More than five years have passed since Angelenos overwhelmingly approved Proposition HHH. The ballot measure authorized the City to issue up to $1.2 billion in general obligation bonds to develop or acquire supportive housing. Supportive housing combines subsidized housing with services (e.g., health services, mental health and substance abuse treatment, job training) to help improve the lives of chronically homeless people. Proposition HHH funds can also be used to develop affordable (i.e., income-restricted) housing for people at-risk of homelessness or facilities such as shelters, restrooms, showers, storage, health clinics, and navigation centers. The ballot measure requires at least 80% of HHH funds to be used for supportive housing and facilities, and up to 20% can be used to develop affordable housing.

Since Proposition HHH was approved, the homelessness crisis in Los Angeles has grown in magnitude and severity. The most recent point-in-time count—conducted before the pandemic—showed tens of thousands of unsheltered residents and a growing number of daily tragedies due to overdoses and violence. Recent policy decisions and shifts in public opinion suggest widespread dissatisfaction with the current situation. While Proposition HHH was not designed to end homelessness in Los Angeles, it remains a centerpiece of the City’s strategy.

Proposition HHH requires the Controller’s Office to perform annual financial audits for each year in which bonds are outstanding or bond proceeds remain unspent. The audit for fiscal year 2020 (see Appendix) did not identify any significant irregularities or improprieties related to Proposition HHH.

We also reviewed the performance of the program. Our 2019 and 2020 reviews of Proposition HHH found that project costs were high and estimated timelines were not aligned with the urgency of the homeless emergency in Los Angeles. This review was intended to provide a status update on Proposition HHH and assess the extent to which the City implemented our previous recommendations. Unless stated otherwise, the data and information contained in this report provides a snapshot of the program as of December 2021.

We found mixed results during this review of Proposition HHH.

• The number of completed housing projects and projects in construction increased since our last review. But per unit costs continue to climb to excessive levels—over $800,000 in one instance—and the total number of completed units (1,142) is wholly inadequate in the context of the ongoing homelessness emergency.
• The HHH Housing Challenge continues to show promise in terms of per unit costs, but most of the projects are significantly behind development timelines that were established when the program was launched in 2019.
• The City is in the process of implementing two recommendations from our previous reports. Specifically, the City has taken steps to improve case processing timelines in several departments and is planning to use Proposition HHH funds to acquire extended-stay hotels and newly-built apartment buildings without tenants.

Given the scale of the homelessness crisis in Los Angeles, the need to build supportive, affordable, and interim housing will remain long after funds from Proposition HHH are fully depleted. It is critical that the City use lessons learned from the last several years to guide its future efforts.

Most bond proceeds remain unspent, but nearly $750 million in loans have been closed

The City has designated more than $1.1 billion in Proposition HHH funds. Approximately 95% of the designated funds have been set aside for development of supportive and affordable housing. The conditional funding commitments are eligible for loan closing once developers successfully complete the financing process and obtain the necessary entitlements to build. The City has closed approximately $750 million in HHH-funded loans to date.

Proposition HHH bond proceeds are typically not disbursed to developers until loans close and construction begins. To ensure adequate funds are on hand for this process, the City periodically issues Proposition HHH general obligation bonds. The table below provides a snapshot of the bond issuances since the ballot measure was approved and Proposition HHH funds that have been disbursed.

As shown in the table, the City has issued bonds valued at almost half of the total amount authorized by voters. A significant portion of bond proceeds remain unspent—relative to the total bonds issued and to the maximum authorized amount—but this process will likely accelerate in the coming months due to the number of projects that have recently moved into the construction phase.

Less than 1,200 housing units have been completed, but there are almost 4,400 units in construction

The City set a goal of developing 10,000 housing units within a ten-year timeframe. According to the City, its plans to reach this goal consisted of housing units developed using HHH funds and supportive units developed using non-HHH funding sources. There are 8,091 total housing units (6,579 supportive) spread across 125 projects that have been designated funding through Proposition HHH. The non-HHH pipeline includes 2,369 supportive units.

The Los Angeles Housing Department (LAHD) is responsible for facilitating the development of most housing units funded through Proposition HHH. More than five years after voters approved Proposition HHH, only 1,142 total units have been completed. However, the overall share of units in pre-development dropped considerably since our last report—from 71% to 26%. This represents important progress. The following graphs provide an overview of all housing units being developed through the LAHD/HHH pipeline.

In addition to the LAHD/HHH pipeline, there are 864 units being developed through the HHH Housing Challenge, which was launched in 2019. The City set aside $120 million in funds with the intention of finding ways to lower costs and shorten timelines using strategies outside of the LAHD/HHH process. Nearly all of these units (84%) remain in pre-development.

Total development costs for Proposition HHH housing projects continued to grow

Los Angeles is an expensive place to build multifamily housing—that challenge is embedded into the cost of developing supportive housing through Proposition HHH. It is further complicated by a combination of cost factors including prevailing wage requirements, financing complexity, land use issues, project labor agreements, and building characteristics (e.g., enhanced accessibility standards). In addition, the pandemic has created a variety of labor and supply chain issues, further pushing costs upward.

Funds from Proposition HHH make up only a portion of total development costs. Across all projects in the LAHD/HHH pipeline, the HHH subsidy per unit is approximately $134,000, or 23% of the total development cost of a project. The remaining funds come from a combination of private and other government (i.e., taxpayer) sources. The large amount of public subsidies—which are finite—underscores the importance of controlling project costs beyond the City’s Proposition HHH contribution. The following snapshot shows estimated per unit development costs through the LAHD/HHH pipeline.

Based on our analysis, construction costs typically make up approximately 63% of total development costs for projects in the LAHD/HHH pipeline. Developers typically finalize construction contracts with general contractors as their projects move toward loan closing (i.e., the latter stages of the pre-development phase). As a result, overall project costs reflect construction market conditions at the time contracts were signed.

• Proposition HHH loans for all of the completed projects were closed in 2018 and 2019 (i.e., pre-pandemic). The significant increase in costs for projects in construction can be partly attributed to pandemic-driven spikes in the cost of lumber and other building materials. Approximately 14% of units in construction exceed $700,000 per unit.
• Budgets for projects currently in pre-development will be adjusted—potentially upward—once developers finalize construction contracts. One project in this group is currently estimated to cost $837,000 per unit. The HHH-funded project is part of a larger mixed-use development led by the Los Angeles County Development Authority. The City cited County Workforce Agreements, infrastructure upgrades, and parking costs as some of the contributing factors to the high per unit cost.

