Los Angeles Housing Project for Homeless Suffers Slow Progress, High Cost: Report

October 8, 2019 Updated: October 8, 2019

A report by Los Angeles controller Ron Galperin has found that after voters approved Proposition HHH in November 2016, the city’s housing program for the homeless has met with slow progress and higher than expected costs.

The proposition authorized the city to issue $1.2 billion in bonds to partially fund up to 10,000 supportive housing units for people who are homeless or at risk of becoming homeless.

“As of September 30, 2019, the City has conditionally awarded nearly the entire amount authorized by the Proposition HHH ballot measure. There are additional projects seeking conditional funding which, if approved, will commit all remaining Proposition HHH funds,” states the Oct. 8 report.

“Assuming all of the pending projects are approved, Proposition HHH will provide 7,640 total housing units, of which 5,873 will be supportive housing.”

Meanwhile, the Los Angeles Homeless Services Authority reported a total of 36,300 homeless people in the city of Los Angeles in 2019.

The estimated time for finishing a housing project is three to six years, according to the controller’s report. The original estimated cost of each unit was $350,000 for one bedroom and $414,000 for two or more bedrooms. The current median cost per unit is $531,373, with more than 1,000 units expected to cost more than $600,000.

“The median cost of building many of these units approaches – and in many cases, exceeds – the median sale price of a condominium in the City of Los Angeles ($546,000) and of a single-family home in Los Angeles County ($627,690),” states the report.

“Developers are spending approximately 40 percent of overall project costs on soft cost components such as fees, consultants, and financing. These costs are nearly as much as the cost of labor and materials to build Proposition HHH-funded housing developments.”

The ballot measure requires the city controller to conduct an audit of the program each year bonds are outstanding or proceeds remain unspent.

Trump Administration’s California Visit

Last month, President Donald Trump sent representatives from his administration to visit the growing tent cities in Los Angeles. The president has expressed a desire to help put an end to the city’s homeless problem in the past. After the visit, California Gov. Newsom and local officials asked the president for more federal funds to expand housing voucher programs.

On Sept. 18, Housing and Urban Development Secretary Ben Carson officially rejected the request, writing in a response letter (pdf) that state officials and mayors now seek “federal dollars … from hardworking American taxpayers but [fail to admit] that your State and local policies have played a major role in the current crisis.”

In his original letter (pdf), Newsom and the mayors of the state’s 13 largest cities wrote that “homelessness is a national crisis decades in the making that demands action at every level of government.”

Accusing the Trump administration of worsening the crisis by “[proposing] significant cuts to public housing and programs like the Community Development Block Grant,” Newsom said that California state and local officials “have ramped up action to lift families out of poverty by investing in behavioral health, affordable housing, and other homeless programs.”

Carson hit back by saying that California’s problem cannot be compared to anything experienced across the country.

“If California’s homeless population had held in line with overall population trends,” Carson wrote in his letter, “America’s homeless rate would have decreased. Instead, the opposite has happened, as California’s unsheltered homelessness population has skyrocketed as a result of the State’s over-regulated housing market, its inefficient allocation of resources, and its policies that have weakened law enforcement.”

California: Fixing What’s Broken

In an interview with The Epoch Times, the former economist for the Colorado Division of Housing and current Mises Institute senior editor Ryan McMaken said that California was never in any place to ask the federal government for help.

“The homelessness situation in California is primarily the result of California’s public policy. So why should federal taxpayers be expected to bail out California communities?”

Arguing that the rising housing costs in the state are the direct product of urban planning policies, McMaken explained that the state’s ongoing meddling policies severely reduce the incentives for developers to build. This, along with other policies such as the minimum wage, make it difficult for residents to afford housing.

Furthermore, he said, “Housing can be rendered unaffordable for a sizable portion of the population when governments restrict housing production through zoning laws, development fees, density restrictions and other requirements that increase the cost of producing new housing units.”

The only ones gaining from the Golden State’s involvement, McMaken explained, are the rich and those who already own real estate, as they often seek “the power of government to increase their ‘quality of life.’”

In the end, McMaken concluded, “the result is less housing, more expensive housing, and an affordability crisis for people who are just starting out or have low-wage jobs.”

It would be truly unjust to force the American taxpayer “to do something” about this crisis, McMaken added, confirming what Carson stated in his letter.

Cutting the Red Tape

In his original request, Newsom said Trump should offer California 50,000 more housing vouchers, adding that the president should also increase the value of the vouchers to account for the state’s high rents. However, the governor did not address any of the state’s possible shortcomings.

In his response, Carson accused the Golden State of undercutting “the ability of police officers to enforce quality-of-life laws, remove encampments, and connect our most vulnerable populations with supportive services they need.” He also found it strange that while Newsom’s letter asked for more money and federal resources to “fight” homelessness, the governor failed to request or apply for federal funding designed to expand the number of patients local psychiatric hospitals can take in.

Furthermore, Carson wrote, California’s sanctuary city policies worsen the crisis as “illegal and inadmissible aliens are increasing housing demand and draining resources.”

To help address homelessness in the country, Carson told the media prior to sending Newsom a response, the Trump administration might give cities that commit to cutting the red tape preference for housing grants.

Rules such as solar panel requirements or limits on how many people should live in one home should be the first ones to go, Carson stated, making it cheaper for developers to expand affordable housing options.

“We’ll give preference points to people who are willing to look at these things,” Carson told the press.

“[T]hose kinds of [regulations] can be easily removed, there’s stacks of rules and instead of replacing regulations what we did was just add regulation on top of regulation, which makes everything complex, takes forever to do, and cost way more money than it needs to.”