March 16, 2022 - From the March, 2022 issue

LA Family Housing’s Stephanie Klasky-Gamer Unpacks Daunting Challenges Facing Homeless Service Providers in LA County

TPR Interviews LA Family Housing’s respected executive director Stephanie Klasky-Gamer to afford her a platform to elaborate on the daunting challenges nonprofits face developing housing and supportive services in LA County – resulting from the fractured approach that jurisdictions are undertaking both to access shelter and to clear encampments in the public right-of-way. Klasky-Gamer importantly opines on how the City of LA’s district-by-district policy is “wreaking havoc” on community trust and efforts to “effectively” transition participants off the streets into appropriate and available housing.


Stephanie Klasky-Gamer

"LA is NOT operating with regional solutions for regional problems... County dollars are shared regionally, but the City of LA has developed a district-by-district solution that is wreaking havoc on effectively moving people out of homelessness."

Stephanie, begin by sharing the origins and mission of LA Family Housing.

Stephanie Klasky-Gamer: For nearly 40 years, LA Family Housing’s mission has been very simple: to end homelessness in people's lives by providing housing enriched with supportive services. Helping families and individuals transition out of homelessness and poverty has been at the core of LA Family Housing.

When we began as an agency in the early 1980s, we were actually two different companies. One was based here in the San Fernando Valley when a group of concerned citizens came together, purchased an old motel, and converted it into a 30-day shelter where 40 families could stay. It was the first shelter in the San Fernando Valley, so it was very creatively called Valley Shelter.

My roots in this work go back to Valley Shelter days when my family was involved through our synagogue in its creation and then later as a teenager volunteering there.

During the early 80s, there was a second group of concerned citizens that came together with the same mission to address what they saw as a growing crisis amongst homeless families. Their strategy was a bit different. Rather than converting an old motel into temporary housing—this was a finance officer and an architect who used to work for the city—they formed a nonprofit that they called LA Family Housing. They coordinated with their former colleagues in the city and picked up small infill lots where they built apartment buildings because their recognition was the way to end homelessness in somebody's life is with a home. They took real estate development expertise and brought it to that mission.

A few years later, through shared vision, mission, funding, and leadership, the two organizations merged under LA Family Housing’s name. I always like to start out describing our organization by sharing that history because it lends to who we are today, the growth that we have experienced this last decade, and how we see our future. We are uniquely positioned as both a real estate development company and a homeless services agency. Both expertise, delivered with heart.

Elaborate also on the nature of LA Housing’s current work and its place in the continuum of homeless services in Los Angeles. Where is LAFH making progress and where are you not?

It depends on how somebody defines progress. Bottom line, how LA Family Housing defines progress is: how are we engaging with people towards finding and navigating that path to transition out of homelessness?

LA Family Housing’s role as both a real estate developer and operator as well as a comprehensive service provider affords us broader opportunities than most within the homeless service delivery system of LA County. Most organizations are either organized around the service they provide, a healthcare provider or a legal agency or an outreach provider, or they're organized around the population they serve. They might only serve veterans, women with children, families, or single adults.

LA Family Housing works along the entire continuum for multiple populations— from a robust street outreach, field-based team, to being the developer and operator of interim housing, to comprehensive case management, what we call housing navigation services, finding that path and helping people navigate along that path out of homelessness into a permanent home, to the continuation of wraparound services even once a family or an individual is placed into permanent housing. We work along that full continuum and for all of the populations that I named before.

TPR recently interviewed Kerry Morrison of Heart Forward LA;  she asserts a key obstacle to homeless service provision is the lack of a functional mental health care system. Address the challenges LA Family Housing encounters interfacing with the region's “impossible to navigate” mental health care system.

There are two ways to answer that. One, our mental health system is certainly a complicated system. Two, it's also an under-resourced system. There just isn't enough support to address the severity of the mental health needs of our participants. Homelessness itself is a traumatic experience.

As we know, not every individual or family experiencing homelessness lives with mental illness, but the unsheltered homeless population is primarily those that have been living with untreated mental health issues. What exacerbates that is the reality that so many people tend to self-medicate to quiet and calm the effects of their mental illness. Whether it's the voices in their head, trauma, or paranoia that they're feeling, not having the resources as a county to address the severity of trauma and mental health issues that so many of our participants experience is taxing on all fronts.

It's horrible for our participants, and it's an enormous challenge for our own staff. We might have clinical social workers who are well-trained in de-escalation methods, but to have the interventions needed, we need psychiatric help and services and staffing at our properties that we just don't have the funding to provide.

Governor Newsom recently announced a bold plan to overhaul California's mental health care system by creating “Care Courts” that will address some of the human challenges of assisting those on the street. Is the Governor’s Care Courts’ initiative a step forward?

We’re strong proponents of any mental health interventions that are aimed at our population. We know that generations of underinvestment in this social safety net, particularly in our mental health system, is really creating the failure for robust mental health care. The Care Courts become another tool in an array of resources needed to intervene and support our participants, though these must be balanced by the need to engage with our participants and not only compel them into treatment.

