Housing expert says: San Jose—lots of homeless spending, still-soaring homelessness
Silicon Valley and other parts of California must find alternative solutions to address its growing homeless crisis, suggests Market Urbanism Report founder Scott Beyer. An Opp Now exclusive. To receive daily updates of new Opp Now stories, click here.
Homelessness is a major problem facing San Jose and Santa Clara County. Research by HUD determined that the county had the nation’s 4th-largest homeless population in 2019. This is because homelessness in San Jose itself increased dramatically in the decade prior, even as the city rolled out homeless mitigation programs. Meanwhile, there are scattered examples nationwide of how a different approach - transitional housing - can address root causes of homelessness more cost-effectively. It might be an approach for local leaders to consider.
But for starters, the local homeless population by and large resides in unacceptable conditions. “84% of San José’s homeless population sleeps outdoors on the street, in parks, tents, encampments, vehicles, abandoned properties and/or bus and train stations,” reported a city memorandum.
The situation has likely grown more dire amid the economic turmoil of the past two years, but it’s hard to determine just how much: as of September 2021, the city had suspended record keeping due to COVID-related issues. However, the city website estimates its homeless count at 6,739, up 11% since 2019.
This is despite spending large sums of money. Opportunity Now recently ran a piece by resident Dean Hotop detailing the city's housing expenditures. He found that funding for the city’s housing department exceeded $1 billion in the last three fiscal years. Some of this has been spent on affordable housing, with the city typically adding around 200–300 per year at a per-unit subsidy of around $125,000. Additional funding for permanent supportive units comes from the county’s Measure A bond.
But the homeless population has actually risen by just over 200 per year through the course of this, suggesting that the housing itself may be part of what draws further homeless populations to the city. Either way, that number of units pales compared to the size of the problem.
San Jose’s situation gels with findings from a 2021 Independent Institute study of homelessness in California. The report (which I co-authored) found that, despite lots of state and local spending, the Golden State saw a marked 9% increase in homelessness even as homelessness decreased nationwide. 27% of homeless Americans now live in California.
The report concluded: “there are now more people experiencing homelessness throughout California than there are people living in Berkeley, Burbank, Inglewood, Pasadena, or Thousand Oaks. If all of those experiencing homelessness in California were collected into one place, they would represent the state’s 39th-largest city.”
This is no surprise given San Jose's and the state's housing costs - which are a big cause of driving people into homelessness. Construction of affordable micro-units could help a substantial number of these people.
This underlies the logic, at least, behind a popular strategy known as “Housing First,” which prioritizes getting homeless individuals into housing and dealing with the root causes after they’re sheltered.
“Housing first argues that homeless individuals need housing above anything else and that once they are in permanent housing, they can then be treated and supported through wrap-around services,” notes Imprint News. California and federal bureaucracies have both prioritized such an approach, shifting funding away from transitional housing, a model we describe below.
But as Independent Institute’s research and that of others has found, there are other causes of homelessness beyond just home costs, indicating that getting the homeless housed doesn’t nip the root of the problem. The Independent Institute noted that 63% of chronically homeless individuals in San Francisco, for example, struggled with substance abuse. Once in these units, they are free to continue abusing drugs and remaining unemployed.
So the problem presented by “Housing First” is that taxpayers are forced to fund an expensive set of units and services (in California, stories abound of supportive units costing in the upper 6-figures). And it’s to perpetuate an underclass who may happen to now have a roof over their heads, but who will remain dependent on the government in perpetuity, because there’s no incentive to behave otherwise.
The ideal would be not only to get the homeless off the street, but teach them the skills and self-control to become productive members of society - so they eventually house themselves.
I argue in the Independent Institute report that the most effective strategy for this is transitional housing. The basic framework is to provide temporary accommodations with mandatory support services, which are not required under most Housing First approaches.
The examples I profiled were Step Denver and San Diego-based Solutions for Change. Step Denver, which caters to homeless men, requires a sobriety pledge as condition for entry. It then provides housing and counseling to help men through their issues and find employment. Once they’ve “graduated” and become self-supporting, they return to Step Denver’s facilities to counsel new entrants. Step Denver does not take government funding, and according to executive director Paul Scudo, serves 275 men annually. It boasts an impressive graduation rate of 70 percent on just a privately-funded budget in the low-7 figures.
Solutions for Change has a similar model, but includes homeless women among its clients. Unlike Step Denver, it is okay with accepting government subsidies, but has missed out on much of that because the non-profit won’t cater to Housing First dogmas. Executive Chris Megison did not want new tenants openly using drugs around the mothers and children living there, calling the idea “insane.” So the federal government withheld $600,000 in funds.
San Jose (and California) is thus presented with two models - permanent supportive housing or transitional housing. While the former has much more entrenched government support, it doesn’t seem there will ever be enough money to truly house all the homeless, given California’s high land, permitting, and construction costs. And even if there was, officials would still face the moral dilemma of enabling self-destructive behavior on the taxpayer dime.
Transitional housing, by contrast, is designed to help people turn around their lives. It may not work for every homelessness case, but successful models do exist nationwide. San Jose officials might consider them as an alternative to the never-ending money-train being dumped into Housing First.
This article featured additional reporting from Market Urbanism Report content staffer Ethan Finlan.
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