An Initiative Promised 20,000 Homes for Mentally Ill Californians. It Delivered Far Less

The Santa Barbara Independent republishes stories from CalMatters.org on state and local issues impacting readers in Santa Barbara County.

In the fall of 2018, California’s voters were determined to make a dent in the state’s rapidly escalating homelessness crisis. By a wide margin, they supported a ballot measure sold as No Place Like Home, which promised to use taxpayer money earmarked for mental health treatment to pay for a $2 billion housing bond.

Voters who read the Yes campaign’s description of the measure that November saw a bold promise: 20,000 new units of permanent supportive housing.

More than five years later, the state has completed just 1,797 No Place Like Home units.

As Californians prepare to vote next month on Proposition 1, which includes another multi-billion dollar plan to build affordable housing with intensive services attached, the story of No Place Like Home may serve as something of a cautionary tale. It’s a case study of big promises, good intentions and urgent need caught in a tangle of NIMBYism and red tape. 

Projects that would be funded by Prop. 1 — which, among other things, would issue $6.4 billion in bonds to pay for 4,350 units of supportive housing and 6,800 mental health treatment beds — could face some of the same hurdles that have delayed the construction of No Place Like Home units, developers and local officials say. Voters happy to agree with the concept of housing homeless people have killed proposals to build such housing in their own neighborhoods. Complicated financing rules and restrictions have delayed other projects, sometimes for years. 

Meanwhile, since No Place Like Home passed, the state’s unhoused population has shot up by 40%, and is now estimated to include more than 181,000 Californians. 

“Look what’s happening. We’re losing,” said Dr. Jonathan Sherin, former behavioral health director of Los Angeles County, who points not just to No Place Like Home, but to a couple of big Los Angeles ballot measures — Measure H in 2017 and Proposition HHH in 2016 — and now to Prop. 1. 

“I’m not disparaging the people or their intentions,” he said. “The systems are antiquated. They’re archaic. They’re impossible to move quickly.”

Molly Weedn, a spokesperson for the Yes On Prop. 1 campaign, said in an email that the new measure would inject money into “proven, successful housing programs” and that there were provisions in the measure to speed up development. 

No Place Like Home units are specifically for people with serious mental illnesses who are homeless; as part of the law, counties are required to provide the residents of these units with mental health and substance use treatment for a minimum of 20 years. 

The pledge to use bond money to build 20,000 supportive housing units can be traced to a 2018 Legislative Analyst’s Office report, which estimated “half of the units would likely be completed within five years.” An analyst told CalMatters that estimate included other sources of affordable housing money, not just the $2 billion proposed by No Place Like Home. Key supporters of the measure who circulated the number widely in 2018 — and cited it in their arguments in the state’s official voter guide — did not return requests for comment.

The California Department of Housing and Community Development, which administers the bond revenue, refused to make someone available for an on-the-record interview. Christina DiFrancesco, a program specialist for the department, said via email that the department developed an estimated number of units only after the ballot measure passed. That estimate is in line with the department’s current forecast that No Place Like Home money will wind up funding a total of 7,702 such units.

The developments that house these units are paid for with No Place Like Home funding and other types of federal, state and local funding. They generally contain a mix of No Place Like Home units and other sorts of affordable housing. So far, in addition to the permanent supportive housing units, No Place Like Home has indirectly supported the construction of an additional 2,332 affordable housing units, though these do not necessarily have services attached.

DiFrancesco said the department provides incentives to developers to start construction as soon as possible, and sets deadlines for lining up financing and for leasing units. All of the No Place Like Home funds have been disbursed to counties since 2022, department representatives said, and construction is picking up pace. 

People who have been housed as a result of No Place Like Home have had their lives transformed. 

But the urgency with which dollars have been turned into housing simply doesn’t match the reality of the pain and suffering of people living on the streets with severe mental illnesses, said Kevin de León, who carried the original No Place Like Home legislation when he served as the state’s Senate president pro tem.

