Can the Bay Area End Homelessness?

A new report quantifies the problem and suggests it isn’t intractable, but philosophies differ when it comes to the role of temporary housing.

These are heady times in the homelessness policy world. California’s homelessness problem is so severe, and its budget so flush, that there is an unprecedented amount of political will and financial capacity to actually address it. 

What’s more, there’s a growing consensus about at least part of what needs to be done: State and city officials, as well as advocates for the homeless and business leaders, agree government should move quickly to buy old hotels and apartment buildings and transform them into housing for the homeless. By this point, just about everyone in this space acknowledges that building new homes for people transitioning out of homelessness is too expensive and time consuming to meet the scale of the need. 

However, there remain major disagreements among policymakers and interest groups about the role of shelter — as opposed to permanent housing — as well as how to approach outdoor sleeping. It’s an awkward political debate that is simultaneously abstract and deeply human. By its nature, the debate reduces the least fortunate people in society to pawns moving from square to square on a policy chessboard. But with a problem this big and this expensive, leaders will need to make decisions that profoundly affect people’s lives, for good or ill, and the public will need to hold them accountable. 

As city and state leaders begin allocating billions of new dollars to homelessness, a recent report helps illustrate the big picture, imagining what it could take to functionally end homelessness in the Bay Area. The report, produced by the think tank arm of the Bay Area Council, is short on details, and includes proposals that some activists disagree with. Still, it’s instructive for understanding the scale of the Bay Area’s homelessness problem, and the options available to address it.

The Report 

Being a business group, the BAC quickly gets down to cold hard numbers, estimating how much it would cost to functionally end homelessness in the nine-county Bay Area. The answer? A cool $9.3 billion in one-time capital costs and another $2.5 billion annually on shelters and services, housing subsidies and operations, and other homelessness prevention measures. (The BAC is no stranger to these kinds of proposals: the group is working with BART to promote an epic plan to transform rail in Northern California.)

The report envisions massively scaling up many of the homeless housing options that currently exist, with an emphasis on the most cost-effective ones. That includes about 22,000 new shelter beds (also known as interim housing) and 56,000 permanent housing units. Instead of using traditional, congregate shelters that fell out of favor during the pandemic and that have never been particularly popular among homeless people, the report envisions filling this need with cabin communities, like the ones that recently have sprung up in Oakland. Those can be constructed for about $11,000 apiece, not including land, and provide a level of privacy and comfort that most shelters do not. 

The report also calls for changing course on permanent housing, emphasizing the acquisition and rehabilitation of existing buildings over new construction. About two thirds of the permanent housing units proposed should be in existing buildings, following in the wake of California’s innovative Project Homekey, which saw the state purchase 6,000 hotel rooms and apartments for homeless people over the past year. The remaining third of the proposed units would be built using modular construction — prefabricated apartments stacked on top of each other — which is a cheaper approach than traditional construction methods. 

Other recommendations from the report include fully funding Section 8 housing vouchers at the federal level. Ensuring every eligible household gets a rent subsidy, instead of the approximately 25 percent that currently do, would be the “biggest immediate-term way for the federal government to reduce homelessness,” according to the report. It also calls for rethinking California’s affordable housing tax credits for developers so that state-subsidized units actually go to people in the lowest income bracket. Over the past decade, only 10 percent of the state’s LIHTC tax credits have funded homes for people making 0-30 percent of the local median income, with the vast majority of credits going to homes for people closer to the middle of the income distribution. 

Notably, the BAC report does not include any specific mention of eviction moratoria, like the ones that San Francisco and California have continuously extended for the duration of the pandemic. (The city’s stay on evictions has been extended through December; the state’s will expire at the end of June unless the state legislature takes action). However, it does endorse the framework laid out in another report from this year by the homelessness advocacy group All Home, which explicitly supports extending pandemic-era eviction freezes and other eviction protections. 

The Shelter Debate

There’s a lot in the report that homelessness advocates make common cause with, especially the need to massively invest in permanent housing, and to do so primarily by purchasing existing buildings. The main area of disagreement — in this report and in California’s homelessness policy debate more broadly — concerns the role of shelters. 

