As the country’s homeless crisis worsens, cities and states are trying to build more affordable housing to prevent their residents from ending up on the streets or in shelters.
But more money is needed to turn construction plans into a reality − and in many cases residents must approve tax revenue increases to foot the bill.
This month, voters in Chicago and California were given the choice: Raise taxes to fund housing and homeless services? Or keep things status quo?
Results were mixed. California’s Proposition 1, which would provide more mental health services for people experiencing homelessness passed by razor-thin margins after weeks of ballot counting. In Chicago, ballot question 1, dubbed Bring Chicago Home, which would have raised taxes on the sales of million-dollar real estate, failed with 52% voting against it.
State lawmakers in Iowa and New Hampshire also are debating legislation that would allow more real estate transfer tax revenues to fund affordable housing. Last year, Delaware passed a law to put more transfer taxes toward affordable housing funds in three counties, and New York did the same for part of Long Island in 2021. Similar efforts in recent years failed in Colorado, Illinois and Maine, according to data compiled by the National Conference of State Legislatures.
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More elected officials throughout the country are running on promises to reduce homelessness. But the problem is growing even as leaders try to solve it. Last year, the U.S. homeless population reached a high of more than 650,000, according to the Department of Housing and Urban Development Annual Homelessness Assessment Report, and housing experts warn rent increases and evictions will push more people into homelessness until cities build cheaper housing. When funding for affordable housing fails to get approved, the time frame for reducing homelessness gets pushed further, advocates warn.
But cities face an uphill battle passing new funding measures to support brand-new housing initiatives, especially when voters are invested in keeping real estate taxes flat.
In Chicago, one of the main groups opposing the Bring Chicago Home campaign said raising taxes could also raise housing costs, hurting homeowners and renters alike.
“Tax increases hurt affordability, they are actually drivers of housing instability,” said Jeff Baker, CEO of Illinois Realtors.
Bring Chicago Home fails to pass after years of organizing
After first launching in 2018, the Bring Chicago Home measure failed to pass last week, leaving longtime grassroots homeless advocates disappointed and frustrated with the results.
“The number of people experiencing homelessness grows every year, it is a matter of life and death,” said Hannah Gelder, the organizing director for ONE Northside in Chicago, a social justice group on the referendum’s steering committee.
Gelder said advocates for the homeless in years past fought at the state level to increase taxes to fund affordable housing, but state lawmakers said they didn’t want to consider legislation on the issue. That meant Chicago, where homeless people number more than 60,000, had to go directly to voters in this year’s election.
Bring Chicago Home would have increased the real estate transfer tax to 2% for properties sold for $1 million or more, while lowering them for more than 92% of buyers purchasing property worth less than $1 million, according to the proposed policy. The plan would have raised about $900 million for new construction over 10 years, the campaign said. Proponents first started organizing around the cause back when Rahm Emanuel was mayor.
“It was an uphill battle to persuade voters to vote on a tax referendum,” Gelder said.
Illinois Realtors, a real estate lobbying group, said it had $1 million to spend on its opposition campaign, which argued the new sales tax would hurt Chicago’s residential, commercial and rental real estate markets.
“This proposal was actually going to hurt the ability of the city to address homelessness,” Baker said.
But, the Bring Chicago Home campaign said their proposed tax would not hurt renters, citing recent studies from Northwestern University and the University of Chicago that found landlords wanting to maintain their return on investment for multifamily buildings worth more than $1 million could do so by raising monthly rents by less than $5.
While grassroots homeless advocates were on the ground talking to their neighbors about Bring Chicago Home and trying to “win hearts and minds,” Gelder said, ads led some voters to believe the new tax would be like writing the city government a “blank check.”
“It played to voters’ distrust of government,” Gelder said.
Baker told USA TODAY he agreed cities across the U.S. need to increase their supply of below market rental units. But, he said zoning restrictions and costly development requirements make “building these homes way too expensive” for real estate owners.
To make the case for the funding, some experts point to growing evidence showing paying for affordable housing saves money long-term because having a large homeless population is costly for cities, said Sarah Gillespie, a housing researcher at the Urban Institute focusing on city budgets.
“It is a choice. You may choose to pay for housing, and if you don’t, then you’re choosing to pay for arrests, jail stays and emergency department visits,” she said.
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California Prop 1 barely passes
California is home to nearly a third of the country’s unhoused population, and data released last year shows the vast majority of unhoused people there said they had a period in their lifetime when they experienced a serious mental health condition. About 27% of California’s more than 170,000 homeless residents have been hospitalized for a mental health condition before, according to the report from Benioff Homelessness and Housing Initiative at the University of California, San Francisco.
California’s Proposition 1 scraped by with barely more than 50% of the vote in a heavily Democratic state.
Gov. Gavin Newsom pushed hard for the measure, which will fund thousands more mental health and substance use treatment slots and housing units.
“Now it’s time to get to work − repairing the damage caused by decades of broken promises and neglect to those suffering from severe mental illness,” Newsom wrote on X, formerly Twitter, celebrating the election results.
Proposition 1 authorizes the state to shift $6.38 million in bonds against county mental health budgets, redirecting most of the money toward new affordable housing.
The money would be borrowed against income taxes already imposed on people who earn over $1 million annually.
Individual cities in California, and elsewhere in the West, have voted by wider margins to raise taxes to fund homeless services, like last year, when Seattle renewed its housing levy for another seven years.
Seattle voters support property taxes for affordable housing
In the Seattle region, another area on the West Coast struggling with a large homeless population, a majority of voters have for years approved a levy on property taxes to fund affordable housing.
In an off-year election, 69% of Seattle voters in 2023 approved a housing tax that will fund the creation of more than 3,100 affordable rentals and homes for purchase, and rental assistance to prevent evictions for an estimated 9,000 low-income families, according to the city.
Homeless advocates in Seattle see more support from voters because the housing tax has been in place for decades, and residents have seen positive results, said Sharon Lee, executive director of the Low Income Housing Institute in Seattle. Affordable housing complexes are spread evenly throughout the city, and “you can’t tell that it’s low-income,” she said.
“They look market rate, they’re well maintained and there isn’t a stigma,” Lee said.
It could be harder to rally voters to approve increased funding for similar projects in America’s older cities, where the phrase “affordable housing” calls to mind “buildings that are falling apart or vacant,” she said.
Atlanta mayor, City Council approve millions of dollars for affordable housing
Instead of turning to voters, last year the Atlanta City Council was able to approve hundreds of millions of dollars for affordable housing, through a bond spread out over the better part of a decade.
The city, which grew by 66,000 residents from April 2022 to April 2023, also is benefitting from more property tax revenue without having to raise or pass new measures, the mayor’s office said.
Philanthropic groups also worked with the city to allocate millions as part of the plan.
There’s still broad public support for it less than a year later, said Joshua Humphries, policy advisor to Atlanta’s mayor. Atlanta residents saw firsthand that the bond was working in a matter of months, he said. In 2023, 14 stalled affordable housing projects − representing 1,238 affordable units − got off the ground because of the money.
In 2023, Atlanta had an unhoused population of 2,679, according to that year’s annual count.
The funds will continue to be used for more new construction, as well as preserving existing housing and developing underutilized public land, Humphries said.
“Affordable housing is the most pressing public policy issue in the country right now, and every city is going to have to grapple with the question of how do they want to be part of making sure that their city has adequate housing stock,” he said. “You need to have the political will and financial investment.”
Contributing: Terry Collins, USA TODAY; Kathryn Palmer, Desert Sun
