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Topic: North Texas | Innovating Ideas for Air Quality Improvement

On Wednesday, August 6, 2014, Michelle Corson joined the North Texas Commission for the fourth webinar in a special Topic: North Texas series about ozone and regional air quality.

Michelle Corson is the Founder/CEO of Champion Impact Capital, a group that specializes in utilizing social impact bonds to address persistent and expensive community challenges, such as air quality and homelessness. Their most recent project, On The Road Lending, helps remove older and high-emitting vehicles from the road and was featured by the Dallas Federal Reserve Bank during their 2014 Investing in What Works: Dallas program.

During this program, Ms. Corson illustrates how social impact bonds can be used to make a positive difference in our community, with a focus on their ability to improve regional air quality.

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Topic: North Texas | Innovating Ideas for Air Quality Improvement

  1. 1. INNOVATING IDEAS in Air Quality Improvement
  2. 2. A Strategy for Funding Improved Air Quality
  3. 3. • First impact investment developer in Texas • Developed two successful Pay-for-Success initiatives – The Cottages at Hickory Crossing – On the Road Lending • We develop projects – putting together structure and partners, developing funding strategy, raise capital • We manage projects through to completion, measuring outcomes Champion
  4. 4. • Only 4 up and running now in the US – 3 criminal justice – 1 Pre-K • Pilot in CA being done on asthma/air quality • Many projects in development across the country • Several projects in development in Texas Current US SIB Projects
  5. 5. • Funding tool built around outcomes • Not a bond, but a contract • Prevention versus remediation • Very specific, not applicable to all issues • Capital Markets take risk • Cost savings financing Social Impact Bonds
  6. 6. • North Texas does not comply with federal air quality standards • Costs us lost revenue for transportation and economic development • Has the potential to cost us expenses in fines and sanctions • Could hurt our ability to attract businesses • Jeopardizes our children’s health Air Quality Economics
  7. 7. Good Air Project Hypothesis By improving indoor and outdoor air quality through the reduction / removal of asthma triggers, we can reduce pediatric asthma- related emergency room visits and hospitalizations.
  8. 8. Design The Good Air Project will be a scientific research project to test this hypothesis through two interventions: one targeting external air quality and one internal air quality
  9. 9. Scope • Stage 1: CIC design two interventions and establish funding mechanism to support costs • Stage 2: Launch Pilot Program in target neighborhood(s) and evaluate impact on pediatric asthma hospitalizations • Stage 3: Expand scale of program, if successful
  10. 10. Dallas has a pediatric asthma “epidemic” • Rates of pediatric asthma diagnosis, hospitalization, and death are significantly higher in Dallas than in Texas or the nation as a whole. • Disproportionately affects adolescent African- American boys • Much higher in low-income areas
  11. 11. 1,230 asthma hospitalizations in 2011
  12. 12. Geographic concentration Highest rates of asthma hospitalization admissions by zip code
  13. 13. Causes of pediatric asthma • Air Pollution – Ground-level ozone and primary pollutants from old, high-emissions vehicles • Poor internal air quality – Mold, dust mites, other pests, secondhand smoke, pet dander • Inadequate education – Poor medication adherence – Lack of knowledge about asthma triggers
  14. 14. External air quality’s impact on asthma Failed Vehicle Emissions Tests and Highest Rate of Asthma Hospitalizations
  15. 15. Internal air quality’s impact on asthma Distressed Housing Indicators and Highest Rate of Asthma Hospitalizations
  16. 16. Pediatric asthma is costly for Dallas • Early stage asthma visit costs only $100, but traumatic event costs $7,300 and 3 days hospitalization. • Total charges for Pediatric Asthma Hospitalizations in 2011: – $172.9 million in Texas – $32 million in Dallas County
  17. 17. Most asthma hospitalizations are preventable Asthma is classified as a preventable hospitalization condition or “Ambulatory care- sensitive” condition, defined as a diagnosis for which a hospitalization can be avoided with timely, effective outpatient care.
  18. 18. The Good Air Project: • Champion Impact Capital is developing the Good Air Project to test the hypothesis proposed in the research project.
  19. 19. Scientific research project • Multi-dimensional attack on asthma triggers in targeted geographies with high asthma hospitalization rates, poor air quality index, and high-distressed housing • Cost-effective interventions that, together, can reduce asthma hospitalizations and associated expenses – External Air Quality – Internal Air Quality
  20. 20. Intervention 1: External Air Quality
  21. 21. Of 277 metropolitan areas nationally, Dallas-Fort Worth ranks 8th in high ozone days. (Source: American Lung Association, State of the Air 2014)
  22. 22. External Air Quality: PREMISE • Children with asthma are highly impacted by days of high ozone (because they are outside more than adults and because their lungs are not fully developed) • Texas does not currently comply with federal air quality standards. • North Central Texas Council on Governments has named “high emitting vehicles” as its top priority area for reducing air pollution.
  23. 23. External Air Quality: PREMISE • Half of North Texas’ air quality issues are attributable to old, polluting cars that have failed emissions tests. • These cars are concentrated in low- income areas – we know where they are. • 489,000 vehicles failed emissions testing in 2010
