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.

1. INNOVATING IDEAS
in Air Quality
Improvement

2. A Strategy for
Funding Improved Air Quality

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. • 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. • 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. • 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. 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. 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. 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. 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. 1,230 asthma hospitalizations in 2011

12. Geographic concentration
Highest rates of asthma hospitalization admissions by zip code

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. External air quality’s impact on asthma
Failed Vehicle Emissions Tests and Highest Rate of Asthma
Hospitalizations

15. Internal air quality’s impact on asthma
Distressed Housing Indicators and
Highest Rate of Asthma Hospitalizations

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. 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. The Good Air Project:
• Champion Impact Capital is developing the Good Air Project
to test the hypothesis proposed in the research project.

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. Intervention 1: External Air Quality

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. 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. 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. 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. Sample of TransactionsBetter for the Environment

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. 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. 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. 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. Intervention 2: Internal Air Quality

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. 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. 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. 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. 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. 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. 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. Question & Answer