The per unit cost of the three HHH Housing Challenge projects in construction is approximately $450,000 and the estimated per unit cost for 12 projects in pre-development is $434,000. Overall, projects in the HHH Housing Innovation Challenge are on track to receive less HHH funds per unit ($111,000) compared to projects in the LAHD/HHH pipeline.

There are other ways to contextualize costs associated with housing projects being developed through Proposition HHH. Approximately 87% of the units being built through the LAHD/HHH pipeline are compact studios or one-bedroom apartments. The remaining units consist of multiple bedrooms and are intended to house families experiencing homelessness. The City estimates that between 9,000 and 14,000 people will be housed when all projects in the LAHD/HHH pipeline are completed. Using this methodology, the estimated cost per tenant or bedroom would be lower than the per unit costs described above.

While project costs and timelines are distinct lenses through which to evaluate projects, they are intrinsically linked. Developers of projects with higher costs typically have a larger funding/financing gap to fill, which adds time and complexity to the process. Longer project timelines typically contribute to higher carrying costs and greater uncertainty for supportive housing developers and investors.  

Development timelines for Proposition HHH-funded housing projects continued to grow—more than half of total housing units will not be completed until January 2023 or later

The overall project lifecycle for projects developed through the LAHD/HHH pipeline is divided into four key phases: planning; pre-development; construction; and lease up. For purposes of this review, we focused on pre-development and construction phases.

A major factor in pre-pandemic timelines for projects in the LAHD/HHH pipeline has been the design of the program itself. Proposition HHH funds are typically the first funding source for projects. Developers are provided up to two years in pre-development to secure adequate funding/financing from several different entities to make their project viable. The pre-development process also consists of obtaining the necessary permits and approvals from City departments to begin construction.

The onset of the pandemic disrupted several components of the pre-development and construction process. Government agencies faced staffing shortages, extended funding timelines/deadlines, and implemented social distancing requirements at worksites. The table below provides a snapshot of project timelines from the LAHD/HHH pipeline. It measures the length of time from funding commitment to occupancy stage for the 15 projects completed since our last report and remaining projects which are in progress.

The City established an aggressive two-year project completion timeline for developers that received funding approvals through the HHH Housing Challenge. The original goal was for these projects to complete construction by the end of 2022, but the pandemic and other factors affected the trajectory of the program. Based on current estimates, the length of time to complete HHH Housing Challenge projects may not be significantly different than projects developed through the LAHD/HHH pipeline.

The graph below provides a snapshot of actual and estimated completion dates for all housing units funded through Proposition HHH since the ballot measure was approved—more than half of the total units are not scheduled to be completed until January 2023 or later.

Even after Proposition HHH-funded housing projects are completed, much work remains. Many of the chronically homeless Angelenos residing in these apartments will need assistance in the form of wraparound services, which is the responsibility of Los Angeles County. It is also important that adequate resources and support are available to help people who wish to transition out of supportive housing because they no longer need or desire services.

Recommendation Follow Up

Our previous reviews of Proposition HHH concluded that project costs were high and estimated development timelines did not reflect the needs of unhoused residents living in dangerous conditions. Specific recommendations from our previous reviews are listed below, along with updates on the City’s progress toward implementation.

Change course on expensive or stalled projects before finalizing HHH loans

Not Implemented

Several projects in the LAHD/HHH pipeline have been beset by significant cost increases and delays after receiving conditional funding commitments from the City. We recommended that the City evaluate its ability to reallocate Proposition HHH funding from outlier projects before loans close. At the time of this review, there were 27 projects in the LAHD/HHH pipeline without loans in place.

The City does not intend to implement this recommendation due to concerns that early cancellation of a funding commitment would compromise business relationships with supportive/affordable housing developers who have secured sites and worked in good faith to move projects forward. In addition, City officials cautioned that withdrawing a funding commitment could create legal issues for the City.

Speed up City review processes for HHH-funded projects.

In progress

Our previous reviews of Proposition HHH highlighted the City’s longstanding challenges with timely and efficient approvals for multifamily housing. We recommended that the City make improvements to its permitting processes, increase staffing, expand the scope of its existing streamlining policy, and implement public reporting requirements for relevant departments.

While the onset of the pandemic has created staffing challenges and the City needs to improve its overall digital services strategy, the issuance of Executive Directive #30 (ED30) in April 2021 established case processing goals and increased the number of departments that must participate in streamlining efforts. But the City has not yet developed a public-facing dashboard to increase transparency and accountability.

Build more interim housing and facilities using funds from Proposition HHH

Not Implemented

One of our ongoing concerns about Proposition HHH has been the imbalance in how the funds have been distributed across project types. Despite a mounting death toll of unsheltered residents, the City has focused almost exclusively on building supportive housing—typically from the ground up—which is expensive and takes several years to complete. The City began building bridge shelters in 2018, but the overall number of beds fell significantly short of the tens of thousands of unsheltered Angelenos. Stopgap measures like interim housing and facilities will not end homelessness, but they will improve living conditions for unsheltered residents who are waiting for supportive housing that will not be built for several years.

To date, the City has set aside approximately $58 million in Proposition HHH funds for interim housing/facilities—a mere 5% of the $1.1 billion that has been designated. We recommended that the City reallocate Proposition HHH funds or use remaining funds to develop interim housing or facilities. This amount has remained unchanged, but the City has designated significant amounts of emergency federal funding to develop 6,700 homeless interventions (e.g., tiny home villages, hotel/motel rooms, safe parking) as part of an agreement with the County. The addition of these sites is important progress for both unsheltered residents and neighborhoods with large encampments.

Acquire and convert commercial properties or apartment buildings without tenants

In progress

New construction of multifamily housing in Los Angeles is both expensive and time consuming. Given the magnitude and severity of the homelessness crisis, we recommended that the City prioritize strategies such as acquiring and converting buildings without tenants—like hotels and motels—because of the potential time and cost savings. While older buildings typically require renovations to make them compliant with accessibility and fire safety requirements, they are less likely to approach $600,000 per unit.

The State launched a program (“Project Homekey”) using this approach as part of its emergency pandemic response in 2020. Local government entities were required to provide matching funds and the properties needed to be brought into service shortly after acquisition. The City acquired 15 properties using non-HHH funds and most of the sites will function as interim housing for three to five years until they are converted to supportive housing. Altogether, these acquisitions included 891 units at a cost of approximately $223,000 per unit. The City cautions that the costs to convert several of the properties may be significant given the overall site conditions and enhanced accessibility requirements.