“I feel that we’ve moved at a snail’s pace,” said de León, now a Los Angeles city council member. “We have to raise the bar because people are dying on the streets as we speak.”

A fateful trip to Skid Row

De León and Darrell Steinberg, who focused on mental health policy during his years in the Legislature and is now mayor of Sacramento, dreamed up No Place Like Home after a visit to Skid Row in 2015. 

Their heads spinning after meeting with advocates, service providers and city officials, the two legislative powerhouses sat down in a café. They started sketching out a vision on a napkin: Could unspent state mental health revenue be used to construct and rehabilitate housing for people with severe mental illnesses? 

Steinberg had co-authored the Mental Health Services Act, a 1% tax on income over $1 million that voters passed in 2004 to improve the state’s struggling mental health system. He had been trying, unsuccessfully, for a decade to use some of that money for a housing bond, he said. In essence, the state would ask investors to loan the money upfront, then would use the Mental Health Services Act money to pay it off over time.

The proposal he and de León dreamed up in the café would prove controversial once they introduced it in early 2016 – some counties and mental health advocates opposed the idea of paying off a housing bond with funds designated for mental health services. 

The Legislature that year was just awakening to the growing crisis on the streets, said Craig Cornett, the budget and finance director for the state Senate at the time, who helped craft the proposal to bring many early opponents on board.  With strong bipartisan support, the Legislature passed No Place Like Home and then-Gov. Jerry Brown signed it in 2016.

“We will no longer turn a blind eye to the needless suffering that is so clearly displayed on our streets,” Steinberg said at the time.

That November attorney Mary Ann Bernard filed a lawsuit to stop the legislation, arguing that it would be illegal to divert the money to housing from treatment programs.

To avoid litigation, Brown and legislators put No Place Like Home on the ballot. 

In November 2018, 63% of voters marked yes.

Challenge One: How to pay for mental health housing 

Today, Steinberg is measured in his critique of the rollout of the policy. He describes it as successful, “the right initiative” and “the right policy.” 

But he agrees that speed obviously matters.

“The consistent frustration is the amount of time it takes to go from bold policy vision and new ideas to implementation,” he said. “We all want it to go faster. I certainly do.” 

What, exactly, has taken so long?

The pandemic — which hit a little over a year after voters passed No Place Like Home — certainly didn’t help.

But many of the issues afflicting No Place Like Home predate the ballot measure.

“The problem isn’t No Place Like Home. The problem is how we finance and build affordable housing,” said Carolina Reid, faculty research adviser at the UC Berkeley Terner Center for Housing Innovation. 

It’s not as simple as handing out cash: Lining up financing can take years.

No Place Like Home awards make up a fraction, sometimes just 10%, of the total cost to build an affordable housing project, developers say. That means a developer often needs to come up with another half-dozen funding sources from different city, county, state and federal programs 

Complicating the issue further: the various funding streams aren’t always in sync, with different deadlines, different requirements, even different definitions of homelessness. 

“It takes way too long, and it’s heartbreaking when you’re seeing people who are living in such horrible conditions,” said Andrea Osgood, chief of real estate development for Eden Housing.

Eden won $6 million from No Place Like Home in June 2022 to build a 72-unit affordable housing development in Castro Valley, south of Oakland. That was just 9% of the project’s total cost of $66 million. The developer had to compile the rest from six other sources. Construction started in June 2023; it is expected to be complete in early 2025. 

Another challenge, Osgood notes: The cost of construction has gone up, sometimes jumping as much as 20% in a year. Insurance rates are climbing as well. As these costs increase, No Place Like Home funds get stretched thinner and can build fewer homes.

Even if Prop. 1 passes, a yawning $38 billion state budget deficit may create new problems, as proposed cuts to other affordable housing funding sources, such as the Multifamily Housing Program, could leave new financial holes. That might translate into even longer construction delays, Osgood said: “All of us are worried in the industry right now.” 

