does not recommend setting line-item benchmarks.
b. Analysis of operating and services costs overall
Costs overall for the 2021 applications data are summarized alongside the WEBARS 2021 data in Section
F of this appendix.
Appendix B page 6
Similar to WBARs services data, the OMS-PSH application data had a relatively small number of projects
reporting for services (56). Additionally, the standard deviation found in the total expenses per unit in
the application data was $61,131 with the mean total service expense of $29,580. This indicates a
significant variation between the total service expenses of each project, making the data unreliable.
Providers interviewed expressed confusion about what to include in the application as a services cost
and on which tab to include it. For these reasons, CSH recommendations for tenancy support services
cost benchmarks are not based on these data. The report includes recommendations for creating clear
guidelines in the applications.
c. Analysis of operating and services costs based on population designated in applications
The application-defined populations are not correlated with service needs or evidence-based services
models. Among the Commerce-designated populations in applications, most applicants designated one
of two groups: Multiple Special Needs and General (Other) Populations. This delineation in the data is
does not provide an indication of service needs or costs. Consequently, we cannot identify correlations
in the data with application-specified population groups and the cost of tenancy support services. This
can be seen in the following scatter plot of "projects with multiple special needs." The colored dots
indicate the projects that selected this population designation by cost.
Appendix B page 7
Additionally, through interviews with stakeholders, it was found that the population type that the
applicants selected did not capture all populations housed in the project. Many stakeholders stated that
they selected "populations with multiple special needs" because the tenants they serve have co-
occurring disorders. The lack of clarity regarding population groups to be served at the application stage
makes it unclear and unlikely that projects designated as PSH are using state-specified PSH eligibility
criteria or services models. This lack of alignment suggests current OMS investments might not be
directed toward the goals stated in the budget proviso to reduce chronic homelessness and unnecessary
institutionalization in the healthcare and justice sectors.
d. Analysis of operating and services costs based on service models
Application data included two categories of service models (PSH and Youth) and were analyzed as noted
above and summarized in Section F.
e. Analysis of operating and services costs based on geography
Data were provided by city but not by geographic category. Twenty unique cities were designated and
eight projects did not have a city specified. An analysis by city indicated that operating expenses are
highest in the City of Seattle. However, Seattle ranked 11th in reported average service costs per unit,
demonstrating variability within geographies and/or another potential indication of a lack of reliability of
services data.
f. Analysis of operating and services costs based on age of housing development
CSH and ECONorthwest concluded that analysis based on the age of housing developments was
inconclusive due to the uncertain nature of when projects had capital improvements. This information
might be available in capitalized needs assessments or funding records that demonstrate rehabilitation
funding, which CSH would be happy to look at in more detail with Commerce.
g. Analysis of operating and services costs based on size of housing development
The strongest relationship with high per-unit operating expenses is with the total number of units in a
project. Among all the projects that requested funding for operating expenses, the higher the total units
were in a project, the higher the per-unit operating expenses were.
Per-unit reported service costs in applications were found to be lower for higher unit projects. Inverse to
the operating findings, reported per-unit service expenses tended to be lower the more units a project
has. Outliers with greater than $20,000 in per-unit service costs were projects with fewer than 50 units.
These findings are inconclusive, however, due to the issues with data on service costs noted above.
C. Summary of Attempts to Cross-reference Application and WBARS Data
Commerce was interested in seeing the alignment and differences between application and WBARs
reporting. ECONorthwest tried a few methods of linking the Application data to the WBARS data.
• We first tried to join them by the actual name of the site. This provided only ~25% matching on
each application per year.
• We then requested that Commerce provide us with the Site Keys associated with each project.
This ended up being the most effective way, however we did not use the actual application data
that we consolidated, and instead used the `PSH Data Inventory` that Commerce had sent us to
Appendix B page 8
find each one of the PSH projects within the WBARS data. This ended up netting us only about
80% of the PSH projects in the PSH Data Inventory.
• Further attempts would have required manual matches for ~200 projects over three years,
which would not have resulted in enough information for the value of cross-referencing data
already analyzed for both data sets.