Over the last several months, the City began planning for a second wave of Project Homekey acquisitions as a result of additional funds made available by the State. Unlike the initial phase of Project Homekey, the City is planning to use $83 million in remaining Proposition HHH funds to fulfill a portion of the program’s matching requirements. At the time of this report, the City is seeking to acquire nine properties (a mix of extended-stay hotels and newly-built but never occupied apartment buildings) at a total cost of approximately $427 million. If these acquisitions are successful, they will provide 868 units of supportive housing at an estimated cost of $492,000 per unit. In addition, they will likely be placed into service within the span of months—in sharp contrast to most housing projects funded through Proposition HHH.

Conclusion

The passage of Proposition HHH remains a critical moment in the City’s recent history. It facilitated the development of thousands of units of housing that will help unhoused residents and people at risk of homelessness. Our previous reviews of Proposition HHH highlighted gaps in the City’s overall strategy and issues—some of which are outside the City’s direct control—that contribute to expensive projects and lengthy development timelines. During this review, we found that less than 1,200 units have been produced in five years and estimated costs for several projects exceed $700,000 per unit.

Even after all HHH-funded housing projects are completed, it is likely that significantly more Angelenos will be experiencing homelessness compared to when the ballot measure was approved. Each day spent without housing or shelter puts those individuals at risk for tragic outcomes. While future plans have not been finalized, building tens of thousands of additional units using the same model will likely cost billions of dollars and will take far too long to match the urgency of the ongoing homeless emergency. Going forward, we continue to urge the City to pursue more balanced approaches and find ways to scale up faster and cheaper projects.

In November 2016, more than 77% of voters in the City of Los Angeles (City) approved Proposition HHH. The ballot measure authorized the City to issue up to $1.2 billion in general obligation bonds to develop or acquire supportive housing. Proposition HHH funds can also be used to develop affordable (i.e., income-restricted) housing for people at-risk of homelessness or facilities such as shelters, restrooms, showers, storage, health clinics, and navigation centers. The ballot measure requires at least 80% of HHH funds to be used for supportive housing and facilities, and up to 20% can be used to develop affordable housing.

Proposition HHH requires the Controller’s Office to perform annual audits for each year in which bonds are outstanding or bond proceeds remain unspent. The financial audit for fiscal year 2020 (see Appendix) did not identify any significant irregularities or improprieties related to Proposition HHH.

Consistent with the authority established in the City Charter, we also reviewed the performance of the program in 2019 and 2020. We found that the total cost of developing housing projects using HHH funds was high (approximately $550,000 per unit in 2020) and estimated timelines (three to six years from concept to occupancy) were not aligned with the growing magnitude and severity of the homelessness crisis in Los Angeles. Accordingly, we recommended that the City pursue the following strategies to help lower costs, shorten timelines, and maximize the overall impact of funds from Proposition HHH.

• Change course on expensive, slow projects – Despite years of data showing rising construction costs and project delays, the City’s overall strategy has remained mostly unchanged. We recommended that the City evaluate its ability to reallocate funding from outlier projects before loans close and find ways to use any remaining Proposition HHH funds to deliver faster and less expensive projects.
• Speed up City approval processes – The City has longstanding challenges with permitting and interdepartmental coordination in the context of housing development. We recommended that the City boost staffing, expand its existing streamlining efforts, and increase transparency and accountability around these issues.
• Build more interim housing and support facilities – Stopgap measures will not end homelessness in Los Angeles. But using available Proposition HHH funds to increase the supply of interim housing and facilities will help unhoused residents meet their basic health, hygiene, sanitation, and storage needs.
• Acquire and convert commercial properties or apartment buildings without tenants – Nearly all Proposition HHH housing projects are new construction, which means that overall costs are directly tied to the rising cost of labor and materials. Different approaches—which require less construction—could prove cheaper and faster to complete if adequate funding is available to purchase and repurpose hotels/motels, unused commercial/office space, and newly-built residential buildings that have not been leased up.

More than five years have passed since Angelenos overwhelmingly approved Proposition HHH. This milestone provides an opportunity to measure the City’s progress to date, follow up on recommendations, and identify lessons learned that should inform future programmatic and policy decisions about homelessness. Unless stated otherwise, the data and information contained in this report provides a snapshot of the program as of December 2021.

Homelessness in Los Angeles

There is an extensive body of research that explores the underlying causes of homelessness. Academics, subject matter experts, and people with lived experience have identified factors such as structural racism, stagnant wages, lack of affordable housing, and an overall weakening of the social safety net. And while several of the causes identified by researchers are decades in the making and outside of the City’s direct control, the overall effects of those societal challenges and policy decisions can be seen throughout Los Angeles.

Housing and facilities developed using funds from Proposition HHH are part of a larger strategic framework designed to tackle homelessness. The City’s Enhanced Comprehensive Homeless Strategy provides the roadmap and direction to departments to implement programs and projects. The County of Los Angeles (County) has a similar strategy roadmap and uses funds from Measure H (passed by voters in March 2017) to provide an ongoing revenue stream to fund services, rental subsidies, and housing. The Los Angeles Homeless Services Authority (LAHSA) has a central role in conducting outreach and administering programs that provide shelter, housing, and services to people experiencing homelessness.

Despite significant funding and attention over the last several years, the homelessness crisis continued to grow in Los Angeles—even before the onset of the COVID-19 pandemic.

• More people are falling into homelessness – The most recent point-in-time count (conducted in January 2020) estimated that there were more than 41,000 people experiencing homelessness in Los Angeles, a 45% increase since 2016. Similarly, the same point-in-time count estimated that there were nearly 29,000 unsheltered individuals—which represented a 35% increase since 2016. Although the 2021 point-in-time count was suspended due to public health concerns about COVID-19, data from the upcoming point-in-time count (scheduled for February 2022) will provide valuable insight into how the homeless population in Los Angeles has changed—and whether the City’s approach should change.
• Unhoused residents continue to suffer tragic outcomes – An upcoming report from the Los Angeles County Department of Public Health (DPH) will provide greater insight into how many people experiencing homelessness have died since 2019 and the underlying causes of those tragedies.DPH’s last report included a preliminary analysis of the impact of COVID-19 on the unhoused population during the seven-month period (January to July 2020) which represented the onset of the pandemic. DPH estimated that 929 unhoused residents died during this period—approximately five people each day—and noted that the total number of deaths represented a 26% increase compared to the same seven-month period in 2019. But DPH found that COVID-19 was the fifth leading cause of death for unhoused residents—drug/alcohol overdoses ranked first. The research also showed a spike in deaths across racial/ethnic groups resulting from fentanyl-related overdoses.

