Bonds

Three Pacific Coast states, Hawaii priortize housing in their budgets

The nation’s housing cost and availability crisis — particularly acute in California, Washington, Oregon and Hawaii — has those states’ governors throwing everything they can at the problem in the hope of knocking it down.

All four states face the dual issues of a shortage of affordable housing and entrenched homelessness, the latter of which isn’t always an economics issue.

Their efforts to tackle the issue were raised by both California Gov. Gavin Newsom and Hawaii Gov. Josh Green in separate on-podium interviews Tuesday at the Milken Institute Global Conference in Beverly Hills.

Green, inaugurated in January, began the year outlining an ambitious agenda in his first State of the State speech in the hope of alleviating some of the state’s worst social problems, including declaring a state of emergency around homelessness. He was able to secure $60 million from lawmakers to address chronic homelessness by building tiny homes. Hawaii’s legislative session ends Thursday.

At Milken, he outlined a new program to locate temporary housing near hospitals.

The first tiny home community will be built next door to the Hawaii Department of Health in Honolulu.

The program will focus on individuals that have been discharged from the hospital with nowhere to go. It will feature 10 tiny houses with security and a space for people to shower, use a bathroom, and access social workers, he said.

“Housing is healthcare,” said Green, a physician.

Providing housing for homeless people would increase their longevity and also save money on medical costs, Green said.

The average spending on emergency room care for a homeless person in Hawaii is $82,000 annually, he said. Putting people in tiny homes following discharge from the hospital for follow-up care will reduce that cost between 42% and 73%, depending on the severity of the person’s illness. Providing follow-up services would reduce emergency room visits and reduce the average annual cost to $21,000.

“The savings can be reinvested in our communities,” he said.

He also plans to pitch President Joe Biden on a pilot program for temporary housing near hospitals, three for blue states and three for red, to test where it reduces Medicaid costs.

“I wrote a bill in 2012 that would allow doctors to prescribe housing,” said Green, a former state lawmaker.

“If we had done that, we would have been able to put people in housing. But it’s not how we usually deal with Medicaid,” he said.

“If you devoted just 2% of the Medicaid budget to this, you would see incredible savings,” Green said.

Green said he doesn’t know if Republican governors would support it; given his brief time in office he hasn’t had a chance to speak with other governors. Green took office in January.

“Governors all have different personalities — and they know the people in their state,” Green said. “I think this will resonate.”

California’s remedy
In California, the state has $15.3 billion in its proposed fiscal 2024 budget to tackle the housing crisis and homelessness, Newsom said during his Milken interview.

He called the extent of the homelessness problem in California “outrageous and unacceptable” and said that “taking accountability involves acknowledging how bad it is.”

The state and its major cities have issued billions in bonds in addition to general fund spending without apparent visual progress at street level. The past few years have shifted to focusing on accountability, including state lawsuits against cities that don’t fast track projects that meet criteria outlined in legislation approved in recent years to speed up housing production.

“We are targeting encampments and dealing with our original sin,” Newsom said. “I am suing cities, including the second city this week, in order to hold them accountable.”

California Attorney General Rob Bonta, Newsom, and the California Department of Housing and Community Development filed a lawsuit against Elk Grove, a city of 170,000 in Sacramento County, challenging the city’s denial of a proposed supportive housing project in the city’s Old Town Special Planning Area.

The proposed Oak Rose Apartments would add 66 units of supportive housing for lower-income households at risk of homelessness, in a jurisdiction the state says is in dire need of low-income housing opportunities.

The state’s lawsuit claims the Elk Grove City Council improperly denied the project. The state seeks injunctive relief to require Elk Grove to approve the project and realign with state law.

“The lawsuit against Elk Grove sends a strong message to local governments: if you violate fair housing laws, we will hold you to account,” Bonta said. The state filed a similar suit against Huntington Beach in March after that city passed an ordinance blocking the processing of applications of accessory dwelling units on single-family home properties.

“When local governments repeatedly fail to uphold their obligations and blatantly look for ways to skirt state law, we will use every tool available, including legal actions to ensure that Californians have access to needed housing,” Newsom said.

“Building more affordable housing is the most effective tool to reduce and prevent homelessness — but the City of Elk Grove is blatantly evading fair housing laws and working against solving our housing and homelessness crisis,” HCD Director Gustavo Velasquez said in a statement.

Elk Grove Mayor Bobbie Singh-Allen responded to the lawsuit with a statement saying the city did not turn down the developer. It’s merely not allowing the project to be fast-tracked.

“The City of Elk Grove is not a bad actor,” Singh-Allen said. “Elk Grove has a strong track record for supporting affordable housing projects and continues to engage in good faith discussions with the Oak Rose Apartments applicant in hopes of reaching a mutually agreeable solution.”

The mayor added that she welcomes further discussions with Bonta’s office.     

Steps taken in Washington and Oregon
Lawmakers in Washington and Oregon have approved housing funding, but wouldn’t sign off on Washington Gov. Jay Inslee’s plans for a $4 billion housing bond, while in Oregon, lawmakers have yet to approve Gov. Tina Kotek’s proposal for a $700 million general obligation bond.

In December, Inslee released a housing proposal as part of his budget that included placing a referendum on the ballot for the bonds, because they would exceed the state’s debt limit.

The $7.9 billion capital construction budget proposal the Senate’s budget writers released in March includes spending on affordable housing, behavioral health, education and natural resources projects, but not the housing bond referendum.

Kotek’s first action as governor was to declare a state of emergency around homelessness, set a statewide goal of building 36,000 housing units within a year and to direct all state agencies to work on finding ways to reduce the number of people living on the streets.

She also recommended in her budget a $1.02 billion investment in affordable housing production and preservation, including $770 million in state debt for the construction of new homes for renters and first-time homeowners. That figure represents an 80% increase in housing over recent construction trends, according to the budget document.

On April 19, Kotek asked the Legislature to approve $1.3 billion: $1 billion in bonding to build and preserve more affordable housing, and at least $300 million in general funds. She had asked for $700 million in general obligation bonds in her budget in January. The Legislature approved a homelessness and housing package that added $70 million to her general fund request, growing it to $200 million, and approved it, but the bond request hasn’t moved ahead.

Funding was allocated April 28 to seven multi-agency coordination groups across the state to get started on projects with the emergency funding, however. The Legislature approved in March House Bills 2001 and 5019, which set in motion programs to tackle the areas of the state that have seen a 50% increase in homelessness since 2017, as designated when Kotek declared a state of emergency in January.

“The housing crisis demands urgent action on an unprecedented timeline. I am grateful to the providers, local and county leaders who quickly assembled to form the MACs, the legislature for passing the package early with bipartisan support and broad stakeholder input, and to communities across Oregon embracing this call to action,” Kotek said in a statement. ”I look forward to the work ahead to help ensure these investments yield visible, measurable results across our state by the end of the year.”
 
Six of the seven regional MACs have finalized contracts to receive emergency funding to execute the governor’s emergency order, which specifies the dollars will be used to prevent nearly 9,000 people from becoming homeless, rehouse more than 1,200 households, and create over 600 new shelter beds in emergency areas by end of the year, according to the governor’s statement released April 29. Due to a local policy that requires the Clackamas County commission to approve the contract before it is signed, Clackamas County’s contract was expected to be signed this week.

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