Can California Clear A Better Path To Housing Stability?
Homelessness has become such a problem in cities across the country that a few have embraced building “step up” housing to help people move from homelessness to lasting stability.
Securing a site and shepherding it through demands extraordinary government effort, coordination, and patience. If a step-up development encroaches on an established neighborhood, it often faces community pushback.
While the idea is gaining momentum, turning it into reality is no simple feat, particularly in California, where building new housing—even for people experiencing homelessness—is extraordinarily difficult.
California’s distinction as the most expensive state for housing is closely linked to its homelessness crisis, which hit a record high last year at 187,000 people, according to the Public Policy Institute of California, nearly a quarter of the nation’s total.
State lawmakers have been trying to ease the regulatory burden to increase housing supply, serving as a model for other states. Step-up housing is, at least, an effort to address the lowest end of the spectrum.
It's such a mess here that we—no matter what—have to experiment and try new interim solutions,” Tyler Kobick, founder and principal of Design Draw Build.
Berkeley, CA, took its first step on June 16 with the opening of a 39-unit building developed by Panoramic Interests, a company known for student housing and infill projects.
This building is definitely an experiment in an interim solution,” says Kobick, whose firm designed it. “It’s designed for the 50x100 lot in California so that other cities can do it.”
The project took close to eight years to complete. After several years of work, it was first approved in 2020 after a public-private partnership was hammered out. It required more legislative approvals before full authorization in 2022.
Along the way, it faced COVID-19 delays, and construction costs doubled. A construction partner backed out. Because of construction costs, it also had to be redesigned.
Berkeley isn’t alone in how long development can take. In Denver, the city’s first micro community for homeless people took four years to build just 11 units, but only one to two days in 2017.
Other cities, though, have been able to move quickly by using government land. Atlanta, for example, opened The Melody on city-owned land last year in four months from site selection to completion of 40 units using converted shipping containers.
Builders and developers would love to have that timeline to build market-rate housing.
Addressing homelessness in California through step-up housing hasn’t come without pitfalls, though. The private development partner with the nonprofit Step Up, which built 39 units in Santa Monica in 1994 and inspired statewide efforts to convert hotels into housing for homeless people, has been bankrupt since last year. All seven of its properties were taken over by lenders.
Step-up Housing Solution for Homelessness
Step-up housing is a transitional or supportive housing model designed to help individuals experiencing homelessness move from unstable or emergency shelter situations into more stable, independent living environments.
These programs typically offer supported independent living with onsite or closely connected services, such as case management, life skills classes, peer support, and mental health care.
The goal is to help residents stabilize, gain independence, and eventually transition to permanent housing, employment, or education opportunities. Residents may start with subsidized rent and gradually take on more financial responsibility as they become self-sufficient.
Berkeley’s Slow Solution
Berkeley has long grappled with a significant homelessness crisis, shaped by a mix of economic, social, and policy factors. While recent efforts have reduced the number of unsheltered homeless, the city continues to face complex challenges around encampments, public health, safety, and the availability of affordable housing.
In 2018, Berkeley residents passed an increase in real estate transfer taxes for homeless services.
The new development received funds from that ballot initiative, along with money from Alameda County and Kaiser Permanente. The Berkeley nonprofit Building Opportunities for Self-Sufficiency is operating the development.
As part of the deal, the city is paying $1.4 million to operate the property, more than half of which goes to the developer to lease the building. The city also has an option to buy the building for $15 million in two years.
A prior architect designed the project in modular form. Kobick says that Panoramic dropped the architect and the prefabrication company during construction.
His firm was brought in to shave costs and came up with a bid at half the price, redesigning the building to hit the number.
Additionally, the design navigated regulations to lower costs and speed up construction time.
He says the design intentionally kept the building small enough to avoid requiring an elevator. Similarly, the electrical system is limited to a 400-amp three-phase service to prevent the need for larger 600, 800, or 1200-amp services, which would trigger additional requirements from Pacific Gas and Electric Company and California.
The whole ball of wax is just obnoxiously expensive,” he says. “From start to finish of construction was only 14 months, which here is very fast because of the inspection rigmarole and all the middlemen involved in housing out here.”
The design was stripped to a minimum that still satisfied the need for housing.
It’s so far superior to a tent on the street,” Kobick says.