The city is now spending more than $500,000 per unit to house homeless, a mere $14,000 less than the median sales price for a condominium in Los Angeles.
Los Angeles’ plan to get homeless citizens off the streets is failing, according to City Controller Ron Galperin’s annual review of Proposition HHH released on Tuesday.
“To create a bigger impact now and in the future, the city must make some immediate changes to its approach,” Galperin told USA Today. “Los Angeles needs to figure out how to make the cost of development cheaper and the timeline quicker.”
Passed in 2016, Proposition HHH set aside $1.2 billion in general obligation bonds to help fund the construction of 10,000 supportive housing units. The proposition also allocated funds for new affordable housing units for long-term use, temporary shelters, and service facilities.
According to Galperin’s assessment, Proposition HHH is woefully behind schedule and over budget. Currently, only two projects are under construction for a total of 117 units, 74 of which have been set aside for supportive housing.
Even if all current pending projects are approved, Galperin says the City of Los Angeles will only have built 7,640 units, with 5,873 being designated as supportive housing.
In addition to slow construction, the cost per unit has exceeded initial estimates by at least $200,000. In 2016, the estimated cost per unit was $350,000 for a studio/one-bedroom apartment and $414,000 for a two-bedroom.
In 2019, the median cost per unit ballooned to $531,373, a mere $14,627 less than the median sales price for a condominium in Los Angeles. One thousand pending projects have a median cost per unit of $600,000, which is nearly equal to the median cost of a single-family home ($627,690) in the area. Lastly, one pending project has a whopping cost per unit of $700,000.
The controller said 40 percent of costs come from fees, consultants and financing while 11 percent come from land acquisition.
“I don’t think anyone can say what Los Angeles has done to create and build housing for the unsheltered has been successful or good enough,” added Galperin in his statement to USA Today. “We are not where we need to be.”
Galperin says one of the biggest obstacles is restrictive local and state zoning laws, which have also caused problems in building enough market-rate housing for buyers and renters.
In response, Los Angeles officials worked with the State of California on AB 1197, a bill that exempts emergency shelters and supportive housing developments from California Environmental Quality Act environmental impact reports.
The city also hired an “HHH Concierge” to streamline the permit process for HHH-funded projects and ensure they are prioritized within each zoning department’s workflow.
A spokesperson for Mayor Eric Garcetti told USA Today the mayor agreed with Galperin’s assessment and believes the city can meet its 10,000 unit goal by 2026.
“The controller’s report is a thoughtful look at a generational challenge, and it rightfully acknowledges the deep complexity of the task before us,” spokeswoman Andrea Garcia said. “We are on track to meet our goals – and Mayor Garcetti is as committed as ever to reaching the objectives.”
Los Angeles isn’t an anomaly. According to the latest Department of Housing and Urban Development figures, nearly 130,000 Californians are living on the street — the highest number of any state.
The State of California is working to address homelessness and affordability issues through several measures such as the “Right to Shelter” bill working its way through the California Senate and The Tenant Protection Act of 2019 signed into law on Tuesday.
The Tenant Protection Act of 2019 bars landlords from raising rents more than 5 percent, plus inflation, each year.
“We have to address the issue of production in the state of California,” Governor Gavin Newsom said during the signing ceremony. “We need to build more damn housing.”
However, the law includes some important exemptions. Landlords of most apartments built after 2004, most single-family rentals and unoccupied rentals can continue raising rents more than 5 percent annually. Furthermore, it includes a clause that prevents local governments from creating lower caps.
Although a 5-percent cap does help cost-burdened Californians from experiencing sudden rent surges, some say its not enough to provide affordable, stable housing.
“[It’s no great victory in terms of what kind of rent caps we need — how rents might be halted from continuing to rise to keep pace with when wages go up,” Kenton Card, a PhD student in the department of urban planning at the University of California Los Angeles, told Inman on Tuesday.
“You need this alongside other tools like new affordable housing money, also perhaps incentives to densify communities and to remove single-family home zoning, but in accordance with protections of current rent-controlled units,” Card added.
“We didn’t see the kinds of game-changing policies out of this legislative session that are going to be necessary to significantly address the housing crisis,” Terner Center for Housing Innovation Policy Director David Garcia told the Wall Street Journal.