For the past several decades now, California and the City of Los Angeles have been in a housing crisis with high housing prices and low rates of home ownership. In 2016, a bill called Proposition HHH was presented to Los Angeles voters. Once passed, Proposition HHH issued $1.2 billion to the City of Los Angeles for the development of affordable housing units for those experiencing homelessness. The goal was to more than triple the development of housing units in the city for a total of 10,000 new homes in 10 years; as of 2021, there are 8,000 homes in the pipeline. However, homelessness has only continued to grow in the city of Los Angeles, causing mixed reviews for the proposition.
Recently, the City Controller, Ron Galperin, released the 2021 audit for the proposition, and while no irregularities were found, it’s clear that the cost of construction, policies, and other factors have severely hindered the goals of Proposition HHH. During this time, the National Producer Price Index for Residential Construction Costs also climbed to 17.6%. The rise in cost, coupled with labor shortages, has undoubtedly contributed to project delays and fewer units being developed.
Ann Sewill, General Manager from Mayor Garcetti’s office assures that LAHD is working to understand the drivers behind these costs and are working with applicants to come up with strategies to reduce costs, for example through supporting modular development, allowing for reductions in the parking requirements.
Interim housing and funding commitments
While the main goal for HHH is to develop affordable housing for the homeless, the funds can also be used for a diverse set of short-term solutions such as interim housing, restrooms, showers, and more. Currently, there is only $58 million allocated for interim housing, which is only 5% of the $1.2 billion awarded for the project. This amount was complemented by an additional $860,516,405 from other sources to produce a total of 10,000 units of interim housing. He also states that focusing on permanent housing is not only a better investment but what will eventually put an end to homelessness.
As was the case with many industries, the pandemic forced many processes to be done virtually. While convenient, getting into the swing of this new way of doing things has had an effect on development efficiency. The city is currently working on streamlining the review process for HHH-funded projects by collaborating with developers and troubleshooting issues on a project-by-project basis.
Despite these issues and learning curves, HHH has begun to move projects from planning into construction every two weeks. Additionally, 1,304 units have been added to the construction phase and another 715 units received occupancy approvals in the past year.
In order for Proposition HHH to continue progressing and meet its goal, a solution must come from policies, finance, and more integrated housing. Galperin has a few recommendations for the continued success of Proposition HHH, some that have not yet been implemented and a few that are in progress. The suggestions in progress include converting existing buildings to housing and speeding up the city’s review process for HHH-funded projects. Those not yet implemented are building interim housing and facilities using HHH funds and reevaluating stalled projects before finalizing HHH loans.
We’ve discussed at length how construction, policy, and technology can work together to streamline processes, lower costs, and build more housing faster. To learn more, download our whitepaper here.