The Two Biggest Questions Surrounding Measure C's Homeless Funding - Voice of San Diego

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The Two Biggest Questions Surrounding Measure C's Homeless Funding

Homelessness funding has become a central selling point for a measure to raise hotel-room taxes on the March ballot. Two major contentions over that funding have emerged: how it might be used and whether it will be enough to meaningfully address the problem.

Michael McConnell, a homeless advocate opposed to Measure C, speaks about the measure at VOSD’s Politifest. / Photo by Vito Di Stefano

Homelessness funding has become both a central selling point and point of contention for a hotel-tax hike on the March ballot.

Though a majority of the revenue from Measure C – 59 percent – would go toward a Convention Center expansion and other needs, the campaign has wrestled most with questions about the money it would deliver to tackle homelessness – namely, how it might be used and whether it will be enough to significantly attack one of the city’s costliest problems. (The measure would also direct a smaller percentage of money toward road repairs.)

Measure C is expected to pull in about $2 billion for homelessness over the next 42 years, with a 1.25 percent to 3.25 percent tax increase on hotel stays.

Proponents are selling Measure C on the promise of a dedicated annual revenue stream for homeless initiatives that would total about $25 million annually in the measure’s first decade.

How it Will Be Used

The measure does not detail how those funds will be used. Backers say that is a feature, not a bug.

The measure is written to allow future city leaders to decide how to spend the new funds on different services that could include housing, shelter, jobs programs and rental subsidies – which also makes it difficult to assess its potential impact. The campaign has said Measure C was written this way because the city’s homelessness needs could shift during the initiative’s 42-year span and proponents decided future elected leaders will be best equipped to decide what should be funded.

Measure C also gives city leaders the option to seek up to $750 million in more upfront financing from the bond market, a strategy that could back more housing development or other costly needs that could otherwise quickly eat up annual tax hauls.

But that financing approach also isn’t guaranteed. The Measure C campaign has emphasized that future mayors and City Councils will set five-year spending plans if the measure passes and that they could use the new money to invest in strategies laid out in the new homelessness plan.

“The City Council recently unanimously adopted a Community Action Plan on Homelessness that can and is likely to be the guide for how the City Council and mayor put (hotel tax) revenues to the highest and best use to tackle our homelessness crisis,” campaign spokesman Greg Block wrote in a statement to VOSD.

Homeless advocate Michael McConnell and others have seized on Measure C’s lack of specificity on spending plans.

Among McConnell’s concerns are the measure’s failure to commit to funding homeless housing and the broad array of programs it could support that McConnell argues may not end up serving homeless San Diegans who are most in need.

Is it Enough?

McConnell has also argued the measure doesn’t bring in enough money to meaningfully address homelessness.

“It’s a small increase of funding potentially for homeless services and it’s nothing to jump up and down about,” McConnell said. “To sell this measure based on homelessness is so disingenuous as far as I’m concerned.”

Meanwhile, some politicians including Councilwoman Barbara Bry, who’s running for mayor, have implied that the measure will provide sufficient funding to combat homelessness.

“If Measure C passes, I will not support the housing bond measure because we will have funding from Measure C,” said Bry at a recent debate, referring to a bond measure that could help deliver thousands of new affordable homes that could appear on the November ballot.

Yet some of Measure C’s most prominent supporters acknowledge that additional help will be needed to meet the city’s need for housing, rental subsidies and other services.

A central tenet of the city’s homelessness strategy approved by the City Council last fall was a target to build or rehabilitate about 2,800 new supportive housing units in the city over the next decade, including nearly 1,700 units in the next four years. The plan estimated development costs alone would total $963 million over the next decade, a sum the city would likely split with other funders. The plan also called for hundreds of additional rental subsidies and services for homeless San Diegans who would need to find another 1,845 low-cost housing units in the private rental market, needs that will also add up to hundreds of millions of dollars.

By comparison, Measure C is projected to pull in $276 million for homelessness in the measure’s first decade, a sum far short of the $1.9 billion in needs laid out in the city’s 10-year homelessness plan.

McConnell, who has spent more than $236,000 on mailers and ads opposing Measure C, has said he is more inclined to support another measure that could appear on the November ballot that has committed to directing money toward homeless housing.

A $900 million housing bond being pushed by housing advocates would focus entirely on helping pay for an estimated 7,500 new affordable housing units, including 2,500 supportive housing units designed to serve particularly vulnerable homeless San Diegans.

