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Commentary By Stephen Eide

One (Small) Cheer for Gavin Newsom on Homelessness

Economics Housing

This week, the California Legislative Analyst’s Office released a critical take on the portion of Gov. Gavin Newsom’s FY21 budget proposal addressing homelessness. The LAO, which has a reputation for straight shooting akin to that of the Congressional Budget Office, took Newsom to task for lacking a strategic vision on homelessness and for throwing good money after bad.

Surely the LAO speaks for most Californians. Public concern over homelessness is surging. Californians have shown great willingness to open up their wallets, as evidenced by several recent successful ballot initiatives, such as Measure HHH in 2016, Measure H in 2017, and Proposition C in 2018. Frustratingly, though, the homelessness crisis never seems to abate, despite the fact that Gov. Newsom may have more experience with homelessness than any public official in the nation. In 2004, as mayor of San Francisco, he rolled out a ten-year plan to “abolish chronic homelessness.” Like many other such efforts, however, Newsom’s plan did not succeed. Far from having abolished chronic homelessness, San Francisco is now host to about 3,030 “Chronically Homeless Persons.”

But the LAO report may make too much of coming up with a grand strategy, when small, useful measures are often the most effective ones. In fact, there is a good idea buried in Gov. Newsom’s budget for homeless services. He proposed to make available new state funds for board and care homes. These are group homes for mentally ill adults, many of whom are at risk of homelessness. Across the state, amidst a historic surge in homelessness, California state government has somehow allowed dozens of board and care homes to close. Los Angeles County is estimated to have lost 16 percent of its board and care facilities in the last three years alone. A leading cause of these closures has been inadequate state reimbursement rates. Newsom’s “California Access to Housing and Services” fund would dedicate $750 million to a narrow range of housing-for-the-homeless priorities, one of which is to “stabilize” the board and care system.

Board and care homes are no one’s beau ideal of mental health housing—many critics of deinstitutionalization, such as Fuller Torrey, have cited to examples of exploitation and abuse by some board and care operators as evidence of government betrayal of the mentally ill. Even in state-licensed, responsible board and cares, the service level is modest. Homelessness advocates scorn them as quasi-institutional.

But it’s much more sensible to house low-income populations in old housing than to build new housing for them, especially given the punishing economics of California’s real estate market. Permanent supportive housing is expensive to build and projects take ages to get off the ground. An October 2019 audit of Measure HHH by the Los Angeles controller found that, three years on, not one of the expected 10,000 new permanent supportive housing units has opened. Moreover, research has found that communities need to build 10 permanent supportive housing units to cut its homeless population by one, and the reduction is temporary. Just like no one ever thought they’d miss the old skid row SRO hotels, whose destruction led directly to the “modern” homelessness crisis, communities will miss their board and care facilities when they’re gone.

To the extent that Gov. Newsom’s budget helps arrest the decline of board and care facilities in California, it represents a modest step in the right direction. To the extent it prompts a re-evaluation of the value of shabby housing for addressing homelessness, it represents a major step in the right direction.

Stephen Eide is a senior fellow at the Manhattan Institute and a City Journal contributing editor.

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