pay for success nofa final.pdf

U.S. Department of Housing and Urban Development

Community Planning and Development

Pay for Success Permanent Supportive Housing Demonstration

FR-5900-N-26

H04396 Stamp

Pay for Success Permanent Supportive Housing Demonstration

FR-5900-N-26

TABLE OF CONTENTS

Funding Opportunity Description. I.

Award Information. II.

Eligibility Information.

Eligible Applicants. A.

Cost Sharing or Matching. B.

Other. C.

III.

Application and Submission Information.

Obtaining an Application Package. A.

Content and Form of Application Submission. B.

DUNS Number and SAM Registration. C.

Application Submission Dates and Times. D.

Intergovernmental Review. E.

Funding Restrictions. F.

Other Submission Requirements. G.

IV.

Application Review Information.

Criteria. A.

Review and Selection Process. B.

Anticipated Announcement and Award Dates. C.

V.

Award Administration Information.

Award Notices. A.

Administrative, National and Departmental Policy Requirements. B.

Reporting. C.

VI.

Agency Contact(s). VII.

Other Information. VIII.

Appendix. IX.

U.S. Department of Housing and Urban Development

Program Office: Community Planning and Development Funding Opportunity Title: Pay for Success Permanent Supportive Housing Demonstration Announcement Type: Initial Funding Opportunity Number: FR-5900-N-26 Primary CFDA Number: 14.273 Due Date for Applications: February 12, 2016

FOR FURTHER INFORMATION CONTACT: Please direct questions regarding the specific program requirements of this Program Notice of Funding Availability (NOFA) to the agency contact identified in Section VII.

Please direct questions regarding the FY 2015 General Section to the Office of Strategic Planning and Management, Grants Management Division, at (202) 708-0667 (this is not a toll-free number). Persons with hearing or speech impairments may access these numbers via TTY by calling the Federal Relay Service at 1-800-877-8339.

Additional Overview Information

1. Incorporation of the General Section. HUD publishes a General Section each fiscal year that contains mandatory requirements for all applicants to HUD’s various competitive grant programs, including this NOFA. Applications must meet all of the requirements of the General Section in addition to the requirements of this NOFA to be considered and potentially receive funding. The full title of the General Section is the General Section to the Fiscal Year 2015 NOFAs for Discretionary Programs. Copies are available at Grants.gov or HUD's Funds Available page, http:

//portal.hud.gov /hudportal /HUD?src= /program_offices /administration /grants /fundsavail.

2. OMB Approval Number(s): 2506-0207

I. Funding Opportunity Description.

A. Program Description.

1. Purpose.

a. Federal Goals and NOFA Priorities

i. Federal Goals to End Homelessness In 2010, the Obama Administration released Opening Doors: Federal Strategic Plan to Prevent and End Homelessness,[1] in which federal partners set goals to end veteran and chronic homelessness by 2015, and end family and youth homelessness by 2020. However, there were still 84,291 individuals identified as chronically homeless in the United States in 2014[2]. These individuals are persons with disabilities who experience long-term homelessness, and who typically cycle in and out of a variety of crisis services, including hospital emergency departments and inpatient stays, psychiatric centers, jails, and prisons. This cycling between services not only has negative impacts on health and well-being, but also incurs high costs to the public. Permanent supportive housing (PSH) is a proven solution to chronic homelessness, not only helping to increase housing stability and improvements in health, but also lowering public costs by stopping the revolving door between crisis services.

The lack of resources, including cuts due to sequestration, has forced the Administration to push back the Opening Doors goal of ending chronic homelessness to 2017, which indicates that communities have a critical need to increase the availability of PSH. HUD has been encouraging communities to prioritize people experiencing chronic homelessness in existing PSH units, and reallocate funds from underperforming programs to create additional PSH.

The President’s FY 2016 Budget also includes a requested increase of $265 million in HUD’s budget to create an additional 25,500 units of PSH. In addition to employing these strategies, communities can also make significant progress in ending chronic homelessness by securing non-traditional funding for PSH.

http://www.grants.gov http://portal.hud.gov/hudportal/HUD?src=/program_offices/administration/grants/fundsavail http://portal.hud.gov/hudportal/HUD?src=/program_offices/administration/grants/fundsavail http://portal.hud.gov/hudportal/HUD?src=/program_offices/administration/grants/fundsavail

DOJ and HUD are partnering to advance Pay for Success (PFS), one promising model for financing services that can attract additional, non-traditional sources of funding. The Consolidated Appropriations Act, 2014 (Pub.L. 113 -76) and the Consolidated and Further Continuing Appropriations Act, 2015 (Pub. L. 113-235 ) authorized DOJ to make funds available for a PFS initiative implementing the PSH model for a population continuously cycling between the criminal justice system and homeless services. DOJ and HUD entered into an interagency agreement that designates HUD as the agency responsible for implementing the PFS Demonstration, and through this NOFA, HUD is making $8,679,000 available.