The lack of a clear path to comparing Application and WBARS data is what led to CSH’s recommendation
to require reporting in WBARS. While WBARS data are not available as frequently as application
reporting, if reporting were mandatory and completed by all providers, Commerce could run reports
directly WBARS to analyze actual costs annually without having to copy and paste data entered into
application forms and then cross-reference actuals reported from past years in applications with actuals
reported in WBARs.
D. Other data considered in determining recommended operating cost benchmarks
a. Fair Market Rents
CSH calculated a state-wide, weighted-average annual fair market rent of those established by the U.S.
Department of Housing and Urban Development for a 1-bedroom apartment. This cost is $14,040 per
unit per year.
b. Public Housing Agency Payment Standards
The highest housing costs in the state are in the city of Seattle. The Seattle Housing Authority’s housing
choice voucher payment standards are established to provide benchmarks for total costs of affordable
and supportive housing in the City of Seattle.
• For 1-bedroom market rate rental apartment (which is presumed to carry debt service and be
utilized in up to 40% of the market) is $21,792.
• For affordable housing (which is presumed not to carry debt service) the payment standard is
$15,624.
E. Other Data Considered in Determining Services Cost Benchmarks
a. Foundational Community Supports (FCS)
The state’s largest program for investing in supportive housing services is the Foundational Community
Supports Medicaid Benefit administered by the Healthcare Authority. Commerce will soon be operating
the Apple Health & Homes program, which is designed to integrate the FCS program with capital,
operating, and mirror tenancy-support services investments.
The FCS supportive housing services rate is based on a per diem rate of $112/day.
Providers may seek reimbursement for up to 30 days of service in a 6-month authorization period.
Services may be reauthorized for an additional six months if a participant continues to need services.
HCA is seeking a change to this policy with the federal Centers for Medicare and Medicaid Services to
allow for 12-month authorization periods. See the chart below for a brief summary.
Appendix B page 9
$ 112 Daily rate
30 Days
$ 3,360 Rate for six-month authorization period
$ 6,720 Minimum annual reimbursement amount
Providers may also seek additional authorizations for additional service days within a six month period
for participants who have additional service needs, thereby increasing payments for these services.
b. Supportive Housing Services Budgeting Tool
The Supportive Housing Services Budgeting Tool - CSH helps providers and funders to determine
accurate costs of supportive housing services in a way that accounts for caseload size, populations
served, staff salaries, and more. Following is one illustration of a portion of the tool inputs that inform
per-person services costs using a tenancy support services model (the same model used by the state in
FCS). While every provider manages their teams differently, running multiple scenarios allows for a clear
projection of costs in a specific state. Following is an example of portions of the tool for illustrative
purposes.
Population Supported through Tenancy Support Services Model
# of tenants in Recommended
Target Population single site caseload size
Families with children whose head of
30 15
household meets program eligibility criteria
Individuals with dual diagnoses of substance
40 10
use disorder and mental illness
Older adults in need of supports with
30 15
activities of daily living
Total clients 100
FTE Annual Salary
Services Staffing (per FTE)
Program Director 1.0 $65,000
Administrative Support 1 $36,000
Housing and Services Coordinator 1.0 $50,000
Supervisor 1.0 $22,500
Tenancy Supports Services Specialist 8 $40,000
Peer Support Specialist 2 $40,000
F. Operating Cost Summary and Benchmarks
Data supplied by Commerce in the data sets described above from WBARS and applications were
substantial and complete enough to draw conclusions about the operating costs of supportive, youth,
and other affordable housing as follows. The 3rd quartile operating expense per unit data reported in
WBARS for 2021 and in the PSH-OMS actuals in the application data were not significantly different;
$17,688/unit and $17,930/unit respectively.
Appendix B page 10
CSH used this analysis to inform its recommended state-wide application and modeling benchmarks of
$17,000 per unit per year in operating costs for supportive and youth housing and $10,000 per unit per
year in operating costs for all other affordable housing. Actual costs for operating subsidies are
reimbursed, and services expenses should be aligned with the results of the HCA rate study, which is
looking at geographic differentials. Additional detail about findings and recommendations for
delineating operating and services costs are described in the report.
