Long Term Housing Investments Pay Off: Not Homes or Shelters; Homes AND Shelters

Los Angeles City Controller Ron Galperin released a new audit on Proposition HHH-financed development that was critical of project costs. Read the audit here. SCANPH has issued the following response to the report:

Long Term Housing Investments Pay Off: Not Homes or Shelters; Homes and Shelters

By Alan Greenlee, Executive Director, Southern California Association of Nonprofit Housing (SCANPH)

The high cost of housing is inescapable in Los Angeles, whether it’s buying a home, building a new one, or grappling with rising rents. The consequences are a severe shortage of affordable housing that has exacerbated our homelessness crisis. We know effective interventions are not hasty patches; strong public stewardship of taxpayer dollars requires tested models: supportive housing for those experiencing homelessness AND shelters/bridge housing.

It cannot be either housing or shelters. Angelenos understand it must be both, as is evident at the ballot box when they prioritized the value of a good investment that pays off in the long run. This is why they voted overwhelmingly to approve Measure HHH to “provide safe, clean affordable housing for the homeless and for those in danger of becoming homeless.” By authorizing $1.2 billion worth of bonds to build homes for the homeless, they saw the value of paying a higher cost upfront to ensure thousands of units are restricted as affordable or supportive housing for decades.

HHH should be considered an infrastructure investment program because it provides effective solutions for the long haul. In the long term, it is cheaper to pay for the costs of building covenanted housing now than employing other, short-term solutions like shelters. Affordable and permanent supportive housing are public assets that serve a societal need now and in the future. Case in point: At current prices of motel vouchers ($100/night), the County could spend $600,000 in 15 years and have no asset to show for, but a permanent supportive housing unit built with HHH funds will still be affordable for another 40 years in the future.

Voters want solutions that work and we are indeed delivering. More than 7,500 units of affordable and/or supportive housing are in the pipeline; tripling the affordable housing production pipeline in just two years. Let’s not lose sight of this accomplishment or the momentum. We are in the early stages of a Marshall Plan-style mobilization to build affordable homes for our many neighbors suffering from homelessness. True progress never happens overnight.

This does not mean that we should not make projects as cost effective as possible. We want the public’s $1.2 billion investment to house as many people as possible, which is why we support the $120 million set aside to develop innovative construction methods, designs, and financial models.

The Controller’s report indicates that the median price per unit being built with Measure HHH dollars is $531,000. According to the report, this is lower than “the median sale price of a condominium in the City of Los Angeles ($546,000) and a single-family home in Los Angeles County ($627,690),” proof that the funds are being used responsibly. Development of any housing type is expensive due to the costs of labor, land, and materials. In reality, the city is typically investing $140,000-$175,000 and the rest is paid by tax-motivated investors, bank loans, and state housing funds. This leveraging of resources was by design to address the costs of such a monumental but much-needed investment.

A recommendation proffered by the Controller’s report to renege on committed HHH funds is sorely misguided and would create uncertainty for developers. Also, the report recommends reducing costs further and using the savings “for temporary shelters, bridge housing, hygiene centers and other service facilities to address more immediate needs.” We’re investing already in ways Controller Galprin suggests. For example, hard-fought resources from state reserves and local general funds are being utilized to build 26 emergency shelters with 2,000 beds through Mayor Garcetti’s “A Bridge Home” program. And the county’s Measure H funds are providing not only support services for HHH-developed housing but also flexible housing funds for rapid re-housing to keep at-risk families housed and sheltered.

Yes, homeless Angelenos need shelters and hygiene stations. But people living on the street also need homes—homes equipped with intensive supportive services to stay off the streets.

We have finally mobilized funding, elected officials, and public support to build. Let’s keep investing in the right, long term solutions.