ii. Permanent Supportive Housing Demonstration Target Population Research consistently demonstrates a correlation between homelessness and incarceration. Especially within the first month after reentry into the community, individuals released from jail or prison are at high risk of becoming homeless and/or recidivating. National Alliance to End Homelessness (NAEH) estimates that one in five people leaving prison becomes homeless upon reentry into the community, which is an estimate that increases to 30-50 percent in major urban areas.[3] Tracking the cycle of homelessness and incarceration in the reverse, the Council of State Governments and NAEH report that over 10 percent of people recidivating from jail and prison are homeless in the months before their incarceration. This rate jumps to 20 percent among individuals with a mental illness.[4] In addition to mental health problems and being at risk of homelessness, a significant number of persons in the reentry population also face persistent substance abuse and other chronic health challenges. In many cases, individuals reentering their communities from jail or prison are caught in a revolving door of incarceration, homelessness, crisis healthcare, and children’s protective services. For this demonstration, the target population consists of people experiencing homelessness who are high users of corrections facilities, homeless services, health care and other crisis services. While the intent is to prioritize those within the target population with the highest needs, especially persons experiencing chronic homelessness with a history of frequent involvement in the criminal justice system and high service usage, eligibility is not limited to those who meet the definition of “chronically homeless.” One of the primary reasons for this approach is to include persons who have been residing in a jail or prison for over 90 days as eligible candidates for the PSH Intervention. This subpopulation is further defined in Section I.A.1.e.i. of this NOFA.

iii. Permanent Supportive Housing Using a Housing First Approach In order to advance the goal of ending homelessness in times of budget constraints, it is critical that communities strategically target existing evidence-based interventions to those who need it most. Extensive research shows that PSH models using a Housing First approach consistently effect positive outcomes for people with long histories of homelessness and chronic disabilities. When assisted with permanent housing and supportive services, people with the most severe medical and behavioral health problems, including those with long criminal histories, show significant decreases in homelessness, arrests, hospitalization, and emergency room visits. Furthermore, when assistance is appropriately targeted, the public costs of shelter, corrections, and health care decline significantly, making the net public cost of serving a person with PSH about the same as or less than the cost of allowing them to remain homeless.[5] Section I.A.1.e.ii. of this NOFA provides more details about Housing First and the essential components of the PSH model.

Being that many people reentering their communities from jail or prison meet the eligibility criteria for PSH, there is growing acceptance of this housing model as a promising intervention for the reentry population. These very PSH programs targeting the reentry population are ongoing throughout the country and are increasing in number.

iv. Funding a PSH Intervention with the PFS Financing Mechanism

(a) What is Pay for Success?

PFS strategies are typically public-private arrangements that enable a government to test or expand innovative programs while paying only for those that achieve agreed-upon target outcomes. PFS strategies are typically associated with preventive social interventions and are put in action through PFS contracts between a government (or other payor for social outcomes) and a nonprofit social service provider. PFS contracting models involve payors and service providers who agree that all or some portion of payment will not be paid until an agreed-upon set of outcomes or level of impact has been verified. Such payments for outcomes are known as Success Payments. Instead of being applied to the direct costs of housing or services, success payments are made based on the degree to which specific milestones agreed upon in advance are achieved, using payment rates also determined in advance. Achievement of outcomes is typically verified by an http://www.gpo.gov/fdsys/pkg/PLAW-113publ76/pdf/PLAW-113publ76.pdf http://www.gpo.gov/fdsys/pkg/PLAW-113publ76/pdf/PLAW-113publ76.pdf http://www.gpo.gov/fdsys/pkg/BILLS-113hr83enr/pdf/BILLS-113hr83enr.pdf using payment rates also determined in advance. Achievement of outcomes is typically verified by an independent evaluator agreed upon by all parties to a transaction.

Given that verification of outcomes that trigger Success Payments may take several years, service providers often will not have the resources to self-finance costs of implementing a preventive intervention during a contract period. For this reason, PFS contracting may require PFS financing, sometimes referred to as “social impact bonds” or “outcomes financing,” through which third-party investors provide financial resources necessary to carry out the intervention. Such third-party investment is typically at-risk and return of capital (and any potential return on investment) via the payor is dependent, in whole or in part, on the achievement of outcomes identified in the PFS contract.

(b) PFS Demonstration Objectives DOJ and HUD seek to evaluate the viability of using a PFS financing framework to improve outcomes for people experiencing homelessness with frequent contact with the criminal justice, homeless services, and health care systems through the provision of permanent housing linked with supportive services. The objectives of the PFS Demonstration are to:

(1) Pilot test the PFS model operated by an intermediary to learn whether the financing approach is feasible to fund a PSH delivery initiative.

(2) Create an opportunity for communities to increase the availability of PSH for the target population, ultimately through a high-quality PFS-finance project, as defined below in Section 1.A.1.b.ii. of this

NOFA.

