Throughout billionaire Rick Caruso’s unsuccessful campaign to become mayor of Los Angeles, critics had one question: why was the real estate developer spending $100m on a race focused on homelessness, rather than simply using his wealth to build desperately needed affordable housing?
Caruso, the developer of some of Los Angeles’ most popular luxury malls, has an estimated net worth of $5.3bn. He made ending visible street homelessness the center of his mayoral campaign.
If she had $90m, his opponent, Congresswoman Karen Bass, tweeted late in the campaign, “I would build housing for thousands of people who sleep on our streets every night. Right away. Without hesitation.”
But as Bass prepares to take office, after a historic win as the first woman and second Black politician to lead America’s second-largest city, housing experts said there was no way $100m would build housing in Los Angeles for thousands of people, a sign of the gap between campaign rhetoric and the reality of California’s housing crisis.
Experts said the record-breaking $102m Caruso poured into his failed campaign for mayor could have only built new housing in Los Angeles for an estimated 150 to 400 people.
Rick Caruso has spent $90 million lying about himself and lying about me.
— Karen Bass (@KarenBassLA) November 1, 2022
I was just asked if I had $90 million, what I would do with it.
The answer is simple: I would build housing for thousands of people who sleep on our streets every night. Right away. Without hesitation.
An investment of $100m could house thousands of people if it was used to fund rental subsidies for existing housing, rather than building new units, said Sharon Rapport, a California policy expert at the Corporation for Supportive Housing. She estimated that $100m could provide 12 months of rental assistance and supportive services to at least 4,000 people. It could go even further in helping families who had more income and just needed a small amount of assistance, providing help with rent to 7,000 or 8,000 families for a year.
With at least 41,000 people in Los Angeles unhoused, and many of them living in cars, tents or other improvised shelters, there is an intense need for more affordable housing, for both people currently living on the streets, and those at risk of being priced out of their housing in the near future. Across Los Angeles county, an average of five unhoused people are dying every day on the streets of one of the wealthiest areas in the world.
But in Los Angeles, there is such a shortage of affordable housing of any kind that organizations in the city have struggled to find housing for people, even when rental subsidy money is available, according to Jason Ward, an economist and the assistant director of the Rand Center on Housing and Homelessness. Nearby San Diego, for example, has done a much better job than Los Angeles at using federal funding to get currently unhoused people into new rentals, he said.
In a region where the costs of construction are high, even $100m does not go far in building new homes for the people who need them, Ward said. Based on a recent review of taxpayer-subsidized affordable housing units that ended up costing $650,000 to $700,00 each, an investment of $100m would build approximately 150 units in Los Angeles, he said.
Using other estimates, including the cost of converting existing hotel or motel rooms into permanent housing or the cost of privately funded construction, the money might stretch as far as creating 300 or 400 single-occupancy units, he said.
Building new housing in California is undeniably expensive, but it’s also necessary, experts and advocates said. Recent research suggests that investing in housing up front may end up costing the public less than allowing increasing numbers of people to live in dangerous and unhealthy situations, and only intervening with city services or law enforcement when they reach a point of crisis.
Two Rand evaluations of supportive housing pilot programs in Los Angeles, from 2017 and 2022, found that the programs either largely or completely paid for themselves, because participants who received supportive housing ended up using less of other city-funded emergency services, like emergency in-patient mental health care or time in county jails.
Homelessness experts also cautioned against politicians, like Caruso, who have talked about addressing street homelessness by creating tens of thousands of temporary beds, not by finding people permanent housing.
“Lots of times, candidates and current elects will say they’d prefer to build shelters. It does get people out of visibility. Voters think that if somebody is not visible, they’re not homeless,” Rapport said. But people living in a public shelter instead of the street are “still living homeless”, she said.
During her campaign, Bass said she would shelter at least 15,000 people in her first year in office, some in more permanent supportive housing and some in interim beds. Her plan included paying for 1,000 new temporary shelters, including shed-like “tiny homes” and individual cubicles in tent structures, as well as leasing and purchasing apartments, turning more motel rooms into permanent housing, and providing rental subsidies. She also said she would work to cut through bureaucratic red tape and waive fees to speed up new housing construction across the city, and work to prevent illegal evictions and provide more financial assistance to help people who are struggling economically stay in their homes.
Bass pledged in her first statement about her mayoral win that “we are going to solve homelessness” and that “Los Angeles is no longer going to be unaffordable for working families – good jobs and affordable housing construction are on the way”.