The lack of progress—real, perceived, or some combination thereof—around the issue of homelessness is fueling policy changes and reshaping public opinion. For example, the City made significant changes to its camping laws throughout 2021 and a large number of geographic zones are now off limits to unhoused residents. In addition, the Los Angeles Business Council, in coordination with the Los Angeles Times, recently conducted a poll of 906 voters in LA County which highlighted growing dissatisfaction with the current situation.

• When asked about the issue of homelessness in LA County, 79% of respondents stated that the situation has gotten worse in the last several years. In addition, 89% of respondents stated that homelessness has either gotten worse or stayed the same in their own neighborhood.
• By nearly a 2-to-1 margin, respondents preferred using existing funding to build short-term shelter sites which can be built quickly/cheaply for most of the homeless population (57%) rather than building long-term housing which costs more/takes longer and may serve a smaller segment of the homeless population (30%). A similar question from the 2019 version of the survey showed strong support for long-term policies (59%) over short-term policies (23%).

These shifts in public opinion are noteworthy given the possibility that Angelenos will be voting on a ballot measure in November 2022 that is projected to generate hundreds of millions of dollars in annual revenue for a variety of initiatives to tackle homelessness–including development of supportive housing. Given that possibility, it is critical that the City use insights from its experience with Proposition HHH as a guide for its future efforts.

The City set a goal of developing 10,000 housing units within a ten-year timeframe. According to the City, its plans to reach this goal consist of housing units developed using HHH funds and supportive units developed using non-HHH funding sources. Based on the current trajectory of the program, there are 8,091 total housing units across 125 projects that have received or will likely receive funds from Proposition HHH. The total units include 6,578 units of supportive housing and 1,513 units of non-supportive housing (i.e., income-restricted affordable housing and building manager units). The non-HHH pipeline includes 2,369 supportive units.

The distribution of Proposition HHH funds across program categories remain mostly unchanged since our last report. The City did not initiate a formal call for projects and allocate any remaining funds, although potential uses for remaining and reprogrammed funds have been discussed with the Council and Proposition HHH Citizens Oversight Committee.

The City set aside nearly all Proposition HHH funds for development of supportive and affordable housing

Data reported by the City shows that approximately $1.1 billion—nearly the entire amount authorized by the ballot measure—has been designated as of December 2021. Nearly all (95%) of the designated funds have been set aside for development of supportive and affordable housing.

Although Proposition HHH was presented to voters primarily as a strategy to increase production of supportive housing, it also authorized the City to use HHH funds to develop interim shelter and facilities. But the ballot measure did not specify the funding distribution across these categories and key funding and programmatic decisions were left to the Los Angeles Housing Department (LAHD), the Office of the City Administrative Officer (CAO), and City Policymakers.

The City’s decision to primarily focus on permanent housing was guided by the Housing First approach to homelessness, which has been supported by the United States Department of Housing and Urban Development (HUD), State of California, and LAHSA. Housing First approaches seek to quickly house people experiencing homelessness without preconditions such as sobriety or treatment/service participation requirements.

Supportive housing is typically intended to provide chronically homeless residents with access to services such as mental health and health services, drug and alcohol treatment, education, and job training so that they can achieve housing stability and improve their quality of life. In the context of Proposition HHH, the City funds development of supportive housing and the County funds or directly provides onsite services through its various departments.

Even after all of the housing units built using Proposition HHH funds are filled with tenants, more work is needed to promote equitable and successful outcomes. The California Policy Lab recently found that 22% of enrollees in supportive housing in Los Angeles County fell back into homelessness or interim housing between January 2010 and June 2019. Of particular concern is that Black residents of supportive housing appear to be experiencing this outcome at a greater rate than other racial/ethnic groups in the study. The study also raised important questions about the consistency of services being provided, lack of opportunities for personal growth and independence, and lack of institutional support for residents who aim to move beyond supportive housing.

LAHD/HHH Development Pipeline

Development of most Proposition HHH-funded housing projects is led by LAHD. Rather than providing developers with funds to cover the full cost of a project, the City designed the program to provide partial funding in the form of loans. Proposition HHH funds are then leveraged to secure other sources of funding, often federal tax credits that developers must compete for through the Low Income Housing Tax Credit (LIHTC) program. This approach is widely used to develop government-funded housing with income restrictions.

The leveraging process comes with tradeoffs. On one hand, Proposition HHH funds can be stretched across a greater number of projects/units. Indeed, Proposition HHH funds are being leveraged at a 4-to-1 rate. On the other hand, the process of securing multiple sources of funding to make a project viable typically adds time and costs to each project.

Although a formal call for projects has not been issued since February 2019, LAHD has typically solicited proposals from private housing developers seeking to build supportive housing with Proposition HHH funds. Applications submitted by developers are screened by LAHD to determine whether they meet specific baseline criteria, including:

• verification that the developer secured a property on which a Proposition HHH project could be built;
• a determination that the project is financially feasible and demonstrates long-term viability as an affordable housing project; and
• confirmation that the developer and service provider successfully managed similar supportive housing projects in the past.

At the conclusion of this process, LAHD staff develop funding recommendations that are submitted to multiple oversight committees, the City Council, and Mayor. Proposition HHH funding commitments for housing are conditional for up to two years and are typically made early in the development process. Developers spend this initial phase assembling funding to make their projects viable and obtaining necessary permits/approvals from City departments required for building multifamily housing (i.e., pre-development).

Approximately $970 million has been designated through the LAHD/HHH pipeline. The funds are spread across 110 housing projects and December 2021 estimates show that they will provide 7,227 total housing units—5,730 of which will be supportive units. The graphs below provide a snapshot of LAHD’s portfolio of Proposition HHH projects at the time we completed each performance review of the program.

There are two key points that emerge from the graphs.

• Only 1,142 total units—831 of which are supportive—are ready for occupancy more than five years after voters approved Proposition HHH.
• Since our last report, LAHD has made progress in moving projects in the pipeline from the pre-development phase into construction.

In addition, the total number of projects in the LAHD/HHH pipeline has remained stable. At the time of our last report, uncertainties related to the pandemic increased the risk that multiple projects would be cancelled. The lone project that was discontinued returned its Proposition HHH loan (approximately $3.1 million), but is moving forward using other funding sources.