(3) Determine whether PSH provided for the target population will reduce recidivism and chronic homelessness.

(4) Determine if a PFS-finance PSH Intervention can achieve taxpayer savings and/or improve cost-effectiveness by decreasing government spending on corrections systems, homeless services, Medicaid, and crisis services that are significant enough: (a) to justify the use of a PFS framework; and (b) to ultimately cover the cost of scaling to other jurisdictions (in addition to a return to investors if future scaling occurs with PFS financing).

(5) Identify lessons learned and best practices on the feasibility of scaling-up and replicating effective PSH and service delivery interventions in other cities, with and/or without federal funding and technical support.

b. Introduction to the PFS Demonstration Framework

i. Purpose The purpose of the PFS Demonstration is to strengthen communities’ ability to prevent and end homelessness and reduce avoidable incarceration by increasing the provision of PSH, a proven evidence-based practice. The PFS Demonstration is an opportunity to equip communities with a new financing mechanism for funding PSH projects that will prevent returns to homelessness and reduce recidivism among the reentry population. The PFS Demonstration is also a valuable opportunity to test ways of achieving greater cost-effectiveness in providing homeless assistance while expanding communities’ access to available funding for PSH.

ii. Overview of the Pay for Success Approach The key stakeholders in a PFS-finance arrangement are typically a government entity (which pays for negotiated outcome targets once they are achieved and validated), service provider(s) (which carry out the evidence-based intervention), investor(s) (which provide the initial investment that pays for the provision of services), and independent evaluator(s) (which validate outcomes to trigger Success Payments). Typically, an intermediary manages the PFS-finance project entering into an agreement with the government entity to achieve specified outcomes, raise any capital needed from investors, and oversee service providers to ensure that the project achieves the specified outcomes. Because the government entity’s Success Payments are dependent on successful outcomes, the private investor(s) take on the risk that the project will be successful (as opposed to the government entity). For this reason, Success Payments include a modest return on investment. Ideally, the intervention will generate cost savings for the government entity, which will cover the initial investment as well as the positive return.

A High-Quality PFS-Finance Project includes the following components:

(a) A well-defined problem and associated target population (which, in the case of this NOFA, are already defined for applicants);

(b) A preventative service delivery strategy that is managed, coordinated, and guided by the service provider and/or the intermediary and is flexible and adaptive to the target problem and population. In addition, the strategy has a robust, rigorous evidence base or a compelling theory of change with pre- and post-intervention outcomes suggesting at least a preliminary level of evidence, meaning that, at a minimum, the model has evidence based on a reasonable hypothesis and supported by credible research findings. Examples of research that meet the standards include: 1) outcome studies that track participants through a program and measure participants’ responses at the end of the program; and 2) third-party pre- and post-test research that determines whether participants have improved on an intended outcome. The PSH model using a Housing First approach is the strategy that will be employed for the PFS-finance project for this NOFA;

(c) One or more well-defined, achievable potential outcome target(s) that are an improvement on the current condition anticipated for the target population and have been agreed to by all required project partners;

(d) A plan for program evaluation using a randomized control trial, quasi-experimental evaluation, or other scientific methodology to be executed by an evaluator;

(e) A binding commitment of funds from one or more independent investors to cover costs associated with delivering the intervention, including administrative and overhead costs of the intermediary, if needed;

(f) A financial model that shows public sector cost savings or efficiency gains;

(g) A commitment from an individual or entity to act as an outcomes payor, whereby its Success Payments may be directed to Investors if they have covered, in part or in whole, costs associated with delivering the intervention; and

(h) A PFS Contract and any associated necessary agreements that incorporate all elements above.

iii. Phases of the PFS Process for the PFS Demonstration

(a) Feasibility Analysis. During this phase, the intermediary assesses community needs and capacity;

identifies the current total costs associated with a population or social problem; projects the potential cost savings to the system (calculations of total cost savings must account for the net effect of any cost shifting among local, state, and federal funding flows) to be achieved through the intervention; identifies opportunities to achieve outcomes more cost-effectively; evaluates the suitability of implementing a PSH Intervention; and evaluates the willingness and capacity of stakeholders to implement a PFS Contract that would result in a PSH Intervention targeting a reentry population cycling between jail/prison and homelessness.

(b) Transaction Structuring. During this phase of the PFS process, the intermediary works with the government entity to identify and finalize key factors such as:

(1) The outcomes that will be measured and how to measure them (e.g., housing stability, reduced recidivism rates, decreased use of the shelter system and crisis care, etc.);

(2) How effects of the project on relevant local, state, and federal funding sources will be tracked in order to measure cost savings and/or cost-effectiveness;

(3) The level of risk involved for the government entity;

(4) Outcome targets that will trigger Success Payments;

(5) A schedule of Success Payments linked to specific outcomes;

(6) The available sources of capital for upfront financing, Success Payments, and any other costs related to the project;

(7) The participation of key stakeholders (i.e., state or local government agencies, homeless assistance providers, financial institution(s) or foundation(s), third-party evaluator(s)) and the responsibilities of each entity; and

(8) Compatibility of the project, including the implementation of the intervention(s) and data collection, with the independent evaluation.

