California Gov. Gavin Newsom has often touted Homekey as one of his administration’s most ambitious attempts to tackle the state’s notorious homelessness and housing crisis.
But the $3.8 billion initiative the Democratic governor launched in 2020 is plagued with a lack of oversight and thousands of homes that still haven’t been finished, according to a damning investigation by CalMatters published Thursday.
Homekey involved giving money to local governments so that they could convert motels and other structures into housing for the homeless.
It was an unprecedented attempt to force cities into the real estate world, where they took everything from inns to sorority houses to a dentist’s office to help solve the state’s housing shortage.
“What we’re doing here today is multiples of what any state in American history has committed to address this crisis of homelessness,” Newsom said at a 2021 press conference.
However, as of last December, around 3,000 homes have not been finished, according to dozens of records requests filed by CalMatters. That’s one in five projects that were promised.
Additionally, around 2,000 units still needed to be converted to permanent living, and grants for 500 units were canceled or never appeared.
One of those unfinished projects was a Travelodge motel in Gardena that the city of Los Angeles bought for $9 million. It was estimated it would take $50,000 to start moving people in.
The reality: Five years in and with $3 million sunk, the motel is still vacant, according to CalMatters, as the motel had a bunch of issues with windows, plumbing, and electricity.
Only 60 Homekey projects of the 148 completed ones were finished on time, according to the report’s analysis. The rest came late, while 45 projects are still incomplete.
Newsom said the program is still a “phenomenal success” with all the housing coming online.
“We’re talking about hundreds and hundreds of projects all across the state of California that they’re trying to manage and organize and operate,” he said when CalMatters asked. “And I imagine each one of them brings its own opportunities and own challenges as we move forward and implement at a scale we’ve never implemented in the state’s history.”
But developers said a key problem was that the initiative wanted to build too fast with little money.
“That’s the issue with Homekey, is they give you not quite enough money to do it, and they want you to do it really, really fast and really, really well,” said Bay Area developer Taryn Sandulyak.
The money from Homekey had to be paired with other sources in order for projects to be successful, Jeffrey Lambert, CEO of Ventura Housing, said.
In some cases, cities were thrust into home building and land development when they had little experience, setting them up for failure. The city of Vallejo, for instance, failed to get a key federal grant and put up safeguards against financial risk.
Homekey’s crunched timeline — finishing construction within one year and moving people in 90 days after — also forced rushed budget estimates that severely underestimated costs.
In Santa Cruz County, three unfinished projects were a result of that underestimation. The county had acquired $6 million for homeless veteran housing, but the project ran out of money. The county was not familiar with how to make sure a construction project was adequately funded.
All those structural issues led the county to not ensure the project was realistic.
“I would say no,” Ratner told CalMatters when asked if they did their due diligence. “I can’t say yes with a straight face at this juncture.”
Now, the state is creating a new housing agency expected to help centralize guidance and to adjust timelines after the many missed projects.
“We are improving our own vetting process, if you will,” said California Health and Human Services Secretary Kim Johnson, “to ensure these projects are successful in delivering.”