Editorial: How do we pay for homeless housing? Here’s one idea: tap state mental health funds

There are nearly 47,000 homeless people living on the streets or in shelters in Los Angeles County. Their problems are all complex, but none are as challenging as those of the chronically homeless, who suffer from mental illness or substance abuse or a physical disability. Over the last few decades, experts have concluded that what this group needs most, generally speaking, is permanent supportive housing, the kind that comes girded with social services such as mental health care, primary care, drug treatment and case management by a professional.

But building such housing is extraordinarily expensive. Now, with city and county officials in Los Angeles finally working on ambitious multi-year plans to fight homelessness, the state legislature is considering one promising funding approach that could help significantly. Under the “No Place Like Home” initiative, proposed in January by State Senate President Pro Tem Kevin de León, the state would sell $2 billion in bonds to help local governments construct and rehabilitate housing specifically for the estimated 29,000 mentally ill homeless people in the state. The bonds would be paid back over 20-30 years from the revenues of the so-called “millionaire’s tax” created under Proposition 63, the Mental Health Services Act.

This is a smart, surgically specific proposal for funding costly and desperately needed housing for homeless people and has rightly earned the support of Gov. Jerry Brown. The Senate and Assembly should approve the bond measure in their budgets.

The Proposition 63 tax generates about $1.8 billion annually in revenue that is dedicated by law to mental health programs. Permanent supportive housing for mentally ill homeless people seems to fall squarely within its mandate. And while some other programs for the mentally ill might see money diverted, the overall harm would be manageable: The debt service on the proposed bonds would take only an estimated 3% to 7% of Proposition 63 revenues each year. It could take even less if the revenue from the millionaire’s tax grows, as budget analysts for De León say they expect. (Of course, in a recession that revenue stream could also drop. But most counties — including Los Angeles — have healthy reserves of Proposition 63 funds that they keep in case funding drops.)

The bond money would be disbursed to counties for permanent supportive housing projects. It is critically important that the state think long and hard about how to use the money most effectively, and how to hold counties accountable for the disbursements they receive. Legislators working on the plan say counties would be eligible to receive a percentage of the available money based either on their percentage of state population or their percentage of the state’s homeless population. For L.A. County, that’s a significant difference — the county is home to about 30% of the state population but has about 40% of the state’s homeless population. The fair and effective approach is to tie county funding to the size of its homeless population.

But the counties wouldn’t necessarily get all the money they were eligible for. They would have to apply for the funds for specific projects. The counties would need to show that they had already raised some funding elsewhere or were capable of using the state funds to leverage other money. Most importantly, counties would need to show that they could provide the project’s wraparound mental health services for years to come. The state’s Department of Housing and Community Development and the California Housing Finance Agency would decide how to allocate the funds.

As homelessness rises in Los Angeles and elsewhere in the state, politicians finally seem ready to take action, and to recognize that doing so will be a long, difficult, costly undertaking. To move forward, they’re going to have to work together more than they have in the past -- at the city, county, state and federal levels -- and not lose their focus or their nerve even when constituents get angry about proposed housing projects or when new problems and social ills demand their time and resources.

It is good news that leaders in Sacramento are also becoming engaged in these efforts. The bond proposal should be approved.

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