Also within this phase and informed by the above, stakeholders negotiate the specific terms of the PFS Contract for the implementation of a PSH Intervention targeting the reentry population. In fidelity to the PFS model, applicants are expected to comprehensively account for all costs and all risk under the PFS Contract.

Ramp-up activities during the early post-closing phase of a contract may be considered part of the Transaction Structuring phase if the applicant justifies why such ramp-up costs are necessary to move the contract to implementation, why such costs cannot be included in the PFS Contract, and how the PFS Contract accounts for the fact that ramp-up activities will be funded separately, including how Success Payments account for any risk that may be borne by the government based on funding of ramp-up activities. Applicants should specifically address how the PFS Contract will account for any potential changes in risk associated with the separate funding of ramp-up activities and how the PFS Contract will allow for potential appropriate contract modifications based on lessons learned during the ramp-up phase, including potential modification of outcome targets, time horizons, programmatic changes, and the amount and structure of Success Payments.

(c) PFS Contract Implementation. During this phase, the terms of the PFS Contract are carried out.

Homeless assistance providers administer the PSH Intervention to the reentry population; the intermediary provides continued oversight and support throughout service delivery; third-party evaluators collect data, monitor performance, and provide an ongoing assessment of performance outcomes. At the point that the third-party evaluator validates that an outcome target has been reached, a Success Payment is made to the investor(s), per the terms of the PFS Contract.

iv. PFS Demonstration Key Roles and Partnerships

(a) Grantee. A grantee is the intermediary that is responsible for assessing the feasibility of a PFS project and/or structuring a PFS transaction and/or overseeing implementation of a PFS project. These activities may include partnership building, capital-raising activities, program design for the target population at the Demonstration Site, managing contracts with service providers, making Success Payments on behalf of the government entity or other payors, and managing third-party evaluators. Intermediaries may carry out all activities directly and/or subaward funds to subrecipients or procure the services of contractors to carry out PFS activities. Eligible applicants are described in Section III.A. of this NOFA, and information regarding required documentation to substantiate eligibility is provided in Section IV.B.1. of this NOFA.

(b) Government Entity. A government entity is a local, state, or tribal government or public agency or office that partners with an intermediary to carry out a PFS-finance PSH Intervention for the reentry population. The government entity may be one of several payors, who are responsible for making Success Payments when successful outcomes are achieved; however, at least one payor must include a government entity per Demonstration Site for the purposes of implementing the PFS-finance PSH Intervention. Intermediaries may issue Success Payments on behalf of the government entity or may subaward grant funds to the government entity for Success Payments or other eligible grant activities as necessary.

(c) Intermediary Advisor. An Intermediary Advisor is an entity with substantial PFS experience that agrees to serve as the grantee’s mentor for purposes of the PFS Demonstration. An Intermediary Advisor is only required for those grantees without direct experience in performing PFS activities, including conducting a Feasibility Analysis, structuring a PFS Contract, managing a third-party evaluator, and/or facilitating Success Payments.

(d) Homeless Assistance Providers. Homeless assistance providers are nonprofit entities that are responsible for the direct provision of PSH housing and services for the reentry population as part of the PFS-finance PSH Intervention. The PFS-finance PSH Intervention guidelines are outlined in Section I.A.1.e.ii. of this NOFA.

(e) Social Investors. Social investors are financial institutions, philanthropies, other entities, or individuals that provide the initial investment to cover the direct costs of the PSH Intervention and receive Success Payments once outcomes are achieved.

(f) Third-Party Evaluator. The third-party evaluator is the entity responsible for validating outcomes to trigger Success Payments. If awarded PFS Demonstration funds for Outcome Evaluation, the grantee may subaward funds to or procure the services of the evaluator.

(g) Demonstration Site. A demonstration site is a specific service area selected from an area with a high concentration of individuals meeting the eligibility criteria of the target population (see Section I.A.1.e.i. of this NOFA), which is agreed upon by all stakeholders as defined in Section I.A.1.b.iv. of this NOFA, where the PSH Intervention will be executed or, for cases of Feasibility Analysis, is proposed. A Demonstration Site is considered to have a high concentration of the target population when stakeholders can expect to serve at least 100 eligible households through the PSH Intervention in that area. Applicants may only submit one application per Demonstration Site but may submit multiple applications if they wish to apply for more than one Demonstration Site.

(h) Partnership. Applicants must have an existing or potential partnership with the applicable government entity for the Demonstration Site. Applicants must demonstrate this existing or potential partnership by including a Letter of Interest in their application package, in which the government entity establishes that it intends to partner with the applicant to pursue a PFS-finance PSH Intervention. See Section IV.B.1. of this NOFA for additional details about the information that must be included in the Letter of Interest.