  24. 24. Replacing Polluting Vehicles • 489,000 vehicles failed emissions testing in 2010 • These cars are concentrated in low-income areas. • On the Road Lending is reducing fuel consumption and greenhouse gas emissions by 25% for their replacement vehicles. Replacing Polluting Vehicles
  25. 25. Sample of TransactionsBetter for the Environment
  26. 26. External Air Quality: OBJECTIVES 1. Improve neighborhood air quality in these target geographies – Expand innovative auto loan program to enable low-income people to purchase better cars – Replace old polluting vehicles in targeted zipcodes with poor external air quality 2. Assess the impact on pediatric asthma among residents
  27. 27. On the Road Lending • Seeks to replace high-emitting vehicles in target neighborhoods with high asthma hospitalization rates • Low-interest loans and financial counseling to working families to purchase newer cars. • Default rate of under 5%. • Improves health and economic mobility of clients.
  28. 28. External Air Quality: RESOURCES • On the Road Lending – Financial education, vehicle selection, loan program • NCTCOG – Low-income vehicle repair / replacement program • TAMU – Research and evaluation • TCEQ – Air quality monitoring • Children’s Medical Center – Pediatric asthma monitoring • American Lung Association & North Texas Commission – Air quality education, anti-idling awareness • bcWorkshop – Neighborhood assessments, videography, surveys • Champion Impact Capital – Project management
  29. 29. External Air Quality: OUTCOMES-DRIVEN • Primary Measurable Outcome: Pediatric asthma hospitalization days for residents of target neighborhoods • Interim Outcomes: – $ of loan capital extended – # of cars replaced – Air quality index readings in target neighborhoods – # of residents reached by public education campaigns • Ancillary benefits – improves credit and creates economic mobility for low-income persons, improves employment opportunities, increases public safety
  30. 30. Intervention 2: Internal Air Quality
  31. 31. “In developed countries, adults and children spend most of their time indoors… the primary indoor air pollutants associated with asthma exacerbation include biologic allergens (dust mites, cockroaches, animal dander, mold), environmental tobacco smoke, and irritants from chemicals and fumes.” - Agency for Toxic Substances and Disease Control, Case Study on Environmental Triggers of Asthma, 2010
  32. 32. Internal Air Quality: PREMISE • Internal air quality is compromised by building construction issues such as leaking roofs, moldy carpets, pests, and pet dander. • Behavioral factors also influence internal air quality, such as smoking indoors, infrequent cleaning, chemical residue from cooking and cleaning products, and “stale air.” • Asthma triggers can be easily and effectively remediated from homes, daycares, and schools.
  33. 33. Internal Air Quality: OBJECTIVES 1. Systematically remove indoor asthma triggers from buildings with highest impact on pediatric asthma – Expand program to assess “high-distressed housing” – homes, apartments, and schools – in target geographies – Educate residents about internal air quality and asthma triggers 2. Assess the impact on pediatric asthma among residents
  34. 34. Health & Wellness Alliance for Children • The Health & Wellness Alliance for Children might oversee: – Targeting of schools, daycares, and homes for highest impacts on asthma hospitalizations – Train specialists to assess buildings for asthma triggers and rehabilitate these environments – Monitor improvements in pediatric asthma hospitalizations
  35. 35. Internal Air Quality: RESOURCES • Federal EPA – Adapt their “Tools for Schools” assessment program to residential environments and train inspectors • bcWorkshop – Oversee the inspection of built environments for asthma triggers and manage the rehab • American Lung Association & North Texas Commission – Public education to residents about internal air quality • TAMU – Research and evaluation • TCEQ – Air quality monitoring • Children’s Medical Center – Pediatric asthma monitoring • Champion Impact Capital – Project management
  36. 36. Internal Air Quality: OUTCOMES-DRIVEN • Primary Measurable Outcome: Pediatric asthma hospitalization days for residents of target neighborhoods • Interim Outcomes: – # of Healthy Homes Specialists trained – # of residences assessed for environmental asthma triggers – # of residences rehabilitated by bcWorkshop – # of residents reached by public education campaigns • Ancillary benefits – creation of jobs and workforce improvement by training “Healthy Homes Specialists” to assess and rehab properties.
  37. 37. Possible funding structures • Traditional revenue bond around vehicle replacement vouchers – fund currently $600 mm • Social impact bond around health outcomes • Federal support for air quality and asthma- related outcomes, using “Pay for Success” or similar grant from EPA, Treasury, HUD, or HHS • Corporate funders
  38. 38. Question & Answer

On Wednesday, August 6, 2014, Michelle Corson joined the North Texas Commission for the fourth webinar in a special Topic: North Texas series about ozone and regional air quality. Michelle Corson is the Founder/CEO of Champion Impact Capital, a group that specializes in utilizing social impact bonds to address persistent and expensive community challenges, such as air quality and homelessness. Their most recent project, On The Road Lending, helps remove older and high-emitting vehicles from the road and was featured by the Dallas Federal Reserve Bank during their 2014 Investing in What Works: Dallas program. During this program, Ms. Corson illustrates how social impact bonds can be used to make a positive difference in our community, with a focus on their ability to improve regional air quality.

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