HHH Housing Challenge

In response to concerns about project costs and timelines, the City set aside $120 million in Proposition HHH funds and initiated the HHH Housing Challenge in January 2019. The primary goal was to identify innovative construction and financing models to produce approximately 1,000 new supportive housing units within two years after receiving funding approval.

The City issued a request for proposals in May 2019 and allowed respondents to submit project applications before having a legal possession of a site on which to build housing (i.e., site control). In order to be considered for funding, applicants needed to demonstrate that their proposed approach was not eligible or feasible under current existing Proposition HHH program regulations. Development strategies submitted by applicants were evaluated by a multidisciplinary team of subject matter experts for a variety of factors, including financial feasibility, creativity, achievability, and scalability.

The selection committee recommended six developers for funding approval. Combined, their proposed projects aimed to provide 975 supportive housing units. Each developer was required to execute a memorandum of understanding (MOU) with the City within two months of being selected through the RFP process. The MOUs outlined each developer’s general plan and established milestones for each phase in the development process.

Multiple projects in the HHH Housing Challenge were recently cancelled due to issues with site control and other projects are returning a portion of their funding commitment because they secured other sources of funding. The City is considering re-programming approximately $23 million previously designed for the HHH Housing Challenge.

CAO/HHH Facilities Program

The Office of the City Administrative Officer (CAO) oversees the development of facilities and interim housing using Proposition HHH funds. The City funded 24 of these projects using approximately $58 million. The relatively limited scope of this effort was driven by the City’s decision to prioritize development of supportive housing. In 2018, the Council voted to suspend a planned request for proposals (RFP) and the CAO has not issued another solicitation for HHH-funded interim housing or facilities.

Eligible projects included rehabilitation or expansion of existing sites and acquisition or construction of new sites. In addition, projects that enhanced existing facilities to improve service delivery—such as retrofits to make buildings compliant with the Americans with Disabilities Act (ADA)—were also eligible. The overall list of completed and ongoing projects is shown below, most of which are renovations of existing facilities.

Facility Type	HHH Award	Total Cost	Completed	In process
Center	$27,484,949	$31,750,275	5	2
Shelter	$12,013,398	$12,615,578	2	3
Clinic	$7,200,000	$26,738,840	2	0
Transitional Housing	$7,114,439	$7,214,439	3	1
DV Shelter	$3,891,338	$6,100,108	3	3
Totals	$57,704,124	$84,419,240	15	9

 

As described later in this report, the City has significantly increased its production of interim housing through an agreement with the County, which was partly driven by a federal lawsuit. Proposition HHH funds were not used for those projects.

Most funds remained unspent, but the City has formally closed approximately $750 million in Proposition HHH housing loans

The conditional funding commitments for Proposition HHH housing projects described above are a part of a larger process. Actual disbursement of bond proceeds from Proposition HHH does not occur until loans are executed and housing projects are ready to begin construction. The City has closed approximately $750 million in HHH-funded loans to date. LAHD is tasked with reviewing invoices submitted by developers and approving payments based on actual work performed.

The CAO oversees the development of facilities and interim housing using Proposition HHH funds, which are made available as loans repayable through a service repayment agreement with a term corresponding to the useful life of the funded facility. Developers of facilities must periodically submit requests for reimbursement payments that are subject to review and approval by CAO staff.

To date, the City has issued three Proposition HHH bonds with a combined value of almost $575 million and spent approximately $347 million of total bond proceeds on hand. The amount of funds spent—which is tied to construction progress—represents a relatively small share of the City’s $1.2 billion bonding authority approved by voters in November 2016. But the large number of projects that recently began construction will accelerate the rate at which Proposition HHH funds are spent.

Development costs are typically divided into three basic categories:

• acquisition of land where the project will be built;
• labor and materials for construction (“hard costs”); and
• all costs other than land or construction to complete the project, including fees, financing, professional services (“soft costs”).

Even before the pandemic, a study by the Terner Center for Housing Innovation found that construction costs for multifamily buildings across the State were rising due to factors such as gaps in the construction workforce and higher materials costs. The unprecedented disruption brought on by the pandemic and other factors accelerated these trends. Existing labor shortages in the construction industry became more pronounced and the cost of some construction materials—such as lumber—skyrocketed. While these costs have somewhat stabilized from their record highs, they remain markedly higher than their pre-pandemic levels.

There are also specific factors associated with building supportive housing—both generally and in Los Angeles—that contribute to high project costs. Our previous reviews of Proposition HHH highlighted several key factors such as the overall high cost of construction in Los Angeles, prevailing wage requirements, funding complexity, regulatory issues, land use challenges, and supportive housing characteristics (e.g., enhanced accessibility standards). In addition, research by the RAND Corporation recently highlighted that project labor agreements—which are required for all HHH projects at least 65 units—can increase construction costs by approximately 15%.

Some stakeholders have downplayed concerns about high total development costs because Proposition HHH funds are not being used to fully fund housing projects. Across all projects in the LAHD/HHH Development Pipeline, Proposition HHH funds comprise approximately 23% of total development costs. According to LAHD, costs not covered by HHH are typically funded by:

• a loan from a bank or bond lender;
• equity investors seeking federal tax credits (typically LIHTC); and
• other governmental programs.

While federal tax credits and funding from State/County programs are not funded by the City, they are still taxpayer dollars and must be carefully spent.

The overall cost of Proposition HHH-funded housing projects continued to grow

Because construction contracts are finalized as the project approaches loan closing, original cost estimates—which are typically developed up to two years in advance—are subject to revision as the projects move from the pre-development phase into construction. This key point—HHH project development costs reflect market conditions at the time construction contracts are signed—is essential to understanding the program. Proposition HHH loan amounts to developers cannot be increased to account for construction budget cost overruns without the approval of the Council.

Cost of Proposition HHH Supportive Housing Projects Ready for Occupancy

There are 18 LAHD/HHH pipeline projects that have been completed and are ready for occupancy. In total, the projects include 1,142 housing units, 831 of which are supportive. The City awarded approximately $154 million in Proposition HHH loans for these projects—an average of approximately $135,000 per unit.

The table below provides a summary of total development costs for projects ready for occupancy. It should be noted that this group of projects closed their loans between December 2017 and November 2019—before the tumult of the pandemic began affecting project costs and timelines.

