Los Angeles is acting on what homeless housing advocates have been demanding for years: Build housing for the homeless. They believe, consistent with federal and state homelessness policy, that the cure to homelessness is publicly provided housing.
On March 7th, Los Angeles voters passed a quarter cent sales tax hike to fund housing for the homeless. The tax increase is expected to generate $355 million a year for 10 years.
The sales tax hike followed a vote last November when voters approved a $1.2-billion bond measure to build housing for the chronically homeless. Add to those two measures the $2 billion in state funding passed by Senate President Pro Tem Kevin de Leon, who represents Downtown L.A., to build housing for the homeless that are seriously mentally ill.
It’s hard to imagine a city more flush in funding for housing for the homeless. The bond measure alone is intended to create 1,000 affordable apartments per year for ten years.
It seems logical. Place a homeless person in a home and they are no longer homeless. The trouble is that a lot of people want a home in Los Angeles. That is part of the reason that it’s one of the country’s worst places to afford a home or an apartment. According to the California Association of Realtors, you have to earn 172 percent of the median income to buy a median house in Los Angeles.
Market forces and politics could doom Los Angeles’ experiment. How will Los Angeles manage to provide free housing to people with no incomes and significant needs at a massive scale without distorting markets, impacting residents, and enraging voters?
It’s already happening in some parts of Los Angeles. Businesses, residents, and developers are clashing in Venice where the few locations available for any kind of development are causing tensions. Los Angeles may experience on a regional scale these types of conflicts as gentrification, a surge of new high-tech businesses, and an ever-increasing homeless population all try to occupy the same space.
Here is another challenge Los Angeles must overcome: Federal housing transfers. According to Governing.com, about 40 percent of all federal transfers to local governments are expected to shrink. In addition, congressional tax reforms may jeopardize tax-exempt housing bonds as programs are eliminated or cut, adding costs to municipal building. California’s affordable housing tax-credit market is already drying up, making affordable housing projects more expensive.
As mortgage rates increase, housing inventories fall, rental affordability decrease, and rental housing units for low-income earners disappear, publicly provided housing for the homeless could become extremely unpopular. When it becomes apparent that housing for the homeless is displacing market rate housing, voters struggling to find a place of their own might rethink their votes. How will they feel to know that the homeless are moving into new $500,000 rent-free units?
Then there is the Not-In-My-Backyard (NIMBY) issue. NIMBYs always claim that building homes for the homeless will draw more homeless – and why not? Once word gets out that Los Angeles’ is building thousands of free housing units for the homeless, it is sure to draw those who can afford a bus ticket. NIMBY-ism has even been cited in the California Legislative Analyst’s office as the reason that community plans are so difficult to implement – and the influx of thousands of homeless units into neighborhoods every year is sure to not go quietly.
California has a history of being the land of good intentions gone awry: Billion dollar bullet trains, state-wide drought for the benefit of a minnow, making beach vacations more affordable. Unfortunately, it seems Los Angeles’ experiment on the mass provision of housing for the homelessness may be the latest example.