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Ballot measure to help homeless in LA may fall short of its goal

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“If we campaigned for 10,000 units, we expect 10,000 units”

Homelessness In Los Angeles Jumps 20 Percent From 2016 Numbers
Homeless people camp on a sidewalk on Skid Row.
Photo by David McNew/Getty Images

Will Measure HHH—the ballot initiative approved overwhelmingly two years ago to build 10,000 units of housing for homeless residents—achieve the goals promised to voters?

Money raised through the ballot measure could subsidize fewer than 6,000 units before funds run out, according to the city’s administrative officer. That’s 4,000 units, or 40 percent, short of its goal.

Pete White, director of the Los Angeles Community Action Network, which helped campaign for the ballot measure, says that’s causing a lot of angst.

“If we campaigned for 10,000 units, we expect 10,000 units,” he says.

City officials did not specify how many units the measure would fund in the language that appeared before voters in 2016. But 10,000 was the figure most commonly used in campaign messaging.

It’s also the number of supportive housing units needed to address the city’s homelessness crisis, according to an analysis of the measure that appeared in voter guides.

Tommy Newman, director of public affairs for the United Way of Greater Los Angeles, says the Measure HHH funding scheme was never designed to subsidize 10,000 units by itself.

Prior to passage of the ballot initiative, the city’s housing department funded around 300 units per year, and city officials planned the measure assuming this trend would continue.

Getting to 10,000 units, then, relies on multiple funding sources—not just HHH, which is designed to pay for about 7,000 of those units.

White says city officials should have made that clearer when they asked LA voters to approve the measure. He’s calling for an audit of HHH spending to ensure the money is being used as efficiently and as transparently as possible.

“We’re going to apply pressure to make sure they’re paying attention,” he says.

PATH Metro Villas groundbreaking
City officials at the ground breaking for PATH Metro Villas, the first project funded by Measure HHH, in East Hollywood.
Photo by CG Media Solution, courtesy PATH Ventures

Passed in 2016, the bond measure made $1.2 billion in financing available for the development of permanent supportive housing. That type of housing is geared toward homeless residents and includes on-site services, such as counseling and addiction treatment.

The money is awarded in the form of low-interest loans, and typically is not used to finance projects in their entirety, but instead fills in funding gaps to ensure the projects get off the ground.

With about 30 percent of its total budget committed, HHH has funded or is expected to fund just over 2,100 units so far.

Since the measure passed, affordable housing developers have also built 270 units of supportive housing using loans from a separate fund managed by the housing department. Projects with an additional 277 units have also secured financing from the same source.

Newman says achieving the 10,000-unit goal is still a strong possibility.

“The goal of HHH is to produce 1,000 units per year,” he says. “We’ve done that. Now, the conversation needs to be about maintaining that level of production.”

To meet the goal, city officials need to maintain or exceed this level of production, Newman says.

But even if that does happen, HHH could still fall short of its goal.

A report from the city’s administrative officer presented to the HHH Citizen’s Oversight Committee in May forecasted that fewer than 6,000 units would be constructed in the worst-case scenario. It assumes that every future project funded by HHH will receive the maximum subsidy—$220,000 per unit—that the city is allowed to award.

Still, Newman acknowledges that a prediction model used by homeless service providers also anticipates a roughly 1,000-unit shortfall, based on current spending.

Eventually, the amount of each HHH loan will have to come down.

That could be a problem, as rising construction costs leave affordable developers with larger financing gaps to fill.

Newman says that passage of a statewide ballot measure in November is “critical” to ensuring that the city can continue to produce supportive housing at the level it has been since passage of HHH.

That measure, called the No Place Like Home Act of 2018, would open up new financing options for permanent supportive housing projects. Newman estimates it could add more than $350 million to the city’s pool of available funding, allowing HHH loans to be reduced to $140,000 per unit without jeopardizing future projects.

Without additional resources from the state or federal government, HHH will likely fall slightly short of its 10,000-unit goal. But Sally Richman, public information officer for the city’s housing department, cautions against predicting too far into the future.

She says future changes to federal tax credits that fund affordable housing could dramatically affect the viability of supportive housing projects. So too would a recession, which could actually make some projects cheaper to build due to lower land and construction costs.

Partly because of this uncertainty, Newman says the city was correct to spend a little extra on HHH projects in the early stages of the program.

“Going in,” he says, “we knew we needed to prime the pump.” Now, it’s just a matter of bringing costs down.

“I don’t know how you could look at HHH right now and say it hasn’t been successful.”