As COVID-19 tore through California, Jennifer Hark Dietz had a decision to make. The state was making perhaps its biggest push ever to get people off the street, offering up billions of dollars for cities and organizations like hers to turn old motels into new homes.<\/p>\n
It was risky. The Homekey program came with up-front cash and a promise to move fast and cut red tape. But it also meant taking on old buildings with little vetting, which had the potential to put a developer in a deep financial hole.<\/p>\n
At first the gamble paid off. In just a few months, Hark Dietz\u2019s nonprofit, People Assisting The Homeless, was housing people in the old 40-room Hollywood Orchid Suites in Los Angeles. She called it a \u201cshining light\u201d for what seemed possible with the radical new program. <\/p>\n
But then came a pale pink Travelodge in the suburb of Gardena. The city of LA had already bought the motel for $9 million, and Hark Dietz said her team didn\u2019t have a chance to vet or tour the site. They\u2019d only seen online photos and basic inspection reports before they took it over in December 2020. A city consultant estimated that it would take about $50,000 to start moving people into the roadside motel. <\/p>\n
\u201cOf course,\u201d she said, \u201cwe know now that\u2019s not the case.\u201d<\/p>\n
More than five years and nearly $3 million later, the motel \u2014 which turned out to need all new windows, plumbing and electrical, among other issues \u2014 was still vacant earlier this year. There was plywood over some of the windows, and someone graffitied a ghost on one side. <\/p>\n
The boom-or-bust results in Los Angeles underscore how little is known publicly about a generational project with a high price tag and even higher stakes. Some projects were huge successes. Others were total failures. Dozens remain stuck in limbo. CalMatters found there\u2019s been little public accountability for any of it.<\/p>\n
Launched by Gov. Gavin Newsom in the summer of 2020, Homekey awarded more than $3.8 billion to local governments to convert motels and other buildings into homeless housing, thrusting many local governments into a new role running multimillion-dollar real estate projects. Cities and counties could hire outside contractors to help or do the work themselves, skipping some of the usual building process for the sake of speed.<\/p>\n
It was unlike anything the state had ever done, largely because it sprang from desperation. Homekey launched during peak COVID, five months before vaccines were available, and after cities had already moved thousands of unhoused people into motels through Project Roomkey<\/a>, another Newsom program. But those rooms were temporary, and officials were scrambling to prevent a mass exodus back to the streets. <\/p>\n With Homekey, local officials across the state bought and gutted Motel 6s, Best Westerns and roadside inns. They got more creative as the program evolved: Tiny homes sprouted in Silicon Valley, and Santa Cruz retrofitted an old dentist\u2019s office. In Southern California, housing took shape in a former Tri-Delt sorority house, an earthquake-stricken church and a hostel that once served as a refuge for Japanese Americans returning from World War II internment.<\/p>\n \u201cWhat we\u2019re doing here today is multiples of what any state in American history has committed to address this crisis of homelessness,\u201d Newsom said at a 2021 press conference<\/a> announcing a major Homekey expansion. <\/p>\n The program came with little built-in oversight. Earlier this year, state lawmakers killed a bill to audit Homekey. No state agency has publicly analyzed the program in detail to find out what\u2019s working and what\u2019s not.<\/p>\n The challenge now: A new and more complex phase is already underway with up to $2 billion from the voter-approved Prop. 1<\/a> mental health bond. But no one has publicly accounted for how many of the program\u2019s original projects stalled out and how many succeeded.<\/p>\n To find out what happened, CalMatters filed more than 100 public records requests with cities and counties that were awarded Homekey funds. We asked for key details on 250 projects announced through the end of 2024, covering all but a handful of projects for which less public data was available. Those state and local records \u2014 along with dozens of visits to Homekey sites, plus interviews with people who built and lived in them \u2014 create a first-of-its-kind window into how it all played out.