(i) Subrecipients/Contractors. Grantees may subaward funds to subrecipients or procure contractors to carry out award activities as necessary.

(j) Department of Housing and Urban Development (HUD). HUD is the federal agency responsible for administering the PFS Demonstration, which involves awarding grants to intermediary organizations, providing grantee support and oversight, and conducting an independent process evaluation for the demonstration.

(k) Department of Justice (DOJ). DOJ is the federal agency with which HUD will consult in administering the PFS Demonstration. DOJ will be involved in HUD’s PFS Demonstration evaluation, scoring applications, making funding decisions, and providing guidance, as necessary.

c. Eligible Activities HUD intends to award grants to facilitate work in all three phases of the PFS process. The PFS Demonstration will fund grantees for one or more of the eligible activities described in this section. Because the costs for each activity type may vary depending on the services provided and/or the location of the Demonstration Site, the PFS Demonstration grant funds available may not cover the full cost in every case. In fact, the funding available for Outcome Evaluation and Success Payments is unlikely to cover the full cost; however, DOJ and HUD do want to make a limited amount available to grantees for this purpose. Applicants are encouraged to leverage and align philanthropic resources and local funding with PFS Demonstration funds as necessary. DOJ and HUD will prioritize applications that can provide evidence or demonstrate the likelihood of leveraging additional funds for PFS Demonstration activities.

i. Feasibility Analysis

(a) Objective. The objective of this eligible activity is to provide government entities and/or nonprofit service providers with the resources and expertise needed to effectively determine their ability to participate in PFS Contracts and structure transactions that have a high likelihood of success and meaningful social return on investment.

(b) Activities. In carrying out Feasibility Analysis activities, grantees will provide technical assistance to government entities, nonprofit service providers, or existing partnerships thereof to identify PFS financing opportunities and to assess the suitability of and potentially prepare for PFS transactions that will result in the implementation of a PSH Intervention. Activities may also include supporting the infrastructure required to implement PFS Contracts, such as improving data collection and analysis capacity. Appropriate TA services may include, but are not limited to, the following activities, as applicable or allowed by federal, state and local laws and regulations (also see the description of the Feasibility Analysis phase in Section I.A.1.b.iii.(a). of this NOFA for examples of acceptable activity types). Feasibility Analysis activities do not include funding for the provision of housing or supportive services.

(1) Organizational/Programmatic Activities

(A) Assess the likelihood of success of a PSH model financed by PFS in the local context;

(B) Assess strength, expertise and capacity of relevant nonprofit PSH providers to deliver desired outcomes consistent with HUD’s programmatic guidelines for PSH;

(C) Assess available local, state, tribal, and/or federal administrative data and other available evidence, data and information relevant to carrying out a potential PFS PSH Intervention, including data matching and analysis;

(D) Provide due diligence, program design and advisory services to assist government entities in determining whether and how to engage in the planned PSH Intervention using PFS financing;

(E) Assess the policy priorities of the relevant government entity that are consistent with the provision of PSH targeted to the reentry population;

(2) Budgetary/Financial Activities

(A) Identify and estimate potential local, state, and federal funding sources that will be impacted by the project, including costs and savings to each affected level of government and program. These funding sources should be used to estimate potential net savings, as well as opportunities to achieve outcomes more cost-effectively at each level of government through the implementation of a PSH Intervention targeting the reentry population (estimates of total cost savings must account for the net effect of any cost shifting among levels of government);

(B) Inform decision-making, develop a framework and conduct analyses for estimating public sector savings, cost-effectiveness, and benefits and Success Payments for the PSH Intervention;

(C) Identify options for a financing strategy to sustain and scale-up the PSH Intervention should the intervention be deemed feasible for implementation through PFS in the Demonstration Site;

(D) Develop a budget estimating the costs needed for the Transaction Structuring phase and ramp-up costs (if any);

(3) Legal/Regulatory Activities

(A) Identify statutory, regulatory and programmatic barriers to and enablers of a PFS PSH Intervention;

(B) Review agreements and contracts for legal requirements and protections;

(C) Assess and address appropriation risks (i.e., the risk that the government entity may not be able to make future Success Payments);

(4) Procurement Activities

(A) Support government efforts to design and implement a process for collecting relevant information from the public or key audiences to inform PFS activities, regarding priorities, service delivery, Transaction Structuring, evaluation, or other relevant issues, priorities, concepts and strategies;

(B) Support government efforts to design and publicize requests for proposals, notices of funding availability, or other relevant funding announcements/proposal solicitations for release by government entities or other payors to solicit the services of coordinators, service providers, or evaluators;

(C) Support government efforts to assess solicited proposals, including respondents’ organizational capacity, past performance, operating model, strength of outcomes, efficiency, quality of management team, and suitability for PFS financing;

(5) Applicants may propose additional or alternative strategies under any of the above task areas which further the purposes of the PFS Demonstration.

