Reviewing LA's Homelessness Report, Pt. 2: Efficacy and Cost of Housing Strategies

This is Part 2 of my review of the City of Los Angeles' Comprehensive Homeless Strategy report, focusing specifically on the Housing section, which is home to the largest number of recommendations and the lion's share of the cost associated with addressing homelessness. Part 1 covered some background on the homelessness crisis and summarized the types of shelter and housing programs that the City has historically relied on, and may expect to use in the future. In this section I review the relative efficacy of these different programs, and the cost of each.

Efficacy of Homelessness Interventions

Permanent Supportive Housing, Rapid Rehousing, and Prevention are the three homeless interventions from the above list that are most strongly favored in this report, and the preference for these strategies is backed up by empirical evidence in support of their efficacy. Below is a sample of the data presented in the report in support of each approach.

Permanent Supportive Housing (PSH)

There are approximately 9,000 chronically homeless persons in the City of Los Angeles, including about 950 who are living on the streets with their families. The chronically homeless—identified in the Comprehensive Homeless Strategy report as those homeless for at least one year, or including four homeless events totaling 12 months—consume a disproportionate share of public resources and frequently suffer from debilitating medical conditions or disabilities. For this reason it is chronically homeless persons that are best-suited for Permanent Supportive Housing. 

Unlike shelters and Transitional Housing, PSH is not time-limited and affords residents a degree of stability that allows them to more effectively address whatever medical or social problems they may face. Residents' likelihood of success is further supplemented by case management and, frequently, on-site mental and physical health programs. The success of this approach is reflected in the retention rates for its residents: After 6 and 12 months over 90 percent of individuals, and over 80 percent of families, are still housed.

Retention rates over 6 and 12 months for chronically homeless residents in Permanent Supportive Housing. Table from Comprehensive Homeless Strategy.

Full independence from public support is an unrealistic goal for a number of homeless persons with especially severe disabilities and other challenges. If the goal of our homeless policy is to keep City residents of the street rather than cycling through relatively ineffective sheltering and transitional programs, Permanent Supportive Housing is an essential component of a comprehensive strategy. 

Rapid Rehousing (RRH)

Rapid Rehousing is targeted at homeless persons with a less intense need for public services, and as such it is able to achieve a high rate of success at a lower cost than permanent supportive housing. Since 2013, 93.5 percent of clients served by RRH have remained stably housed.


Between September 2009 and October 2011, 4,218 individuals in 1,724 households were served by Prevention programs in Los Angeles. Of these clients, rental assistance was the most common form of financial assistance offered, followed by help with security deposits and utility payments. Every household involved in the Prevention program(s) was engaged in the case management system, and about 60 percent received legal services assistance.

Prevention services are provided at considerably lower cost than sheltering or housing programs; details of the costs for each program type are detailed in the following section.

Costs of Shelter and Housing Programs

A surprising finding from the report (for me at least) is that Emergency Shelters and Transitional Housing are actually more expensive than Permanent Supportive Housing on an annual basis, despite their lower efficacy. Below is a figure from the report that summarizes the estimated cost of many of the programs described above.

Summary of estimated annual costs for several housing programs. Table from Comprehensive Homeless Strategy.

Notice that Emergency Shelter and Transitional Housing, both of which have been de-prioritized by the federal government, are more expensive on an annual basis than PSH. The $15,000 per household for Permanent Supportive Housing includes direct services for residents (such as medical care and mental health treatment) as well as the annualized cost of building new housing or a lease for existing housing. The report estimates a cost of about $351,000 for studio and 1-bedroom apartments and $414,000 for larger units; about $100,000 of that would be picked up by the City. The cost of a lease ranges from about $12,000 to $20,000 per year depending on the size of the unit.

Individuals and families placed in PSH are typically those with the highest Vulnerability Index scores—those deemed highest-priority for housing and possessing the greatest acuity of need. As a result, they are often the most costly in terms of the consumption of public resources such as law enforcement, medical care, and substance abuse treatment programs. As numerous studies have shown, the cost of treating homeless persons on the street can actually exceed the cost of housing them. One such study in Santa Clara County notes that, while homeless residents cost the county an average of $5,148 per person, "individuals with costs in the top 5% accounted for 47 percent of all costs and had average costs of over $100,000 per year." Another, smaller-scale study performed by USC found that providing four homeless individuals with Permanent Supportive Housing actually reduced public service costs by more than $20,000 per person over a two-year period.

In Santa Clara County, homeless residents with public costs in top 5% accounted for 47% of total costs spent on services for the homeless, and individuals averaged over $100k in costs, per person, per year. Chart from  Economic Roundtable .

In Santa Clara County, homeless residents with public costs in top 5% accounted for 47% of total costs spent on services for the homeless, and individuals averaged over $100k in costs, per person, per year. Chart from Economic Roundtable.

The cost of Prevention, by comparison, is just $3,500 per household. The report rightly views expenditures on Prevention and Diversion as cost avoidance strategies—by spending money on these Prevention, some individuals and families can avoid the need for a more expensive housing intervention.

Some additional data on the relative costs of each option are provided below. Again, note that for PSH, the City would either pay to have new units constructed (capital cost), or would pay for an annual lease—not both.

Summary of City's capital, service, and rental subsidy costs for several housing programs. Table from Comprehensive Homeless Strategy.

Part 3 is up next, where I'll review some of the key recommendations in the Comprehensive Homeless Strategy.