Newsom’s housing program that spent billions exposed in brutal report
Newsom poured $3.8 billion into Homekey to end homelessness. Five years later, thousands of units sit unfinished and local officials admit they skipped due diligence.
California Gov. Gavin Newsom’s signature homelessness program has delivered exactly what critics of big-government solutions always warned: billions spent, timelines blown, and thousands of promised homes still empty.
Homekey, launched in 2020, handed local governments cash to buy motels, sorority houses, even a dentist’s office and turn them into housing. Newsom boasted it was "multiples of what any state in American history has committed." Yet as of December, roughly 3,000 units, one in five projects, remain unfinished. Another 2,000 still need conversion to permanent housing, and grants for 500 units were simply canceled.
The details are brutal. Los Angeles spent $9 million on a Travelodge in Gardena; officials figured another $50,000 would get people inside. Five years and $3 million later, the motel sits vacant with broken windows, plumbing, and electrical problems. Only 60 of 148 completed projects finished on time. Forty-five are still incomplete. A $17 million Encino project and three Santa Cruz County efforts for homeless veterans collapsed after costs were wildly underestimated.
Developers saw the failure coming. Bay Area developer Taryn Sandulyak told investigators the state gave "not quite enough money" while demanding it be done "really, really fast and really, really well." Ventura Housing CEO Jeffrey Lambert said projects needed outside funding just to work. Cities with no real estate experience were suddenly thrust into development, then surprised when they botched federal grants and risk safeguards.
Santa Cruz officials ran out of their $6 million allocation because they didn’t know how to properly fund construction. When asked if the county performed due diligence, official Ratner answered: "I would say no. I can’t say yes with a straight face at this juncture." The program’s own rules, one year to finish construction, 90 days to move people in, produced rushed budgets that guaranteed overruns.
Newsom still calls it a "phenomenal success" with "hundreds and hundreds of projects" and "own opportunities and own challenges." The state’s response? Create yet another housing agency to centralize oversight and relax timelines. California Health and Human Services Secretary Kim Johnson said they are "improving our own vetting process" to make projects successful. The pattern is familiar: announce an ambitious fix, ignore execution, then announce another layer of bureaucracy when it collapses.
Original reporting: New York Post.
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