In addition, LAHD notes that projects are still under construction when they reach the “Ready for Occupancy” stage. Construction doesn’t end—and the final costs are not officially tabulated—until all punch list items are completed, and when the Final Certificate of Occupancy is obtained. As a result, the costs listed above may be further revised until projects are officially complete. Proposition HHH program regulations require a third-party cost certification audit to be completed within 60 days of the issuance of the Certificate of Occupancy.

To determine how development costs are distributed across projects, we analyzed data from LAHD and found they were consistent with a 2020 study by the Joint Center for Housing Studies at Harvard University.

The relatively small share of costs attributed to land acquisition may be attributed to the fact that four of the projects were built on City-owned land.

Cost of Proposition HHH Supportive Housing Projects in Construction

There are 65 projects in construction through the LAHD/HHH pipeline that will provide 4,205 housing units, 3,478 of which will be supportive. The City awarded approximately $578 million in Proposition HHH loans for these projects—an average of approximately $137,000 per unit.

The table below provides an overview of projects in construction. Nearly all of these projects closed their loans in 2020 or 2021, suggesting that the disruption of the pandemic likely affected project budgets and timelines.

As shown in the table, the per unit cost of these projects is on the verge of exceeding $600,000 per unit. In addition, approximately 14% of the units in construction are estimated to cost more than $700,000 per unit. LAHD provided additional information about the individual projects that have crossed the $700,000 per unit threshold. Beyond across-the-board increases in construction costs that apply to all projects, LAHD provided site-specific issues such as parking requirements, units with multiple bedrooms, commercial space, and small/unique lot configurations.

As expected, construction costs saw an overall increase and as a ratio of total project costs.

According to the data, 16 of these projects are being built on City-owned land.

Cost of Proposition HHH Supportive Housing Projects in Pre-development

There are 27 projects in pre-development in the LAHD/HHH Development Pipeline that are expected to provide 1,880 housing units, 1,421 of which are projected to be supportive. The City awarded approximately $240 million in Proposition HHH loans for these projects—an average of approximately $128,000 per unit.

The table below provides a summary of projects in pre-development. These projects have not finalized their loans or signed construction contracts, so their overall project costs will likely trend upward given the sustained disruption in labor and materials markets.

As shown in the table, this group includes a project with an estimated cost over $800,000. The project is a 62-unit senior supportive housing project component of a larger 4.2-acre mixed-use development being led by the County. The City’s HHH contribution is $200,000 per unit of senior housing. The development also includes affordable housing, retail spaces including a grocery store, and Metro training facility. According to LAHD, there are several cost drivers affecting the project including: extensive site preparation costs; development of a parking structure for the senior housing; a County Community Workforce Agreement.

The estimated costs and cost distribution of projects in pre-development are outlined below.

Projects in pre-development show higher estimated land costs compared to projects in construction or ready for occupancy. The increase is driven by six projects which report land acquisition costs above $5 million each.

There are other ways to contextualize costs associated with housing projects being developed through Proposition HHH. Approximately 87% of the residential (i.e, non-building manager) units being built through the LAHD/HHH pipeline are compact studios or one-bedroom apartments. The remaining units consist of multiple bedrooms and are intended to house families experiencing homelessness. The City estimates that between 9,000 and 14,000 people will be housed when all projects in the LAHD/HHH pipeline are completed. Using this methodology, the estimated per tenant or bed cost would be lower than the per unit costs described above.

Cost of HHH Housing Challenge Projects

There are currently three projects from the HHH Housing Challenge in construction with an average HHH contribution of approximately $124,000 per unit. A single developer is responsible for all three projects, which include modular construction on smaller parcels. When completed, the projects will provide 142 total housing units, of which 139 will be supportive. The current estimated cost per unit for these projects is approximately $449,889. While the sample size is insufficient to draw larger conclusions, these projects have lower cost estimates than typical projects from the LAHD/HHH pipeline that are currently in construction.

There are 15 additional HHH Housing Challenge projects currently in pre-development with an average HHH contribution of approximately $109,000 per unit. When completed, these projects will provide 722 total housing units, of which 709 will be supportive. The current estimated cost per unit for these projects is $434,151.

While the estimated cost of the HHH Housing Challenge projects is promising, questions remain about whether the approach can be successfully scaled and replicated. In addition, the current cost projections are markedly higher than the per unit estimates ($352,000) provided during the 2019 RFP process.

The typical development process for government-funded supportive or affordable housing is a complex, multiyear endeavor—even under the best of circumstances. During our initial review of Proposition HHH, LAHD estimated that projects would take between three and six years from conceptualization to occupancy. While several of the factors that contribute to the timeline are outside of the City’s direct control, the timeline is not reflective of the ongoing homeless emergency in Los Angeles. At the current trajectory, several thousand unhoused residents will die before HHH-funded housing projects are completed.

At a high level, the process for projects in the LAHD/HHH pipeline is comprised of four phases.

The City is typically not involved in the initial planning phase and LAHSA is responsible for the lease up process through its Coordinated Entry System (CES). For purposes of this review, we focused on measuring the length of time projects spend in pre-development and construction. While each project is different, there are some common factors that drive overall timelines during these phases.

• Project funding/financing – Because Proposition HHH funds make up only a portion of total costs and are awarded at the early stages of the development process, the City provides developers with conditional funding commitments which are good for up to two years. Developers spend that time assembling the remaining funding/financing to make their projects viable and compliant with established loan requirements.
• Permitting and entitlements – Proposition HHH developers must obtain the necessary land use approvals and permits to build their project. This requires navigating their project through several City departments and bureaus, such as Planning, Building and Safety, Public Works, Fire, Water and Power, and Transportation. This process also includes community outreach and addressing any lawsuits or design changes resulting from stakeholder input.
• Construction – The construction process for Proposition HHH-funded housing projects is similar to other types of multifamily infill construction. Unexpected issues may emerge which require further coordination with City departments or other governmental entities.

The early stages of the pandemic further complicated most aspects of Proposition HHH housing development. Staffing challenges in the City and other entities impacted workflows, funders revised application deadlines, and social distancing requirements affected construction worksites. The overall volatility and uncertainty contributed to the Mayor’s decision to suspend all deadlines related to financing and pre-development activities necessary to develop or rehabilitate affordable and supportive housing (known as a “tolling order”). As a result, developers approaching the expiration of their two-year window to assemble financing and obtain permits could continue the process without obtaining a formal extension or losing their conditional funding commitment.