<\/p>\n Among our findings:<\/p>\n 1. Homekey made producing housing simpler. But it came at a cost. Homekey provided billions of dollars in housing funding up front, allowing some developers to sidestep the usual webs of investors and lenders and finish much faster than normal. But fewer funders also means less oversight. With rushed vetting, some projects got bogged down in delays, blown budgets or worse. At least one Homekey developer was forced out of business by an unwieldy project. Another is facing fraud charges.<\/p>\n 2. When Homekey worked, those involved stress that it really worked. Nearly 13,500 people now live at Homekey sites, according to the state Housing Department. For small and rural communities, such as Glenn County, the program provided crucial cash for their first-ever homeless housing. Officials from Mendocino County to Ventura say they were able to stabilize people longer term by adding stronger ties to public services and extra investment in resources such as counseling.<\/p>\n 3. Those successes magnify the opportunities squandered. Projects involving about 3,000 homes \u2014 roughly 1 in 5 promised by the program \u2014 weren\u2019t finished as of the end of last year. Another 2,000 units have people living in them on a temporary basis but haven\u2019t been converted into permanent housing, the program\u2019s main goal. In 10 instances involving 500 more units, the state publicized grants that later were canceled or that never materialized because local officials or developers backed out.<\/p>\n 4. A lack of transparency raises familiar questions about the program\u2019s future. State officials stress that they have extended deadlines and improved vetting for the program\u2019s latest bond-funded iteration, Homekey+. But they refused to publicly provide details about that vetting process. And as homeless services providers have long warned, there remains no guaranteed state funding to keep existing or planned Homekey projects going. <\/p>\n<\/ul>\n Yes, many Homekey projects opened late or over budget. But, officials emphasize, they still opened.<\/p>\n Newsom said he considers the program a \u201cphenomenal success.\u201d <\/p>\n \u201cWe\u2019re talking about hundreds and hundreds of projects all across the state of California that they\u2019re trying to manage and organize and operate,\u201d he said when CalMatters asked about it at a recent press conference. \u201cAnd I imagine each one of them brings its own opportunities and own challenges as we move forward and implement at a scale we\u2019ve never implemented in the state\u2019s history.\u201d<\/p>\n Taryn Sandulyak knows that better than most. The Bay Area developer thought Homekey might be her big break, but it ultimately put her out of business. She sees a fundamental mismatch at the heart of the program. It wanted high quality, high speed and low budgets. <\/p>\n \u201cYou can only have two of those,\u201d Sandulyak said. \u201cYou really can\u2019t ever have three. That\u2019s the issue with Homekey, is they give you not quite enough money to do it, and they want you to do it really, really fast and really, really well.\u201d<\/p>\n The chasm between Homekey successes and failures isn\u2019t a simple, one-size-fits-all story. But it does provide an outline of what it will take to make good on California\u2019s big effort to finally make a dent in its homelessness crisis. <\/p>\n \u2018Failing was not an option\u2019<\/p>\n On the west side of Ventura, just as the surf town creeps up into the hills toward Ojai, sits what used to be one of the city\u2019s worst nuisance properties: a nearly 100-year-old apartment building once known, in a nod to local drug slang, as the \u201cBooyah Mansion.\u201d <\/p>\n The city\u2019s housing authority, Ventura Housing, cobbled together enough money in 2019 to buy the building. But it didn\u2019t have enough cash to fix all 300-something code violations at the crime-ridden property \u2014 until Homekey came along. <\/p>\n \u201cWe had some scary stuff go on here,\u201d said Karen Flock, Ventura Housing\u2019s real estate development director. \u201cThis property failing was not an option.\u201d<\/p>\n Now known as El Portal, the 29-unit apartment complex today serves as a lifeline for a mother with 9-year-old-twins, one severely autistic. It\u2019s a refuge for a woman who lived for six years in a city-funded Tuff Shed. Another neighbor still keeps his shopping cart from the street in his apartment as a reminder of what he\u2019s been through, and why he can never go back.<\/p>\n Ventura and other cities and counties that were able to pull off Homekey projects relatively on time and on budget credit a variety of factors for their success. Some grantees provided services themselves rather than contracting them out, better integrating public resources. Others raised extra money for on-site social services or worked closely with first responders to head off concerns about crime and stabilize residents.