Could a 'master leasing' strategy help Knox County mitigate homelessness?

Last week, we examined how one Midwestern community went about increasing its affordable housing stock. A collaborative effort between the local government and two private organizations paved the way for a 61-unit, high-quality affordable housing community in western Indianapolis.

But those on the front lines say the struggle doesn't stop there. Even when affordable housing stock is increased – and more living spaces become available in a community – homeless individuals often face a second, and sometimes more daunting, barrier to entry.

"A lot of our guests – not all, but many – have either substance misuse issues, mental health issues or both. A lot of our guests have felonies on their records. A lot of our guests have evictions on their records," Springer said.

"So it doesn’t make them great candidates on paper, even if they’ve turned their lives around and have stabilized."

Case managers can – and do – advocate for their clients in these situations, Springer said. But at the end of the day, the landlord holds the lease. They make the final call.

And oftentimes, Springer said, a client's past represents too large a risk to accept.

"Independent landlords have to make the decision on which tenants they accept," Springer said. "For many, that can be a dealbreaker."

What if there was a way to lower – or maybe even eliminate – this barrier to entry? What if the relationship between landlord and tenant could be altered in situations like this, so both sides benefit?

One West Coast community has begun to utilize a strategy that has helped them accomplish this task.

Reaching 'functional zero'

Nearly every community in America is fighting to reduce homelessness in some way, shape or form.

But Bakersfield, California has managed to separate itself from the pack in recent years.

The community is one of five nationwide to functionally eliminate chronic homelessness, according to Community Solutions, a non-profit working to establish long-term solutions to homelessness through its "Built for Zero" campaign.

"(Bakersfield) is not L.A., but it’s a decent-sized city combined with a huge rural county," Jake Maguire, a principal at Community Solutions and co-director of the Built for Zero campaign, told Next City last year.

"It’s a large, complex geography in one of the highest-cost states in America, with conservative politicians and lots of things that would make people say, 'That’s not the place to go solve homelessness.' But actually, Bakersfield did it."

Chronic homelessness is defined as "(experiencing) homelessness for at least a year – or repeatedly – while struggling with a disabling condition such as a serious mental illness, substance use disorder, or physical disability," according to the National Alliance to End Homelessness.

Homeless service providers in Kern County, California (where Bakersfield serves as the county seat) began meeting regularly after joining the Built for Zero campaign in 2015.

By 2018, the community had accomplished one of the main objectives of the program: building a comprehensive real-time, by-name list of all single adults experiencing chronic homelessness in the community.

By March 2020, after two-plus years of identifying and helping fulfill specific needs for each individual, the community completed the mission: achieving "functional zero" for chronic homelessness, according to the definition provided by Community Solutions.

Kern County went from 72 individuals experiencing chronic homelessness in late 2017 to just two in early 2020, according to a story published by Next City last May.

In doing so, Bakersfield (population 380,000) became California's first city to functionally eliminate chronic homelessness. Rockford, Winnebago and Boone Counties in Illinois; Lancaster City and County in Pennsylvania; Bergen County in New Jersey; and Abilene, Texas are the only other communities to do so nationwide.

A 'small idea' turned big

How did Bakersfield do it? Anna Laven, Executive Director of the Bakersfield-Kern Regional Homeless Collaborative, told Knox Pages that local providers shared a universal, agreed-upon mindset during the campaign: fail fast and fail forward.

"Part of the strategy with Built for Zero is you start with small ideas and you do them quickly. You test it out, work to scale it up, and even if it doesn’t work, you’re still failing forward," she said. "So it’s still worth doing, even if it doesn’t work."

One of the "small ideas" that turned into a major solution was the concept of "master leasing," a key to Bakersfield functionally eliminating chronic homelessness, according to Laven. 

It was meant to address the problem Springer described above, when unhoused individuals aren't "great candidates on paper," even after their lives have stabilized — yet another major barrier to housing. 

"People experiencing homelessness, a lot of times there is a lot of psychology involved with achieving permanent housing solutions," Laven said.

"One of the things happening here was a lot of folks had a lot of red flags – and they had little hope that if they applied for a standard apartment placement, they would be selected. So they didn’t even want to apply because it’s like, 'Why am I trying? Because I’m just gonna be rejected again.'