Another challenge LAFH confronts is surely that there's no single jurisdiction or point of authority accountable for failures to address homelessness. Elaborate on this challenge.

LA Family Housing has been consistently outspoken on the importance of developing and implementing regional solutions to homelessness. Right now, LA is NOT operating with regional solutions for regional problems. We have created in this past year, particularly in the City of Los Angeles, a district-by-district strategy that runs counter to a regional solution. County dollars are shared regionally, but the City of LA has developed a district-by-district solution that is wreaking havoc on effectively moving people out of homelessness.

We recently shared a story outside my office on the corner of Lankershim and Arminta where three people set up a tent in the pouring rain. We were trying to get them inside. We operate interim housing as well as permanent housing. Our interim housing sites have the lowest barrier to entry. We knew we had open beds at two of our interim housing sites. Unfortunately, those beds were not in the same council district as where the folks were outside. We had vacant beds in the pouring rain for these three people to move inside in a council district two miles away. Unfortunately, they were not experiencing homelessness in that district, so they couldn’t go there.

 If we truly see this as a crisis that demands urgency and demands us to do things differently, that's not the time to start putting up boundaries. Our participants don't care about a street boundary.

I wish there was a single coordinating entity only if they have authority. We have a single coordinating entity that funnels all the federal, county, and city dollars, but they're really acting as a grants manager because they're not given the authority to set policies that are regional.

What currently stands in the way of a single regional entity with such authority?

I believe what stands in the way is just ownership of dollars. The people who are managing the dollars are saying, “Nope, I want services delivered X way”. But another entity who contributed funds into the “pot” may say “No, we think it should be done Y way.” They have not been granted the authority to manage the money and determine the way it is used. LAHSA was set up more to do grants and systems administration, not establish policy.

Stephanie, describe LAFH’s role in the development of shelter. Who do you collaborate with to develop affordable and homeless housing?

We collaborate with you, everyone reading The Planning Report, architects, neighbors across the street from us, politicians in City Hall or at the County, and state and federal governments. Everyone is a collaborator, quite frankly.

Being a collaborator doesn't mean everybody should have a say that something happens or doesn't happen. I think there are lots of layers on productive, affordable housing development that can be done more efficiently and effectively, both in cost and time. Right now, we're just letting everybody weigh in. That's not acting with urgency in the crisis that we're in.

Who are our collaborators? As you know, in order to develop affordable housing in the City of Los Angeles, the city has prioritized leveraging other public funds in order to produce housing and in so doing, each affordable housing or supportive housing development is built with at least five sources in the capital stack. City funds, county funds, one or two sources of state funds, Federal low-income housing tax credits, and then conceivably some conventional debt. When you have that many sources, you call those funders collaborators. When you have that many sources, you're also adding to the time and cost of every single development.

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I wasn't being facetious when I started out saying you're a collaborator because I do believe that supportive and permanently-affordable rental housing is an investment in communities. When LA Family Housing identifies a new site and builds in a community, we really are committed to engagement with that neighborhood on what we're building, who we're building it for, and what kind of neighbor we will be in our operations. That's part of the collaboration. I don't ask the community necessarily for permission to build this because if it is zoned by right to build it, we should be able to move through and get it done. Right now we have a process that makes that a little bit more challenging.

Recently the LA Times’ Steve Lopez negatively opined on the city’s significant cost of providing such housing. Please put in context what Lopez was talking about and what you see as a sign of hope or not with respect to developing these houses at a cost the public can afford.

I think what was disappointing in Steve's article was that he seemingly based his opinion on an outlier in our City Comptroller’s audit. Even the Comptroller recognizes that that was a one-off deal.

For the most expensive per unit deal in our pipeline right now, the excess cost on that site is because it was a city-owned parcel and was not a developable parcel. It sits on an 80-foot drop. It sat as surplus property in the City of LA for more than 13 years. The City had 12 market-rate developers proposing to build on that site, but then they all withdrew their interest based on the hillside characteristic of the site and those associated costs.

 When you're looking at a site with an 80-foot drop, you have two options. You either pay a lot of money to fill in dirt or you pay a lot of money to remove dirt. If you just build right up on the very top, flat portion of the site, you're underutilizing the property. In addition, there are additional costs associated with all of the reinforcements you need to build on a hillside. The city should have taken the time to make that a developable site and then put it out for RFP for an organization like LA Family Housing to bid on the site.

A second city-owned parcel that we were going to do, but we actually pulled out of, was a DOT-held site identified as surplus property for the city. They gave it to the Housing Department to put out an RFP. Somewhere in this conversation between two city departments, they never had agreed upon the one-for-one parking replacement requirement. If they needed the revenue of this parking lot, this never should have been a surplus site. If it was, let the city build their underground parking garage and then provide LAFH with the deck on which to build the affordable housing.

 Instead, they said we needed to build the underground parking and the housing on top, which was going to put us in that $800,000 per unit range. I said no because I knew that the City would not stand next to me three years from now when Steve Lopez or the Comptroller says that was $800,000 a unit, $300,000 of which was because we had to build a subterranean parking garage as a parking lot for the city.

