L.A. digs a hole more slowly than economics fills it back in: The Proposition HHH Facilities Program RFP

As newsletter subscribers know, last week the City of Los Angeles released the “Proposition HHH Facilities Program FY 2017-18 Request for Proposals for the FY 2018-19 Bond Issuance.” That program is an excellent opportunity for nonprofit and public agencies looking for capital funding. There was $85 million available in 2016, and this year there may be more. Even better, grants to $3.5M are up for grabs.

Prop HHH funding is a great opportunity for nonprofits involved in homeless services, since it provides capital funding for facilities, which don’t have to including housing units. As we’ve written before, facility grants are usually much harder to get than grants for the services provided at the facility. Also, the RFP states:

The Prop HHH Facilities Program is intended to fund the acquisition and/or improvement of real property for facilities (hereinafter referred to as “project(s)”) that provide services or goods to, or otherwise benefit, persons experiencing homelessness, chronic homelessness, or at risk of homelessness (hereinafter referred to as “homeless”).

The key phrase is “at risk of homelessness,” which makes almost any LA human services provider potentially eligible for a Prop HHH grant, not just traditional homeless services providers. This is because clients of most L.A. human providers are well below 200% of the Federal Poverty Guidelines (FPG). Given the very high rents in LA, this means they likely pay well over the federal/state/local standard of housing affordability of 30% on gross income for housing costs (e.g., rent, utilities, etc.).

From a grant writing point of view, this means they’re pretty much all all at risk of homelessness. Whether obvious or not, many of these clients are, have been, or will be episodically homeless (e.g., living in cars, motels, family members, shelters, etc.).

From a larger perspective, though, Prop HHH is also like digging a tiny hole in the housing affordability problem, while the rest of L.A.’s rules and regulations act as a dump truck filling that hole back in. You may ask what that means. One good explanation comes from Reddit, of all places, as this architect explains why virtually all new housing units in L.A. are “luxury” units. As he says, “EVERYTHING built in LA is defined by parking, whether we like it or not.” Moreover:

In making our assessments as to required space for parking, the typical calculation is that each full parking stall will require 375sf of space (after considering not just the space itself but also the required drive aisle, egress, out of the structure, etc. So that 800sf apartment is actually 1175 sf to build. [. . .]

So not only is 32% of your apartment just for your car and otherwise useless, but its also by far the most expensive part of that apartment to build.

It’s not possible to build enough housing for middle-income people in L.A., let alone low-income or homeless people, because of parking and outdoor space requirements. The City of L.A. is doing useful work for a handful of nonprofits with Prop HHH, but unless the City changes its parking requirements, there isn’t much real change that’s going to happen. The high cost of free parking is real. In the proposal world, though, none of these problems and trade-offs exist. In the real world, however, a couple hundred million dollars to build a couple hundred units (or even a thousand units) isn’t going to do much for homelessness in a city of four million and a metropolitan statistical area (MSA) of twelve million. In 1970, L.A. was zoned for ten million people. Today, with our vastly inferior technology, it’s zoned for four million and change. Until the city fixes zoning, it’s not going to fix homelessness.

Basically, it’s impossible to build enough housing for people in L.A. because it costs so much to also build housing for cars.* As grant writers, however, we love to see new programs like Prop HHH that’ll provide “walkin’ around money” for LA nonprofits.


* Seattle is a little better off, but it still has many perverse zoning issues, which I wrote about comprehensively in “Do millennials have a future in Seattle? Do millennials have a future in any superstar cities?” The short version of that highly detailed article is that many cities severely restrict housing supplies; in the face of rising demand, this raises the cost of housing.

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