Homekey has been a transformative tool to expand and expedite the Los Angeles region’s supply of affordable homes for those experiencing homelessness even as California and localities seek to resolve long-term financing needs.

When California launched Homekey in July 2020, at a time of great public health and economic anxiety because of Covid-19, affordable housing advocates and local governments across the country took notice and applauded the program’s innovation and urgency.

The purpose behind Homekey was fairly simple: Let communities take advantage of underutilized sites, like hotels and motels that were not at full occupancy during the pandemic, and allow them to be acquired and renovated for either interim housing or permanent supportive housing (PSH) for persons facing greater Covid risk because they were experiencing homelessness.

Standing up a new affordable housing financing program, in a matter of months, just does not happen regularly in the Golden State.

In a new Enterprise report from our Southern California market, in collaboration with consulting firm CTY Housing, we found that the program deserves plenty of praise even as administrators around the state acknowledge improvements for future funding rounds built on lessons learned.

We looked at a sample of Homekey sites across Los Angeles County – interviewing operators and public partners that were supported through the initial tranche of funding from 2020 – to distill a series of summary takeaways along with some deeper-dive case studies on select sites.

The report and a selection of project-level case studies point to a program that:

• Was creative in its regulatory flexibility and program design
• Leveraged federal pandemic relief funds and philanthropy effectively
• Provided an injection of capital resources for communities with little to no interim housing or PSH infrastructure
• Helped to incentivize intergovernmental collaboration around projects that went operational in months not years

Homekey has been an unprecedented opportunity for Los Angeles to leverage its strong interim and PSH provider networks to increase and diversify its short- and long-term housing options.

Los Angeles was relatively unique in its decision to target resources during the first funding round almost exclusively toward interim housing uses rather than for PSH, at least initially.

Unlike many communities across the state, the region was able to tap into a deep provider network that has been in operations for decades and in growth mode fueled by recent civic initiatives such as Proposition HHH and Measure H. The programmatic focus on interim housing made sense given the insufficient amount of shelter beds countywide relative to the need, along with the intense legal and public pressure to address unsheltered homelessness and sprawling encampments that are pervasive in many neighborhoods.

Most of the initial Homekey sites will be converting from interim to permanent supportive housing in the next five years, allowing operators to fundraise for capital needs to address the renovations needed.

The program is advancing multiple objectives while allowing nonprofit housing operators to advance their mission and to expand their asset base.

The various bottom lines related to supportive housing creation, ending homelessness, neighborhood revitalization, and addressing public health risk sounded promising but, with little precedent and evidence for a model such as Homekey, measuring success will understandably take some time.

That is because almost all the first-round Homekey sites are still in the process of converting from interim housing to PSH. More than one operator described this program as the “opportunity of a lifetime” to create lasting affordable housing solutions for clients struggling to get back on their feet.

The program is also facilitating partnerships. Some experienced interim housing providers are teaming up with tenured PSH developers to offset limited real estate development expertise, so they can satisfy the dual needs of short-term housing operations and long-term PSH development and management.

Operators also appreciated the privacy that the non-congregate hotel/motel configuration affords – quite different from traditional shelter layouts – to help promote recovery, restore dignity and foster self-determination.

More time and study are needed to account for the full costs and timelines of hotel and motel conversions as well to better understand participant outcomes in non-congregate settings.

Supported by the Conrad N. Hilton Foundation, this is not a formal program evaluation but rather an assessment of early-stage implementation in just one region of the state: Los Angeles.

Clearly the program is evolving and reconciling some of the inherent limitations from the initial funding constraints and program design. We noticed, for instance, that the second round of Homekey, at least for the city of Los Angeles, is decidedly more focused on acquiring sites that can covert to PSH immediately.

It will be interesting to look over time at the conversion process and the costs associated with a two-phase rehab approach, one for the initial life and safety renovations to become interim housing and a second to adapt the site to long-term supportive housing.

This research builds on a more substantive report in March from the Terner Center for Housing Innovation at UC Berkeley that looked at program experiences and impact statewide.

Here are our key findings:

• Nonprofit operators and public administrators expressed different motivations for wanting to participate in Homekey, suggesting that the program is advancing a more diverse set of outcomes beyond its core goals to address public health and housing supply goals.
• Homekey’s requirements demanded an exceptionally high level of coordination among state and local governments, as well as housing operators, to execute the program objectives in the required timeframes, pointing to the potential for intergovernmental collaboration to achieve meaningful results when resources and political will are committed. At the same time, multiple funding rounds enabled the state and local government learn from prior experience and refine their future strategies to optimize Homekey outcomes.
• Like all interim housing, Homekey-funded sites are expensive to operate, and in many cases, not resourced at the level that operators suggest is required to provide the level of services that clients need.
• The city and county of Los Angeles are now grappling with identifying capital and operating subsidy to convert the sites to permanent supportive housing because operating subsidy from project-based Section 8 vouchers is dwindling and over-subscribed.
• The configuration and land use restrictions of motel and hotel sites were not intended for use as interim or PSH and presented challenges for operators as it relates to service delivery and conversion planning.
• For Los Angeles and its vast and diverse homeless population, congregate and non-congregate interim housing are necessary options but the varying formats present advantages and disadvantages that warrant more study.
• Homekey’s regulatory flexibility – including exempting properties from the California Environmental Quality Act (CEQA) – is an important tool for expediting housing creation. But, at the same time, community engagement is necessary, even for projects that are not changing the physical form of neighborhoods.
• Converting sites from interim to permanent housing will be challenging for all operators, especially those without in-house real estate development capacity, which presents an opportunity for local government to arrange technical assistance and streamline review and approval processes for these sites.

Read more about the assessment and policy recommendations as well as the case studies on Homeless Outreach Program Integrated Care Services conversion of the EC Motel, PATH Ventures and the Ramada Inn, the Weingart Center Association and the Beacon and the Alcott Center and Homekey Commerce.

For more information about the report and our work in supportive housing and homelessness in Southern California, contact Marc Tousignant.