San Francisco's Homeless Ticking Time Bomb

the majority of the city's homelessness budget goes to keeping people in no-contingency housing units, permanently. what happens when the city can't pay the bill?
Sanjana Friedman

Editor's Note: The hardest thing you’ll ever have to comprehend in terms of San Francisco’s government is the city’s leaders aren’t incompetent. This is what they want.

At any given moment, on any given day, there are around 8,000 people sleeping on the streets of the city — one of the wealthiest, per capita, in human history. Once acquainted with the basic facts of the crisis, including the incredible sum of money dedicated to solving the problem, the average San Franciscan concludes the city must be run by morons. How else, with billions of dollars, have city leaders failed to provide a few thousand temporary beds? Even with supportive services, the numbers don’t add up. This is because the average person assumes the small cabal of activists who run the city’s bloated homeless industrial complex want to temporarily shelter and rehabilitate the homeless. They do not. In fact, they are ideologically opposed to the concept. The goal of San Francisco’s activist government is to provide every person who moves to the city with a free, one-bedroom apartment for the rest of their life. City funds are largely allocated to this end. Once placed, this “permanent” solution costs money every year, and every year more people move to the city looking for free housing. The problem compounds.

While the project was never sustainable, the city’s sheep-like wealthy tax base has recently fled for the suburbs. Now, billions of dollars and a decade later, with more people living on the streets than ever, the government faces an impending $724M deficit, with around ten thousand more people reliant on funds, for “free” housing, that could easily cease to exist. This is a ticking time bomb.

Today, Sanjana Friedman provides a detailed primer on the homeless crisis, and a navigation of the truth that’s been largely covered up. I’m proud to publish something so important on Pirate Wires, and encourage anyone who has ever wondered about this crisis to read the piece, post the piece, share the piece, and take the piece to your local politicians.

-Solana

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“It is not designed to be solved. It is designed to be perpetuated.” — Former Mayor Willie Brown on San Francisco’s homelessness crisis. (Source)

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This month’s catastrophic Hayes Valley fire, which damaged five buildings before a crew of almost 150 firefighters managed to put it out, now appears plausibly linked to a row of tent encampments along Octavia Boulevard, prompting renewed interest in a question often asked about San Francisco: why do so many people live in outright squalor on the streets of one of the wealthiest cities in the world? 

This year, San Francisco allotted $672 million to its Department of Homelessness and Supportive Housing (HSH), whose stated mission is to “make homelessness in San Francisco rare, brief, and one-time.” Since its inception in 2016, the HSH’s budget has tripled; in total, it has received over $3.3 billion in public funds. Yet the number of people on the streets continues to grow. HSH estimates that, on any given night, around 4,400 people sleep on the city’s streets and 3,400 sleep in shelters1, putting the total number of homeless people in San Francisco at around 7,800, up over 20 percent from 2005. Where is all the money going? Is well over half a billion dollars not enough to provide temporary shelter and emergency care for all 3,400 people sleeping in tents, blankets, and cars on San Francisco’s streets? Is it not enough to improve the appalling hygienic conditions that once led a UN rapporteur to compare Downtown’s encampments to Mumbai’s slums?

From San Francisco’s Department of Homelessness and Supportive Housing (HSH).

As it turns out, most of that $672 million does not fund temporary shelter and care for people on the city’s streets. The majority — 56 percent in this year’s budget — is spent on permanent supportive housing (PSH): single-occupancy units that the city indefinitely subsidizes for those it believes would otherwise be homeless. Leased and maintained at enormous cost to taxpayers, PSH units underpin San Francisco’s dysfunctional ‘Housing First’ approach to homelessness, which prioritizes connecting people on the streets with permanent homes over providing them with temporary support. Since San Francisco places no sobriety requirements or maximum income cutoffs on this housing, and tenants need only certify that they would otherwise be homeless through third-party or self-declaration, PSH is, in effect, permanent for all who choose to stay — irrespective of participation in rehabilitation or job training programs. 

But San Francisco cannot build or lease new homes fast enough to house the influx of new homeless migrants drawn to the city either for the temperate weather and lax drug laws, or for the promise of a subsidized home. As these new applicants crowd the lengthy housing waitlist, vying for units with low turnover rates, the city spends increasing sums on ‘resolving’ its homelessness crisis — which in this case means providing more permanent supportive housing. This increased spending, in turn, reinforces the perverse incentives drawing people to the city in the first place. Now, San Francisco faces a forecast budget deficit and, for the first time in a quarter-century, a shrinking tax base — a ticking time bomb for its homeless policy. How long will SF be able to sustain its runaway spending on homelessness? What will happen to people on the streets and in supportive housing when the money runs out?