"It becomes this whole loaded process."

Bakersfield leaders began thinking of ways to solve this problem. They were able to arrive at a potential solution by dreaming big, Laven said, while also taking ownership of the issue at hand.

"One of the ideas we tried (thinking about) is, what if we can create a situation where, if clients apply, it is essentially a guaranteed 'yes'? Can we create a situation like that?" Laven recalled.

"In this case it was, 'OK, how do we close the deal on this?' You’re so close," she continued. "We’ve done the match-list process (to find a potential living space), we’ve matched the client to a voucher program, but they don’t want to apply."

The concept of master leasing came up early in the discussion, Laven said. It would attempt to restructure the relationship between landlord and tenant – allowing an easier path to housing for the client, while also reducing perceived risks for the landlord.

Here's how it worked:

In this situation, the Housing Authority of the County of Kern served as the leaseholder. The agency worked directly with private landlords in the community to secure units for clients.

This structure allowed the housing authority to essentially serve as a middle-man in the tenant-landlord relationship. It worked, Laven said, because it offered benefits for both sides.

Landlords, who may have been hesitant to work directly with homeless individuals, were offered guarantees: the housing authority would act as the leaseholder, assuming all financial responsibilities in the relationship — including monthly rent payments and liability for any damages that may occur on the property.

The housing authority also promised to carry out evictions if needed.

Unhoused clients, meanwhile, were offered a much higher likelihood of being accepted into a private living situation, Laven said. They were also not required to overcome the psychological hurdles involved with the re-housing process alone – instead, they were offered a less strenuous, more reliable alternative.

"Our potential solution was, 'What if we did a master lease?'" Laven recalled. "That way we control the unit and the tenant that goes in."

The housing authority started small with the concept – leasing two units with the intention of sub-leasing both to clients.

"Within two days, both of those units were filled," Laven recalled. "That told us there was something there."

The housing authority eventually leased eight units through the program, Next City reported. By the end of the first year, seven of the people housed through the program either took over the lease and stayed in the same unit or used their housing voucher to move to a different unit.

"We have had success with it, both for clients and property owners or landlords," Laven said. "But it has to be done with a concerted effort."

What it took – and what lies ahead

Bakersfield's master-leasing program is not bullet-proof – in fact, market factors have made the concept more challenging in recent months, Laven said – and it wouldn't have been possible in the first place without several key factors.

The first is funding. The housing authority received a generous grant from Kaiser Permanente, a California-based health care provider, to cover the year-long program. Laven said it totaled "somewhere between $100,000 and $200,000," and it came with no strings attached.

This meant the housing authority could use it for anything program-related, including everything from apartment inspections and property maintenance to appliances for clients. Anything it took to get clients into and through the program, this grant would fund.

"They really believe in our work," Laven said of Kaiser Permanente, one of the nation's leading health care providers. "We’ve received a number of grants from them in response to COVID as well; they’re a really strong partner of ours.

"But it’s flexible funding sources like that that really allow you to make a difference. Because sometimes there are what may seem like small things, that are true barriers."

This flexible funding allowed the local collaborative "to just meet the client where they’re at," Laven said, speeding up the process of getting people in units.

"Whatever’s getting in the way, let’s deal with it and deal with it quickly, so you can get through all these crazy steps," she said.

Built-up trust with local landlords also played a role, Laven said. The funding helped supplement years of relationship-building between the housing authority and private property owners in the community, which allowed for negotiations to begin in the first place.

"You have to have flexible funding to try to undertake it. (Landlords or property owners) are going to want to take some type of signing bonus – there’s some negotiation that happens," Laven said.

"And it works well if you’re working with a landlord who you’ve already built a relationship with, and there’s already trust there, and they’re familiar with voucher programs and familiar with calling case managers if something happens.

"With that built trust, risk mitigation and funding all built in, if something happens to a unit, they’re guaranteed repair costs and things like that will be taken care of. It has the potential to work well, but it’s not a fast, easy lift. You have to work at it."

Bakersfield's master-leasing program also required tight collaboration between the community's homeless service providers over an extended period of time. This was accomplished through Built for Zero, which currently involves 105 communities nationwide.