<\/p>\n Jeffrey Lambert, CEO of Ventura Housing, said the crucial thing was realizing early that Homekey money alone isn\u2019t nearly enough. Instead, the city combined it with other public and private funding, staffing and resources. Projects that failed or got stuck in limbo often fell apart after they ran out of money.<\/p>\n \u201cHomekey works,\u201d Lambert said, \u201cbecause of all the stuff added on top of it.\u201d<\/p>\n For housing researchers such as Ryan Finnigan, deputy director of research at UC Berkeley\u2019s Terner Center for Housing Innovation, the real strength of Homekey was not the building minutiae. It was the attempt to challenge the state\u2019s status quo of painstakingly slow housing development while people keep pouring onto the streets.<\/p>\n \u201cIf we\u2019re not willing to try a new approach,\u201d he said, \u201cthen we\u2019re not going to learn as much about how we can be more creative, how we can work with more urgency than the current systems.\u201d<\/p>\n As fraught and full of delays as the construction process can be, getting a project completed is often just the first hurdle for Homekey. Once a project opens its doors, it typically needs significant resources in addition to the state funding. Mendocino County credits much of its project\u2019s success to extra services for residents, which aren\u2019t paid for by the state grant, said Megan Van Sant, a senior program manager for the county who oversees the Homekey site. <\/p>\n At the former Best Western hotel now known as Live Oak Apartments, there\u2019s a therapist on retainer for tenants, plus a dog trainer paid to work with problem pets. Both try to help residents resolve any issues that come up before they escalate into grounds for an eviction.<\/p>\n To provide those extras, the county runs the project itself, rather than contracting with an outside service provider as many Homekey projects do. Two county staffers work full-time inside the building, using their connections to do everything from enrolling residents in Medi-Cal to pairing them with mental health services.<\/p>\n All that is expensive. <\/p>\n \u201cI think the state should continue to support these projects,\u201d Van Sant said. \u201cThe state asked communities to do these projects, and they cost more to do well than what you can earn in rent.\u201d<\/p>\n Sherry Collins, 66, moved into the project three years ago, at a time when she was terrified of what would come next. Her husband had died, her health was failing, she couldn\u2019t work, and she couldn\u2019t afford to keep living in her cabin in the tiny coastal city of Fort Bragg. <\/p>\n Now she feels like she\u2019s home. Collins decorated the window of her room with little red and pink hearts and adopted a kitten with extra toes, whom she named Mr. Handsome. She continues to deal with health challenges after losing a leg to diabetes about a year ago. The building has only four units accessible for people with disabilities, making it a challenge to accommodate everyone, but one recently opened up for Collins, where she can more comfortably shower. <\/p>\n \u201cThey have been awesome to me,\u201d Collins said. \u201cThey\u2019re more like family.\u201d<\/p>\n Never-ending projects<\/p>\n For Sandulyak, Homekey was too good to refuse. <\/p>\n Five years earlier she had co-founded Firm Foundation Community Housing, which helped Bay Area churches turn their parking lots and backyards into tiny homes for homeless residents. <\/p>\n Homekey was a once-in-a-lifetime opportunity to dramatically scale up that vision by using millions in state funds to house dozens of people in Vallejo. It would be the small nonprofit\u2019s most ambitious project by far.<\/p>\n Sandulyak never suspected that by applying for Homekey, she had doomed her organization.<\/p>\n Firm Foundation was awarded $12 million in 2022 to build a 47-unit modular apartment building called the Broadway Project. Over the next four years, nearly everything that could go wrong did. <\/p>\n Some problems had nothing to do with Homekey. The general contractor went bankrupt, and the nonprofit tapped to operate the facility squabbled with the city, leaving the project in limbo for a year. The state wouldn\u2019t let Firm Foundation pick a new partner to run the housing, which Sandulyak says further delayed the opening.