G. Tenancy Supports Services Costs and Benchmark
Data supplied in the data sets provided by Commerce from applications and WBARS reporting did not
provide sufficient data from which to assess average per-person services costs. Using the additional
tools described above, CSH concluded that average per-person services costs in Washington State
should be benchmarked at $10,000 per year in order to account for proper caseload sizes and
compensation for staffing supportive housing that meets fidelity standards for tenant outcomes.
H. Annual Adjustment Factors
All providers CSH met with during the course of the study stressed the importance of an annual
adjustment factor to account for increasing costs due to inflation and other cost drivers such as
insurance premiums. While there is no clear way to have a standard, right-sized factor, three percent
per year has traditionally been a generally- accepted industry standard for budgeting housing and
services costs. While this percentage might provide an initial guideline for budgeting, it is recommended
that Commerce review the factors affecting costs for providers every two years and make adjustments
to the benchmark according to current data.
Appendix B page 11
Appendix C: Funding Sources and Cost Projections
The nature of public funding for new housing requires capital financing to be in place well in advance of
operating and services funding due to the time it takes to acquire, rehabilitate, and/or build new
housing. Public funders generally estimate that a housing owner will require operating subsidies and
services funding two years after their capital award. It has been challenging for Commerce to estimate
the total need for these ongoing subsidies and its portion of these costs due to its lack of per-unit cost
benchmarks, unclear information about other funding sources, and variability in revenue sources. This
appendix begins to shed light on these factors and offers initial cost and revenue projections.
A. Projected Tenant Rents
Tenant rent is the primary source of revenue in rental housing. In the case of PSH, tenants often have
fixed or very limited incomes, and their rents are not enough to cover the costs of operating housing.
However, their contribution is an important part of the financing picture. The modeling in this report
assumes all tenants have social security income.
Monthly Social Security Income: $ 841
30% of Income = affordable rent $ 252
Annual tenant rent $ 3,028
B. Projected Operating Subsidy and Services Funding Needs
Using the cost benchmarks recommended in this report of $17,000 per unit per year, total operating
subsidy needs after tenant rents are $13,972 and total services costs are $10,000 per tenant.
Per unit operating cost benchmark $ 17,000
Annual tenant rent $ 3,028
Operating subsidy needed $ 13,972
Services funding needed $ 10,000
Total operating and services funding needed $ 23,972
C. Available (non-state) Public Funding for Operating Subsidies and Tenancy Support
Services.
CSH identified the following potential partner funders of operating subsidies and tenancy support
services state-wide. Dollar amounts are rough estimates for 2023 and 2024. Funders were unable to
predict revenue beyond this timeframe due to the uncertainty of document recording fee revenue and
potential appropriations.
Appendix C page 1
Estimated operating and services funding available for housing that will
Partner Funder*
come online in 2023 and 2024
Rough estimate of funds available for new projects
2023: $3.5M
City of Seattle Office from multiple sources. Pays for operating and services.
of Housing Current expense benchmark: $25,000 per unit/per year
2024: $4.5M
for operating and services. No per-unit funder cap.
King County Rough estimate available for new projects from
Department of $5M multiple fund sources. Significant variables in revenue
Community & over two years sources will be at play in 2023. Pays for operating only.
Human Services No expense benchmark. No per-unit funder cap.
Federal Department
Rough estimate state-wide, primarily for operating
of Housing and
$2.1M based on past amounts (2022: $1.1M, 2021: $500,000,
Urban Development
over two years 2020: $400,000). Allocations could be anywhere in the
(HUD) Continuum
state and are not made by geography.
of Care (CoC)
$300,000
Snohomish County Pays for operating only.
over two years
Local PHAs sometimes attach their housing subsidies to
Public Housing Agencies (PHAs)
new housing developments.
*CSH spoke directly with Commerce, the Commerce Policy Advisory Team, the OMS Cost Study
workgroup, and multiple local jurisdictions to ensure this list is as exhaustive as possible. (Sources
reflected show only amounts more than $100,000 that are dedicated to PSH aside from Snohomish
County funds, which are competitively allocated for purposes other than PSH but might be used for
PSH.) A participant of the Commerce Policy Advisory Team meeting CSH attended thought Bellingham
might be contributing to OMS but the city reports zero funding available for new projects in the next
two years.
