Is an $800M boost from the state helping solve homelessness in the Bay Area?

Hillview Court was designed as a place where some of the Bay Area’s most vulnerable homeless residents could gain enough stability to piece their lives back together. But since the Milpitas housing site opened in 2021, the former hotel has experienced hundreds of emergency calls, repeated reports of insect infestations and multiple overdose deaths.

Earlier this year, the decomposing body of one tenant went undiscovered for days until a neighbor reported an overpowering odor seeping from the apartment. The coroner’s office determined Ricardo Mendoza, 38, had died of an overdose.

“They opened the door, and that smell, you will never forget that smell,” said Bijou Crayes, a neighbor who had requested the wellness check. “It hurts my heart because that was my best friend.”

The long-term homeless housing at Hillview was funded as part of an $800 million investment in the Bay Area through Homekey, a state initiative tasked with rapidly transforming aging motels and other properties into desperately needed housing and temporary shelters for thousands of the region’s 31,000 homeless residents.

But a Bay Area News Group review of the pandemic-era program found some sites have struggled with habitability and drug problems amid limited state oversight, and that hundreds of people ended up back on the street after spending time at facilities throughout the five-county region. Ongoing funding, even where the program is succeeding, is not assured.

“It’s not getting the outcomes anybody’s looking for, from top to bottom,” said State Sen. Dave Cortese, a San Jose Democrat who pushed for an audit of the state’s homelessness spending.

In 17 cities across the Bay Area, the state has funded more than three dozen Homekey projects. Beyond bringing homeless people indoors, the program aims to provide on-site social services and support in finding permanent housing.

There have been signs of success, including a Pittsburg shelter, Delta Landing, where Gov. Gavin Newsom announced Homekey’s start in 2020. “Homekey is providing thousands of individuals with the supportive services they need and a safe place to call home,” Newsom said last year.

In an effort to assess Homekey’s performance in the Bay Area, this news organization compiled hundreds of pages of coroner records, code enforcement documents and police statements, as well as site data from agencies in Santa Clara, San Mateo, Alameda, Contra Costa and San Francisco counties. The review also included interviews with experts, officials, developers, site operators and Homekey residents at several sites. The state does not keep track of such issues, making it difficult to draw program-wide conclusions beyond identifying red flags.

However, regional data those counties send to the federal government show most Homekey shelters are struggling to place people in permanent housing, even though officials in many cases declined to provide site-level metrics, citing privacy concerns.

Among the findings:

Most homeless people in Homekey shelters don’t find housing: During the first three years of the program, just 37% of the more than 2,500 people who moved through Homekey shelter sites in the Bay Area found long-term homes, according to county data.

Some sites struggle with habitability issues: Code enforcement records show dozens of habitability complaints and violations at eight of the Bay Area’s 28 completed and operating facilities. The problems include reports of mold, cockroaches and maggots at sites in Oakland and San Jose, severe water damage at a facility in Redwood City, and crumbling walls and faulty heating units at a property in San Francisco.

Some facilities also face drug challenges: At least 27 people have died of drugs or alcohol at eight Homekey sites across the Bay Area, according to county coroner records. The deaths reveal the challenges of caring for a high-risk population, as providers manage staffing shortfalls and some residents decline services, officials and operators say. An examination of code enforcement cases and overdose deaths reported by various local agencies found problems at about a third of area Homekey sites.

Homekey has limited state oversight and lacks measurable objectives: To oversee the program, the state relies mainly on self-reported updates from local officials and site operators, leaving a patchwork of city and county agencies in charge of supervising conditions at individual facilities. The state also does not mandate benchmarks to measure success, which some experts say can create a void of leadership and accountability.

Homekey projects are less expensive than building affordable housing, but ongoing funding is uncertain: So far, the program has awarded $793 million to 38 projects in the Bay Area totaling 3,368 housing and shelter units, according to state data. Excluding millions in additional local dollars, that comes to around $235,000 per unit, less than a quarter of what it can cost to build affordable housing in the Bay Area. But officials and experts say there’s widespread uncertainty about how to fund ongoing operations.

Back to the streets

After the pandemic hit in early 2020, officials scrambled to move thousands of vulnerable homeless people across the state into leased motel rooms to prevent deadly COVID-19 outbreaks. Newsom, flush with federal emergency stimulus money and under growing pressure to get a handle on the crisis, unveiled Homekey that summer. The program has since set aside more than $3.75 billion to help local governments buy and convert motels and other buildings, and construct new facilities.

The Bay Area’s Homekey sites are divided almost evenly between long-term supportive housing, where tenants typically pay subsidized rent and can stay as long as needed, and shelters with private rooms, where residents can live rent-free for a limited time. Local governments typically hire nonprofits to develop and operate the properties, as well as provide on-site services.

Despite the push to place shelter residents in lasting homes, almost two-thirds didn’t find housing. At least 27%, roughly 670 people, returned to the street. Some died. The rest went to other shelters, temporary living situations or unknown locations.

But at the Bay Area’s permanent housing Homekey sites, 91% of the more than 1,300 residents remained tenants or relocated to other long-term homes — a figure officials pointed to as a key accomplishment.

The main reason shelters aren’t as successful?

