By Gail Gilman
This is the second in a three-part series to help demystify interim housing and align the public and local decision-makers behind models that can work around the Bay Area.
- The first part, The Role of Interim Housing as a Homelessness Response, provides historical context, a definition of interim housing, and examples of how it appears in the Bay Area.
- This post digs into the challenges and barriers to scaling interim housing, and expands on how it can be consistent with a Housing First approach.
- The last part puts forward 7 Principles for Interim Housing, to help jurisdictions and service providers design, develop, and improve interim housing sites across the region.
Interim housing is a critical component of our strategy to make homelessness rare and brief, along with permanent housing and homelessness prevention. But in order for interim housing to scale and achieve its potential, there are structural barriers to overcome. We’ll get into some of these challenges in this post, including how we fund homelessness and housing, finding viable locations to build interim housing, the bureaucratic processes potential developers have to navigate, and workforce issues.
But before getting into all that, we want to be very clear about one thing and call out an elephant in the room: interim housing is absolutely consistent with a “Housing First” approach. It’s actually because of our belief in Housing First that we believe so strongly in interim housing.
Interim Housing and Housing First
The National Alliance to End Homelessness (NAEH) defines “Housing First” as prioritizing a permanent home above other needs when assisting people experiencing homelessness. The approach is “guided by the belief that people need basic necessities like food and a place to live before attending to anything less critical, such as getting a job, budgeting properly, or attending to substance use issues.” We couldn’t agree more, and it’s great that most of the homelessness response field is now aligned with this approach.
Every human being needs a decent home—possibilities are endless when you have that foundation, and little is possible when you don’t. That’s exactly why interim housing is so important, and why it’s consistent with Housing First. Permanent housing is always the goal, but interim housing can address immediate safety and health concerns for people getting connected to permanent housing. In a region where more than 25,000 people sleep outside on any given night, and where deeply affordable housing is scarce and building more is costly and slow, the streets should not be the waiting room for a permanent home.
We define interim housing as a short-term dwelling in which to stabilize and heal after living on the streets, on the way to a permanent home. Interim housing features non-congregate sleeping arrangements (i.e. individual rooms with doors that close), and offers a basic level of supportive services, individual privacy, security, and space to keep belongings.
- While more research is needed, interim housing with wraparound on-site supportive services appears to have a higher success rate exiting residents to permanent housing than traditional congregate shelter. One investigation of interim housing in Santa Clara and Alameda counties indicated that residents of tiny homes with substantial supportive services on site were far more likely to exit to permanent housing than were residents of traditional “dorm-style homeless shelters.”
- People living outdoors are more likely to accept an interim housing placement than traditional congregate shelters. The independence, privacy, and security that these sites provide is incredibly important, as we discussed in our first post on this topic. During the historic rain storms of January 2023, news outlets reported that people who were unsheltered still refused to shelter in congregate settings. In Des Moines, Iowa, even with snow on the ground, a comprehensive survey found people rejected traditional shelter because of safety concerns and “problems with other people.”
Interim housing alone cannot solve homelessness, and people staying at such a site should still be considered homeless and in need of a permanent home as soon as possible. Still, it is widely seen as a significant improvement over traditional congregate shelter. NAEH has recognized this and laid out extensive guidance for Reimagining Interim Housing that is largely aligned with our thinking and elaborates on many issues raised in these posts.
Another concern about interim housing is the sense that it competes for funding with permanent housing. This problem is related to some of the funding challenges explained below. Unfortunately, we are operating in an environment with serious resource scarcity, and that inevitably breeds competition. The bigger problem is the resource scarcity that pits one solution against another.
As we explain in the 1-2-4 Framework for Homelessness Solutions, we need to invest simultaneously in multiple solutions at scale in order to significantly reduce unsheltered homelessness and make homelessness in the Bay Area rare, brief and non-recurring. We need a “yes, and” approach, and the funding to effectively do more than one thing at a time. When all three legs of the stool are working as intended, the whole system will work better.
So let’s focus on that resource scarcity—the real elephant in the room. But first, it’s important to understand the cost of the quality, well-supported interim housing we are talking about.
While the costs for developing and operating effective interim housing vary considerably even across the Bay Area, two local examples can provide guidance for the on-site services required for successful programs and the annual funding required to provide them.
