Los Angeles Goes Into $150 Million of Debt as Homelessness Crisis Worsens

By: Stephanie Bontorin | Published: Jun 19, 2024

Los Angeles will take on $150 million in municipal debt to pay for housing construction during the mounting homelessness crisis. The state of California has been dealing with the housing crisis for years. They have attempted to throw money at the problem time and time again.

Now, a new measure will attempt to build housing for the most vulnerable in the second-most populous US city.

Rent-Stabalized Housing Units Needed

The measure was first passed in 2016 with a total $1.2 billion city bond measure. Proposition HHH was voted in to deliver permanent rent-stabilized housing for the city’s most vulnerable residents.

An aerial view of a large white apartment building surrounded by trees

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The millions being borrowed this month will go towards building 2,574 units. More than 16,000 individuals are expected to be helped by the increased funding.

LA Addressing the Growing Homeless Epidemic

The issue of housing has long been described as an epidemic in the city of Los Angeles. As the costs of rent, food, insurance, and medical care rise, more individuals and families are struggling to stay ahead, and many have been left behind to fend for themselves.

A high level view of three rough tents on the street next to a green dumpster

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The state of California recently added a total of $3.3 billion in funding to combat the growing crisis. More than 46,260 people in Los Angeles reported being unhoused in 2023; this number has increased by more than 63% from eight years ago. Not all of these people are drug users or former felons; many who experience homelessness are hard-working families and kids.

The Debt Will Be Added Through Bonds

The debt will be taken on as bonds sold through the standard market. The size of the city’s economy and the demand for tax-exempt debt in California will make the bonds extremely attractive to buyers.

A California flag on a pole next to an American flag.

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Pat Lumby, the municipal strategist at CreditSights Inc., says, “The social benefit of contributing to the amelioration of such a significant problem with enormous human costs will stimulate additional demand from national investors.”

Funds From Bond Sales Will Be Used for Public Housing

Once the bonds are sold off to the public, the funds will be used to build new facilities that support mental health services, drug and alcohol treatment, education, and job training.

A large blue and orange apartment building with several small balconies

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The bonds are scheduled to go live on June 24 and are backed by Los Angeles property taxes.

Housing Can Improve the Lives of Residents Suffering From Homelessness

A recent pilot project for Universal Basic Income in Denver showed that 45% of residents found themselves housing after just 10 months of no-strings-attached payments.

Apartment buildings and balconies seen in the daytime.

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Housing and access to basic medical care can substantially decrease many cities’ drain on their social services and programs. In the long run, cities will save money by paying out less to emergency services, homeless shelters, and police.


Why Are There So Many Homeless People in LA?

Although drug addiction, mental illness and poverty are issues nationwide, they’re not the only contributing issues to homelessness in Los Angeles. Instead, many of the people who fail to secure adequate housing in LA are families with young children.

A man sits on a park bench with a suitcase and a hand made cardboard sign

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The main cause stems from shortages of affordable housing. Other contributing factors like medical debt, physical illness, and low pay exacerbate the ongoing issues.


The City Is on Track To Deliver Housing

So far, almost 100% of Proposition HHH’s funds have been committed to the homeless project.

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City officials also note that the additional funds will push them towards completing the initial process of building 10,000 housing unites in 10 years.


Non-Profit Organizations Are Happy About the Funding

Tommy Newman, the vice president of public affairs at United Way of Greater Los Angeles, a not-for-profit organization that advocates for a higher tax to raise money for assistance programs, shared his enthusiasm for the funds.

A team of people hand out foot at a soup kichen

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“It’s exciting to see these bonds being sold consistent with what the voters approved and helping the city beat its goal.”


Governor Gavin Newsom Added Measures To Add Tax to Wealthy Residents

Governor Gavin Newsom backed a recent $6.4 billion measure that passed with a simple majority to add funds for the growing homeless epidemic.

California Governor Gavin Newsom speaks during an interview

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Voters approved a quarter-cent rise in sales county tax to help fund the projects. More initiatives have also been added to tax the wealthiest residents in the state to benefit the most vulnerable.


Los Angeles Lacks the Necessary Resources To Solve the Current Issues

Newman at United Way noted, “We need more emergency shelters, we need more solutions for people with serious mental illness, and we also need this supportive housing which is appropriate for people who have long-term disabilities.”

A man wears a black jacket while sitting on the side of the street with a black dog wrapped in a red blanket

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The alternative of leaving people on the streets hasn’t worked for most residents in the past. New measures need to be taken to increase shelter beds and support services.


Low-Income Housing Units Have Already Proved Successful

In recent months, Washington View apartments opened for low-income housing, giving disabled veterans and homeless individuals a much-needed home.

View of a large apartment building being built

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So far, many residents have reported improved quality of life by having a safe place to live at an affordable price. City officials hope to build more affordable housing units such as these to improve life around LA for its residents.