D. PSH Pipeline
Commerce has awarded capital funds for the creation of 1,757 new units of PSH that are slated to open
in 2023 and 2024. For the cost modeling in this report, CSH estimated half of the units opening in each
of the next two years.
Commerce anticipates allocating the following capital funds to create an estimated additional 1100 units
of supportive housing this biennium:
Allocation type Amount Estimated Units
AHAH $ 60,000,000 500
Rapid Capital $ 85,000,000 400
Traditional Capital $ 50,000,000 200
Total $ 195,000,000 1100
Appendix C page 2
The total estimated PSH pipeline based on known capital funds, committed and anticipated, includes
2,857 units. The following model is based on these new units only and does not account for revenue or
subsidy needs attributed to existing housing developments. It also does not include projections for units
to be created with future appropriations of capital funds.
E. Model Assumptions
Multiple assumptions inform this model. CSH would be happy to work with Commerce to run
additional scenarios based on alternate assumptions.
• HUD CoC funds are attributed equally among geographic types in the model, which is
unlikely, but there is no clear predictor before the competitive process is conducted.
The model assumes $2.1M coming to Washington State every year and $700,000 going
to each of the three geographic types.
• The model assumes Commerce and its partner funders have funded or will be funding
exactly the same projects and units in King County, which is not likely the case, but there
is no clear predictor of the exact overlap before the competitive process is conducted.
• Partner funders have projected revenue only for 2023 and 2024, but the model assumes
revenue from these sources at the same level in 2025 and 2026 and a constant 60%
contribution from Commerce across its portfolio. This is a theoretical assumption, and it
should be noted that increases or decreases in the amounts contributed by other public
funders will directly impact Commerce’s ability to ensure full funding of its portfolio.
• Estimates of units by geographic types for 2025 and 2026 assume the same percentages
as 2023 and 2024.
F. Total Projected Costs and Commerce Portion
Based on the subsidy amounts and partner funder contributions above, the following model
demonstrates the subsidies needed to cover the operating costs and tenancy support services in the PSH
pipeline of new units by geography.
2023 Projections
Units funded Annual operating & Potential Available Funds
Commerce
Geography with capital services subsidy from Partner Funders Commerce Portion
Percentage
funds cost @$23,972/unit Annually
King 527 $ 12,621,469 $ 6,700,000 $ 5,921,469 47%
Urban 242 $ 5,801,321 $ 850,000 $ 4,951,321 85%
Rural 110 $ 2,636,964 $ 700,000 $ 1,936,964 73%
Total 879 21,059,753 8,250,000 12,809,753 61%
Appendix C page 3
2024 Projections
Units funded Annual operating & Potential Available Funds
Commerce
Geography with capital services subsidy from Partner Funders Commerce Portion
Percentage
funds cost @$24,692/unit Annually
King 1,053 $ 26,000,225 $ 14,400,000 $ 11,600,225 45%
Urban 484 $ 11,950,721 $ 1,700,000 $ 10,250,721 86%
Rural 220 $ 5,432,146 $ 1,400,000 $ 4,032,146 74%
Total 1,757 $ 43,383,092 $ 17,500,000 $ 25,883,092 60%
2025 Projections
Commerce Percentage
Units funded with Annual operating & services subsidy
Geography
capital funds @$25,432/unit
60%
King 1,383 $ 35,163,344
Urban 636 $ 16,162,449
Rural 289 $ 7,346,568
Total 2,307 $ 58,672,360 $35,206,416
2026 Projections
Commerce Percentage
Units funded with Annual operating & services subsidy
Geography
capital funds @$26,195/unit
60%
King 1,712 $ 44,852,850
Urban 787 $ 20,616,125
Rural 358 $ 9,370,966
Total 2,857 $ 74,839,940 $44,903,964
G. Commerce Revenue Projections
In 2022, Commerce reported that it had allocated the last of its currently-available OMS funds for new
capital projects coming online.
The only potential existing source to be allocated to the units above is the project-based rental
assistance associated with ESSHB 1277, for which counties will have the first right of refusal to allocate.
