Newsom Homeless Encampment Plan an Overly Costly Solution at Best

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On November 27th, Governor Newsom announced a $300 million commitment to move more homeless Californians from homeless encampments into housing. The Governor’s focus on removing encampments is right, but unfortunately his approach will be an overly costly solution at best.

More likely, the $300 million that the Governor wants to spend will barely make a dent in the state’s worst in the country homeless problem. The reason: this $300 million is still adhering to the costly yet ineffective Housing First approach.

According to the Notice of Funding Availability, which defines how the money can be spent, these “funds may only be used for proposals that connect people experiencing homelessness in encampments to interim shelter with clear pathways to permanent housing or place people directly into permanent housing (emphasis added). These restrictions create two problems that will undermine the benefits from all this spending.

First, Housing First rarely follows up with the necessary support services that address the root causes driving a person’s homelessness. The result, as we have seen time and time again in California, is that most of the people will simply shuffle through the homeless bureaucracy but ultimately end up back on the streets.

Second, the focus on permanent housing (or a direct path to permanent housing) eliminates innovative and cost-effective solutions that are both cheaper and create better platforms for addressing the root causes of someone’s homelessness. One example of these innovative programs that we highlighted here are temporary housing communities such as Dignity Moves.

Temporary housing offers tremendous cost benefits compared to the permanent housing solutions the Governor prefers. Based on their literature, Dignity Moves can house and provide the requisite support services that homeless people require for around $50,000 per person. This indicates that the $300 million investment that the Governor just announced could move 6,000 people out of homeless encampments and into a more stable housing situation. Plus, since Dignity Moves helps connect their residents with the needed support services, these residents are now on the path toward sustainable housing.

At the other extreme, building a permanent housing unit in LA (the center of the homelessness crisis in California) cost $600,000 on average last year. This means the Governor’s $300 million investment would only move 500 people out of homeless encampments – one tenth the number that could be helped if those funds focused on moving people into temporary housing.

It is the lack of innovative thinking in the Governor’s proposal that is disconcerting and will likely cause the money to be wasted. In other words, the Newsom’s announcement is simply another lost opportunity.

Dr. Wayne Winegarden is a senior fellow in business and economics at the Pacific Research Institute, and co-author of the book on California’s homeless crisis No Way Home (Encounter Books).

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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