The Los Angeles Homeless Housing Bond

In few cities has homelessness been as contentious an issue as in Los Angeles. The residents of the city have long displayed a live-and-let-live attitude toward the homeless, and in one recent survey of Los Angeles County residents homelessness was cited as the second-most important problem facing the county. Yet, the city has often resorted to a strong-arm law enforcement approach to the street homeless; in 2009 two national advocacy groups anointed it the “meanest” city in the country for its criminalization of homelessness.

In November, Angelenos will have an opportunitunity to express which side of the street they are on, as a referendum authorizing the city to issue $1.2 billion in general obligation bonds to provide supported housing for the homeless will be on the ballot.

Los Angeles has by far the largest population of street homeless in the country.  According to the city’s estimates complying with HUD’s Point in Time enumeration, there were 17,687 unsheltered homeless people residing on the city’s streets in 2015. That compares to 3,200 in New York, 2,000 in Chicago and 500 in Washington DC.  Even allowing for errors in the count, the scale of the problem is severe.  With about 4.5 street homeless per 1,000 housed residents, Los Angeles is second only to San Francisco in terms of the intensity of the problem.

In 2002, under the direction of Police Chief William Bratton, the city began enforcing, especially in the “Skid Row” district near downtown, a 1968 ordinance that prohibited sleeping in or upon a street, sidewalk or public way.  The ACLU of Southern California filed suit on behalf of six homeless individuals, but a district court upheld the city’s sleeping ban. However, in Jones v. The City of Los Angeles the following year, a panel of Ninth Circuit judges reversed the district court’s ruling, finding that the plaintiff’s may have become homeless involuntarily and their choice to sleep on the street was “involuntary and inseparable from their status.”

In 2014, a federal appeals court also struck down a Los Angeles law prohibiting people from living in vehicles, and in 2016 the city was ordered to stop seizing and destroying the property of homeless people left unattended on the street.

In the Jones decision the appeals court ruled that the city could not enforce the prohibition on sleeping on public sidewalks as long as the number of homeless persons exceeded the number of available shelter beds.  At that time, and still, the city has nowhere near the number of shelter beds necessary to accommodate its homeless population, although the shelters that it does provide are rarely used to capacity.

In 2007, the City and the ACLU reached a settlement agreement stemming from the Jones suit, whereby the city pledged not to enforce the sleeping ban until at least 1,250 units of additional permanent supported housing are constructed for current or formerly chronic homeless persons. Although the city has supported construction of some excellent facilities, nearly 10 years later the City has not completed building all of the promised units and the exact count is a matter of dispute.

The City of Los Angeles contains about 4 million people and has an annual municipal budget of about $8.8 billion.  About 70 percent of its unrestricted revenues go toward police and fire protection. The City’s department of Housing and Community Investment (HCIDLA) enforces building codes and rent regulations, oversees social services and housing programs, and facilitates the development of affordable housing projects financed with state and federal funds. There is also a Los Angeles Homeless Services Authority (LAHSA), an independent joint authority of the city and county which coordinates the utilization of federal and local funding in providing services to homeless people in the city and county. Through HCIDLA, LAHSA and other public agencies the City budgeted about $139 million in FY 2016-17 for homeless prevention, services and housing.

The County of Los Angeles, which has over 10 million residents, has a budget almost three times the size of the City’s. About 87 percent of the County’s budget is devoted to social services, health services and public protection. The County’s homeless and housing program budget in FY 2016-17 is $98.7 million.

In August, 2015, the County’s Board of Supervisor’s launched a “Homeless Initiative” aimed at coming to grips with the burgeoning homeless problem.  In the following months various experts and stakeholders were convened, leading to the release of a strategy report that was approved by the Board of Supervisors on February 2, 2016. On the same day, the Los Angeles City Council approved a homeless plan prepared under the auspices of city administrative officer Miguel Santana. Both of the approved documents are thoughtful, comprehensive plans that emphasize a continuum of care and permanent supported housing.

