The LA Controller website describes Proposition HHH as such:
Los Angeles voters approved Proposition HHH in November 2016 by an overwhelming margin, authorizing City officials to issue up to $1.2 billion in general obligation bonds to partially subsidize the development of up to 10,000 supportive housing units for individuals and families experiencing homelessness. HHH funds can also be used to support new affordable housing units, temporary shelters and service facilities.
The audit didn't exactly have good news for voters.
LAist wrote this about the current unit forecast:
Now, Galperin's audit says we're likely to get 7,640 units, even though nearly all of the bond money has been allocated. And that's only if all the projects in the pipeline are actually completed. Also, only 5,873 of the 7,640 expected units will be supportive housing. The rest will be affordable housing and manager units.
Though LAist seems to emphasize that only 5,873 units are specifically for "supportive house," one should note that Proposition HHH language does allow for affordable housing. Of course, one does have to wonder if current forecasts indicate that only about 6,000 individuals that are homeless will be helped out of the current estimate of 31,000.
Also, I really don't think anyone should find it shocking that estimates would come in short of 10,000 -- though perhaps the 23.5% miss is pretty wide off the mark.
Yahoo wrote this about what is driving the cost structure up:
At an average cost of $531,373 per unit – with many apartments costing more than $600,000 each – building costs of many of the homeless units will exceed the median sale price of a market-rate condominium. In the city of Los Angeles, the median price for a condo is $546,000, and a single-family home in Los Angeles County has a median price of $627,690, the study states.
Prices rose dramatically because of higher-than-expected costs for items other than actual construction, such as consultants and financing. Those items comprise up to 40% of the cost of a project, the study found. By contrast, land acquisition costs averaged only 11% of the total costs.
. . . .Part of the problem with costs is that some of the projects are being built in some of the most-expensive areas of the city. More apartments could be built at a lower cost, the study found, if they were resituated in lower-cost, outlying areas.
I suspect that homeless are like the rest of us -- they'd rather be homeless in as nice of an area as possible. Obviously, the homeless wouldn't be allowed in Beverly Hills, but living in DTLA is probably a better location than other spots. I suspect that if housing was shifted to lower cost locations there might be issues with finding tenants for the units. This is just a guess on my part.
The LA Times wrote this about projects that haven't started yet:
. . . If followed, Galperin’s proposed reevaluation could affect up to 95 homeless housing projects that have received preliminary approval, but have not reached the next stage of obtaining a development agreement with the city. The audit acknowledged that making significant changes at those stages might not be feasible, but said the city should try.
But the city’s Housing and Community Investment Department released a statement saying that changing the terms of projects with conditional approval would be a poor business practice, “further delaying the pre-development process and the start of construction for the affected projects, creating new funding gaps for those projects, and reducing the time value of money in an inflationary construction cost environment.” It would also create “a chilling effect on the development industry and damage the city’s reputation,” the department said.
I would say that the Housing and Community Investment Department has a point. On the other hand, the development industry is still going to get their money so how upset could they possibly get (as long as re-bids aren't required).
Los Angeles Magazine wrote about Proposition HHH back in March.
A Los Angeles magazine analysis found that the first 25 projects funded by HHH have been delayed by an average of 203 days past their estimated start date: the shortest holdup was 28 days; the longest, 424.
. . . .At the rate the city is spending HHH money—and it has already committed about half of the $1.2 billion bond fund—officials project the total amount of units built could be fewer than 6,000. The population now living on the streets and in the shelters of the city is greater than 31,000, according to the Los Angeles Times. Homelessness declined 3 percent in the city last year.
I did a semi-detail look at the audit report. Unfortunately, I had to manually type numbers into Excel as it didn't appear like there was an Excel version of the data available. My numbers aren't going to be perfect due to this process, but hopefully they're close.
First, the various articles write about the fact that we're nearly 3 years after voters approved the proposition and yet no housing has opened up for the homeless. The goal was that over 10 years, 10,000 units would be built. Based on this, it looks like things aren't moving very well, which LA Mag points out. On the other hand, if you look at the data and the revised target of 7,640, the goal is to wrap this up by 2023. That would be over a 7 years timeframe. There are 114 buildings that are expected to be built. Here's the annual expected breakout:
2019: 2
2020: 18
2021: 69
2022: 23
2023: 2
The 114 buildings comes out to about $1 billion of Proposition HHH funding. (The total cost is over $30 billion and is being funded with money beyond HHH I didn't attempt to determine where the remaining funds are coming from). I'm not sure what is happening to the remaining $200 million. Perhaps it is going to various over-head costs. Or maybe some additional units will still be built.
LA Mag mentions that the average delay in starting construction is 203 days. Since the final project is expected to be finished in Oct 2023, one could reasonably assume that these targets might shift into 2024, but by only one building. It might also be reasonable to assume that the big bump in completed buildings for 2021 will actually shift to 2022.
Once construction starts, it looks like the expectation is that the building will be completed within 19 months.
Second. The LA Times wrote that Galperin believes that there should be a re-evaluation of projects so that the goal of 10,000 can be reached. Of course, this would probably shift projects out significantly as you're basically starting from scratch. So the 10 year target might not be reached, but costs might drop -- though there is the issue of inflation as mentioned by Housing and Community Investment Department . The LA Times mentions that 95 units could be impacted by this suggestion. Here's my break-out of various categories. I don't know how this 95 units is reached though obviously my numbers may have errors:
Under Construction: 15 -- these can't be impacted by this suggestion
Loan closed: 2
Pre-Development: 62
Under Review: 35
(Note: I don't know if the process map goes from under review to pre-development to loan closed to under construction.)
Third, call me negative, but my bet is that Los Angeles Magazine's projection of fewer than 6,000 units is a possibility. If final costs increase 25% above Galperin's initial estimates due to various delays, that would get you to around 6,000 units.
Here's the argument for Proposition HHH back in 2016 that should now be reviewed (LA Times):
:
HHH would spend too much money on homeless people. Then consider this: Not housing homeless people costs taxpayers even more — in police work, jail space, emergency room visits, and services at libraries, parks and other places where homeless people congregate. Last year, the city spent $100 million interacting with homeless people. County services for homeless people cost almost $1 billion more. Here’s the reality: If we decide that it’s unacceptable to have people literally living on the streets, we can’t simply arrest them or coerce them into shelters. The necessary next step is to provide housing and services. It’s not cheap, but neither is the alternative.
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