Newsom’s Budget Puts New Focus on Buying Hotels to House Homeless

California Gov. Gavin Newsom unveiled Thursday a scaled-back plan to address housing and homelessness in California as part of a revised budget that attempts to tackle a projected $54.3 billion deficit brought on by the economic impact of COVID-19.

“We’re going to be dealing with challenges we haven’t faced in some time,” Newsom said.

Under his revised plan, the state will use $750 million, which his office says was procured through a federal relief package, to buy hotels and motels that are now leased through Project Roomkey, a program to house homeless people during the coronavirus pandemic. The state will then turn them over to local governments to transition into permanent supportive housing.

“Purchasing the hotels is really a tremendous opportunity,” said Anya Lawler, a housing policy advocate with the Western Center on Law & Poverty.

What’s gone from the budget is a $1 billion homelessness fund Newsom originally proposed to pay for rental assistance, support communities to build more affordable housing and help stabilize board and care homes.

“I am disappointed to see funding for cities to address homelessness eliminated,” said Assemblyman David Chiu, D-San Francisco, who chairs of the Assembly’s housing committee.

“Our housing crisis has made people poorer, sicker and more vulnerable to COVID-19. We cannot let up on addressing this issue,” he said in a statement.

Housing advocates were relieved to see that Newsom had committed to keeping $500 million for the state’s low-income housing tax credit program, a key tool used to spur affordable housing development.

“I am really impressed at the governor's commitment to not sacrifice critical investments in housing the homeless and creating more affordable homes when we most need them, despite the record deficits the state is facing,” said Matt Schwartz, president and CEO of the nonprofit California Housing Partnership.

California will also receive $532 million in federal CARES Act funding for housing and homelessness programs. The additional money will be used for “acquiring housing for people experiencing homelessness, as well as securing low- and moderate-income housing in response to the COVID-19 pandemic.”

An additional $331 million from the National Mortgage Settlement will be used to help homeowners avoid foreclosures and provide legal aid to renters facing eviction. The budget did not include emergency rent relief, which tenants’ rights groups have been fighting for as many renters have lost income during shelter-in-place orders.

The revised budget also slashed nearly half a million dollars for mixed-income developments and urban affordable housing projects.

The economic outlook for housing production remained bleak, according to the state’s Department of Finance. The department predicted shrinking homeownership, a 21% reduction in housing construction permits this year and a reluctance to build homes during an economic downturn.

“I don’t want us to lose sight, even in this moment, that we still have to set some pretty audacious goals in bringing homeless people indoors,” said Tomiquia Moss, founder and chief executive of All Home, a Bay Area organization dedicated to tackling homelessness.

“We need to look at who’s at risk of homelessness and make sure we’re helping those people first,” Moss said. “Otherwise the bottom will just keep sinking further down.”