By Wayne Winegarden & Kerry Jackson
Project Homekey, California’s answer to its homelessness troubles, came with great promises. But like many government plans before it, it’s fallen short, and isn’t likely to recover.
California’s homeless population exploded from about 114,000 in 2014 to more than 161,000 in 2020, the most recent year. Over the same period, homelessness in the rest of the U.S. fell from approximately 508,000 to 419,000. Somehow this happened as California’s economy expanded much faster than the economies of all other states — 28.8 percent growth vs. 17.6 percent.
When COVID-19 arrived in 2020, California introduced Project Roomkey, a program to house the homeless mostly in hotel and motel rooms. The governor’s office said Roomkey was needed to help flatten the curve of viral infections and “preserve hospital capacity.”
Soon thereafter, Project Homekey was born. Through it, state and federal dollars would be used to buy and then renovate hotels and motels, which would then become permanent homeless housing. Gov. Gavin Newsom promised that Homekey would receive “unprecedented” state financial support and would be “a once-in-a-generation opportunity to massively expand housing for the homeless in California.”
So far, though, it has not met expectations.
Project Homekey is based on the “Housing First” approach to reducing homelessness. Experience shows us that this approach, in effect since 2016, is more of a cover-up than a solution. It doesn’t treat the root causes of homelessness, which for many are addiction or mental illness. It simply institutionalizes the homeless.
Worse, Housing First also attracts outsiders who “are drawn to the promise of a permanent and usually rent-free room,” says the Cicero Institute.
“We’ve run the Housing First experiment, and it didn’t work,” says Cicero’s Judge Glock. Though more than 200,000 new permanent supportive housing units for the homeless have been built since the federal program was launched nearly a decade ago, “we’ve seen street homelessness increase by almost a fourth” (primarily in California, we might add, as our data above clearly indicate).
Project Homekey is prohibitively expensive, so much so in Los Angeles that it is unsustainable. The county paid $275,000 per unit for a 20-room hotel, and $330,000 per unit for 39 rooms in two Lancaster motels. Comparatively, a Los Angeles-based organization that provides housing for AIDS patients paid an average of $102,000 per unit for more than 1,350 hotels and motel rooms.
San Francisco has been granted tens of millions of dollars for Homekey projects but has ineffectively deployed the resources. It dedicated $1.1 billion in fiscal 2021–22 to homelessness, a sum equal to nearly 80 percent of the entire budget of Jacksonville, Florida, a city slightly larger than San Francisco. “But despite this enormous spending,” says UCLA economics professor Lee Ohanian, “homelessness and the attendant problems of drug abuse, crime, public health issues, and an overall deterioration in the quality of life, spiral further downwards each year” in the city.
How can this be? There’s a disturbing lack of accountability, which makes evaluating program spending nearly impossible. Some programs are so poorly managed that homeless “prefer living on the streets to the facilities that are being provided to them at enormously inflated costs to taxpayers,” Ohanian says.
In his 2022 State of the State address, Newsom credited Homekey with moving a “record 58,000 people off the streets since the beginning of the pandemic.” Yet “the actual number of people out of the streets and in housing via the governor’s signature Project Homekey thus far is about 8,000,” a CalMatters fact-check found in March.
Policymakers must realize that doing things the way they always have — herding the homeless into Housing First programs, and equating spending with success — hasn’t worked and never will. They need to focus resources on mental health and addiction, implement proven private-sector innovations, enact policies that will fuel a housing boom, and be open to new thinking. If not, we’ll still be talking about California’s homelessness challenges a decade from now.