Eliminating homelessness is an expensive proposition, but we can pay for the great majority of it by simply redirecting money that's already being spent inefficiently on treating homeless individuals on the street.Read More
This is Part 3 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. Part 2 looked at the efficacy and cost of different homelessness reduction strategies. In this section I review the specific recommendations included in the report.
Recommendations for Addressing Homelessness Crisis
There are a whole bunch of interesting recommendations in the report, and for the sake of brevity (ha), I'll limit this to a few of the key items.
1. Increase Supply of PSH and RRH; Grow Prevention/Diversion Capacity
Based on the CAO's analysis, it won't surprise anyone to learn that the primary recommendation within the Housing section of the report is to increase the supply of Permanent Supportive Housing and Rapid Rehousing units, and to ramp up Diversion and Prevention efforts. They also suggest that we are currently oversupplied with Transitional Housing; this may present an opportunity for conversion to a more effective use.
Including beds/units for both individuals and families, they propose the following changes (ten-year cost estimates for each program are in parentheses):
- Increase Emergency Shelter beds by 371
- Increase capacity for Prevention/Diversion by 1,230 individuals or households ($22.5 million)
- Increase supply of Rapid Rehousing units by 3,434 ($294 million)
- Decrease the number of Transitional Housing units by 1,844 units (N/A)
- Increase the supply of Permanent Supportive Housing units by 9,895 units ($742 million for construction, $807 million for leases)
The total cost of these programs would be approximately $1.87 billion over 10 years.
The production trends over the next 10 years are graphed below. They show an early dependence on Permanent Supportive Housing leases, which are slowly reined in as new PSH units are constructed. As a long-term housing strategy, construction is favored over leases because it avoids worsening LA's already extremely low rental vacancy rates, which are a major contributor to rising rents. Rapid Rehousing units and Diversion investments are assumed to be made at a consistent rate over the ten-year period.
The report recommends an early reliance on PSH leases because construction will take several years to ramp up and we clearly do not have time to wait to address homelessness in the City.
2. Establish Sustainable Funding Stream to Address Homelessness
Many other large cities have established Housing Trust Funds with dedicated funding streams that are reserved for homeless reduction programs. San Francisco is provided as an example: In 2012 the City passed a local ballot measure that captured some of the former redevelopment agency's revenues that had previously been used for affordable housing funding.
The Budget section of the report notes that there are a variety of funding sources potentially available, including a set-aside from the General Fund, affordable/homeless housing benefit fees, increases to parking or hotel taxes, or a bond measure. Regardless of the path our elected leaders take, they should remember that the cost of proactively addressing homelessness must be measured against the cost of doing nothing—in many cases it is far more costly to leave someone on the street than to house them and provide the full wrap-around services that address their challenges directly.
3. Utilize 4 Percent Low Income Housing Tax Credit to Expedite Construction, if Necessary
One challenge to developing over 7,000 units of Permanent Supportive Housing is the ability to secure enough complementary financing (from the state, federal government, etc.) to support the City's roughly $100,00-per-unit contribution. If those non-City funds don't materialize, each new unit would be considerably more expensive. A major hurdle to securing this outside support is Los Angeles' dependence on 9 percent Low Income Housing Tax Credits (LIHTC), which give the City more money but are far more competitive and for which there is limited total funding. An alternative is to finance development primarily using 4 percent tax credits; this option is more expensive for the City—a $150,000 per-unit subsidy rather than $100,000—but is much more easily accessible.
Assuming that every Permanent Supportive Housing unit we build is financed using 4 percent tax credits, the City's development cost would increase from $742 million to $1.1 billion. But realistically, this may be the only way to fund such a large number of PSH units—particularly when we're trying to subsidize thousands of units of low income and moderate income affordable housing at the same time.
4. Expand Adaptive Reuse for Homeless Housing
Taking a cue from the wildly successful Adaptive Reuse Ordinance in downtown LA, which has been widely credited with spurring the revitalization of the area, the authors suggest that adaptive reuse can also be used to expand the supply of Bridge Housing and Permanent Supportive Housing. Aside from providing another route to producing new housing, adaptive reuse has also been found to be slightly cheaper than building new units with similar characteristics.
Homeless housing and service providers already have experience converting buildings from hotel or motel accommodations to housing for the homeless, so the key would be to incentivize continued conversions through additional funding, expansion of Adaptive Reuse Incentive Areas, reevaluation of strict adaptive reuse requirements, and fast-tracking for zoning and permitting processes associated with redevelopment.
5. Use Public Land for Affordable and Homeless Housing
The City and County both own a lot of property, and where it isn't be used productively it should be considered as a site for affordable and homeless housing development—especially where underutilized property is transit-accessible. This recommendation aligns with similar policies established elsewhere, such as at Metro, as the growing affordability crisis seems to be turning every governmental body into an affordable housing developer, whether they like it or not.
The upside of developing on public land is two-fold: First, since the City/County already owns the property it doesn't have to spend time negotiating a purchase (or taking through eminent domain) from a private owner. So we get new housing faster. Second, since the land has already been paid for, usually at least several decades ago if not longer, the total cost of development is reduced—an important goal in the face of roughly $2 billion in homeless housing needs.
There's a bunch more in there, but those are some of the most impactful strategies in my view. If you'd like to see the full list, you can download the full Comprehensive Homeless Strategy report and skip to page 119.
