A bill for an ordinance establishing a "Social Impact Bond" fund in the General Government Special Revenue Fund and the means for authorizing expenditures from such fund. (FINANCE & SERVICES) Approves the creation of a new fund in the General Government Special Revenue Fund for Social Impact Bonds to provide a multi-year reserve to make performance-based payments to contractors providing housing and case management for chronically homeless individuals. This is a companion ordinance to the Long Bill. The Committee approved filing this bill by consent on 12-4-14.
It has been moved and seconded. Comments from members of Council Councilwoman Fox. Thank you, Mr. President. This ordinance establishes a social impact bond fund, essentially a counting place hold to put money that we will use for this mechanism. Now, I don't recall City Council formally approving this mechanism, which ironically does not involve actual bonds. It has an intriguing spin and one I really thought long and hard about. The sales pitch is that we contract with investors to start a program and we pay only for success with all the money taxpayers will save. However, put another way, it's a mechanism to debt finance social programs. Let me say it again. I believe it's a mechanism to finance social programs. Now, it's justification is the same logic I heard when Mayor Hickenlooper promoted Denver's road home for the homeless will save millions because will howls and treat the high expense individuals really costing taxpayers . That was what we were told and council voted to assert that program. Ironically, the plan first use I was told about for Denver using social impact bonds was to establish a program for high expense homeless individuals. And we'll save enormous amounts of money so we can fund the program and repay investors with interest, of course. Why not just serve those individuals with the program already promoted to serve them or just the program? Well, undoubtedly have specific contracts coming up where we can talk about the problems unique to each purpose that the city wants to use social impact bonds for. And if you I feel certain if this fund is established. The causes will grow and grow and grow. One teaser, though, is the difficulty. During the pilot program of correcting course midstream if that's warranted, you already have research criteria out there that's been established to prove a specific program caused an outcome and thus should generate payments to the investors. I mean, there'll be a whole lot of other issues I believe, that people will be raising as this goes forth. But right now, I'm being asked to create a fund to put money in for this purpose. At this time, I'm not ready to create an investment market for social programs. Let me say again, it's basically a new concept for expanding and debt financing. Social programs. Thank you, Councilman Fox. Councilman Brooks. Yeah, thank you, Mr. President. And I want to make sure that the public here's another version of Social Impact Bonds, which is one of the most innovative social funding mechanisms that cities are beginning to do nationwide. And I just want to make sure that there's someone here from Department of Finance that can is Tyler here at all to speak to that? Councilman Brooks. Guys start for the mayor's office. Tyler is not here tonight, but we have a briefing scheduled on the entire social impact bond program and what's being proposed in Safety and Well-Being Committee, I believe, on January 13th. So there will be more information provided at that time. Okay. You know, thank you. I appreciate this guy. I really would have liked Tyler to be here because this has been a program that the city has been working on in conjunction with a lot of private partners in the city of Denver for the last year. And we are kind of voting on the fund tonight. So our hope that he can be here. But I would ask that for those who are tuning in, we're going to ask a ton of questions. We're going to try to specify some specific projects in which the city will go after. But this is an incredible opportunity for the city and county of Denver to fund programs not from our general fund, but some innovative ways outside of that. And so I hope that we'll get that opportunity to to have a robust conversation there. Thank you. Reading. Thank you, Councilmember. Councilwoman Robb. Thank you, Mr. President. I have also given a lot of thought to this, and some of my thoughts have gone along the way. Councilwoman thoughts went like, How does it really work? How do people really get paid back? Why would they invest? I hadn't thought of it in terms of of course we'll pay them back. But I did attend a couple of the I don't know whether they were interest sessions or seminars outside of the city and county building that were hosted through, I think, the Strategic Partnership Office. And it's very technical. I feel like there are a lot of measurements. I'm not saying that I could do the measurements myself. I don't understand them quite that well. But there are there is an independent advisor. We could legitimately ask, well, how does that person get paid? But. All of that, said Skye. My question is, you know, I'm still very open to this because of the size of the problem. But my question is, why are we setting up the fund before we're briefed on the exact program? The fund is just a mechanism. I get it. Right. It should have. Been established in the long bill and it was an oversight. It should have been established for the 2015 budget as part of the long bill. And why, if we haven't decided on the program, should it have been established. That the way the program works, you have to hold a reserve to pay back those funds if we. Do see a savings. And so we need to create a mechanism to do that. If we move them forward, if there are individual actions, they will still come to council for approval. This is just to establish that fund within the but the budget process. Thank you. Thank you. Councilwoman Robb. Councilwoman Cannick. Thank you, Mr. President. I just wanted to, as chair of finance, I did allow this to go through. I'm concerned with the condition that we get the full briefing. And so so that was a condition of this going through. And on the substance, I will say, these may not be the same kind of investors you're thinking of from Wall Street who put in $100 and want to get 110 or 100 and whatever back. The most frequent investors in social impact bonds are foundations who generally invest $100 and they get zero back. So if they invest 100 and they get ten back, 15, $20 back, those are funds they can then reinvest in growing outcomes. So I think that's a really important distinction for folks to have even just tonight, even just for the generic mechanism with no program to go with it, which is that this opportunity does bring and grow resources to the city that we would not otherwise have, i.e. outside investment from foundations. And in none of these models do you really pay back more than what you received. You're just paying back something to an investor that's typically trying to do good without getting a single dollar in return. So that may help to shift folks thinking a little bit about why this is an opportunity to city should pursue. And in terms of the return, I mean, I think that this is one of those things where it doesn't mean that you're not going to have other people who need similar services but jail nights and hospital nights , for example. And, you know, if we're dealing with someone who is homeless, are more costly than the housing that has been well-established in many cities throughout the United States, Seattle in particular. And so I do believe that even though it doesn't mean you don't have to continue providing other homeless services, those however many folks you have, you are saving dollars. So we'll learn more about that. I apologize for the timing of this going through, but it was conditioned on the committee hearing on the substance. So I do encourage folks to vote yes for tonight for a fund structure so that the financing pieces is done. But we then can can debate the program. Thank you. Thank you. Councilman Canady, councilman rep. Yeah, I'm still stuck. I want to be clear, we're establishing the fund, but we're not putting any money on it. So why do we have to have a reserve? Because we won't have a reserve. We'll have a fun number. Mm hmm. I'm sorry. I don't know the details of why exactly it had to be done at this specific moment in time. I can have Brendan reach out to you. This is first reading tonight. Okay. I can have Brendan and Tyler. I think we really have to explore this. I'm very serious about the proposal, but I'm perplexed about how it came forward. Great. Thank you, Councilwoman Rao. Councilwoman. Councilman Brooks. You know what? I just wanted to this is this is on first reading. So I just want to make sure that we have Tyler and Brendan and some folks from finance here for second reading this. I have my vote tonight. I wish they'd have been here tonight. But to make sure that they're here for the second reading is going to be critical for this passage. Thank you. Thank you. Councilman Brooks, any other comments on 1017 C None, Madam Secretary. Roll call. But no. Carnage. Liman, Lopez. Montero. Nevitt. Ortega. Rob. Abstain. I Susman. Brooks Brown. No, Mr. President, I. Councilwoman Ortega. Thank you, Madam Secretary. Please close the voting and have the results tonight. Two nays, one abstention. 10 hours, two nays, one abstention. 1017 has been ordered published. Madam Secretary, you want to have the next one, which I believe was 950. Councilwoman Fox called that one out. Wait for technology to catch up, but also ask, what would you like for us to do with this?