<\/p>\n Other problems were directly related to Homekey. By design, the program forced cities to take a much more hands-on role with housing development than they were used to. Vallejo wasn\u2019t prepared for that responsibility. It fumbled its attempt to get a key federal grant and failed to set up important safeguards that protect affordable housing projects from financial risks. <\/p>\n Soon, Sandulyak had $2 million in bills and no way to pay them. With construction three-quarters done, the project ran out of money. Firm Foundation was forced to stop work.<\/p>\n It became such a nightmare that the Vallejo City Council asked for an independent audit to find out what went wrong and why. The audit blamed<\/a> both the city and Firm Foundation for allowing the project to run out of money before it was finished. Firm Foundation vastly underestimated the project\u2019s cost, and the city bungled efforts to secure additional funds.<\/p>\n In some ways, the audit found, the very nature of Homekey helped set the project up for failure. <\/p>\n One big problem was the timeline. Homekey required projects to finish construction within one year of their award, and to move people in 90 days after that. To meet those deadlines, Firm Foundation created budgets before the architectural drawings were even done, contributing to serious cost underestimates, the audit found. <\/p>\n The audit also found a lack of oversight at the Broadway Project, which it said is typical of Homekey projects. Normally, a single affordable housing project uses funding from multiple sources, including the city, the county, the state, federal funds, tax credits, private banks and more. The more funders and investors, the more eyes watching and holding the developer accountable. With Homekey, the city applying for the grant typically takes on all those risks by itself, the audit found. <\/p>\n On a recent Thursday morning, Sandulyak gathered with city officials and her construction partners in front of a crowd to celebrate what they, at times, had thought would be impossible: the Broadway Project was finally open. Behind them rose the terracotta-colored wall of the sleek, new, modular apartment building. A red ribbon waited in front of them.<\/p>\n On the count of three, Sandulyak helped Vallejo\u2019s assistant city manager snip the ribbon. The crowd cheered.<\/p>\n The project ended up coming in two and a half years late and 70% over budget. Despite those setbacks, the audit found it still cost less per unit and was built more quickly than the region\u2019s average affordable housing project.<\/p>\n But it cost Sandulyak everything. She laid off three of her four employees, and she plans to lay off the last one and dissolve her organization. The nonprofit is still on the hook for more than $1 million in unpaid bills related to the project.<\/p>\n Despite her pride in the finished building, Sandulyak wonders how much more housing her nonprofit could have built \u2014 if only she\u2019d never applied for Homekey.<\/p>\n Still, 52 people now have somewhere to call home.<\/p>\n \u201cI\u2019m unshaken in my belief that that is worth it,\u201d Sandulyak said.<\/p>\n One of those people is 62-year-old Terrence White, a former refinery worker who was forced into early retirement by an injury and can\u2019t afford market-rate rent. Now, he pays $294 a month and finally has his own place.<\/p>\n \u201cIt feels wonderful,\u201d he said.<\/p>\n The Homekey gold rush<\/p>\n During the frantic first two years of Homekey, when many experienced affordable housing developers were sitting out the untested new program, an LA company called Shangri-La Industries stepped in to help fill the void. It scored nearly $115 million in contracts to build 500 homes for homeless Californians in cities from Salinas to San Bernardino. <\/p>\n But a federal indictment<\/a> and a separate civil lawsuit allege that millions in state funds instead went to fund a lavish lifestyle for the company\u2019s chief financial officer. <\/p>\n Among the charges attributed in court records<\/a> to Shangri-La\u2019s former CFO, Cody Holmes: $46,000 in monthly rent for a Beverly Hills house with a pool. Designer gifts for a girlfriend, including a $127,000 diamond necklace and a $111,000 crocodile Birkin bag. A $5,000-a-month lease on a Ferrari Portofino. Another $53,000 for Coachella passes, and $44,000 for flights on private jets. <\/p>\n All this while many of the desperately needed motel rooms sat empty. <\/p>\n Homekey set a low bar for contractors to qualify: They had to have worked on at least two affordable housing projects that included at least one homeless tenant. <\/p>\n Shangri-La easily cleared that hurdle. But had any state or local officials done more digging, they might have seen warning signs.