Where Have All the Public Dollars Gone? 

At a recent sweep behind the Travelers Inn shelter on Parkway Drive, unhoused victims of the sweep said that they were unfairly exited from the Inn by the operator, RH Community Builders. Photo by Bob McCloskey
At a recent sweep behind the Travelers Inn shelter on Parkway Drive, unhoused victims of the sweep said that they were unfairly exited from the Inn by the operator, RH Community Builders. Photo by Bob McCloskey

California spent $17.5 billion trying to combat homelessness from 2018 to 2022, reported Nick Watt of CNN, on July 11, 2023. His article, “California has spent billions to fight homelessness. The problem has gotten worse,” points out that $20.6 billion in state funds had been allocated to fight homelessness through 2024, in addition to millions in federal grants.

“Nearly $4 billion went to local governments to spend on anti-homelessness initiatives. $3.7 billion went to a program called Project Homekey to specifically buy properties like motels [to convert] into permanent, affordable housing,” stated Watt.

On Feb. 16, a press release from the City stated that “to date, the City of Fresno has received $137,880,079 of Homekey funding from the State of California. More than 3,000 people have been housed in motels purchased by the City.”

Watt’s CNN article reported that only 13,500 units had been created with Project Homekey funds. He reported that a further $2 billion went to tax credits for developers, another $2 billion went to kickstart affordable housing projects and nearly $2 billion was spent on emergency rental assistance.

Many Californians question where the rest of the dollars have gone and the lack of transparency and accountability for the counties, cities, contractors, and nonprofit and for-profit service providers receiving these public funds. With homelessness worsening, Watt examines the system and sheds some light on a longstanding, self-perpetuating, deeply entrenched industry.

All the agencies in California’s current system to address homelessness, including those governed by the 45 Continuums of Care (CoC), are participants in a system that, some say, perpetuates homelessness. Some advocates call it a nonprofit (with some for-profits) bureaucracy that exists to expand funding for needed but mostly temporary services.

Locally, the Fresno Madera Continuum of Care (FMCoC) has 51 members, including the City of Fresno, the County of Fresno and many service providers such as Turning Point of Central California and RH Community Builders, two major recipients of public dollars. This network of service providers and contractors, many of whom are also recipients of state funds, holds a lot of political power and consistently lobbies elected officials for more funding.

CoCs are mandated in each region by the U.S. Department of Housing and Urban Development (HUD) to oversee the distribution of federal funds and state-administered federal grants allocated for homelessness.

According to HUD’s website, “the CoC Program is designed to promote community-wide planning and strategic use of resources to address homelessness; improve coordination and integration with mainstream resources and other programs targeted to people experiencing homelessness; and improve data collection and performance measurement.”

The FMCoC website states that “it assists homeless persons to make the critical transition from homelessness to independent or supportive permanent housing [and] accessing education, health and mental health services, employment training and life skills development.”

The FMCoC was cited in a 2019–2020 Fresno County Civil Grand Jury Report. The grand jury found that there was a lack of central coordination, poor communication to the public and a lack of transparency. It also cited potential conflicts of interest because of the structure of the board. These problems continue to exist.

In addition to federal funding, the City of Fresno and the County have received massive state funding that goes directly to contractors, shelter operators and service providers. And there’s little oversight and accountability for these state funds and how this money is spent.

The State of California created a homeless task force in 2017 that failed to establish a process to oversee and audit providers that receive state dollars. Finally, in late 2023, that oversight was established by the legislature.

The lack of transparency and accountability thus far has left the public in the dark. And, given that there is abuse in all systems, the public is asking, how much money has been wasted?

The current system provides huge public dollars for services as well as for administrative costs, executive salaries (usually six figures) and other overhead costs. Paying workers, nonprofit and for-profit executives, and administrators to run service provider organizations and temporary shelters drains dollars without providing permanent solutions. Giving public funds to a for-profit organization to rehab and manage a small number of permanent housing units is not a solution.

So-called public/private partnerships are not working and merely expand the social services system that continues to drain public dollars. Under the current system of interlinked public and private social services, unhoused people get helped but not in any effective way.

The state has allocated nearly $4 billion for Project Homekey for shelters, rapid re-housing and permanent housing. When the first round of Homekey funds went out in 2020, the partnership of Fresno-based RH Community Builders, an LLC, and Illinois-based UPholdings, LLC, and the Fresno Housing Authority were the only ones to receive Homekey dollars in Fresno County. Subsequently, three more Homekey projects were granted to the RH Community Builders and UPholdings partnership.

With the grants, RH Community Builders, a shelter operator and a for-profit property management company, and UPholdings, like the other public entities and nonprofits that applied, now hold ownership and collect rents on the Homekey properties purchased with public state funding.

Fresnoland’s Pablo Oriheuda reported on Nov. 23, 2023, that one RH/UPholdings project, Crossroads Village, initially “received $15.3 million in Project Homekey funds in 2020 to convert the space into emergency rapid rehousing for Californians experiencing homelessness who were at high risk of serious illness or impacted by COVID-19, according to the project’s news release. Since 2020, the project [has] received nearly $60 million in more funding through local programs and Fresno County.” 

RH Community Builders and UPholdings are just two examples of how public dollars to address homelessness are allocated. 

A Housing First approach with an emphasis on social housing and supportive services on site has been successful where implemented. In addition, modular homes, tiny homes, container homes and other innovative housing options are much less expensive and must be considered if we are to build the number of housing units needed for housing affordability and access. Housing First would provide permanent supportive housing and be far more cost-effective than the current expensive and broken system.

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