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iAUDIT! - Despite skyrocketing real estate costs, $2 million will still buy a pretty decent house in most parts of greater Los Angeles. In Westchester, $1.87 million will get you a 2,460 square foot 4 bedroom house. What, then, would you expect to pay for a one-bedroom apartment/condo with low-grade appliances and cheap cabinet work? Would you pay $2 million? If that seems preposterous, you might be surprised to know that it may not be far from what LA pays to house a single homeless person.
Here's the breakdown. According to L.A.’s City Controller, Inside Safe has spent $342,425,500 and permanently housed 741 people. That’s a cost of $462,110 per person housed. Bear in mind that is only the cost of placing someone in housing, and does not include the cost of the housing itself. Of the 741 people housed, 168 have been placed in permanent supportive housing. A 2022 report from the City Controller said the average cost of construction of Measure HHH-funded units was $596,850. Given inflation, we can safely round that number up to $600,000 in 2024. Adding the per-person cost of Inside Safe to the cost of creating new housing units puts us well above $1 million. To that, add the cost of what City Homelessness Chief Lourdes Castro-Rameriz refers to as “relentless outreach” to get an unhoused person to agree to enter the shelter/housing system. Outreach providers bill for every “contact” they make, and they say it may take dozens of contacts before they can coax someone to enter a shelter or housing unit. Once they’re inside, many need intensive mental health or substance abuse interventions, further increasing the costs. We can see how the cost to house one person could easily reach $2 million or more.
If you hope the costs will decrease over time if and when the City builds sufficient housing, don’t count on it anytime soon. 2016’s Measure HHH, the $1.2 billion voter-approved bond, was supposed to provide 10,000 housing units for the homeless. The revised estimate is about 8,800, or only about one-fifth of the units needed to house the City’s 45,000 homeless. It would take at least four more bonds the equivalent of Measure HHH to build enough units, assuming both construction costs and the homeless population remains stable.
The $2 million per person is based on the City’s preferred method of homelessness intervention: creating and acquiring permanent housing. As I previously wrote, this is the most expensive and time-consuming intervention. If you want to consider a less expensive housing option, let’s look at time-limited subsidized (TLS) housing. As the name implies, TLS provides subsidized housing (usually existing apartments) for a limited amount of time, giving occupants a chance to achieve financial stability so they can live on their own. Because the TLS program involves subsidizing the rent of an existing apartment, it avoids construction expenses. TLS is supposed to be a more economical way of housing people who do not need extensive support services. The Controller’s Inside Safe dashboard says 741 people have been placed, 328, or 44 percent, of the people in housing are in TLS units. Although defined as “permanent”, by its nature, TLS is temporary. Subsidies last between six months and two years; when the subsidy runs out, an occupant may find him- or herself homeless again.
It is almost impossible to calculate the cost per person for TLS programs for a number of reasons. As mentioned by court-appointed auditors in recent hearings, the City and LAHSA have had difficulty producing reliable statistical and financial data on their programs, so identifying participation and costs associated with TLS is problematic. Also, many people leave TLS housing and fall back into homelessness. We can use Inside Safe as an indicator. Referring to the Controller’s dashboard, 956 people have fallen back into homelessness after entering the Inside Safe program; that is 29 percent more people than those who were housed. Finally, LAHSA does a poor job holding its TLS providers accountable for their performance. As reported by LAist, HOPICS, one of LAHSA’s major nonprofit contractors, received a $140 million grant to provide subsidized apartments, and did such a poor job monitoring its subcontractors, many occupants fell behind on the rent and were threatened with eviction.
It is important to note LAHSA considers TLS units a pathway to permanent supportive housing. LAHSA’s TLS website describes the process where someone originally assigned to a TLS unit may be reassessed and given a PSH unit based on the need for additional support. Therefore, housing costs may include the initial cost of placing someone in a TLS apartment, and paying rent for an undermined amount of time, plus incurring the additional costs of support and assessment before moving them to a PSH unit, where the costs of tenant support and building maintenance will continue indefinitely.
There are also serious questions about providing the support needed to keep people housed. A survey of Inside Safe participants by a collation of advocacy groups shows 75 percent of respondents received no mental health services despite the preponderance of mental health issues among the unhoused. The survey contradicts City and LAHSA claims of consistent services for Inside Safe residents. Only about 30 percent have worked with someone to move into permanent housing, and fewer than nine percent have received help getting a housing voucher. The survey’s findings are consistent with comments made by the auditors in federal court, where they noted a lack of performance data and documentation supporting provider billings. Inside Safe isn’t the only program suffering from a lack of client support. At an October 2 hearing, auditors described hellish conditions in the shelters they visited, where many occupants are basically left to fend for themselves regardless of their mental and physical health issues.
By design, Los Angeles has created a costly, inefficient, and ineffective homelessness intervention system. By choosing to build expensive housing as its primary solution, LA has intentionally starved other parts of the system, like shelters, of funding. It has also created a failed, yet lucrative, outreach structure, first by paying providers for the number of referrals, then by encouraging repetitive, (and often fruitless), outreach attempts, and finally, by not providing needed support services to the few people who are housed.
The cost, in terms of dollars and damaged lives, is described in Christopher LeGras’ article about his friend Brian, who, after being placed in a cheap apartment, received virtually no support despite mental and alcohol problems. In fact, his apartment was situated directly over a lively pub, exacerbating his feelings of being isolated and ignored. It is little wonder, then, that he soon left for the streets. LeGras happened to see him a few months later, and Brian delivered the perfect critique of the current system: “I asked if he’d tried getting another permanent place and he said no. He said, ‘I’m better on the street. That place [Step Up] was bad, man. I feel better out here.’” How miserable does housing have to be to make someone prefer the streets?
If LA was truly serious about reducing unsheltered homelessness, it would have developed balanced shelter-housing solutions long ago. It would assure people are properly assessed and assigned the services they need to live independently, (if they are able). By necessity, it would include a coercive component instead of employing “endless outreach”. Unquestionably paying a provider for dozens of outreach contacts (especially since “contact” is ill-defined among agencies), imposes no consequences on ineffective outreach providers. At some point, people who resist being moved off the street must be given a choice to accept shelter offers or move on. Of course, that option would be predicated on having a robust and properly-managed shelter system in place. It could also offer “safe camping” sites for those who don’t want to move into a structured shelter. But it must not allow interminable encampments. This is similar to the balanced approach used by the City of Redondo Beach and other South Bay cities as they work toward “functionally zero” homelessness. In this case, the city uses a “Homeless Court” system to connect people to the services they need, in return for having some criminal records expunged. I’ll write more about the South Bay’s program in a future column.
By relying on new housing, LA meets none of these needs. People are left on the streets for housing that may be years away. Or they are placed in poorly managed shelters that offer little solace from the streets. If they are lucky enough to be housed, the odds of their staying are stacked against them since services are sporadic at best. Those lost to the streets could end up being recycled through the system, driving up costs and decreasing housing program efficiency.
Given the inefficiency and lack of controls, the astronomical costs of housing should be no surprise, but it is not acceptable. More cost-effective solutions exist, but LA’s leaders refuse to consider them. What they do consider acceptable is to pay up to $2 million to place people like Brian in a sparse apartment, alone and abandoned by the system that should be helping him, counting the hours until he can return to the streets.
(Tim Campbell is a resident of Westchester who spent a career in the public service and managed a municipal performance audit program. He focuses on outcomes instead of process.)