<\/p>\n Shangri-La\u2019s construction business was sued twice for breach of contract in 2018<\/a> and 2019<\/a>, court records show, after two firms alleged that it failed to pay them. The company was also a contractor on a troubled LA veteran housing project, where records first reported by KCRW<\/a> show Shangri-La partners sold the property to themselves, increasing the project\u2019s budget by $8 million. <\/p>\n With Homekey, federal prosecutors allege<\/a> that Holmes \u201cknowingly submitted fake bank records\u201d to the state Housing Department to boost Shangri-La\u2019s credentials \u2014 financial claims that state officials apparently failed to verify with the banks. Holmes has pleaded not guilty, and an attorney representing him declined to comment. <\/p>\n As the company took on the Homekey projects, property records show that entities connected to Shangri-La or its partners paid around $13 million for actress Milla Jovovich\u2019s Beverly Hills mansion, adding to a portfolio that included a $7 million oceanfront home in Long Beach purchased two years earlier. <\/p>\n In a separate civil fraud case<\/a>, state prosecutors allege in court records that Shangri-La went behind the state\u2019s back and took out undisclosed loans on the Homekey buildings, giving up control of the sites and violating their contract with the state. That became a major problem when the company defaulted on the loans. <\/p>\n For several of the properties, no one had filed crucial paperwork to ensure that they remained affordable housing. After the buildings ended up in foreclosure, some were scooped up by companies with no commitment to homeless housing.<\/p>\n Homekey contracts tasked local officials with vetting projects and reviewing contractors\u2019 organizational documents, budgets and other key details. But records show state officials also reviewed Shangri-La\u2019s financials, and once they paid out the Homekey money, they failed to verify that paperwork was completed to restrict the buildings to affordable housing.<\/p>\n The state Housing Department and several local governments that hired Shangri-La for Homekey projects declined to comment, citing ongoing litigation. <\/p>\n Andy Meyers, the former CEO of Shangri-La, acknowledged in an interview that he had \u201ca lack of control\u201d over his company. He has sued Holmes for fraud. He also blamed the local and state officials. <\/p>\n \u201cMy CFO had a lot of wrongdoing,\u201d he said. \u201cBut it was a confluence of events that caused each project to go bad.\u201d<\/p>\n Meyers said officials\u2019 failure to file the proper affordable housing restrictions, which were also required by his lender, triggered a financial disaster that led his company to default on some of the properties. On two projects that Shangri-La did open in San Bernardino and Salinas, he estimated that the company incurred around $11 million in unexpected costs.<\/p>\n \u201cWe have spent so much money following their guidelines and following their timetables,\u201d he said, \u201cand they never followed their guidelines or timetables.\u201d <\/p>\n Monterey County Supervisor Chris Lopez rallied support for a Homekey project in his hometown of King City. He thought Shangri-La made sense for four projects in the county, since it had already opened one Homekey site in Salinas. <\/p>\n But it didn\u2019t take long for constituents to start asking why rooms were sitting empty behind chain-link fences. <\/p>\n \u201cThe longer it went on without seeing any movement, the flag started to get raised,\u201d Lopez said. \u201cI was starting to hear less and less communication and more sort of finger pointing.\u201d<\/p>\n Local officials like Lopez had to start from scratch, raising millions more dollars to revive the projects as encampments swelled. It took 10 different deals totaling $16 million to open the King City project in March, three years behind schedule.<\/p>\n The full trail of Shangri-La\u2019s deceit stretches from the state\u2019s agricultural heartland to the edge of the Southern California desert. A $27 million Thousand Oaks hotel project sits abandoned today, robbing a region of 77 homes while it had a decade-long housing waitlist. Another $16 million project scrapped in Salinas would have provided 58 homes. Officials still plan to salvage 200 homes in other parts of Monterey County. The only two Shangri-La projects that stayed open during the legal battle, two motels in Southern California, were full of people who were plunged into messy foreclosure disputes.<\/p>\n Carrie Harmon, San Bernardino County\u2019s director of community development and housing, said in an email that \u201cthe county entered into this effort in good faith, relying on representations that later proved to be inaccurate.