The LifeMoves Mountain View site, developed in approximately six months using a modular construction process funded in part through Homekey, opened in 2021. The facility contains 100 units (88 for single adults and 12 for families) and provides an array of on-site supportive services. Eighty-six percent of families and 67 percent of single adults who reside at the facility successfully move to permanent housing thereafter. The start-up capital costs for LifeMoves Mountain View amounted to approximately $174,000 per unit, and ongoing operating costs have come to approximately $27,000 per bed (or about $34,000 per unit annually).
San Jose’s Maybury “Bridge housing community” consists of forty small (approximately 80 square feet) tiny cabins for single adults. According to analysis reported in one press account, approximately 57% of exits from this site are to permanent housing destinations. Capital costs for this site amounted to approximately $2.5 million ($62,500 per unit), and ongoing operating costs have amounted to just over $48,000 per unit annually.
While more evidence is needed, the costs listed above are notably higher than those of traditional congregate shelter. Recent nation-wide research estimates that nonprofit organizations operating traditional shelters receive an average of about $28,000 in revenue per shelter bed annually. Average start-up costs to develop new congregate facilities in the Bay Area have been estimated at just over $43,000 per bed, while the approximate operating cost to operate congregate sites in Alameda County was pegged at just over $18,000 per bed annually.
The higher operating costs for more successful interim housing are because of the supportive services they provide, which are crucial to create the outcome (placements to permanent homes) that we all want to see from such facilities. In a well-functioning homelessness response system that is not overburdened, there is still a role for traditional shelter, but right now the system asks much more from those facilities than they are designed to provide.
Although the per capita cost of non-congregate interim housing is higher than traditional large-scale shelters, the benefits to residents and the larger community are well worth the additional investment.
Clearing Hurdles to Scale Interim Housing
To be able to build and operate interim housing at the scale of the need in the Bay Area (and elsewhere in California), we see four categories where innovative solutions are needed.
More Flexible Funding Sources: Interim housing is not eligible for many of the traditional funding sources for both operations and capital that permanent supportive and other transitional housing can rely on. Housing providers have noted that funding sources such as housing vouchers, tax credits, and debt financing often have eligibility requirements, staff certification requirements, performance targets and reporting procedures, and bed rates designed for permanent homes or short-term emergency shelter, but unavailable for interim.
The lack of sufficient access to capital and funding is a huge barrier for would-be developers and leaves private and nonprofit sources to fill the gap. This also limits the scalability of project expansions. Importantly, the operating dollars needed to tailor appropriate support services at interim housing sites require flexibility due to the uncertain duration and variable needs of the population being served.
Streamlining and Technical Assistance for Interim Housing Production: Given those capital financing and funding challenges, very few for-profit or nonprofit developers are willing to build interim housing. Development of capital projects, and the approval and permitting processes, are extremely challenging to navigate, even for traditional affordable or permanent supportive housing. It gets even more complicated for this new form of housing that may not fall under traditional planning and building code regulations. Navigating these challenges requires an unusually high level of expertise, coordination, and political savvy. In order to build the amount of interim housing our region needs, the system needs to be much simpler and easier to navigate. Even then, developers and service providers will likely still need significant technical assistance to do it well.
Identifying sites and building neighborhood support: Finding suitable locations for interim housing sites is difficult, and earning the support of neighbors and local stakeholders makes it even more challenging. There is a lot of stigma surrounding people experiencing homelessness, much of which is unfair and inaccurate. Most residents of interim housing sites would not stick out in a crowd or be identifiable as such, but unfortunately many people associate homelessness with personal failure, extreme mental distress or debilitating substance use. Folks in those acute states are very visible, but not representative. LifeMoves had to abandon plans for an interim housing site in Santa Clara in 2021 because of neighborhood opposition. As we discuss in our interim housing principles, neighborhood relations are an important factor for site location choice and ongoing site management standards.
Invest in the Homelessness Response Workforce: Operating quality Interim Housing is difficult interpersonal work that requires trained and qualified staff. The people who provide the support services in Interim Housing sites are the key to success, and the current state of this workforce is a bottleneck in our system. The homelessness response workforce is notoriously underpaid, undersupported, and burned out. There is a shortage of trained, qualified case managers, and insufficient career development pathways for people to move into more skilled positions. This is not the fault of the workers or even their employers in many cases—this vital work is ultimately funded by governments that contract with nonprofit service providers. Those contracts, and the government programs (often state and federal) that fund them, must do a better job at accounting and paying for the true cost of this work.
We hope that explaining these challenges can help local governments, policymakers, service providers, and developers begin to chart a path to addressing them. Don’t miss the third and final post in this series, 7 Principles for Interim Housing.