A business perspective of housing first

NPR’s business program, Marketplace, had a commentary on housing first on Thursday Janaury 24th’s program. Brendan Koerner a contributing editor at Wired magazine and a columnist for Slate prepared and deleivered the commentary. He questioned if “dedicating so many of his agency’s resources to Housing First, Mangano has chosen a short-term payout over long-term investment, and that’s no way to run a business.”

To listen to the commentary click here. audio_icon.gif

This is the text of the commeantary.

KAI RYSSDAL: Most of the talk about housing has been aimed at helping homeowners who might have to make tough choices, but some people have run out of options. The number of homeless in this country is rising as the economy deteriorates. That’s prompted Washington to come up with a program called “Housing First.” It puts a priority on getting people off the streets and into homes.

Commentator Brendan Koerner says Housing First is based on a tried and true business strategy, but he says the money could be better spent.

BRENDAN KOERNER: It’s hard not to admire Phil Mangano. Inspired by St. Francis of Assisi, Mangano quit his lucrative music-industry job a quarter-century ago to dedicate himself to public service. He vowed to apply the skills he’d developed while negotiating record deals to wiping out homelessness.

As President Bush’s “homelessness czar,” Mangano’s top priority has been Housing First. It’s a strategy inspired by a fundamental business tool — cost-benefit analysis. According to Mangano, a mentally-ill or drug-addicted homeless person who drifts through hospitals and jails can cost the government upwards of $150,000 per year, but simply renting that person an apartment lowers the annual tab to between 14 and $25,000. Best of all, 85 percent of participants in Housing First stay off the streets for good.

Mangano’s innovative program reduced chronic homelessness by 11.5 percent between 2005 and 2006. Supporters of Housing First say this decline has an important trickle-down effect for businesses located in areas where vagrants cause problems.

But speaking strictly in financial terms, Mangano’s approach may be a money loser over the long haul. Housing First deals only with a handful of single, deeply troubled adults. Meanwhile, with foreclosures soaring and wages stagnant, the number of homeless families is increasing. Take Massachusetts, where more homeless families are living in shelters than at any time since 1983. Nationwide, homeless families now account for over 40 percent of the overall homeless population. Thirty two percent of them are unable to find space in shelters.

It’s increasingly difficult for these families to find permanent accommodations. In San Francisco for example, nearly 7 percent of the population is waiting for housing assistance. Advocates for the homeless blame government budget cuts.

There are long-term financial costs to this problem. Homeless kids are less likely to finish school and become productive taxpayers, and homeless families are a drag on the resources of relatives who provide temporary food and shelter.

By dedicating so many of his agency’s resources to Housing First, Mangano has chosen a short-term payout over long-term investment, and that’s no way to run a business.

KAI RYSSDAL: Brendan Koerner is a contributing editor at Wired magazine and a columnist for Slate.