Commerce reports that this source is currently estimated at $53M annually. The language from RCW
36.22.176 states: with no less than 60 percent of funds to be used for project-based vouchers for
nonprofit housing providers or public housing authorities, housing services, rapid rehousing, emergency
housing, acquisition, or operations, maintenance, and service costs for permanent supportive housing as
defined in RCW 36.70A.030. The multiple eligible uses of these funds and multiple administrators across
the state suggest that some amount less than $32M might be available to support the capital pipeline.
Predicting revenue from this and other document recording fees is very difficult due to fluctuations in
the real estate market. There are predicted significant shortfalls in document recording fees due to the
following factors:
• 30% drop in WA home sales July 2022 vs. July 2021
• 60% drop vs. previous year in national mortgage refinancing through June 2022
Appendix C page 4
Commerce reports that ongoing management of forecasting this revenue is challenging and that a
combination of reserves and award management has so far avoided fund depletion, but these tactics
can only go so far now that all funds have been awarded and the capital pipeline continues.
H. Potential Impact of FCS
As noted in Appendix B, the FCS program is the state’s largest program for investing in tenancy support
services. This program is primarily paid for by the federal government. It is not yet fully utilized and is
the only immediately-available source that can stretch OMS dollars further. The following model
demonstrates the additional number of people experiencing chronic homelessness that could be housed
with a $20M appropriation of OMS if FCS covered 75% of services costs. This type of increase would
require significant investments in provider capacity-building in 2023 and 2024 and would not be likely
until 2025.
Total Funding Scenario based on $20M appropriation
OMS $ 20,000,000 60%
Other public funders $ 13,500,000 40%
Total $ 33,500,000
Households served without FCS
Per unit baseline operating subsidy $ 13,972
Per-unit services funding $ 10,000
Total per-unit subsidy 23,972
Households served ($33.5M/$23,972) 1,397
Households served with FCS paying 75% of services costs
Per unit baseline operating subsidy $ 13,972
Per-unit services funding $ 2,500
Total per-unit subsidy 16,472
Households served ($33.5M/$23,972) 2,034
Percentage increase 46%
I. Other State Sources of Operating and Services Funds.
Commerce identified two additional sources of existing state funding for PSH rental assistance and
services.
Appendix C page 5
Community Behavioral Health Rental Assistance (CBRA) program- Administered by Commerce
• This program pays for rental assistance and services for individuals with behavioral health
conditions, a subset of households who may be in need of supportive and/or youth housing.
• The housing portion of these funds is designed for use in a scattered-site leasing model, but if
these funds are underutilized for this purpose, it may be worth exploring whether the program
guidelines could be amended to allow for the funding of housing operating subsidies that are
attached to structures.
• This program makes awards to service providers. If Commerce were to attach the rental
assistance funds from this program to housing developments, it should change the recipient
type to housing providers so they can show funders and equity investors that their operating
subsidies are secure.
• The services funding available through CBRA can provide ancillary services for tenants in
Commerce-funded housing and, as noted in the program guidelines, “partnered with programs
offering supportive housing services such as Foundational Community Supports.”
• This source also pays administrative costs, which could be helpful to HTF-funded projects
Governor’s Opportunity for Supportive Housing (GOSH)- Administered by the State Aging and Long Term
Services Administration (ALTSA)
• This program pays for rental assistance and services for individuals being discharged or diverted
from Eastern and Western State Hospitals who are eligible for ALTSA services and in need of
supportive housing.
• Similar to CBRA, the housing portion of these funds is designed for use in a scattered-site leasing
model.
• This program makes awards to service providers. If the state were to attach the rental assistance
funds from this program to housing developments, it should change the recipient type to
housing providers so they can show funders and equity investors that their operating subsidies
are secure.
Funding attributed to the current portfolio
While it is theoretically possible some existing projects won’t be renewed and the revenue from those
projects could be used for new projects, because this would be a serious proposition in terms of the
unwinding of leased housing, any changes to the recipients of those funds or transfers of ownership
would likely be done over time with supports and technical assistance in an effort to keep the housing
operating successfully for its tenants. For these reasons, the recapture of funding is not part of the
model.
Appendix C page 6
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