Body
California’s Homekey program, launched under Gov. Gavin Newsom in 2020, set out to rapidly expand homeless housing by pushing billions of dollars to local governments to turn hotels and other buildings into permanent housing. But a CalMatters investigation described a program that sometimes delivered quick openings and steady tenant placements, while also producing projects that stalled for years, triggered disputes over public funds, and left communities without clear, centralized explanations of which approaches worked best.
The report described Los Angeles as an example of how Homekey could accelerate housing production and also magnify implementation risk. People Assisting The Homeless, a nonprofit in the city’s orbit, told CalMatters that it moved quickly at first after taking over the Hollywood Orchid Suites in Los Angeles. The nonprofit later said its attempt to use the program for another site became bogged down after it was forced to take on a motel in Gardena with limited opportunity to vet the building before operations began.
CalMatters said People Assisting The Homeless described a pale pink Travelodge in Gardena that it took over in December 2020, with the city of Los Angeles having purchased the motel for $9 million. The nonprofit said its team did not have a chance to vet or tour the site and relied on online photos and basic inspection reports. A city consultant estimated the work to begin moving people into the motel would cost about $50,000, but the nonprofit later said it was far from that figure and that more than five years later the motel was still vacant earlier this year.
The investigation said the broader lesson from the Homekey “boom or bust” results in Los Angeles was how little public accountability exists for a generational, high-cost housing effort. It said Homekey awarded more than $3.8 billion to local governments to convert motels and other buildings, thrusting many cities and counties into roles running multimillion-dollar real estate projects. With the program designed to move fast by offering up-front cash and cutting some typical building-process steps, the report said oversight and vetting could be reduced relative to traditional housing financing structures.
Launched during the peak of the COVID-19 pandemic, Homekey emerged after cities had already moved thousands of unhoused people into motels through Newsom’s earlier Project Roomkey, though those rooms were temporary. CalMatters said Homekey differed because it aimed at longer-term housing by converting existing buildings, from Motel 6 and other hotel brands to other facilities that included tiny-home developments in Silicon Valley and retrofits such as an old dentist’s office in Santa Cruz. Newsom, at a 2021 press conference announcing a Homekey expansion, said the effort was “multiples of what any state in American history has committed to address this crisis of homelessness.”
The report said Homekey carried little built-in oversight, and it pointed to state lawmakers killing earlier this year a bill that would have audited the program. It also said no state agency has publicly analyzed Homekey in detail to determine what was working and what was not. With the next phase already underway—up to $2 billion from the voter-approved Prop. 1 mental health bond—the investigation said there was no public accounting of how many original projects stalled and how many succeeded.
CalMatters’ findings described how the program could simplify housing delivery while increasing risk. The report said Homekey’s up-front funding let some developers bypass webs of investors and lenders and finish faster, but fewer funders also meant fewer eyes and less oversight. It reported that at least one Homekey developer was forced out of business by an unwieldy project and that another developer faced fraud charges, alongside a pattern in which rushed vetting could contribute to delays or budget blowouts.
Even where Homekey worked, the report said local officials and housing providers stressed that it depended on adding services beyond the core state funding. The state Housing Department said nearly 13,500 people now live at Homekey sites, and officials in small and rural communities described the program as crucial for creating their first homeless housing. Researchers and practitioners, including UC Berkeley’s Terner Center for Housing Innovation, said the real strength of Homekey was its willingness to test a faster housing-development approach amid ongoing homelessness pressures, while also warning about what the program required to succeed.
The investigation described delays and incomplete conversion of promised units. It said projects involving about 3,000 homes—roughly 1 in 5 promised—had not finished as of the end of last year, and it said another 2,000 units had residents on a temporary basis but had not become permanent housing. It also said some announced grants were later canceled or never materialized in instances involving about 500 additional units.
Local housing officials described how combining Homekey dollars with other funding and staffing could determine whether projects opened on time and stayed stable. In Ventura, Ventura Housing credited Homekey to a project that helped it buy a nearly 100-year-old building known locally as the “Booyah Mansion” and later renamed El Portal, where a 29-unit apartment complex now houses residents. Ventura Housing real estate development director Karen Flock said, “This property failing was not an option,” and Ventura Housing CEO Jeffrey Lambert said Homekey worked “because of all the stuff added on top of it.”
In Mendocino County, Megan Van Sant said the county ran services and supported tenants with roles such as mental-health staffing and other intervention resources that were not funded by the state grant. Santa Cruz County’s Housing for Health division, through Robert Ratner, pointed to underestimating costs and to Homekey’s pricing and timeline approach as a major driver of some delayed projects, saying that budgeting errors and design elements capped how much the state would pay per unit. Ratner also said Santa Cruz County assumed the state would scrutinize applications for viability, but he said it appeared the state relied on counties for that vetting.
The report said some Homekey awards never became housing for veterans or people transitioning back into the community. It described Santa Cruz County converting rural vacation cabins into housing for homeless veterans with a state completion deadline initially set for 2023, but said the project ran out of money and construction stopped before it crossed the finish line. It also described other cases in Oakland’s Chinatown where a planned conversion of a century-old building to housing for people returning from incarceration was abandoned after inspection found severe construction issues, with the city returning the grant.
The investigation also highlighted a broader question: what happens when Homekey projects open late, run over budget, or face long-term funding gaps after the state money is spent. It said most projects use pay-as-you-go models rather than longer-term financing structures, which it described as creating a financial cliff for thousands of Homekey homes. Megan Van Sant said, “If (Homekey) is going to be a long-term, permanent, successful program,” the state would need to find “ongoing funding.”
As California prepares to carry the program forward through Homekey+, the report said state officials have described improved vetting and longer timelines in response to delays. California Health and Human Services Secretary Kim Johnson said officials were “improving our own vetting process” to ensure projects deliver successfully. The state’s Housing Department also said it monitors each project closely when issues arise or deadline extensions are granted, and Assistant Deputy Director Cari Scott said in a statement that the program helped house “so many vulnerable Californians” quickly despite the pandemic and other challenges.