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UC Berkeley Blog: Expand State-Funded Housing Opportunities

Just five years ago, an overwhelming majority of funding to address homelessness in California came from the federal government, with little state involvement. The growing number of homeless people – the majority of them homeless – has been left to local jurisdictions to deal with, with little attention from the legislature or state agencies.

That tide has turned, as evidenced by the state’s commitment to unprecedented levels of funding to address homelessness as well as its willingness to pilot innovative new programs across state agencies. Our latest research paper, California’s Homekey Program: Unlocking Housing Opportunities for People Experiencing Homelessness, focuses on lessons learned from Homekey, one of the most important programs through which the state has scaled up its investments in the fight against homelessness. -shelter. Sometimes confused with Project Roomkey — which rented rooms in hotels for temporary shelter during the pandemic — Homekey seeks to address homelessness by dramatically increasing the supply of permanent affordable housing across the state.

Figure 1: California State Funding Dedicated to Addressing Homelessness

The program has already had a significant impact. Developed amid the COVID-19 pandemic, Homekey provides local public entities with large capital grants that can be used to purchase existing buildings and convert them into housing for those experiencing homelessness or at risk. In the first round of funding, often called Homekey 1.0, the state awarded about $800 million in grants to 94 projects, the majority involving the purchase of hotels and motels that had been hit hard by the pandemic. In total, Homekey 1.0 added 6,000 rooms and/or units to the state’s short-term and permanent housing supply in less than six months, at an average initial cost of $238,000 per unit. That alone is a significant achievement, especially when compared to the time and cost it typically takes to build affordable housing. Credit should also be given to the Herculean efforts of staff across the state – at the California Department of Housing and Community Development, city and county agencies and departments, and nonprofit and community organizations – who have succeeded during the pandemic without an existing road map for how to do this job.

As the state prepares to continue investing in Homekey, with $1.45 billion authorized for this fiscal year, important lessons can be learned from the program’s first cycle. We find that Homekey’s grant structure, coupled with the flexibility given to jurisdictions in the use of funds, has allowed them to move quickly to meet local needs. Unlike how affordable housing is typically financed, Homekey has also reduced the need to pull together multiple sources of financing (which adds time and cost) to make projects feasible. Homekey’s focus on speed — facilitated by streamlining regulations — has made all the difference in how quickly localities have been able to house people. We also see that Homekey 1.0 has generated new partnerships and strengthened old ones and, in some places, helped improve coordination between city and county agencies.

But more needs to be done to ensure that the program has the desired long-term impact. Despite all its strengths, Homekey remains embedded in an underfunded and fragmented affordable housing system. This means that many properties do not have sufficient financing to support long-term operations – this remains the biggest challenge and concern for Homekey grantees. Some buildings also need a lot more work to convert into permanent housing, but Homekey’s grants weren’t large enough to cover the necessary renovations. Obtaining additional funds for the conversion of these sites is difficult and can introduce new regulatory barriers and requirements. Resources to support resident wellbeing – including case management, health care, and mental health and/or addictions counseling – also remain well below what is needed.

None of these challenges are easily solved, and the history of affordable housing policy is filled with examples of ambitious programs that have failed due to a lack of continued commitment to funding, implementation and systems reform. However, the state has shown through the Homekey program that it can quickly initiate ambitious new programs that address the urgency of California’s homelessness crisis. It must continue to display this same ambition and ensure that the long-term implementation of Homekey lives up to its promise.

Read the full report here.


This press release was produced by the UC Berkeley blog. The opinions expressed here are those of the author.