Los Angeles passed a $1.2B bond measure in 2016 to address homelessness

Projected per-unit cost of apartments for homeless ($700K) is greater than the county's median sales price for a home ($618K)

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LOS ANGELES — As this city tries to cope with thousands of people living on the streets, a few homeless and low-income senior citizens will be luckier than most next year.

They will receive keys to one of 72 new apartments,complete with a fitness center, in the heart of trendy Koreatown, built at a projected cost of $690,692 for each unit, according to the city controller's office. Two additional projects in the pre-approval phase are expected to top $700,000 per unit in total costs.

"This kind of cost is utterly unacceptable," Controller Ron Galperin said. "I believe we need a fundamental course correction."

Despite a booming national economy, homeless people have set up tents in makeshift encampments in major cities on the West Coast amid a housing shortage that has driven up rents to unaffordable levels.

In Los Angeles, the tents are spread out on sidewalks across the city, the homeless emboldened by a court ruling that allows them to live outside if no shelter space is available. Making matters worse, many live in filthy, third-world conditions without basic necessities like toilets and sinks. It makes them and those who venture near susceptible to disease.

Cities continue to grapple over difficult housing decisions about how to solve the homeless crisis. Should homeless people be entitled to the same level of permanent housing as regular renters or homebuyers? Should the units be distributed equally throughout the city, even in the fancier districts, or clustered in lower-income neighborhoods where land costs are lower? Are there lower-cost alternatives?

"There's nowhere that's doing a great job," said Megan Hustings, managing director of the National Coalition for the Homeless in Washington, D.C. "Across the board, we have not been investing in affordable, low-cost housing."

The high price for toilets

With the backing of Mayor Eric Garcetti, Los Angeles voters passed a $1.2-billion bond measure in 2016 with the hope of seeing up to 10,000 permanent housing units. It would be enough to make a significant dent in the 27,221 people deemed living "unsheltered" in the most recent homeless count. Besides tents, they sleep in cars or out in the open.

The result has been a crash program to construct new apartments meant as permanent housing for homeless people across the city at a median cost that Galperin pegs at $520,000 each. He said by taking a costly route, at the current rate only somewhat more than 7,000 units will be constructed, far short of the 10,000 goal and leaving thousands on the street who otherwise might be able to be housed if there were a lower-cost alternative.

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The bond issue provides up to about $150,000 a unit for permanent housing for the homeless with the rest coming from a variety of sources. In addition, the city is developing shorter-term homeless shelters, often dormitory-style housing or units with shared bathrooms or kitchens.

Being forced by court order to let people camp out on the streets is no bargain, either.

"It's still cheaper to put a person into a home than leave them on the streets," said Joel John Roberts, CEO of People Assisting the Homeless or PATH.

There's the cost of police, ambulances and health care at emergency rooms. And under pressure to improve sanitation, the city is putting additional toilets near encampments: The average annual cost per toilet under the city's Mobile Pit Stop program is $173,930 for the permanent ones and $320,325 for the temporary portable ones.

The high cost for toilets reflects not only the cost of servicing them, but the need to provide monitors to make sure they remain clean and are not used for nefarious purposes. San Francisco has operated a similar system for five years at 25 locations, at an average cost about $200,000 each, and is expanding it.

'The immediacy of this crisis'

The soaring cost of permanent housing isn't due to extravagance, city officials say.

"Mayor Garcetti is leveraging every available dollar – as efficiently as possible – to confront our region's homelessness and affordability crisis," his spokesman, Alex Comisar, said in a statement. "Angelenos in need are already benefiting from high quality, long-lasting supportive housing that will serve our city for generations to come.

"Mayor Garcetti recognizes the immediacy of this crisis, and is working with a diverse coalition of partners to find innovative solutions that can be scaled up quickly."

High costs are due to the realities of building in a city like Los Angeles, where land is more costly than ever and there are shortages of construction workers and materials amid a building boom in high-end apartments and condos in the rest of the city, officials say. The permanent units are meant to last at least 55 years, which is why construction standards have to be as high as anywhere else.

"Obviously, the city would very much like to see projects produced at a lower price point," said Rushmore Cervantes, general manager of the Los Angeles Housing and Community Investment Department, which is leading the charge on homeless housing construction. But many of those costs, he adds, are outside the city's control. And while it provides funding for some conventional projects, it is also looking for innovative approaches.

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As for units costing almost $700,000, Cervantes said the price tag includes common areas and spaces aimed at helping the homeless make the transition to housing. As part of the transition, there will be help for residents to cope with addictions or mental illness. The median sales price of a home in Los Angeles County was $618,000 in June, tracker CoreLogic reports.

"We include the wrap-around services to address their needs and make them successful," Cervantes said.

Is the city's program sustainable?

Those camped out on the streets are mixed in their opinions about whether it's better to wait out the prospect of having their own apartments, kitchen and bathroom included, rather than getting into something lesser sooner.

Billy Lindsey, 50, who lives in a tent under a blue tarp on Seventh Street in the city's Skid Row area, eyed the homeless apartment building under construction across the street.

"You got a place to live – water, shower, all the things you don't have here," he said. "They need to be building more like this."

Cynthia Angulo, 54, living near the opposite corner, wasn't sounding so choosy.

"I settle for what I can get," she said. "I won't be picky. There's a lot of predators out here. It's getting worse."

Critics, however, wonder if more people could be housed by less expensive means. The city's program is "not sustainable," said Mark Ryavec, president of the Venice Stakeholders Association, which has been raising questions about some homeless projects slated for the hip seaside enclave that's home to some of the city's priciest real estate.

He calls the pricey apartments a product of the "homeless industrial complex," in which "they are buying Mercedes-Benzes and Cadillacs when they should be buying Fiat 500s" when it comes to providing homeless housing.

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The Union Rescue Mission, one of the city's oldest religious-based facilities in downtown Los Angeles serving homeless people, is trying the cheaper approach. It is building a large fabric structure, complete with heating, air conditioning and access to clean restrooms, that's expected to last for decades and will provide beds for 120 women who are currently sleeping on air mattresses in the chapel, said its CEO, the Rev. Andy Bales.

He said the facility will be built at a fraction of what the city is spending to build apartment buildings. He thinks the city is taking the wrong approach.

"I am not only shaking my head at the lack of progress over the last three years, but I am shaking my head over how much money has been spent and how little there is to show for it," he said.