(c) Expected Deliverables. Grantees’ Feasibility Analysis activities must include deliverables. As described in Section V. of this NOFA, application proposals should itemize specific outputs and grant deliverables, such as written reports detailing the findings of the Feasibility Analysis. If the grantee concludes that a PFS Transaction is inappropriate for the Demonstration Site, the deliverable should include a report outlining alternative approaches the government entity may pursue in order to achieve the social outcomes sought by PSH. HUD will work with grantees to finalize the expected deliverables in the cooperative agreement.

ii. Transaction Structuring

(a) Objective. The objective of this eligible activity is to assist governments and nonprofit entities that have identified feasible projects to structure and close a PFS Contract for the implementation of a PSH Intervention for the reentry population at a particular Demonstration Site. This eligible activity is intended to culminate in a finalized, fully structured, high-quality PFS Contract or in an analysis of alternative financing structures if stakeholders could not close the PFS Contract.

(b) Activities. Appropriate Transaction Structuring activities may include, but are not limited to the following, as applicable or allowed by federal, state and local laws and regulations (also see the description of the Transaction Structuring phase in Section I.A.1.b.iii.(b). of this NOFA for examples of acceptable activity types). Transaction Structuring activities do not include funding for the provision of housing or supportive services.

(1) Provide overall transaction coordination and support

(A) Design PFS transaction work plan, timeline and task list;

(B) Coordinate planning and meetings of relevant transaction participants;

(C) Manage all transaction elements to meet the shared timeline of stakeholders;

(D) Identify an outreach plan to identify eligible PSH Intervention participants that includes coordination between correctional facilities, homeless assistance providers, crisis care services, applicable government agencies, and other key players involved in implementing the PSH Intervention. Outreach plans should consider how persons with disabilities and limited English proficiency can be reached;

(E) Develop a plan to identify, select, train, and provide technical assistance for homeless assistance providers;

(F) Assess strength, expertise and capacity of selected homeless assistance providers, including quantitative and qualitative assessment of respondents’ track record, operating model, strength of outcomes, and compatibility with the transaction;

(G) Address homeless assistance provider performance concerns or capacity gaps;

(H) Engage and educate homeless assistance provider staff to ensure that expectations of their role in the PSH Intervention are clear and feasible;

(I) Coordinate selection of qualified third-party evaluator(s);

(J) Develop outcome measures and specify evaluation methodologies and data sources that can be accessed to valuate identified outcome measures;

(K) Ensure that the evaluation design and service delivery plans are fully compatible (i.e., If the evaluation design were to require the random assignment of participants, does the service delivery plan accommodate this requirement?);

(L) Ensure that all data necessary to identify the target population and measure outcomes will be made available by the government entity or other data source, and shared among relevant stakeholders, including the intermediary, outcome evaluator, DOJ, and HUD, timely and in accordance with all applicable confidentiality requirements;

(M) Coordinate or lead design of key PSH Intervention components, including detailed service provision, duration of services, outcome monitoring, and evaluation design;

(N) Assess the risk of and develop contingency plans for lack of stakeholder capacity or support, (i.e., stakeholders not providing adequate feasibility checks or information and/or not agreeing to key PSH Intervention requirements identified in this NOFA);

(2) Raise capital and develop capital structure

(A) Identify sources of funding for Success Payments (including sources beyond federal funds);

(B) Conduct financial modeling of the transaction, including analysis of possible payment terms and transaction structures;

(C) Develop investment and entity structure, especially regarding Success Payments, that mitigates relevant risks and establishes appropriate incentives;

(D) Develop relevant documentation, such as a term sheet, that includes outcomes pricing, capital structure, Success Payment triggers, and payment schedules;

(E) Ensure that, in the case that PFS Demonstration grant funds cover the cost of any ramp-up activities, those costs are taken into account in the structuring of Success Payments and the measurement of net savings generated by the PSH Intervention;

(F) Market the transaction to investors in order to raise capital commitments necessary to fund the PSH Intervention;

(3) Mediate and facilitate agreement between each of the parties to the transaction

(A) Coordinate the negotiation of all parties around economic and contract terms;

(B) Develop and finalize all contracts and supplementary documentation, including offering or loan documents as relevant, working with legal counsel as appropriate;

(4) Close the PFS Contract and prepare for the Contract Implementation phase. Preparation for Contract Implementation may include ramp-up activities needed to assist homeless assistance providers to scale up their operations for the PSH Intervention. Examples may include activities that build the infrastructure of the PSH Intervention prior to the delivery of housing and services such as: recruiting, hiring, and training additional homeless assistance provider staff; training current staff to ensure they have the capacity to deliver the intended intervention; refining the referral process; finalizing and implementing evaluation methodologies; equipment; facility set-up; setting up information technology (IT) for the systematic collection of program participant data; and programming Homeless Management Information System (HMIS) specifications. These activities are also relevant for PFS Contracts which are “shovel-ready” at the time of application and require funding for costs related to closing the transaction.

