California’s HomeKey Program Faces Major Challenges
California Governor Gavin Newsom has often highlighted HomeKey as a significant effort by his administration to tackle the state’s severe homelessness and housing issues.
However, a troubling report released by CalMatters reveals that the $3.8 billion initiative, which began in 2020, suffers from insufficient oversight and a backlog of unfinished homes.
HomeKey was designed to provide local governments with funds to convert motels and various buildings into housing for the homeless. It was a unique approach aiming to plunge the state into the housing market, repurposing everything from inns to dental offices.
“What we are doing here today doubles down on what any state in American history has done to address this homelessness crisis,” Newsom proclaimed during a 2021 press conference.
Yet, as of last December, about 3,000 homes remained unfinished—around one in five of the promised projects, based on records obtained by CalMatters. Additionally, around 2,000 units needed conversion for permanent housing, and funding for 500 units was either canceled or not provided.
A notable example is the Travelodge Motel in Gardena, purchased by Los Angeles for $9 million. Despite spending $3 million over five years, the motel has not yet welcomed residents due to issues with plumbing, electricity, and windows.
According to the report, out of the 148 HomeKey projects completed, only 60 were finished on schedule, while the rest experienced delays, and 45 projects are still incomplete.
Despite these findings, Newsom maintains that the program is a “tremendous success” with homes ready for occupancy.
“We’re managing hundreds of projects across California,” he responded to CalMatters inquiries. “Each brings its set of challenges as we strive to achieve something unprecedented in our state.”
On the other hand, developers are voicing concerns, pointing out that the project’s rapid pace is hindered by inadequate funding.
“The issue with HomeKey is that they’re not providing enough financial support while expecting quick, quality results,” commented Bay Area developer Taryn Sanduljak.
Jeffrey Lambert, CEO of Ventura Housing, emphasized that HomeKey’s funding needs to be supplemented by additional financial sources to ensure success.
In some situations, cities, lacking the necessary experience, struggled to implement housing solutions. For instance, Vallejo failed to secure essential federal grants, exposing themselves to financial pitfalls.
The tight timelines imposed by HomeKey, requiring completion within a year and occupancy within 90 days, led to rushed budget estimates, significantly underestimating costs.
Santa Cruz County faced similar challenges with three unfinished projects due to this underestimation. Although $6 million was allocated to house homeless veterans, funds were exhausted before the project could be completed, and county officials found it challenging to ensure proper funding.
In light of these structural problems, officials are now questioning if adequate diligence was performed. One official acknowledged to CalMatters, “I would say no,” admitting he couldn’t assert otherwise with confidence.
The state is now in the process of establishing a new housing agency, aimed at providing centralized guidance and modifying schedules in response to the failures many projects experienced.
“We are refining our review processes to enhance the success of these projects,” said Kim Johnson, California Health and Human Services Secretary.
