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In Pricey Silicon Valley, a Plan to Preempt Homelessness

No-strings-attached stipends that prevent struggling tenants from tumbling into homelessness pay off in the long run, a program in California’s Santa Clara County has found.

Bloomberg

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Street in San Jose, California

Homes in San Jose, California, in 2022. Sky-high housing prices and a lack of affordable apartments have turned the Silicon Valley region into a laboratory of homelessness prevention experimentation. Photographer: David Paul Morris/Bloomberg

Fernando Cortes understands the importance of being heard by your local government, especially in times of need or stress. He works as an interpreter in San Jose, California, helping Spanish-speaking residents navigate government offices and applications.

He’s also a single father with shared custody of his 10-year-old son, and during the pandemic, when demand for in-person interpretation work collapsed, he fell behind on rent payments for his small studio apartment, which were just over $2,000 a month. San Jose and surrounding Santa Clara County, the heart of the pricey Silicon Valley region, have long had one of the nation’s most expensive housing markets.

“I was going long nights without sleep,” said Cortes, 45. “I was sharing my space with my son, so I couldn’t lose it. It was double stress.”

That’s when friends directed him to Santa Clara County’s Homeless Prevention System, or HPS, a program administered by a network of local nonprofits that provides financial assistance to tenants at risk of eviction. In 2022, he applied and was able to secure enough funds to cover his rent for three months. “It was like a blessing,” he said.

Researchers at the University of Notre Dame in South Bend, Indiana, who studied HPS found that 81% of those who enrolled were less likely to experience homelessness within six months. The no-strings-attached assistance, which averages $6,000 to $7,000 per household over four months, also has a wider community impact: For every $1 spent, the community saw $2.47 in benefits, the 2023 study concluded. Approximately 95% of families that used the service remained in stable homes.

“It's almost like we built a new safety net that didn’t exist before,” said Chad Bojorquez, chief program officer of Destination: Home, one of the organizations that helped create the program.

A New Paradigm

HPS is part of a proliferating family of interventions predicated on the notion that the cheapest way to address homelessness is by keeping struggling tenants from being turned out on the streets in the first place. A massive 2023 study of homelessness in California by the UCSF Benioff Homelessness and Housing Initiative found that most unhoused people believe that a subsidy of $300–$500 a month would have kept them sheltered. The effectiveness of providing direct aid was borne out by the high-profile success of federal housing relief programs deployed during the Covid-19 crisis. Prevention-focused programs have emerged in Connecticut and Birmingham, Alabama, while roughly 150 sites have “basic income” experiments and pilots that provide direct cash payments to households in poverty.

Informally, direct housing support had been happening in Santa Clara County for years — small handouts from agencies that helped families pay for medical bills or rent. And more than 90% of US cities have assistance programs aimed at preventing homelessness, according to economics professor David Phillips, one of the Notre Dame researchers who studied Santa Clara County’s system. But most simply identified those at high risk and “kicked the can down the road,” he said.

HPS was different, providing assistance without a pre-set time limit for people who were still housed but on the brink. “Early on, we learned that all these families were calling the family shelter, and saying, ‘Hey, I think I’m going to be homeless in a couple of months, I’m not sure how I’m going to make it,’” Bojorquez said. “And they were told to come back when they were homeless. We realized, these next few months are when we can make a big difference.”

Launched in 2017, the program was devised to be more flexible than others, forgoing spending caps and tracking data and performance to understand where the money was going and what it accomplished. It coalesced around two efforts: Housing 1,000, a program to better coordinate homeless services among the dozens of agencies and nonprofits in the county, and a 2017 report showcasing the enormous cost of homelessness in the region.

“We found three people were falling into homelessness for every person that we were housing,” said Bojorquez. “We call that inflow, as an industry term. People were just falling into homelessness on a regular basis.”

Two local organizations run the system, with lead organizer Sacred Heart Community Service, an anti-poverty nonprofit, joined by Destination: Home, a county-wide public-private group. The first two-year pilot of HPS distributed $3.3 million to roughly 330 households. Most of the funds go out in direct payment to landlords, but it can also be used for gas and car payments or to pay for other bills. Currently, the effort has 19 participating organizations, a centralized contact system and dedicated phone line; the current fiscal year, which ends in June, will see approximately $29 million distributed to about 1,700 households. The program continues to be expanded — the county will take over full operation this summer.

When Cortes was getting assistance, he was nervous about making sure the payments arrived on time and often called program administrators for updates. But he said they were open and helpful, explaining how the system worked, how his landlord was going to get paid, and when he could expect help. HPS organized to pay back rent directly with his landlord, eliminating the stress of constantly communicating about a late payment. Today, he’s still in the same studio apartment.

“One of the most important things is they made me feel that I deserved the help,” Cortes said. “They weren’t just giving me the service because they had to; they made me feel that I was worth it.”