(5) Ensure that the PFS Contract accounts for any potential changes in risk associated with the separate funding of ramp-up activities and allows for potential appropriate contract modifications based on lessons learned during the ramp-up phase, including potential modification of outcome targets, time horizons, programmatic changes, and the amount and structure of Success Payments.

(6) Support early Contract Implementation activities up to the delivery of housing and services to ensure the PFS Contract is moving towards successful implementation;

(7) Applicants may propose additional or alternative strategies under any of the above task areas which further the purposes of the PFS Demonstration.

(c) Expected Deliverables. Grantees’ Transaction Structuring activities must include deliverables. As described in Section V. of this NOFA, application proposals should itemize specific outputs and grant deliverables, such as a fully structured PFS Contract that has been closed successfully. DOJ and HUD expect that a fully structured PFS Contract will provide a level of specificity that evidences how the requirements of this NOFA are met, such as: the definition of the target population, the strategy for identifying and engaging PSH Intervention participants, a description of the PSH model that will be implemented, the number of participants expected to be served, outcome measures, Success Payment schedule, the expected cost offsets, data-sharing agreements, program outcome monitoring methodology, etc.

The grantee must submit to DOJ and HUD the outcome evaluation methodology for review and approval before the PFS Contract is finalized to ensure that the third-party evaluation will meet an acceptable level of rigor and will assess the PSH Intervention’s consistency with HUD’s programmatic guidelines for PSH. The outcome evaluation methodology must include the approach to identifying a comparison group. This comparison group is meant to be a reference group for assessing outcomes against a group of demographically similar non-participating reentrants. Examples of approaches that have been used to construct control/comparison groups include random assignment of eligible reentrants to PSH and control groups or statistically constructed comparison groups using matching techniques on propensity scores or other quantitative measures.

If a PFS Contract does not ensue, the grantee should provide a written analysis of alternate social finance strategies to achieve desired social outcomes. HUD will work with grantees to finalize the expected deliverables in the cooperative agreement.

iii. Outcome Evaluation

(a) Objective. The objective of this eligible activity is to provide government entities with the resources and expertise needed to effectively assess whether outcome goals have been met and whether achievement of these outcomes are reasonably attributable to the implementation of PSH and enhanced service delivery.

(b) Activities. As part of the PFS Contract Implementation phase of the PFS process, grantees will provide, directly or through a subrecipient or contractor, the services of a third-party evaluator who will carry out the following activities, as applicable or allowed by federal, state and local laws and regulations (also see the description of the PFS Contract Implementation phase in Section I.A.1.b.iii.(c). of this NOFA for examples of acceptable activity types). Outcome Evaluation activities do not include funding for the provision of housing or supportive services.

(1) Inform and agree to the outcome evaluation design and validation methodology;

(2) Conduct an independent validation of the outcome evaluation methodology, including to ensure that needed data can be accessed appropriately and timely;

(3) Monitor the outcome measure(s) agreed upon in the PFS Contract;

(4) Assess whether the operationalization of the PSH Intervention is consistent with HUD’s programmatic guidelines for PSH;

(5) Determine whether the outcome goals have been met; and

(6) Provide the documentation to trigger the release of Success Payments.

(c) Expected Deliverables. Outcome Evaluation activities must include deliverables. As described in Section V. of this NOFA, application proposals should itemize specific outputs and grant deliverables, such as: an evaluation plan that details the outcome measures and the methods employed to develop those measures;

outcome evaluation design; and the process for having an independent validation of the outcome evaluation methodology that will be employed; written assessments of progress towards meeting outcomes; analyses of data; final evaluation report of results; and supporting documentation including data sets, administrative data sources, cost information, and other applicable records. DOJ and HUD must review and approve the outcome evaluation design as well as the plans for an independent validation of the outcome evaluation methodology before the PFS Contract is finalized. HUD will work with grantees to finalize the expected deliverables in the cooperative agreement.

iv. Success Payments

(a) Objective. The objective of this eligible activity is to provide government entities with assistance in funding Success Payments, which will compensate investor(s) for the financial investment in PSH Intervention costs, once outcome goals have been met. While this NOFA allows grantees to apply for and use PFS Demonstration funds for Success Payments, the grant funds available for this activity are unlikely to cover the full cost of Success Payments.

(b) Activities. As part of the PFS Contract Implementation phase of the PFS process, grantees will authorize payments to the investor(s) (e.g., financial institution, foundation) once the third-party evaluator verifies that an outcome goal, as established and agreed upon in the PFS Contract, has been met through the agreed-upon validation methodology approved by DOJ and HUD. Success Payment activities do not include funding for the provision of housing or supportive services.