“The problem in the whole region, the reason we have this crisis, is that the housing doesn’t exist,” said Dr. Margot Kushel, director of UC San Francisco’s Benioff Homelessness and Housing Initiative.

Habitability and drug problems

Even when homeless people find housing, it doesn’t guarantee an end to their problems.

At Hillview Court, residents have reported thefts, assaults and rape. In 2021, a well-known drag artist was stabbed and killed while visiting the property near a leafy business park. Code enforcement officials have also opened six cases for reports of mold, bedbugs and broken elevators at the 132-unit complex, which receives about two emergency calls a week, on average.

Resident Lisa Reeve, 61, pointed to a recent SWAT team standoff at the property as an example of the security threats, concerns echoed in interviews with seven other residents. She also keeps Narcan to reverse overdoses she says happen regularly at the site.

“It’s the retraumatization, the constant retraumatization,” Reeve said.

Coroner’s records show at least four people have fatally overdosed at Hillview, including Mendoza, who had been dead at least four or five days when his body was found. Crayes remembered her neighbor “Ricky” as a funny and caring friend who wasn’t able to get the help he urgently needed at Hillview.

“When you run a place like this, you’ve got to encourage people that came from nothing to try to build their spirit up, their soul up, to make them feel like humans again,” she said.

Issues stymying Homekey sites across the Bay Area are a reflection of the challenges of housing those with serious mental health or substance use disorders — a dynamic exacerbated by the fentanyl epidemic. Some residents have trouble keeping their spaces clean. Others invite unauthorized guests, creating safety issues. And some decline offers of care.

“They’re not in a hospital, they’re not heavily medicated, they’re not in a drug rehab center,” said Laura Archuleta, chief executive of Jamboree Housing, which operates Hillview and dozens of other affordable and supportive housing facilities across California. “They’re in their own apartment, and they’re trying to move out of addiction. And we’re providing services to help them with that.”

Homekey doesn’t require residents to stop using drugs or accept services. The reasoning, backed by research, is that people can best take advantage of resources — drug treatment, mental health counseling and housing navigation — only after they have a stable living environment.

It’s imperative, experts say, that sites are well staffed and maintained to offer the intensive support required for such a high-needs population, a challenge given tightening budgets and a shortage of workers.

“If you have the funds and the resources and the staffing, not that you can ever drive risk to zero, but you can make things safer and healthier, less chaotic,” Kushel, with UC San Francisco, said.

Officials say conditions at many of the struggling sites, including Hillview, are improving as they make new investments and increase welfare checks and offers of care.

Limited oversight

Despite the billions of dollars it has invested in Homekey, the state has taken a largely hands-off approach to oversight.

The state housing department relies primarily on self-reported updates from local officials and site operators, leaving dozens of city and county agencies to monitor conditions and hold providers accountable. Local governments also determine benchmarks for each project’s success.

Some local officials said they appreciate the autonomy. But setting statewide goals — for example, coming up with targets for moving families from shelter to permanent housing — would help cities and counties “not feel like it’s their sole responsibility to solve this crisis,” said Tomiquia Moss, founder of Bay Area homelessness solutions nonprofit All Home, whom the governor recently appointed to lead the agency overseeing many of the state’s homelessness programs.

Finding success

After two years of living out of her car, Rosalena Garza was unsure what to expect at Contra Costa County’s Delta Landing Homekey shelter in Pittsburg.

She soon found having a private room for herself and her pet cockatoo, Baby Girl, along with regular meals and community birthday celebrations, made the motel feel like a home while she searched for an apartment.

“I was given this chance,” Garza, 52, said. “I know I don’t want to mess it up.”

At the 172-unit former motel off Highway 4, more than eight in 10 residents find permanent housing — about double the placement rate of Homekey shelters regionwide.

Delta Landing has housing specialists who help residents apply for affordable housing. And crucially — unlike many other Homekey shelters — the site doesn’t impose a time limit on resident stays. It even offers temporary rental assistance once they move out.

“It doesn’t feel like shelter — it’s not intended to,” said Jonathan Russell, chief strategy and impact officer at the nonprofit Bay Area Community Services, which operates the site.

Funding challenges

For sites like Delta Landing to endure, more money is needed for services and operations. Currently, Homekey provides facilities with around three years of funding to help cover ongoing costs.

“That’s not a sustainable strategy,” said Moss with the nonprofit All Home.

While building and renovating sites has proven faster and less expensive than developing traditional affordable housing, local officials are growing increasingly worried about a lack of ongoing funding over the next few years, said Kerry Abbott, Alameda County’s director of homeless care and coordination.

Abbott said Alameda County currently spends around $3,000 a month to operate each of its Homekey rooms, which would bring annual costs at its largest site, a 136-unit property in Oakland, to roughly $5 million at full capacity. In Santa Clara County, officials said monthly expenses can reach as high as $4,500.

Recent changes to Medi-Cal, the state’s health care program for low-income residents, could help offset some operating costs. And Homekey’s permanent housing sites can cover expenditures through federal housing vouchers, though such subsidies are in short supply.

But Jon White, chief real estate officer with Abode, which has developed three Homekey sites in the Bay Area, worries that sites may have to shut down if they fail to secure enough funding.

“There’s going to be a whole plethora of Homekey projects,” he said, “that are potentially failing in three to five years.”