\u201d <\/p>\n Even some of those whose Homekey projects went well say they\u2019re not surprised that things went sideways. In Mendocino County, Van Sant said the state\u2019s oversight was limited to quarterly progress reports. Once the money was spent, the state stopped asking for any information at all.<\/p>\n \u201cThey gave us a bunch of money, made us do some paperwork, and then they\u2019re out of here,\u201d Van Sant said.<\/p>\n For Colleen Robinson, public officials\u2019 failure to see the red flags with Shangri-La was life-changing. <\/p>\n Robinson, now 62, survived years on the street after losing her job and fleeing a bad relationship. The All Star Lodge in downtown San Bernardino was her chance to start over. Shangri-La did manage to renovate and open that project in late 2022.<\/p>\n Two years later, the bank foreclosed. Because no one had put the affordable housing restriction on the property, the new owner told Robinson and other tenants that it was going to quadruple the rent. She said the new owner neglected the building; weeds and stray cats reclaimed the parking lot, police sirens blared, and neighbors died with little explanation. <\/p>\n \u201cThis would give hell a run for its money,\u201d Robinson said.<\/p>\n Harmon said the county was still trying to buy the building and figure something out, but Robinson didn\u2019t wait around to see how the saga ended. On a Thursday in February, she packed up and boarded a Greyhound bus for Iowa, where one of her children lives.<\/p>\n Homeless veterans still waiting<\/p>\n Some Homekey projects still haven\u2019t opened. <\/p>\n Santa Cruz County has three badly delayed Homekey projects, one of which will be more than four years late when it is slated to finally be finished at the end of next year. For that project, the county obtained more than $6 million to convert rustic vacation cabins under a grove of redwood trees into housing for homeless veterans. The state initially set a completion deadline of 2023, but the project ran out of money before it crossed the finish line, forcing construction to stop. <\/p>\n There were many reasons why, but one stands out: underestimating the cost, said Robert Ratner, director of Santa Cruz County\u2019s Housing for Health division. <\/p>\n The developers had never undertaken a project this large, and that inexperience contributed to the budgeting error, Ratner said. But so did the design of Homekey, which capped what the state was willing to pay per unit at about half what it takes to build affordable housing in some parts of California. <\/p>\n The idea was that projects would be cheaper because they were converting existing buildings, while also cutting out extra layers of bureaucracy that add time and expense. That led developers to low-ball budgets, which came back to bite them when the savings weren\u2019t as great as anticipated, Ratner said. <\/p>\n Once the budgeting error was made, neither the state nor the county caught it, Ratner said. The county assumed that the state would scrutinize all Homekey applications and throw out any that didn\u2019t seem viable, Ratner said. But it appears that in reality, the state was relying on the counties to do that vetting.<\/p>\n Santa Cruz County had little experience analyzing whether a construction project was adequately budgeted. Typically, the county relies on other funders, such as construction lenders and tax credit investors, to do that job. But those investors weren\u2019t present here. <\/p>\n When asked whether he and his colleagues had done their due diligence to make sure the projects were realistic, Ratner was straightforward. <\/p>\n \u201cI would say no,\u201d Ratner said. \u201cI can\u2019t say yes with a straight face at this juncture.\u201d<\/p>\n Other projects just never happened. <\/p>\n A $14 million Homekey award was supposed to help breathe new life into the Hotel Travelers, a rundown, century-old building in Oakland\u2019s Chinatown, as housing for people returning from incarceration. But once the developer got a look at the building, that plan fell apart. An inspection revealed such severe issues with the building\u2019s construction that the developer determined it would be \u201cmorally untenable\u201d to proceed. Oakland returned the grant.<\/p>\n In total, CalMatters found at least 10 cases where a Homekey award was announced, only for the grantee to later withdraw their application, return or redirect the money, or have the state claw it back. Some instances had more public explanation than others. <\/p>\n City officials in Fresno voted down their own project. Long Beach was unable to come up with a suitable location for $2 million worth of brand-new tiny homes left sitting in storage. Projects in Marin and Mariposa counties evaporated when real estate deals fell through, and the state rescinded its grant for a project in Salinas after a nonprofit partner pulled out.