(c) Expected Deliverables. Grantees’ Success Payments activities must include deliverables. As described in Section V. of this NOFA, application proposals should itemize specific outputs and grant deliverables, such as any supporting documentation substantiating that Success Payments have or have not been made consistent with the process, payment schedule, calculations, validation methodology, etc., agreed upon by all stakeholders in the PFS Contract. HUD will work with grantees to finalize the expected deliverables in the cooperative agreement.

d. Program Requirements

i. Performance Measurement and Reporting. Grantees will be required to develop performance measures to assess their progress in achieving the objectives for each eligible activity as described in Section I.A.1.c. of this NOFA and meeting the terms of the grantee’s cooperative agreement with HUD. These measures will be approved by HUD and included in the cooperative agreement. Throughout the course of the period of performance, grantees will be required to report to HUD annually on all performance measures and fiscal expenditures in a form prescribed by HUD. Once homeless assistance providers begin to serve program participants through the PSH Intervention during the PFS Contract Implementation phase of the PFS project, grantees will also be required to report on participant demographic and other relevant data collected in HMIS, such as racial and ethnic data, by submitting to HUD an HMIS-generated report similar to the Continuum of Care (CoC) Program Annual Performance Report (APR).[6]

HUD will make grantees’ annual performance reports available to the public on the HUD Exchange website.

Grantees are also expected to participate in regular, at least quarterly, check-in meetings or conference calls with HUD staff as HUD seeks to learn from grantees’ experiences and provide administrative support as necessary. See Section VI.C. of this NOFA for more information about reporting requirements.

ii. Administrative Cap. Grantees may use up to 10 percent of the total grant award on administrative costs related to the general management and oversight of PFS Demonstration activities. Administrative costs do not include staff and overhead costs directly related to carrying out eligible PFS Demonstration activities, which are eligible as part of those activities.

iii. Participation in Demonstration Evaluation. HUD will contract with an evaluator to conduct an evaluation of the PFS Demonstration including all Demonstration Sites to measure its effectiveness and to identify lessons learned and best practices. Grantees will be required to provide data and participate in the evaluation as described in the final evaluation design, which will be developed in consultation with other federal agencies that are examining PFS approaches.

iv. Participation in HMIS. Homeless assistance providers carrying out the PFS Intervention are required to enter data on all persons served and activities assisted through the PSH Intervention into the applicable CoC’s HMIS in the area in which those persons and activities are located. Homeless assistance providers must comply with the CoC’s HMIS requirements.

e. Intervention Design and Target Population The intended result of the PFS Demonstration is the implementation of a PSH Intervention for the target population that effects positive outcomes, including: housing stability, reduced recidivism, cost savings or cost-effectiveness, and knowledge about the feasibility of PFS strategies to deliver PSH. Interventions should be tailored to local contexts to address specific local needs; therefore, some degree of variation is appropriate. However, all interventions must include the following core programmatic elements, though the specific approaches used to implement them may vary.

i. Eligible Participants. The target population for the PFS Demonstration is a subset of the reentry population that consists of people experiencing homelessness who are high users of corrections facilities, homeless services, health care and other crisis services. A target population cannot be based on race, color, religion, national origin, sex, age, disability, or familial status.

Applications that do not specifically identify the target population described in this section will not be considered for funding. Eligible program participants must have a history of: 1) the most costly service needs and 2) a pattern of homelessness and involvement in the criminal justice system. Sections I.A.1.e.i.(a). and I.A.1.e.(b). of this NOFA outline the eligibility criteria for the PSH Intervention.

Grantees receiving funding under this NOFA for Feasibility Analysis and/or Transaction Structuring must encourage the ultimate selection of participants for PSH using a data-driven approach, as determined in the Feasibility Analysis, which prioritizes the costliest users based on the Severity of Service Needs outlined below.

Grantees receiving funding under this NOFA for Outcome Evaluation and/or Success Payments must select participants for PSH using a data-driven approach, as determined in the Feasibility Analysis, which prioritizes the costliest users based on the Severity of Service Needs outlined below. Reaching this high-cost target population is crucial in achieving substantial cost savings to frequently utilized crisis public services. Essential methods for reaching the intended target population include the following:

(a) Severity of Service Needs. In order to qualify for homeless assistance, program participants must demonstrate having the most costly service needs.

(1) For the purposes of this NOFA, a person with the most costly service needs is an individual for whom at least one of the following is true:

(A) Has a history of high-cost utilization of crisis services, which include but are not limited to:

emergency rooms and psychiatric facilities; or

(B) Has significant health or behavioral health challenges or functional impairments which require a high-cost level of support in order to maintain permanent housing.

Severe service needs as defined in bullets (A) and (B) above should be identified and verified through data-driven methods such as an administrative data match. For example, Demonstration Sites can match data from correctional systems, HMIS, Medicaid, and/or hospitals to identify individuals with repeated use of jails or prisons, homeless services, emergency departments, hospital inpatient services, or other public services.

In undertaking various methods to reach the intended population, entities cannot ask about the nature or severity of one’s disability or make eligibility determinations based on an individual's specific diagnosis or disability type.

(2) In states where there are alternate criteria used by state Medicaid departments to identify high-need, high-cost…