The coordinated initiatives of the City and County governments were not enough, however, to convince Governor Jerry Brown to declare a state of emergency in response to the homeless problem, which they hoped would allow them to access up to $500 million in additional state funds usually reserved for disasters like earthquakes and fires. The Governor’s office has stated that a gubernatorial declaration of emergency is not appropriate to deal with this type of on-going problem.

The City’s approved homeless plan estimated implementation would cost $1.87 billion over 10 years, a figure which does not include “all supportive service costs.”  Homeless advocates, and many independent researchers, point out, however, that a comprehensive approach to homelessness could save public dollars. A 2016 report issued by the County’s Research and Evaluation Services Unit found that L.A. County spent $965 million through six agencies providing services to homeless individuals in FY2014-15. A report by the City’s administrative officer found that the City incurs expenses exceeding $100 million annually through agency services to and interactions with the homeless.

After considering several alternatives for funding its homeless plan, the Los Angeles City Council in June adopted a resolution putting a bond issue to finance homeless housing construction on the ballot for November’s election. The ballot measure, designated Proposition HHH, would authorize general obligation bonds totaling up to $1.2 billion to be issued. The City expects to sell the bonds in ten series over time ranging from about $30 million to $210 million per series. Principal and interest on the bonds would be paid through the City’s property tax levy. By FY 2026-27, by which time all of the bonds are expected to be issued and sold, property taxes are expected to be $.0185 per $100 in assessed valuation higher than they otherwise would be, meaning a home with an assessed valuation of $341,000 would pay about $33 in additional property taxes annually.

If approved, the bond proceeds can only be used to acquire and improve real property, and may not be used to finance services and operations of any housing built. Up to 20 percent of the proceeds can be used to finance affordable housing development for low-income individuals and families who are not currently homeless, as well as temporary shelter facilities, storage facilities, shower facilities, and associated infrastructure and landscaping. The City expects the bond proceeds to provide about one-third of the financing necessary to meet a goal of 10,000 new supported housing units for the homeless over the next 10 years.

The County is reported to be negotiating a memorandum of understanding whereby it would commit to funding the social services necessary to compliment the City’s development of supported homeless housing. After considering several new revenue options for financing the services, including an increased sales tax and a gross-receipts tax on marijuana sales, the County settled on an additional 0.5 percent tax on personal  incomes over $1 million, which would generate an estimated $243 million annually.

In 2012, California voters approved Proposition 30, a temporary income tax increase on single filers earning over $250,000 annually and on joint filers earning over $500,000 annually.  The top California State marginal income tax rate is now 12.3 percent; on the ballot in November is Proposition 55, which would extend the Proposition 30 tax rates through 2030.   Governor Brown, who led the effort for Proposition 30 (but is officially neutral on Proposition 55), is thought to be opposed to local government income taxes. The California legislature did not act on the County’s request for authorization to place the “millionaires tax” on the November ballot, but the County will apparently continue to try to gain such authorization.

Proposition HHH, the City’s bond program for homeless housing is, however, on the ballot in November.  Approval requires a two-thirds affirmative vote. In addition to the legion of advocacy, community, and labor groups that support it, the Los Angeles Area Chamber of Commerce, in alliance with the United Way of Greater Los Angeles, is putting significant resources into a pro-HHH campaign.  The Los Angeles Times has endorsed the measure and the Los Angeles County Board of Supervisors passed a resolution in support.

As with any significant municipal effort to address a vexing social problem, some valid misgivings about the homeless housing bond proposal have been raised. In particular, there is a concern about the City’s capacity to administer a housing development program of this scale, and that there is as yet no agreement in place for funding the supportive services. Nevertheless, municipal governments cannot develop the expertise to mitigate the problem of homelessness if they never try.  The voters of Los Angeles now have the opportunity to express directly whether they prefer to ameliorate the problem or live with the status quo, and whether they are willing to put their own tax money behind the effort.  It will be one of the most interesting, and perhaps consequential, local votes in November’s election.