A Trailblazing Partnership Between Housers and Healthcare Providers

The State of Arizona’s Medicaid agency (AHCCCS) recognizes the vital importance of safe, decent and affordable housing to health.  With a portfolio of over 3,000 units of affordable housing for Medicaid members with a determination of serious mental illness (SMI) and/or substance use disorder, housing is a major component of how the State of Arizona assists those trying to recover and stabilize.

Over the last 15 years, AHCCCS has purchased hundreds of units of housing throughout the state for members determined SMI. The investment employs use restrictions to guarantee the units will be held for periods of 15-30 years for members.  Most of the housing units purchased were homes, 4-plexes, duplexes and smaller apartment complexes. AHCCCS pays ongoing operating subsidies for most of these units. 

AHCCCS has also developed a voucher program that operates exactly like a HUD program regarding rent calculation and inspection standards, but employs a Housing First methodology. With access to 1,800 state-funded vouchers, members with an SMI determination are able to rent apartments in the community while paying 30 percent of their income for rent.  

The stable, affordable housing is showing positive results.  Once their immediate housing needs are taken care of, members are able to focus on their health, employment, and recovery. As indicated in a recent study by NORC, the  AHCCCS funded voucher program operated by Mercy Care produced a 24 percent reduction in healthcare costs. The agency expects to test more innovative approaches to supporting members while continuing to focus on bending the health care cost curve.  

The Laurel Tree Development

In 2017, AHCCCS embarked on a unique partnership with the Arizona Department of Housing, PNC Bank, Thomas Development Co, and Catholic Charities to help fund part of an affordable housing development in Phoenix, Arizona. The investment in the Laurel Tree tax credit project was one of the first of its kind initiated by the Medicaid agency. While there were operational challenges associated with determining how a Medicaid authority would contribute funds to a tax credit project, the partnership with the Department of Housing and the other organizations ensured the project’s success.

Of the 70 affordable units in the planned Laurel Tree development,  18 will be set aside for Medicaid members with SMI determinations.  AHCCCS contributed $2 million dollars in capital funding for construction costs from a pool of state money called the SMI Housing Trust Fund.  This fund is unique to the State of Arizona and allows AHCCCS to support the purchase, rehab and development of affordable housing for members with an SMI determination. AHCCCS receives approximately $2 million a year from the fund.   

In addition to the capital investment, AHCCCS utilizes state general funds to provide housing subsidies for members with SMI determinations. AHCCCS will project-base its subsidy for the first time in the form of a rental assistance contract. Project-basing the vouchers into the housing development will ensure ongoing operations. 

The Laurel Tree development is close to the Phoenix light rail system, two bus stops, schools, retail stores, and other amenities. This newly designed facility will contribute to a sustainable quality of life for its residents through its dynamic design, location to employment and services, and convenient access to transportation. Residents will be connected to each other, their neighbors, and all the amenities Phoenix has to offer. This community is designed to support the city’s plan of an urban walkable area and promote a sense of security for its residents.  The design incorporates the “Housing First Model,” and a single point of entry into the podium style, multi-level, residential facility and supportive services offices.

Bringing Medicaid Covered Services to a Housing Program

In a 2015 memo, the Center for Medicaid Services (CMS) communicated that it would allow states to pay for permanent supportive housing services using federal Medicaid funds.  Medicaid cannot pay for housing subsidies or utility costs.  Every state can choose if and how they wish to implement this benefit; the opportunity opened doors for low-income Medicaid members to receive assistance in finding and stabilizing in housing. The State of Arizona, through its Regional Behavioral Health Authorities (RBHAs), has worked with dozens of provider agencies across the state to build a solid network of wrap-around, permanent supportive housing services. 

Initial available services include helping members gather necessary documents to apply for other affordable housing programs, driving members to meet landlords, and submitting lease applications. Once a member is successfully housed, the services are modified to help ensure each member is best equipped to maintain that housing. Examples include medicine management, landlord and neighbor mediation, assistance with apartment cleaning, money management, and more. Through its network of providers, Mercy Care will ensure that all 18 members living at Laurel Tree receive the necessary permanent supportive housing services.  

Partner Agencies

Catholic Charities Community Services, Inc. (CCCS) and Thomas Development Co. (TDC) are co-developers and managing members of Laurel Tree at Northern LLC.  CCCS is also the on-site service provider for the resident populations.

CCCS has provided services for over 80 years to low-income individuals and families in Central and Northern Arizona communities.  This non-profit organization employs over 450 full and part-time persons who possess the expertise to provide a multitude of services for special needs populations, as well as low-income households. With its culturally and linguistically experienced staff, CCCS staff can communicate in 27 different languages, thereby enhancing the range of people it can serve.

CCCS manages over $23 million in government contracts to support its programs.  Its programs include education and family support; permanent supportive housing, social support, foster care and residential; emergency assistance; counseling and behavioral health; and adoption. 

Thomas Development Co., a Boise, Idaho based real estate development company, was founded in 1990 by its current President and CEO, Thomas C. Mannschreck.  The company has developed more than 3,500 apartment homes since its inception and has received several prestigious awards including the Mayor’s 2015 Building Excellence Award in Boise, and the first United States Green Building Council LEED Platinum Certification for an apartment community in Idaho.