Adrian Covert, lead author of the BAC report, argues that the tent encampments that have become a common site across the region are in part the result of a homelessness strategy that doesn’t focus enough on temporary shelter. “There has been a trend across the United States over at least the past decade to focus resources on permanent housing. And for good reason: a sheltered homeless person is still a homeless person, whereas a housed homeless person is not,” Covert says. “However, given the realities and the costs of building in the Bay Area, we’ve been unable to scale up permanent housing faster than our expensive housing market is creating new homeless people.”

Covert points out that the Bay Area provides less shelter per capita to its homeless population than any other major metro area in the United States. Over the past decade, the Bay Area has increased its permanent housing stock for the homeless by 91 percent, but decreased its shelter capacity by one percent. That’s been great for the people who get housing placements, but it means those still waiting are living on the streets, rather than in shelters, Covert says. 

Tomiquia Moss, chief executive of All Home, and a contributor to the BAC report, calls for a focus on the “entire continuum of housing options.” That’s the basis of All Home’s 1-2-4 framework: For every one unit of interim housing, you need two units of permanent housing, and four homelessness prevention interventions. “We want to shift that paradigm to say, if we want to tackle homelessness at scale, we must invest in interim housing, because we need to bring people off the streets as quickly as possible to be safe and to heal, and we must also invest in permanent exits.” 

Moss consciously uses the term “interim housing” instead of shelter. “We don’t mean congregate shelters. I ran a shelter. I know how challenging that can be for people who are coming inside,” Moss says. “We mean tiny homes, we mean hotels, we mean subsidies, we mean shared housing.” 

But Moss draws a line there: “Under no circumstances is living on our streets or encampments a better option,” adding, “encampments are, frankly, unsafe for everybody in the community, especially the people who live in them.” 

Jennifer Friedenbach, executive director of the San Francisco-based Coalition on Homelessness, agrees on the need to have a “diversity of housing strategies,” but she’s concerned about the increased emphasis on shelters in the BAC and All Home reports. “If you look at the communities that have been able to move the dial on homelessness, those are the communities that have right-sized their shelter systems,” she says. Shelter systems should be “relatively small,” with “primary investments on either side of that. So you do huge investments in prevention to keep people in their homes, and then huge investments into housing.”

An overemphasis on shelters traps people there, Friedenbach says, because it sucks resources away from housing. “It’s been a huge mistake in many cities.” 

Sara Shortt, director of public policy for HomeRise, which manages 700 units for formerly homeless San Franciscans, agrees. “The whole approach for decades was to have people go to shelters first… then go to transitional housing, be in programs, pass through hoops and meet criteria and prove themselves before they were given permanent housing. And that was proven to be unsuccessful.”

Shortt also thinks the BAC is likely responding to complaints by CEOs and the tourism industry about the visual impact of homeless people on the streets. “It’s no surprise to see that they might advocate for more interim solutions because their biggest concern is going to be visible homelessness.”

Friedenbach adds that policies relating to homelessness should be centered on the needs and wants of unhoused people. “If you think that sitting in an armchair, you know better than what unhoused people know for themselves, that doesn’t work.” 

Covert has rebuttals to some of these arguments. Despite shelter mandates that give New York City, Boston, and Washington, D.C. huge shelter systems, these cities also have higher per capita stocks of permanent housing for the homeless than the Bay Area. (San Francisco’s per capita stock of permanent housing is larger than New York’s but smaller than Boston’s or Washington’s.)

Covert also acknowledges that growing the size of the shelter system “will create another problem.” But he argues that it’s worth the tradeoffs. “You’d need to create exits for people to get out of shelters. But that’s a better problem to have than the status quo.” 

Friedenbach, on the other hand, says there’s no difference between bringing people into housing directly from the streets and bringing them in from shelters. “We house people off the streets every day.”

The Bigger Picture 

It’s one thing to debate the merits of different policies related to homelessness. It’s another to actually create the financial and regulatory conditions that would make ambitious new approaches possible.