Some Measure C supporters see the Measure C and the possible bond as complementary measures.

Father Joe’s Villages CEO Deacon Jim Vargas and Building and Construction Trades Council leader Carol Kim, both vocal champions of Measure C, argue city voters must approve both the hotel-tax measure and the bond measure to significantly address homelessness and implement the plan – not simply one or the other.

City Councilman Chris Ward, who chairs the regionwide group coordinating the countywide response to homelessness and has endorsed Measure C, has said he is urging the City Council to place the bond measure on the ballot for the same reason.

“(Measure C) doesn’t provide anywhere near the amount of money that we need. That doesn’t mean it’s a bad initiative,” said Vargas, who has appeared in campaign commercials describing the need for dedicated homelessness funding. “I am a proponent of Measure C. I think we need it.”

Vargas and Kim are among the Measure C supporters who suggest that hotel-tax dollars could be used to pay for needed services and perhaps some housing while the bond measure could fund a larger share of the new housing called for in the city’s homelessness plan.

Stephen Russell of the San Diego Housing Federation, the housing group pushing the bond measure, has for months made a similar argument.

He said the hotel-tax measure could lessen the burden on the city’s day-to-day fund as it seeks to maintain and expand homeless services to implement its homelessness plan while the bond could fund brick and mortar.

“We need both resources. I don’t think it’s an either or,” Russell said. “I think it’s a yes and.”

But the bond measure has yet to make the November ballot, and it’s likely it will need Bry’s support to make it there.

So How Much Housing Would Measure C Fund?

The homelessness plan written by nonprofit Corporation for Supportive Housing and adopted by the City Council estimated the 2,800 supportive housing units considered central to the city’s success in reducing homelessness would cost an average of nearly $344,000 to develop and would need to be paired with both annual rental subsidies and services that each total at least $14,000 a year.

Ted Miyahara, former vice president of multifamily housing finance at the San Diego Housing Commission, said the city has typically provided subsidies to supportive housing projects that cover just under a third of their per-unit cost.

Assuming that ratio and an average subsidy per unit of $100,000, Miyahara projected that Measure C’s annual tax haul alone could fund an average of 248 supportive housing units a year or just under 2,760 units over about 10 years – and that’s only if future city leaders make the unlikely decision to invest all new hotel-tax money in housing projects and development costs don’t explode.

Using the same math, a $100 million bond might help finance 1,000 units.

But to make those projects work, Miyahara said, the city must have housing vouchers to subsidize rents for those units, a resource that has for years lagged behind need. The rental assistance would also need to be supplied somehow – whether via the federal government or city funds.

“I think the limiting factor is really the vouchers,” said Miyahara, who now leads development nonprofit San Diego Community Housing Corporation.

Jonathan Hunter, a consultant who’s spent decades working to combat homelessness and create homeless housing in the western United States, noted that Los Angeles officials have been forced to offer larger subsidies for projects funded by the city’s Proposition HHH due to federal tax reforms and escalating development costs.

With increased development and operating subsidies, Hunter predicted that San Diego’s Measure C might help fund closer to 900 units with a $250 million bond or 800 to 900 units over a decade – again, if the city devoted all of its annual tax revenue to building housing.

Hunter acknowledged that would be a difficult trade-off.

“This would help but would not lead to dramatic reductions in street homelessness in San Diego as it would meet roughly a third of the need for just supportive housing but would mean no funds are available for diversion, rapid rehousing and the other critical interventions for families,” Hunter wrote in an email to VOSD.

The city could deliver many more of those interventions with Measure C than new housing.

For example, Measure C funds could more easily support nearly 770 new homelessness prevention slots the plan projected might cost about $2.5 million annually. These so-called diversion slots would consist of short-term aid meant to quickly help those at risk of ending up on the street or in shelters. It could also help pay for some of the plan’s roughly 800 new slots of shorter-term rental assistance and services that might cost about $18 million a year.

Given the long list of needs, Kim said she hopes two-thirds of city voters support both Measure C and the housing bond – a significant threshold to cross – so they can work in tandem to tackle the homelessness crisis.

“I am concerned that people think that one will be enough,” Kim said. “I think that people need to understand the gravity of the situation, and that when things are this hard and this challenging, they require more resources, not less.”

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