"Through conferencing you’re doing bi-weekly or at least monthly, you’re able to leverage best practices and the creativity of your whole community, as opposed to working in a silo as the lone case manager," Lavan said of the Built for Zero campaign.

"We were trying different strategies as a community, trying them quickly, and testing out whether or not that works. Then, the next time you meet, in one or two weeks, you’re going back to the group to say it worked or it didn’t, and where do we go from here.

"That's one of the things I love (about this community), is we do have a true collaboration across many entities. We're all working together to achieve a shared goal."

Despite its success rate, however, Bakersfield's master-leasing program has seen its fair share of challenges in recent months. The program has remained at eight units or fewer, Laven said, due to various factors.

Even with guarantees provided through the agreement, some landlords remain hesitant to rent to unhoused individuals, Laven said.

"We have attempted to scale up to some degree and I will tell you, it’s hard to do because property managers and landlords want to control who goes into their units," she said. "So we’ve had some success, but scale-ups have been hard."

An increasingly tight housing market – even tighter in the area of affordable housing – hasn't helped.

"Our vacancy rate has continued to get lower and lower for the last three quarters, and now it's really low, which typically means there’s almost no inventory. So that just becomes more of a barrier," Laven said.

"Our community isn’t unique with that. But people are choosing to sell properties because of the frenzy around housing right now."

Laven said Bakersfield's homeless service providers remain undeterred, however, and will continue efforts to expand the program.

The area has seen master-leasing work before – it has helped provide traditional housing for homeless veterans and emergency shelter for homeless youths in years past, Laven said – and it may very well see it work again.

"We keep attempting to do it," Laven said.

Could this work in Knox County?

While Bakersfield and Kern County, California – population 909,000 – might seem worlds away from Mount Vernon and Knox County, Ohio, the reality is this: master leasing is working in other parts of the country as well, including here at home.

The Main Place, a mental health and wellness center serving Knox and Licking counties, has been utilizing the concept in a limited fashion for nearly two decades, according to Housing Specialist Tony Cunningham.

The non-profit currently leases out six apartments to clients in downtown Mount Vernon, at 15 E. Vine St., above NAMI (an agency that offers no-cost mental health services). The agency also leases out 21 units in Newark, spread across three different locations.

Not all clients who live in the Mount Vernon units were formerly homeless, Cunningham noted – however, all have been diagnosed with a severe mental disorder and are in need of stable housing.

The Main Place has master-leased these units for 15 years, Cunningham said. He called the program "successful," although some clients prove more reliable than others.

"It’s like any other landlord/tenant relationship," said Cunningham, who has seen the program from start to finish, having served in his role for the last 20 years.

The program has worked well enough, however, Cunningham said The Main Place is looking to expand in the future. He said the agency's next master-lease facility in the city will likely contain on-site support staff, available to help clients around-the-clock if need be.

This model has worked in Newark, Cunningham said, where support staff has been in-place at one facility for eight years.

"It’s helped us deter some issues at the building – not anything super bad," he clarified, "but just to deter issues and make sure our clients are more protected."

Cunningham said there are plenty of success stories stemming from the Newark facility with support staff on-site.

"We’ve got several people that came to us that had been chronically homeless for 10 years or better, and in the eight years we’ve had this building, we have been more than successful," he said.

"These folks are now re-engaged with the community. So the supportive program works, it’s just a matter of getting it built and getting it staffed."

Could the practice of master-leasing be expanded in Knox County to cover a broader range of unhoused clients, in an effort to mitigate homelessness?

Might it prove advantageous, given the amount of rental assistance programs already in-place throughout the county, through agencies such as Knox Metro Housing Authority, Kno-Ho-Co and The Main Place?

Springer thinks so.

"I think it’s a huge advantage," The Winter Sanctuary’s operations manager said of master-leasing. "Mainly because in those situations, the landlord knows they’re gonna get paid. That’s the largest thing.

"Just the fact that financially, it’s covered, is a huge deal for our guests. Because as you can imagine, it’s hard to save up money if you’re homeless. It’s incredibly difficult. For many of our guests, I don’t even know if they’d be capable of (getting back into housing) without that kind of support."