Permanent Supportive Housing Notice: Funding opportunity for “pipeline” projects postponed

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nov. 15, 2021

TO: Permanent Supportive Housing – Operating, Maintenance and Supportive Service (PSH-OMS) awardees and stakeholders

FROM: Department of Commerce Housing Finance and Housing Assistance Units

SUBJECT: Postponed opportunity for “pipeline” project operating funds

Dear awardees and stakeholders:

Substantial new funding appropriated by the Washington Legislature in the 2021 session for operating, maintenance and service costs of publicly-funded permanent supportive housing projects generated intense interest. Subsequent conversations with stakeholders rendered a clear, unambiguous call to pair operating awards with capital awards. Commerce committed to do this beginning with the December 2022 capital awards.

Those stakeholder conversations also made it clear that permanent supportive housing projects awarded operating, maintenance and service funding in the 2019-21 biennium should be renewed annually moving forward. The contracting cycle is now complete for those renewals - the same projects funded last year (fiscal 2021) - resulting in obligation of an additional $3.4 million for fiscal 2022, a 19.6% increase over the previous year.

A second, upcoming round of funding will include projects that have been placed in service since the first round of funding in 2019. We estimate there are nearly 20 such projects committed to providing permanent supportive housing that received Housing Trust Fund capital funds, but only about half are under construction. Of these, only a handful are open or nearing operation. There are likely other permanent supportive housing projects that will also seek operating, maintenance and service funding. These may include projects that received public funds from sources other than the state Housing Trust Fund (such as the Washington Housing Finance Commission, the city of Seattle or King County), applicants for Rapid Capital Housing Acquisition funds or projects switching to a permanent supportive housing service model.

We recognize that operating support funds are critical for individual projects, and even more so with very difficult conditions resulting from the pandemic. Housing providers are encouraged to continue working with Commerce and other public funders to leverage all sources of funding available for emergency uses.

Funding opportunity for "pipeline" projects is postponed until 2022

In the 2021-22 HB1277, the Legislature provided the vehicle to sustain a system of permanent supportive housing over the long-term, and to fill operating gaps for housing models that are effectively solving homelessness and have no other operating resources. We also recognize that each of the permanent supportive housing projects opening soon had provided operating plans in their capital applications without the expectation of receiving operating, maintenance and service funding.

As we try to balance short-term with long-term permanent needs, the funding opportunity for these “pipeline” projects, originally planned for mid-November, is postponed until 2022 for the following reasons:

  • More time is needed to determine the actual (experienced) cost of operating permanent supportive housing units and providing services to the residents. Applications received during the last funding round revealed enormous variations in per-unit operating costs. In response to a Legislative directive, Commerce engaged the Corporation for Supportive Housing to analyze and potentially benchmark the costs of maintaining such units. Their report is expected is fall 2022.
  • Providers and stakeholders have emphasized the need to meet and protect the fidelity and standards of permanent supportive housing. Commerce is currently developing a method to document that projects meet a reasonable standard of care. This will ensure that the best practices and foundational tenets of permanent supportive housing are implemented and in place.
  • More time is needed to understand the actual monthly revenue generated under HB 1277 for the purposes of this program. Monthly predictions, based on real collected revenue thus far, are necessary to project fund balances into the future and to map current and future obligations against the fund balance. This is necessary to ensure we do not exceed spending authority or actual fund availability.

Funding is finite, and Commerce must make long-term commitments with all serious deliberation and public input. Our intent is to ensure funded projects undergo periodic verification that they are operating in accordance with the permanent supportive housing definition cited in RCW 36.70A.030 and other guiding sources. Also, that funding levels are within the parameters of the Corporation for Supportive Housing study conclusions.

We appreciate your support as we continue working to operate the Permanent Supportive Housing - Operating, Maintenance and Service program with due rigor and oversight. We will continue to keep you informed through this mailing list.

Thank you,

Jeff Spring, Director, Office of Supportive Housing