The Top of Funnel

From the HSH’s 2022 ‘Point in Time’ Report.

Contrary to popular narrative, it is not true that most people sleeping on San Francisco’s streets are from the city. In fact, the overwhelming majority are not originally from San Francisco, and most seem to have arrived quite recently. Confusion on this point arises mainly from the city’s deceptive method of collecting and interpreting homelessness demographic data. The HSH estimates, for instance, that “for every household San Francisco is able to permanently house through its Homelessness Response System, approximately four households become homeless,” suggesting that an endemic force is pushing longtime San Franciscans into homelessness. But a cursory look at the department’s data methodology shows that this frame is misleading.

First, HSH does not collect data on where homeless people in San Francisco were born or raised; they collect data on where people were living immediately prior to becoming homeless. In 2022, they reported that 71 percent of people on San Francisco’s streets were living in the city when they became homeless. According to HSH methodology, “place of residence” can include living with friends, family, partner, or even a motel. This means that if someone stays with friends or family in SF for a month (or even a night) before winding up homeless on the city’s streets, the HSH could technically count them as ‘from San Francisco.’ On top of this, the Department classifies these “San Franciscans” in only three ways — those living in the city for less than a year prior to becoming homeless (17 percent, according to the latest data), between one and 10 years (52 percent) and for 10+ years (31 percent). But a duration window as expansive as between one and 10 years makes it impossible to know whether this 52 percent figure includes more people closer to the one- or ten-year ends of the residency spectrum. Regardless, we should be wary of reading too much into specific numbers — all of this data is self-reported, and anecdotal reports have emerged of homeless people being “coached” by non-profit workers to say they are from SF. 

Once settled in San Francisco, these homeless transplants are free to take advantage of the city’s lax drug laws, vast apparatus of homeless support services, and federally imposed injunction against clearing encampments, while they decide whether to apply for housing or remain on the streets.

From the HSH’s 2022 ‘Point in Time’ Report.

The Downward Spiral

There are currently over 9,000 people living in San Francisco’s PSH units, and over 33,000 have either applied or been referred to the housing waitlist.2 The cost of building and maintaining these units is, in general, exorbitant. Construction fees can exceed $100,000 per unit, and on-site services (which may include case management, nursing, food security support, behavioral therapy, and job training) can cost tens of thousands of dollars per unit, per year. In total, the HSH now operates over 13,000 units of supportive housing for around 9,000 individuals3 and spends around $389 million per year on housing-related expenses. Though in theory tenants pay up to 30 percent of their income toward rent, in practice few are evicted from PSH for non-payment; of the 216 PSH eviction notices issued by the city last year, only 6 percent were related to outstanding rent, while the rest were related to nuisance activities or property damage. 

Despite sky-high operating costs, living conditions in many HSH-run supportive housing units are often miserable. Residents frequently complain of vermin, plumbing issues and unchecked violence in their buildings. Still, the annual turnover rate in the units is only around 12% per year, suggesting that most who enter the city’s permanent supportive housing choose to stay.

Why do most remain despite the often unsanitary and unsafe living conditions? Perhaps because the supportive housing system gives them few incentives necessary to become independent. Many PSH tenants suffer debilitating addiction problems, but California state law prohibits sobriety requirements at supportive housing sites. In some cases, San Francisco even seems to predicate addicted tenants’ access to PSH on their ongoing status as addicts. For example, having a ‘disability’ is one of three eligibility requirements for PSH (the others are reporting personal income, if any, and the HSH's assessment of risk of homelessness), but this disability need not be related to mobility, learning, or ability to communicate — it can also be “a physical, mental, or emotional impairment, including an impairment caused by alcohol or drug abuse that... is expected to be long-continuing or of indefinite duration [and] substantially impedes the individual’s ability to live independently.” Tenants can lose their units if “the adult household member with a qualifying disability… no longer [resides] in the unit, and there is not a certified qualifying disability among any other adults in the household.” In other words, if a person cites addiction as their disability when applying for PSH, then they risk losing their unit if they manage to get clean. 

Finally, there are no PSH-wide income maximum or minimum cutoffs, and no PSH-wide requirement that the tenant show progress in becoming financially independent, such as by working an ever-increasing number of hours, or even regularly looking for a job. If you're hopelessly addicted to drugs, SF will essentially enable your addiction in perpetuity, or for as long as you want.

