Why Some Homeless Nonprofits Become Owners
Marlon Crump has struggled with homelessness for over a decade. But for the past two years, he has had stable housing in Portland.
He lives in a new mixed-use building on a corner lot in the Creston-Kenilworth area of the city. Businesses are at the bottom of the two-story blue development. Three apartments are on the upper level. Two of them are at market price, but the last one is a single room apartment, or SRO, with 11 beds. That’s where Crump lives, in room number five.
The configuration is similar to that of a college dorm, where each resident has their own personal bedroom and everything else is shared: kitchen, living and dining room, bathroom and laundry room. There’s even a private backyard, complete with patio furniture and a grill.
“I certainly don’t take that for granted, living here,” Crump said. “I know what it was like to really crawl that road, to finally have peace of mind in my own sanctuary.”
Marlon first heard about this place from a social worker in December 2019. They helped him get a tour.
“I saw the play and I was like wow, very sweet,” Crump said. “I think I could live here.”
Marlon could pay the $475 per month rent using his monthly Social Security check. So he signed the lease and moved in.
The process was fast and smooth, and it was designed to be so through a concept known as master leasing.
According to the latest information from Multnomah County point-in-time homeless count, the number of homeless people in the county has increased. Other counties in the region have seen a similar increase. Government officials, political candidates, and just about everyone in Oregon have ideas about how to address homelessness. One idea is to increase the use of prime leasing. It is also one of the main demands in 3000 PDX Challengea pitch from a coalition of Portland homeless service providers and advocacy groups aiming to house 3,000 people by the end of 2022.
This idea is not new. It’s used for things like investment properties in real estate, essentially adding another party into a landlord-tenant relationship.
In Crump’s case, instead of renting directly from the building owner, it rents from the unit’s main tenant, homeless service provider JOIN.
The non-profit organization provides the flexibility many people who lived on the streets or in shelters need to find stable housing.
“It also has a big advantage in giving us the opportunity to [get to] know the owners and be able to place customers in situations where they have a higher likelihood of succeeding,” said Tony Robertson, JOIN Owner Recruitment and Retention Program Coordinator.
JOIN began master leasing in 2015. Robertson’s team handles much of the usual owner logistics, such as handing over units and managing deposits. And other JOIN employees help customers complete and understand the documents.
The nonprofit is meticulous about finding the right home for each person, preparing them for living together, and providing ongoing housing support after residents move in. JOIN also provides social services to help residents connect to their new community and neighborhood, as well as find jobs. . JOIN typically pairs two of its staff per customer in a rented master unit to provide support.
“We’re just not trying to place [people] just for the sake of placing,” Robertson said. “We try to put them in situations where they can be proud of where they live and feel good where they are.”
And with JOIN, clients looking for a home don’t have to worry so much about having a bad credit score, a negative payment history, or things like an old misdemeanor charge.
Homeless nonprofits are simply more understanding than a typical landlord, said Steve Berg, vice president of programs and policy at the National Alliance to End Homelessness.
“[Master leasing] is very useful for someone who has been [living] on the street,” Berg said. “Trying to engage in a transactional relationship with the owner is just asking a bit much.”
Owners who take out a master lease can take advantage of the hands-off approach. They don’t have to vet potential tenants and they get guaranteed rent, even if some of the rented units are empty.
Make life “infinitely better”
Master leasing to house the homeless has been practiced in the United States for decades in cities such as New York and San Francisco.
Berg said San Francisco pioneered its Direct access to housing head lease program with his local health department in the late 1990s. He subsidized SRO units through head leases and began housing high-risk homeless people.
A study on the effort found the program to be a huge cost saver for the city. It saved more than $30,000 per household, mostly in healthcare costs.
“People who got housing weren’t going to the hospital as much and they weren’t going to jail as much,” Berg said. “It saved the city a lot of money and made these people’s lives immeasurably better.”
Principal leasing has also been widely used amid the pandemic. Several cities across the country have used it to quickly house people particularly vulnerable to COVID-19 who were living on the streets. The United States Department of Housing and Urban Development has even published guidance for cities and organizations wishing to use master leasing in July 2021.
Homelessness’ miracle solution?
Using a head lease to quickly house people may seem like a no-brainer. But it’s not a silver bullet to ending homelessness.
Although San Francisco has a successful SRO master lease program, others overseen by the city are notorious for unlivable conditions. Money and lack of supervision are the big problem there.
JOIN staff agree that adequate funding is essential to hire more social workers, for housing support and general upkeep of rented properties to satisfy both landlords and residents.
“It takes money to do that,” Robertson said. “It takes paint, light fixtures, lawn maintenance and things like that to make [clients] feel good about their new living situation.
In addition, negotiating the terms of the head lease can become complex.
John Paul Kelly is the Supportive Housing Team Coordinator for Central City Concern, a Portland-based nonprofit social service organization. Kelly said CCC got into head leasing about four years ago when it tried to quickly relocate some of its customers. The negotiations became arduous once the lawyers got involved.
“It was bickering over who was going to take responsibility,” Kelly said. “In the end, it became too complicated and we backed off.”
Also, some homeless service providers may not want to take on the role of owner with all the responsibilities that come with it.
Still, Kelly said using prime leasing to create more housing opportunities can work on the right terms.
“It’s another tool in a very, very small toolbox and we have to use every little tool we can get our hands on,” Kelly said.
And with rents continuing to rise and inflation barely abating, using prime leasing as a way to quickly house people could become common practice in Portland.
So far, JOIN’s head lease agreement with Marlon Crump has worked well. The space may seem small, but it’s a huge step up from sleeping on a sidewalk or on a mat in a shelter.
Crump doesn’t plan to leave any time soon. He said having his own shrine is a weight on his shoulders, as well as on his heart.
“I’m very lucky to be here, very blessed,” Crump said. “I am even more grateful that JOIN has provided us with many concrete solutions to preserve and maintain our housing.”
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