KP invests $50 million in innovative partnership to address homelessness

Kaiser Permanente recognizes that the health of our members and the communities we serve is profoundly impacted by conditions in those communities. Safe, affordable housing is primary among them, for without it, focusing on basic health and medical needs is nearly impossible. For those experiencing chronic homelessness, rates of illness and mortality are far greater than that of the general population.

As part of our commitment to the health of the communities we serve, Kaiser Permanente is investing $50 million in an innovative funding and development model to create safe, high-quality affordable apartments to house the homeless.

This novel partnership will help build an estimated 1,200 to 1,800 one-bedroom units at less than half the average $550,000 cost for similar units in Los Angeles, and reduce the production timeline from an average of 5 to 7 years to 18 to 24 months.

In California, where cost and complexity often inhibit these much-needed developments, this is a potential game-changer. Notably, the community-centric housing will also provide on-site supportive services, including case managers, health care services, and retail such as fresh foods.

Innovative model and novel partnership are potential game-changers

In this partnership, Kaiser Permanente is collaborating with a private equity impact fund launched by SDS Capital Group, an investment firm experienced in creating affordable housing. SDS is partnering with RMG Housing to produce the buildings.

Raising the required capital up-front rather than through government subsidies helps reduce the complexity, risk, cost, and time to produce the housing, as does the single-developer agreement and land lease agreements with non-profit landowners.

The collaboration with SDS is an example of Kaiser Permanente’s commitment to “social impact investing,” wherein the primary goal is to generate a social benefit (like housing) and financial returns sufficient to sustain the fund.

“COVID-19 has greatly increased the need for permanent supportive housing beyond the crisis levels California was already seeing, and we expect it to get worse” said Julie Miller-Phipps, president of Kaiser Permanente Southern California Health Plan and Hospitals.  “Our social impact investments have allowed us to support many different approaches to increasing the supply of affordable housing, but we must double down on finding innovative ways to make fast, significant strides to support people experiencing homelessness, because without a safe, stable place to live, having good health is nearly impossible.”

Thanks to Kaiser Permanente’s catalyzing commitment of $50 million, derived from an investment fund that our organization established in 2018 for just such social impact projects, helped spark others to join the SDS fund. As a result, SDS seeks to produce 20 to 30 apartment buildings located in California areas with high rates of homelessness. Of the first 10 developments planned, 8 will be in Los Angeles, where the need is critical.   

Housing and health are inseparably linked. Kaiser Permanente is committed to making an impact.                              

This investment advances Kaiser Permanente’s mission by complementing industry-leading integrated care with efforts to improve the conditions for community health. While Kaiser Permanente alone cannot solve homelessness and housing instability, we can contribute to solutions by modeling leadership and partnering in innovation.  

We believe this investment has the potential to transform lives and communities.

 

Read more about how this unusual partnership came to be in this Los Angeles Times article.