<\/p>\n Newsom\u2019s legacy and a financial cliff<\/p>\n Despite the vastly different outcomes at Homekey projects around the state, there\u2019s no plan for a comprehensive audit to see what worked and what didn\u2019t \u2014 a decision that raises the question of whether the state has done enough to grapple with Homekey as it forges ahead with the new version of the program, Homekey+.<\/p>\n Earlier this year, lawmakers nixed a public accounting proposed by Assemblymember Leticia Castillo<\/a>, a Republican from Corona.<\/p>\n \u201cWhile the program has expanded housing options, critical questions remain about its long-term impact and cost-effectiveness,\u201d a summary<\/a> of Assembly Bill 505<\/a> said. \u201cIt is unclear how many Homekey-funded units remain occupied after one year, how many individuals successfully transition to stable, long-term housing, and whether Homekey\u2019s cost per unit is competitive.\u201d<\/p>\n The bill was never publicly debated. It died in January.<\/p>\n The state did do one audit of multiple homeless services programs<\/a> in 2024. It didn\u2019t get into Homekey delays or what actually happened to people living in the buildings, but it analyzed the costs of eight projects. Based on that small sample, the auditor concluded that Homekey was \u201clikely\u201d cost-effective, with an average cost of $144,000 per unit, compared to the hundreds of thousands of dollars more it can cost for new construction in California.<\/p>\n The challenge is that when Homekey plans fell short of ambitions at job sites around the state, the consequences were often murky. In extreme cases, where cities acknowledged that projects failed to materialize, the state has clawed back grants. But usually, the main penalty for blown deadlines or other missteps is that the state may hold it against a local government or developer the next time it applies for funding \u2014 a dynamic that provides no public transparency.<\/p>\n What happens next will be left up to a new state housing agency set to be launched<\/a> this summer, the California Housing and Homelessness Agency. That effort is expected to include a new development committee to \u201cprovide centralized, coordinated guidance to state housing policy and funding decisions.\u201d<\/p>\n For now, the state\u2019s Housing Department maintains that it \u201cmonitors each project closely\u201d if issues arise or deadline extensions are granted. Even with widespread delays, the agency maintains that \u201cHomekey has helped build more and faster.\u201d<\/p>\n The state said it is learning as it gives out the new Homekey+ funding. After seeing so many projects miss the one-year deadline, the state doubled the timeline for new construction to two years. Homekey+ projects that serve veterans<\/a> now can propose bigger budgets for new builds, potentially addressing the issue of under-budgeted projects running out of money. <\/p>\n Officials also said they\u2019re scrutinizing applications more closely now, including looking carefully at whether applicants are budgeting enough funds for their proposed projects, said California Health and Human Services Secretary Kim Johnson. <\/p>\n \u201cWe are improving our own vetting process, if you will,\u201d she said during a recent news conference, \u201cto ensure these projects are successful in delivering.\u201d <\/p>\n The state\u2019s housing department maintains that Homekey accomplished a major feat: building thousands of units despite a global pandemic, labor shortages, supply chain issues and other challenges.<\/p>\n \u201cIt is tremendously rewarding to see so many vulnerable Californians housed so quickly, and to have voters expand the successful Homekey model to house and support veterans and others facing behavioral health challenges,\u201d Assistant Deputy Director Cari Scott said in a statement.<\/p>\n As the state\u2019s housing policies shift, there\u2019s one big question left for people like Van Sant in Mendocino: Will there be enough money to keep Homekey projects running?<\/p>\n Most of the projects have a pay-as-you-go model, versus standard 10- or 15-year affordable housing financing \u2014 a calculation that leaves a financial cliff looming for thousands of Homekey homes.<\/p>\n \u201cIf (Homekey) is going to be a long-term, permanent, successful program,\u201d Van Sant said, \u201cI think the state\u2019s going to have to find a way to find some ongoing funding for it.\u201d<\/p>\n ___<\/p>\n Data reporters Erica Yee and Kate Li contributed to this story.<\/p>\n ___<\/p>\n\n