Call to Action
The Comprehensive Homeless Strategy is being presented to City Council's Homelessness and Poverty Committee on Wednesday, January 13th at 3:00 PM in City Hall room 340. If you're able to make it, I strongly recommend that you attend and speak in support of the strategies and goals outlined in this report. I'm hoping to set aside some time to attend myself, so hopefully I'll see many of you there!
Thanks for reading!
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.
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.
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.
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.
Part 3 is up next, where I'll review some of the key recommendations in the Comprehensive Homeless Strategy.
The City of Los Angeles just released its Comprehensive Homeless Strategy, and there's a lot of material to cover. The 237-page report is an impressive document not just for its apparent quality and exhaustiveness, but also the time frame within which it was developed—barely more than 3 months, which is a blistering pace even outside of the deliberative halls of government.
Since there's a lot to go through, I've gone through a few sections and would like to summarize for those unlikely to read the whole document. Before reading on, I recommend that readers check out Curbed's (surprisingly detailed and non-snarky) summary of the report's key messages; my own summary will be more focused, with this post specifically looking at the Housing section of the report.
Why I'm Writing About the Housing Section
The authors of this report acknowledge that housing strategies account for the largest number of proposals as well as the vast majority of the cost associated with their recommendations. It's no coincidence that housing is such an integral component of the report, and I think the report itself best summarizes why:
The decades-long period of underbuilding housing in Los Angeles has contributed to the homelessness of individuals and families and, once homeless, made it difficult for those with vouchers or other benefits to gain housing. Underbuilding housing in the face of increasing demand led by continued population growth in the region has created extremely low vacancy rates. Supply side economics dictate that when demand exceeds supply, prices will rise. This rise has led to conditions where rents continue to increase to the point where low income individuals are paying more than fifty percent of their income on rent; are living in overcrowded, illegal housing; and are commuting long distances, increasing regional traffic, to avoid high housing costs in the urban core.
Low and moderate income Angelenos are a job loss, medical emergency or relationship dissolution away from homelessness. For those forced by personal or economic circumstance to move quickly, vacancy rates lower than New York City mean affordable housing is increasingly difficult to find, thus increasing the likelihood of becoming homeless in a moment of crisis. Los Angeles is last out of 20 major metropolitan regions in the country in producing housing. It is no coincidence that our City is experiencing the highest rates of homelessness in the nation.
To understand the approaches outlined in this report, we first have to be clear on what our options are, starting with the difference between sheltering and housing strategies.
Shelter versus Housing
The Housing section begins by making a distinction between a few different responses to homelessness, described briefly below:
1. Shelter — Shelters serve as a temporary refuge from living in public space. Examples include Emergency Shelter and Winter Shelters, which are only available to homeless individuals or families for short time periods. Because of its relative lack of success in helping homeless individuals move into a permanent, stable housing situation, the federal government and homeless advocates have shifted their focus away from this strategy.
2. Bridge Housing — As the name implies, this type of housing is an interim facility that serves homeless individuals and families as they transition into permanent housing. It is favored over shelter options because it involves one-on-one case management and is more successful at connecting homeless persons with other supportive services.
3. Housing — There are three primary housing types/programs, the first two of which are strongly favored over sheltering strategies because they best align with Housing First policies that have become the gold standard in homelessness reduction efforts. The appropriate program for each homeless individual or family is determined through use of the Vulnerability Index-Service Prioritization and Decision Assistance Tool (VI-SPDAT), which measures the priority for connecting the homeless person or family with housing and support services, as well as the acuity of their need and intensity of services they require.
- Permanent Supportive Housing (PSH) is the most comprehensive response, including non-time-limited housing (hence, "permanent") and a variety of support services to assist those with mental health disorders, disabilities, substance abuse problems, etc. It is reserved for those with high acuity scores in the VI-SPDAT. PSH is particularly well-suited to the chronically homeless, who "often incur significant public costs – through emergency room visits, run-ins with law enforcement, incarceration, and access to existing poverty and homeless programs." There are few pre-requisites, such as sobriety or mental counseling, that homeless persons must meet to be placed in Permanent Supportive Housing; rather, the goal is to provide a level of stability (Housing First) that provides a foundation upon which individuals can address these challenges.
- Rapid Rehousing (RRH) is a less comprehensive housing strategy intended for homeless persons with moderate to lower levels of priority based on their VI-SPDAT score. RRH is time-limited and its scope of services is not as great, with a greater focus on programs that reinforce financial independence, such as employment assistance. Rapid Rehousing's goal is to assist homeless persons and families with their transition away from dependence on public services. RRH is also strongly favored by the report's authors, and is positioned as the alternative to Permanent Supportive Housing for lower-priority, lower-acuity homeless individuals and families.
- Transitional Housing is a time-limited housing option that typically places conditions upon potential residents prior to move-in, unlike Permanent Supportive Housing. Retention rates are lower for Transitional Housing than for PSH and RRH programs, and the federal government and advocates have de-prioritized this type of housing strategy.
4. Prevention and Diversion — These strategies are not forms of housing assistance in a strict sense, but they are nonetheless essential programs that assist vulnerable persons with locating alternatives to entering the homeless system.
Part 2 is up next, where I review the efficacy and cost of each of these program types, as reported in the Comprehensive Homeless Strategy report.