All of a sudden, those conditions are beginning to come into view, although homeless advocates like Friedenbach and Moss are united in the belief that current state and local spending proposals still are not enough. The state legislature is debating allocating $8 to $12 billion to homelessness over the next two years, with the largest chunk likely to go to an expansion of Project Homekey and related programs. The state budget could, potentially, provide funding for 46,000 homes for California’s 160,000 or so homeless residents. Governor Gavin Newsom also announced Monday that the state would pay all back rent owed by lower-income people who haven’t been able to pay rent during the pandemic, helping to prevent even more people from becoming homeless in the future. San Francisco Supervisor Dean Preston, a former tenants rights activist, has called into question whether the governor’s commitment will actually serve every tenant in need.  

At the city level, Mayor London Breed has a plan to spend $1 billion on homelessness and place 6,000 residents into housing by July 2022. (The city’s most recent official statistic on the number of homeless people in San Francisco is about 8,000, but Friedenbach believes the figure is closer to 21,000.) The plan relies heavily on funding from Prop. C, which is finally out of legal limbo and will generate about $300 million annually for spending on homelessness, essentially doubling the city’s budget for this issue. Prop. C, a 2018 ballot measure written by Friedenbach, includes clauses limiting the amount of money that can be spent on temporary shelter, insulating that pool of funds from some of the debates described above. When the measure was up for consideration by the voters, Breed opposed it. 

Looking further into the future, Moss and Covert believe the Bay Area Housing Finance Authority (BAHFA), which was established in 2019 by legislation from Assemblymember David Chiu, could provide a longer-term funding mechanism for housing the homeless. The agency may eventually look to place a regional tax or bond measure on an upcoming ballot. It could also improve coordination between jurisdictions, making sure homeless residents can access services across county lines. 

A regional approach is important, Covert says, because the current, fragmented homelessness services ecosystem allows some cities to skirt their obligations to provide for their homeless residents, knowing that San Francisco or Oakland will pick up the slack. “There are cities who have a crisis and are in denial of their crisis, and are just happy letting neighboring jurisdictions deal with the problem.”

Sound familiar? It’s the same mentality that helped create the Bay Area’s broader housing crisis, of which homelessness is the most acute manifestation. 

Often lost in these discussions is “how closely linked rates of homelessness are in the United States to expensive rents,” Covert says.

It’s not exactly rocket science: The harder it is for people to afford housing, the more people become homeless. While mental illness, drug addiction, and other factors can contribute to a person becoming homeless, at the end of the day it’s all about the cost of housing. After all, plenty of people in Kansas, Mississippi, and Vermont have substance abuse and mental health issues, yet virtually none are homeless, according to the latest counts from the U.S. Department of Housing and Urban Development.  

Now that San Francisco and California are on the cusp of making serious moves to address homelessness, this connection, between homelessness and the cost and availability of housing, will become all the more obvious and important. Many of the same processes and regulations that hold back market-rate housing construction also hold back shelter and housing for the homeless. The only reason Project Homekey has been so successful is that it eliminated much of the red tape that normally accompanies building or changing anything in California. 

Project Homekey also revealed that “market rate” and “affordable” housing are not static categories. As the government buys thousands of units to house the homeless, and, perhaps someday, provides millions more Section 8 vouchers, it follows we’re going to need a lot more homes overall. Even brand new “luxury” condos that everyone loves to hate can house the homeless: Friedenbach revealed that the city is considering a few “new construction” buildings as part of its homeless housing acquisition plan, following in the footsteps of a nonprofit in Seattle that did the same thing. Oakland used part of its Homekey allocation to purchase single-family homes for shared housing. 

The private market built these homes, and then the state snatched them up for the people who needed them most. It’s not a perfect system, nor is it cheap, but at this point it looks like our quickest, best option to make real progress on homelessness. Insulating that process from self-defeating regulations, and building a lot more housing overall, can only help. 

“We have to challenge the perennial constraints that limit our housing production: It costs too much, it takes too long, our zoning laws, NIMBYism,” Moss says. “We can’t continue to swirl in the constraints and then wonder why we have one of the worst unsheltered homelessness crises in the country.” 

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