Development timelines for Proposition HHH housing projects continue to grow—more than half of all units have estimated completion dates of January 2023 or later

Our previous review of Proposition HHH included an analysis of the average number of years required to complete a project, from issuance of the letter of commitment to the ready for occupancy date. Three projects had been completed until that point and they took an average of 2.8 years. It is important to note that funding commitments for those projects were not “first-in”, and therefore may not be fully representative of typical LAHD/HHH projects. The remaining 108 projects had an estimated timeline of 3.9 years.

We used a similar process to develop estimated timelines during this review. The table below shows estimated timelines for 15 projects completed since August 2020 and the remaining projects that are currently in construction or pre-development.

The estimated increase for projects in progress is being driven by additional time spent in the pre-development phase. Completed projects began construction approximately 435 days after receiving a letter of commitment from the City. Estimates for projects in progress are almost 900 days to reach the same milestone.

The following graph provides a snapshot of all 7,227 housing units currently in the LAHD/HHH pipeline and their actual/estimated dates of completion. Half of the total units have estimated completion dates of January 2023 or later.

Timelines for Proposition HHH Housing Challenge Projects

The HHH Housing Challenge established an aggressive two-year project completion timeline once developers received funding approvals from the City. The original goal—based on MOUs signed in January 2020—was for these projects to complete construction by the end of 2022.

The onset of the pandemic brought on several challenges. The Mayor’s emergency tolling order suspended deadlines to establish site control within four months of executing the MOU and the site selection process from some projects extended into 2021. Because HHH Housing Challenge projects are not eligible for conditional funding commitments until developers establish site control, these delays have had a significant impact on overall project timelines.

Our previous reviews of Proposition HHH concluded that project costs were high and estimated timelines were not aligned with the urgency of the crisis. Although most Proposition HHH housing projects are currently in the construction phase, there are still opportunities to use remaining funding and any additional funding that may become available. Specific recommendations from our previous reviews are listed below, along with updates on the City’s progress toward implementation.

The City should evaluate the feasibility of reallocating some Proposition HHH funds that have been conditionally funded, especially funds committed to housing projects with outlier development costs.

Status: Not implemented

The City’s primary screening approach when funding projects through the LAHD/HHH pipeline is to consider whether the: developer has legal control of a site where a project can be built; project is financially feasible; and developer and service provider have successfully managed supportive housing projects. For the most part, actual project costs—merely an estimate at that stage—have not been an explicit part of the evaluation criteria.

Even before the onset of the pandemic, project costs associated with several Proposition HHH supportive housing projects exceeded reasonable expectations. This trend has continued and projects exceeding $600,000 per unit are no longer outliers. We recommended that the City explore the feasibility of reallocating funding commitments from some projects in the pre-development phase.

The City does not intend to implement this recommendation due to concerns that early cancellation of a funding commitment would compromise business relationships with supportive/affordable housing developers who have secured sites and worked in good faith to move projects forward. In addition, City officials expressed concern that withdrawing a funding commitment could create legal issues for the City.

The City should support efforts to streamline permitting and other processes to ensure that projects that are currently–or will soon be–in the development pipeline are completed as quickly as possible.

Status: In progress

Our 2019 review of Proposition HHH highlighted some of the City’s longstanding challenges with timely and efficient permitting processes for developing multifamily housing projects. The Mayor issued Executive Directive #13 (ED13) in October 2015 to facilitate streamlined and prioritized case processing for all affordable housing developments. Although it was issued before Proposition HHH, the strategies outlined in ED13 apply to supportive housing developments.

Despite ED13 and other efforts to expedite projects, respondents to a 2019 survey on Proposition HHH provided critical feedback that indicated much more needed to be done. A 2020 survey of developers by LAHD identified multiple issues, including accessibility reviews and a lack of prioritization in multiple City departments despite existing policy requirements.

We recommended that the City take the following steps.

• Expand the scope of authority of Executive Directive 13 by establishing priority case processing in other City departments such as Engineering, Department of Water and Power, and Fire Department.
• Require departments to provide recurring public updates regarding their progress on moving Proposition HHH housing developments to completion.
• Increase the number of dedicated staff across multiple departments to shepherd supportive housing projects through the approvals process.

The Mayor issued Executive Directive #30 (ED30) in April 2021. ED30 was developed with the underlying premise that ED13 was insufficient to meet the City’s housing challenges. The directive included a larger number of participating departments and expanded the Mayor’s Affordable Housing Cabinet which consists of assigned liaisons and senior personnel tasked with troubleshooting and promoting interdepartmental coordination.

ED30 also outlines a process where developers of multifamily housing projects that have ten or more units and at least 20% of total units designated as affordable (i.e., income-restricted) are eligible for prioritized case processing. But it does not provide an additional tier and further prioritization for 100% affordable projects developed through Proposition HHH.

For example, the directive states that the Department of Building & Safety shall reduce processing times for building, electrical, plumbing, mechanical, and grading permits by 25%, relative to other applications in the department. General Managers are expected to report their progress on a quarterly basis. Data recently presented by the Mayor’s Office to the Proposition HHH Citizens Oversight Committee indicated that multiple departments met or exceeded their target thresholds.

The City should do more to improve transparency around these issues. ED30 states that processing times provided in quarterly reports from assigned departments will be used to develop a Housing Scorecard on the Mayor’s website. This dashboard has not yet been completed or made publicly available.

The City should use remaining HHH funds—or any HHH funds that become available—to prioritize the development of facilities such as interim housing, clinics, storage, and showers to help better manage the immediate needs of Angelenos experiencing homelessness.

Status: Not Implemented

One of our primary concerns about Proposition HHH and the City’s approach to the homelessness crisis has been the strategic disconnect between the decision to focus almost exclusively on building housing—which takes several years—and the mounting death toll in the streets.

• More than 95% of funds allocated through Proposition HHH have been set aside for supportive/affordable housing rather than interim housing or facilities such as restrooms, showers, and storage. Because building housing has been the clear priority, the City suspended its Proposition HHH facilities program in 2018.
• While more HHH-funded housing projects will be placed into service in the coming months, only 1,142 units have been completed since the ballot measure was approved. Meanwhile, thousands of unhoused residents have died in Los Angeles County during that same period.

Even after housing being built through Proposition HHH is completed, it is likely that tens of thousands of people will remain unsheltered. A critical question has been—and continues to be—what should the City do to help people while they wait for housing to be built?

We recommended that the City take a more balanced approach and use additional Proposition HHH funding to develop interim housing and other facilities. While stopgap measures will not end homelessness in Los Angeles, providing short-term help would allow unhoused residents to meet their basic sanitation needs and obtain onsite access to services. For several years, the City’s production of interim housing consisted of congregate shelter beds developed through the A Bridge Home program. Developing these facilities was helpful, but the effort fell far short of accommodating tens of thousands of unsheltered Angelenos.