Challenge Two: Where to build new housing 

But finances aren’t the only problem. Developers and county officials say they frequently run into resistance when they try to find a place to build permanent supportive housing units.

In part, developers blame California’s Environmental Quality Act, an environmental law that allows concerned citizens to sue to delay —or even stop— proposed housing developments. 

Two of the 10 No Place Like Home projects proposed by Eden Housing were hit with such lawsuits, Osgood said. One, in downtown Livermore, won nearly $6.5 million from No Place Like Home back in June 2022.  Litigation is ongoing; the project still hasn’t broken ground. 

Plain old NIMBYism — the acronym for “Not In My Backyard”— has sunk other projects. 

“It was just local community concerns about the kinds of clients that we serve,” said Michelle Cabrera, executive director of the County Behavioral Health Directors Association.

Challenge Three: How to learn from it 

Rosemary Balsley, 49, spent 14 years without a home of her own – first living in her car, then, after the engine died, couch surfing wherever someone would take her in. 

In 2021, Balsley scored a roomy one-bedroom apartment on the third floor of a No Place Like Home project in East Palo Alto, and everything changed. A self-described neat freak, Balsley loves having her own space that she keeps smelling of Pine-Sol. She soaks in the tub to ease the pain of an old shoulder injury. And she welcomes guests – her older sister and a friend came over and threw her a small birthday party last month. 

But it’s not just the roof and four walls that have made a difference for Balsley, who has several mental health diagnoses, including bipolar disorder and schizophrenia. She now has support staff to help her navigate apartment living. A counselor, who Balsley calls her “go-to girl,” calls regularly to check in and sometimes makes her food.

The combination of a home and supportive services has helped Balsley become someone she worried she’d never be: an independent woman. She’s managing her mental health well with medication, she’s paying her bills on time – including her $296 a month in rent – using her disability benefits, and she’s considering going back to school or looking for a job. 

“I’m a part of the world now,” she said. “I don’t feel like an outcast.” 

The question, of course, is not whether such housing is valuable, but how California can build it faster.

The state is trying. Legislators have passed bills to speed up approval and remove land use and parking restrictions for certain apartment buildings that include low-income units. 

Californians should start to see No Place Like Home projects move more quickly as those laws take effect, said Michael Lane, state policy director at the San Francisco Bay Area Planning and Urban Research Association.

“You need to have the land, you need to have the financing, but then you also have to have the political will to approve the projects,” he said. “We’ve made a lot of progress over the last few years, and we’ll begin to see the results of that.”

Sen. Susan Eggman, a Democrat from Stockton who authored part of Prop. 1, said the state has learned valuable lessons from No Place Like Home. She said Prop. 1 includes exemptions to California’s Environmental Quality Act to facilitate the development of supportive housing. It also requires more transparency: Counties will have to submit annual reports to the state outlining how money is spent.

“With No Place Like Home there wasn’t a lot of accountability from the communities,” Eggman said. “Now there will be measurements and outcomes to really be able to see what the community needs, what they have and what their plan is to make sure those resources are there.”

Should Prop. 1 pass, the Department of Health Care Services will split responsibility for distributing bond money with the state housing department. A representative of the health care services department said in an unsigned email that the initiative would authorize them to require corrective action plans or levy fines against counties that do not meet capacity and other annual performance goals.

Farrah McDaid Ting, director of public affairs for the California State Association of Counties, said she was initially skeptical about No Place Like Home. At the time, assuming it would pass regardless, she decided to help craft a legislative package that she and the counties she worked with could support. She considers the construction of more than 1,600 units so far “a huge achievement,” one she doubted would happen back when de León and Steinberg first floated their idea in 2016.

But when it comes to getting housing built faster, she said, “none of us”— not governors, not Senate leaders, not countless others —“nobody has been able to figure out how to make this stuff happen.” 

“I definitely think it’s progress,” she said. “Whether it’s the best way to make progress, I don’t know.”

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This story originally appeared on CalMatters.org, a nonprofit, nonpartisan media venture explaining California policies and politics.