As in so many cities and counties, it was the pandemic that pushed Santa Clara County to try a new approach to rental assistance. The county had received American Rescue Plan funding and set up an eviction help center to connect tenants and landlords with federal support, said Emily Hislop, a manager at the City of San Jose Department of Housing. At that time, in late 2021, different parts of the housing and legal system collaborated extensively to find ways to protect tenants. As the pandemic receded, those officials saw a chance to expand that work.

“We were in an eviction crisis before the pandemic that’s only exacerbated,” said Hislop. “Cities and counties and organizations had already come together to respond to the pandemic. What grew out of that moment was a sense of, ‘How can we address this going forward?’ The coordination among all of these agencies has been transformative.”

As Bojorquez said, a lot of perspectives shifted when the county distributed $85 million in direct financial aid in a matter of months — a totally new paradigm for social service — and “the world didn’t explode.”

Plugging a Gap

Part of the reason Phillips was so eager to study Santa Clara County’s program was to see how this kind of assistance played out long term in an area of such wide wealth inequality. Home to Alphabet Inc. and Apple Inc., Santa Clara County is a place of income extremes, and it has long ranked high on the US Department of Housing and Urban Development’s annual estimates of US counties with the highest number of homeless residents. The gap reflects the county’s location and history, an area that was farmland just a few decades ago and boomed during the ascension of Silicon Valley, bringing an influx of workers during a period of extraordinarily low housing construction in California.

That entrenched affordable housing crunch — median monthly rent in San Jose is just over $2,900 and the median single-family home price in 2023 was almost $1.8 million — has given rise to a host of homelessness initiatives. San Jose has also experimented with quick-build “tiny homes” as a means of temporarily sheltering the area’s unhoused residents, a group that numbers close to 10,000, according to the county’s most recent point-in-time count.

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An encampment in San Jose, California, in 2022. Silicon Valley has long struggled with high rates of unsheltered homelessness. Photographer: Aric Crabb/MediaNews Group/East Bay Times via Getty Images

The scale of Santa Clara County’s housing shortage has also informed the larger HPS idea that the challenges its clients face aren’t likely to be over in a month. A parent might need several months of financial assistance to figure out how to pivot out of working three jobs, or take the time to get trained to seize a new opportunity, or to extract themselves from an unaffordable housing situation.

Most other eviction-prevention programs demand proof of stability and will only work with those who have temporary issues like an unexpected expense; Santa Clara doesn’t require that. That’s why the results that the Notre Dame team recorded underscore the value of such programs. No strings attached still work. While this isn’t the same as directly providing cash — the standard recipient of aid gets the program to pay back rent to a landlord — it’s still a temporary program aimed at alleviating a shortfall.

There are technically no limitations to the program, Bojorquez said, but here are checkpoints along the way; case managers working with each family check in at thresholds, roughly $7,000 and $25,000, and do case conferencing, to ensure families meet certain criteria or there is some resolution in sight (medical care is ending soon, perhaps, or a plan is in place for finding new housing or employment).

“I hope that people will look at what Santa Clara County and Destination Home are doing and look at it as an example of something that others can emulate,” said Phillips. “It tells us something about root causes. It tells us there’s a group of people who can’t afford their rent and some temporary financial help can solve the situation. But financial assistance isn’t going to change how much rent costs in Santa Clara County.”

That last point — that rental assistance and universal basic income pilots can’t address the fundamental issues that cause poverty — is echoed in other critiques of these programs. Many centrists and conservatives have argued that they’re too broad, too costly, reduce workforce participation, and lack broad public support. A Pew study found that in the summer of 2020, during widespread pandemic unemployment, just 45% of Americans were in favor of UBI.

But defenders of this proactive aid model emphasize that societal costs start to spiral once people are out on the streets, where job loss, contact with the criminal justice system and emergency room visits can quickly follow. Research found that the highest acuity, or most serious, homeless residents cost the county $85,000 annually. It makes the $6,000 it might take to stabilize a resident’s finances over several months look like a bargain.

“Part of it is that there isn’t that negative connotation or perception around homeless people,” Bojorquez said. “These are hardworking families who can’t make ends meet. Here’s a relatively affordable way to keep people housed.”

Hislop describes HPS as plugging a hole, but the pressures behind that breach continue to grow. Last summer, San Jose’s evictions were up 25% over pandemic-era levels, she said. And last month, a Destination Home report found that homelessness in Santa Clara County spiked 24% in 2023.

“We’re seeing those inflow numbers, and the need is bigger than ever,” said Bojorquez. “Over half of people are coming to us recently because of an income loss or reduction. People aren’t making enough money, housing isn’t affordable, and we aren’t getting enough support from the federal level. We’re buried under this much larger systemic situation.”

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This post originally appeared on Bloomberg and was published March 19, 2024. This article is republished here with permission.

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