In March 2020, a coalition of Los Angeles stakeholders filed a lawsuit (LA Alliance for Human Rights, et. al. v. City of Los Angeles, et. al.) that accused the City and County of violating State and federal laws in their response to the homelessness crisis. While the legal proceedings continue to unfold, the City and County reached an agreement to provide 6,700 beds and services for people experiencing homelessness in the City of Los Angeles within 18 months. The agreement allows for a variety of housing interventions including hotel/motel rooms, tiny home villages, sprung structures/tents, and safe parking. The City has spent the last several months bringing these facilities into service, but funds from Proposition HHH have not been used.

The City should prioritize acquisition, rehabilitation, or adaptive reuse opportunities with remaining HHH funds or HHH funds that become available.

Status: In progress

At the time of our last report (September 2020), the City had tentative plans to allocate approximately $30 million in uncommitted HHH funds to solicit proposals for new projects using the same process which had been used during previous funding cycles for the LAHD/HHH pipeline. We argued that the public health emergency and economic shock of the COVID-19 pandemic called for a different strategy, especially since the status quo was resulting in high project costs and lengthy development timelines.

We recommended that the City focus on acquiring and converting existing properties—such as hotels and motels—because it would likely mitigate the impact of rising construction costs and land use issues that add time and money to projects. Most importantly, it would help move unsheltered residents into housing faster. But this alternate approach presented its own set of potential issues. Some hotels and motels function as housing of last resort for vulnerable residents, so steps would need to be taken to prevent displacing those individuals. In addition, the City would incur costs to retrofit older buildings to meet modern accessibility and fire safety requirements. Despite these challenges, the practicality of this approach has been reinforced since we issued our last report.

Project Homekey Phase 1

As part of its pandemic response, the State launched a program (“Project Homekey”) which made funding available to local governmental entities to acquire properties and quickly house people experiencing homelessness or at risk of homelessness. Entities participating in the program were typically required to provide local matching funds and eligible projects included properties that could immediately be used as supportive housing or temporarily used as interim housing and later converted to permanent.

According to data provided by the City, ten hotels/motels were acquired using a combination of State/City emergency pandemic funding during the first phase of Project Homekey. An additional five properties were acquired without State funding. Altogether, these properties will provide 891 units at a total cost approximately $198 million—or approximately $223,000 per unit.

These per unit costs are significantly lower than LAHD/HHH Primary Development Pipeline projects that are currently in construction (approximately $596,000/unit). In addition, the 891 units acquired in the span of six months is nearly 80% of what the LAHD/HHH Primary Development Pipeline has produced (1,142 units) in more than five years. But there are key distinctions that need to be considered to better contextualize any project cost and timeline comparisons.

• Most of the hotels/motels acquired through this program will be used as interim housing for between three and five years and then converted to supportive housing. The projects being built through the LAHD/HHH pipeline are typically new construction and will function as supportive housing immediately after they are placed into service.
• The acquisition costs listed above included approximately $22 million in facility rehabilitation costs (approximately $25,000 per unit) in order to meet basic ADA and fire safety requirements. According to the City, the additional costs to fully convert these facilities to supportive housing may be significant and are difficult to estimate because the conversions for most of the projects will not take place for several years.
• The economic shock of the pandemic led to a large influx of federal funding to State and local governments, a portion of which was made available as grants to acquire these properties. This process is significantly faster than conventional project financing models that rely on federal tax credits and several different funding sources. The future success of this model is largely contingent on the availability of funding. In addition, the tourism industry experienced a significant downturn throughout 2020 and the uncertainty likely contributed to an unusually favorable market to acquire hotels/motels.

Given these factors, comparing Homekey Phase 1 projects to projects in the LAHD/HHH pipeline is not an apples-to-apples exercise. But the concept of quickly acquiring properties at lower costs and temporarily using them as interim housing before converting to supportive housing continues to show promise.

Project Homekey Phase 2

The State allocated an additional $2.75 billion for a second phase of Project Homekey based on the results from the initial phase of the program. The State allocated funds to local jurisdictions based on criteria that included the number of unhoused residents—approximately $358 million was set aside for Los Angeles County.  

In October 2021, LAHD obtained authorization to apply for funding and submitted a preliminary plan to acquire 750 units of supportive housing. Based on the information reported by LAHD, there were two key distinctions from the initial phase of Project Homekey.

• Proposition HHH funds were included, along with other sources, to meet the matching requirements.
• LAHD prioritized newly-built apartment buildings without tenants and extended stay hotels because both types of properties would likely require less rehabilitation work and could function as supportive housing faster than sites acquired during the first phase of Project Homekey. Potential properties were identified by Council Offices or real estate brokers.

In February 2022, LAHD reported back to the Council and identified specific properties to acquire using funds from Project Homekey, Proposition HHH, and other sources. The proposed acquisition plan includes nine properties at a total cost of approximately $427 million. There are 868 units spread across these sites and the estimated cost per unit is $492,000. Consistent with the strategy outlined in October 2021, the properties include a mix of newly-built apartment buildings and extended stay hotels. The table below provides basic details about these potential acquisitions.

The City’s proposed plan is to use the remaining uncommitted Proposition HHH funds (approximately $80 million) to acquire these properties. Beyond the lower cost per unit, these projects will likely be placed into service within the span of months—in sharp contrast to most housing projects funded through Proposition HHH.

The passage of Proposition HHH remains a critical moment in the City’s recent history. It facilitated the development of thousands of units of housing that will help unhoused residents and people at risk of homelessness. Our previous reviews of Proposition HHH highlighted gaps in the City’s overall strategy and issues—some of which are outside the City’s direct control—that contribute to expensive projects and lengthy development timelines. During this review, we found that less than 1,200 units have been produced in five years and estimated costs for several projects exceed $700,000 per unit.

Even after all HHH-funded housing projects are completed, it is likely that significantly more Angelenos will be experiencing homelessness compared to when the ballot measure was approved. Each day spent without housing or shelter puts those individuals at risk for tragic outcomes. While future plans have not been finalized, building tens of thousands of additional units using the same model will likely cost billions of dollars and will take far too long to match the urgency of the ongoing homeless emergency. Going forward, we continue to urge the City to pursue more balanced approaches and find ways to scale up faster and cheaper projects.

Click here to read the latest Prop. HHH financial audit.