Getty Images / Anadolu Agency

Why is San Francisco Doing This?

The foundation of San Francisco’s approach to solving homelessness is a philosophy called Housing First, which was first tested at shelters in New York City in the 90s but has been most widely implemented in cities throughout California. Proponents of Housing First believe ‘housing is the solution to homelessness,’ and advocate for providing long-term, state-funded housing to homeless people over temporary shelter. San Francisco’s foray into Housing First policy began around 2004, when then-District 2 Supervisor Gavin Newsom championed a ballot measure called ‘Care not Cash,’ which diverted cash payouts to homeless people toward investments in building PSH. In 2016, California enshrined SF’s pilot into law, requiring that all state-funded homeless programs adopt the principles of Housing First, which include connecting homeless people “to a permanent home as quickly as possible” and “remov[ing] barriers to accessing the housing, like requirements for sobriety or absence of criminal history.”

That same year, Mayor Ed Lee consolidated San Francisco’s homelessness response, which had previously been administered through various public offices and non-profits throughout the city, into a single department — the HSH — and pledged to spend over $1 billion in the next four years to move approximately 8,000 homeless people into permanent supportive housing. The HSH received an additional windfall of cash in 2018, when SF voters passed Proposition C, which imposed a gross receipts tax on companies whose yearly revenue surpassed $50 million and designated this money to funding supportive housing and homelessness services. Since then, San Francisco has received over $600 million in Prop C money, major revenue generators like Stripe and Block (formerly known as Square) have left the city due to the tax, and the number of homeless people on the streets and in shelters has risen from around 6,800 to almost 8,000.

The Ticking Time Bomb

This past April, in response to legislation passed by the Board of Supervisors mandating that the city offer all unsheltered homeless people a “safe, dignified place to sleep,” Mayor Breed and the HSH unveiled a new five-year plan to reduce street homelessness by 50 percent, and overall homelessness by 15 percent. The almost 100-page plan, put together with Focus Strategies, a Los Angeles County-based homelessness policy consulting firm that the department hired for over $300,000, requires $607 million in extra funding to cover “start-up costs” over the next five years, followed by an extra $217 million each year for program maintenance. It seeks to place “at least 30,000 people” into permanent housing by building 3,250 new units of PSH, and to install an additional 1,075 beds in shelters throughout the city.

In keeping with the 130-page equity action plan that the HSH submitted in early 2021 to San Francisco’s Office of Racial Equity (inaugurated in 2019 by executive order of Mayor Breed as a sub-department of the city’s Commission on Human Rights, which received over $15 million in funding last year), the new five-year plan cites “advancing racial equity and housing justice” as the “leading focus within our community’s efforts to prevent and end homelessness.” To this end, it will provide “infrastructure and sustainability supports… to more BIPOC-led organizations and organizations deeply rooted in historically marginalized neighborhoods and communities” while “specifically focusing on supporting the capacity-building efforts of Black-led organizations.” Provisions are also included to “design, launch, and implement the Ending Transgender and Gender Non-Conforming (TGNC) Homelessness Initiative,” which involves dedicating 150 PSH subsidies to “transgender and gender non-conforming households.” Initial implementations of the plan were set into motion this past May and a full roll-out began in July.

Yet macroeconomic concerns cast doubt on how long San Francisco will be able to sustain its ballooning spending on homelessness. Two years ago, the city’s tax base shrank for the first time in a quarter-century. Recent projections suggest it will face a $1.3 billion budget deficit in five years. Faced with these numbers, even the HSH acknowledges that “when the needs exceed available local resources, households unable to resolve homelessness on their own may need to leave San Francisco or remain homeless for long periods of time.”

From KQED, based on data from the San Francisco Mayor’s Office.

But ‘when’ is now; the needs have already exceeded the resources, and thousands of people are already on the streets, living and dying in utter abjection as they wait for housing paid for on someone else’s (rapidly dwindling) dime. Those placed in supportive housing often don’t fare much better. Deprived of incentives to find work or get clean, most remain stuck in a cycle of addiction and poverty. Many end up dying of overdoses, alone in their state-subsidized, dilapidated one-bedrooms apartments. This is the crude reality of San Francisco’s approach to solving homelessness. And until it changes, the tents will continue to crowd the streets and the city will continue to burn. 

-Sanjana Friedman

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