Los Angeles Homeless Issue: Proposition HHH 2020 Audit

Los Angeles recently released a new Controller audit related to Proposition HHH. The proposition is meant to address homelessness in the city. The proposition allowed the city to issue $1.2 billion in general obligation bonds.

Here's what the LA Times (Sep 9) reported:

The average cost of building a single unit of housing for the homeless in Los Angeles has risen to $531,000, according to an audit from the city controller, who recommends that L.A. rehab motels and open dormitory-style buildings to save money and get people off the streets quickly.

Controller Ron Galperin, in a report due Wednesday, also cited two projects whose costs soared to nearly $750,0000 per unit and assailed delays that he said have driven city-funded homeless construction expenses up from initial projections of $350,000 a unit.

. . . Ann Sewill, general manager of the city’s Housing and Community Development Department, said savings from motel conversions, while appealing, are unproved.

“Everyone thinks motels are lower-cost, but there haven’t been that many models going through,” Sewill said. She said the city has opened or developed 30 bridge housing facilities, shelters designed to move homeless people into permanent housing faster. But the permanent units aren’t there, and Proposition HHH is the only source of money to expand the supply, she said. 

The $531,000 average cost is actually nothing new. This was already reported as the average cost in 2019 as can be seen via this post I wrote. What I did want to dig into were some comparisons that can be made between the 2019 Audit and this current audit when it comes to specific projects.

There are three projects that have been completed: 88th and Vermont, Casa del Sol and PATH Metro Villas II. Here are some cost comparisons between the current audit and the 2019 audit.

88th and Vermont

2020 Audit: $549,801 per unit

2019 Audit: $549,501

Casa del Sol

2020 Audit: $498,309

2019 Audit: $495,206

PATH Metro Villas II

2020 Audit: $498,309

2019 Audit: $451,236

The first two came in relatively in-line with expectations. Just a tad bit higher. The PATH project really came in over-budget. That project had 122 units so that resulted in additional costs of $5.7M or just over 10% of what was set last year. 

(I did happen to notice that the 2020 per unit costs for Casa del Sol and PATH are exactly the same. I had to do a double check on those figures.)

I was also interested in checking how specific projects were progressing by looking at project construction dates. In the 2019 Audit they had an Appendix that listed out each project. It was really clean and easy to look through. Unfortunately, I couldn't find a similar Appendix for the 2020 Audit. Instead they had a map, which requires hovering over a dot. Anyways, I did a couple checks.

Sun King Apartments:

2020 Audit: April 15, 2021 construction date

2019 Audit: May 18, 2020

Thatcher Yard:

2020 Audit: July 8, 2021

2019 Audit: Mar 1, 2021

Those two projects were picked at random and both showed a delay. My first thought was that these delays were perhaps COVID-19 related -- all projects just got pushed. The report has this quote that implies that this is a reasonable assumption: COVID-19’s impact on these already lengthy timelines is not clear, but will almost certainly extend them, and it is possible that some projects in the pipeline today may never come to fruition. 

Interesting part of that quote is that some of these projects may just not happen due to COVID-19. I didn't go deep enough into the report to understand why projects might drop off due to the pandemic. I'm just randomly thinking that delays may cause cost issues.

Finally, I have to admit that I find Ann Sewill's comment that motel conversions aren't cheaper than starting from scratch a bit strange. Really? Actually, I'd think with COVID-19 causing less tourist to come through Los Angeles that the city might be able to buy some properties on the cheap.