It’s disappointing that reporters and elected officials don’t call out what is driving the cost up for these properties. It is three key things. The public dollars that are used to build affordable housing align public policy goals above and beyond just affordable housing. When you use public dollars to build housing, we as the developer are required to meet the City’s environmental and sustainable design goals, prevailing or union wage requirements, and supportive services and design requirements. That puts a premium on the total development and therefore per-unit costs.

You're not comparing equals to equals when you say what it costs to build a 400-square foot studio apartment by a market-rate developer who didn't use any public capital, prevailing wage, sustainable design features, or has no supportive services staff on site. If they want to put four balconies on a 20-unit building, they can do their four. But LA Family Housing would have to do 20 balconies because those are design requirements associated by the County. There is easily a 28 to 30 percent premium on the affordable housing development costs that are associated with public policy goals attached to the public dollars that we use to build that housing.

The second key thing to understand is the high priority that the city of LA has put on leveraging other public sources from their own. They put in about 20 percent of the financing on a deal, and we are capped at how much the city will fund per unit. We still have to go out and apply for 80 percent of the rest of the financing. Each of those sources that I described, even if it's just four more sources, you can't apply to source three until one and two are lined up. You can't even apply for source one until the entitlements are in place.

This is why LA Family Housing launched a private equity initiative last year on three of our Project Homekey sites. We recognize that under Project Homekey 1.0, the city did not set aside funding to convert those properties into permanent supportive housing (PSH). Unlike what the state required, which was to convert these hotels and motels into permanent supportive housing, the City of LA instead chose to use the properties as interim housing. They then told the owner-operators that they have to find their own financing to convert the properties into PSH in three to five years.

If the City of LA is financing seven or eight deals a year, how in three to five years are 15 owner-operators going to come to the city looking for funding to convert these hotels into permanent supportive housing? It's not realistic. I wish the city had taken the 15 properties and said they were going to phase the conversion of three properties the first year, three properties the second year, and then dedicate resources towards their conversion. Instead, we got the regulatory agreements that we all agreed upon, which were to operate as interim housing.

LA Family Housing began doing some financial modeling on what it would take to convert these buildings solely with private equity and avoid what has become a challenging puzzle of piecing together multiple public sources of financing. What we have found is that we are saving up to $4 million on each deal and two years of time by avoiding public dollars. I have found some very generous philanthropists who want to invest in this model. Unfortunately, not all city council members have approved an early conversion of Project Homekey sites into permanent supportive housing. I'm hoping that in time they will.

Before closing, what should voters of LA be listening for as candidates for local leadership propose their homelessness agenda?

I'm listening for candidates that have an understanding of what the city's role is compared to the county’s role because I think that has become a little bit blurred.

The county is responsible for all the health and human service dollars and that includes resources for street outreach, resources to provide 24/7 wraparound services, mental health care, and physical health care, whether it's in interim housing or in permanent supportive housing.

The city is responsible for land-use policies and capital to build new housing. Those are two really different roles, but neither can operate in a silo. What I listen for in our candidates is someone with an appreciation of the distinct roles, a smart team that understands the nuances of the regulations, whether it's land use or capital or service dollars, and then a collaborative spirit. Let's work together to identify what have been the barriers to increasing the pace and reducing the costs in addressing homelessness and producing more housing.

Lastly, what do you listen for, and what, if you are willing to share, just sounds like hogwash to you?

I would prefer to hear real strategies and realistic benchmarks rather than grandstanding that throws out numbers like, “We're going to do X by Y date.” Define X and set reasonable benchmarks. We cannot as a city continue to focus on interim housing. We have put so much emphasis on that.

I would call in a candidate who continues to only focus on interim housing because that is not a solution. That just means you are reducing the unsheltered homeless population, but you're not reducing homelessness. People are still homeless if they're living in a shelter.

COVID was this enormous opportunity because there were resources that came to LA that we've never had before. Under Project Home Key, we mobilized fast during a pandemic to open up thousands of beds in these master lease motels. Where we may have failed was giving the general public a sense that by moving people inside, we ended homelessness. As soon as those leases ended, if we didn't have new permanent solutions for our participants, our system failed those folks.

Equally, I'd be cautious of saying that we should only produce permanent supportive housing. I would love a candidate to step up and really present a viable unit-acquisition strategy in the City of LA. We need a public entity that can master-lease existing vacant units so we can plug and go a lot faster.

That way, when my street engagement team sees someone out on the street, our team knows that we have access to a unit immediately to move that client into.. The unhoused neighbor can come inside and won’t have two weeks of processing and paperwork and seeing if they qualify and waiting for a match and then waiting for a landlord to approve them.

I want us as a system to have control over those units. I want an entity in Los Angeles to work on a unit acquisition strategy. Yes, we need to produce more housing. Yes, we need to have interim housing beds. But until we have greater control over a larger volume of existing vacant units and newly produced affordable housing, we're never going to catch up.

 

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