Natalie Hanson

SACRAMENTO, Calif. (CN) — Chastising California cities for a lack of "aggressive" planning on how to use state funding to combat homelessness, Governor Gavin Newsom pulled the plug on $1 billion in funding for homeless services — at least for now.

Newsom announced Thursday he will get city leaders together this month to review current strategies for addressing the statewide homelessness crisis, and to identify better approaches. For now, the $1 billion third round of Homelessness Housing, Assistance and Prevention grants, which cities build their homeless services strategies around, are on hold.

“As a state, we are failing to meet the urgency of this moment,” Newsom said. “Collectively, these plans set a goal to reduce street homelessness 2% statewide by 2024. At this pace, it would take decades to significantly curb homelessness in California — this approach is simply unacceptable. Everyone has to do better — cities, counties and the state included.”

The grants are awarded on the condition that each local government has a plan approved by the state that reduces the number of unsheltered homeless individuals and increases permanent housing. Recipients of the third round of funding have new requirements such as creating a homelessness action plan that details local actions to prevent and reduce the number of people experiencing homelessness. Plans must include the number of unhoused people in a given community and identify all programs and sources of funding — with outcome-driven results and strategies for achieving goals — to address the crisis.

But the governor said some plans actually project double-digit growth in homelessness.

Newsom cited years of efforts to approach homelessness by investing $15.3 billion, including an effort with Caltrans since last year to clear more than 1,600 encampments across the state and remove more than 2,200 tons of trash. The budget he signed this year includes $700 million for encampment resolution grants with $350 million earmarked for assisting those living on state right-of-way property.

The governor has also spearheaded the Homekey and Project Roomkey programs to help get people off the streets. By partnering with cities across the state, Project Roomkey has sheltered more than 60,000 people since the pandemic began, and Homekey has funded 12,500 units since its inception in late 2020.

However, these programs have taken heat over how some cities handle staffing and funds, with calls for audits to understand how cities manage partnerships with nonprofit organizations relying on these fund cycles to manage their programs. And the state's largest cities are embroiled in lawsuits over the legality of their approaches to moving people from streets to shelters and if there is enough shelter available, including the state capitol, San Francisco and Oakland.

Sacramento expected to receive $13.3 million in aid. Mayor Darrell Steinberg said in a statement that Sacramento County has housed more than 17,000 people since 2017 and relies on these funds to keep up such resources.

“Let’s use this moment to create a legally enforceable obligation for all cities, counties and the state to get more people into permanent housing,” he said.

“Let’s use this moment to create a right to mental health care for the people who are desperately sick on our streets. It must not be optional, but mandatory, for counties to intervene directly in these numerous encampments where the suffering of people and our neighborhoods is so obvious. We can pair new rights and obligations with the responsibility of people to accept the housing and services when they are offered.”

San Francisco planned to get $47.3 million from the state. Mayor London Breed said the city has housed nearly 4,200 people, and the county is one of the few in the state with a 3.5% decrease in homelessness over the last three years, including a 15% decrease in unsheltered homelessness.

“To effectively build on this success, we need collaboration and clarity from the state,” Breed said. “Instead, the state has decided to abruptly withhold funds that we have been planning around and that will actually make a difference in our communities — all without any warning or conversations or opportunities to address their concerns.”

“While we welcome accountability, now is not the time to delay funds that will help get people off the street. Now is not that time to create more hoops for local governments to jump through without any clear explanation of what’s required.”

Denny Machuca-Grebe, public information officer for the city’s Department of Homelessness and Supportive Housing, said the department has not received any guidance on how to improve the current action plan while finalizing a five-year strategy on homelessness. He said Newsom's move puts at risk more than 400 shelter beds, a youth drop-in center and transportation, case management and harm reduction services designed to help transition people from streets and shelters to housing.

Across the bay, Oakland saw a 24% increase in homelessness. City officials did not respond to requests for comment about how much they are depending on from the state's homeless aid funds. The city had been preparing a companion plan setting goals to reduce homelessness with a price tag estimated at $65 million.

Alameda County used $102 million for Project Roomkey programs to shelter 5,301 people during the pandemic. The county has said via email that it has spent $15 million placing people in purchased hotels and other buildings to use for supportive housing, dubbed Project Homekey.