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The Long Beach City Council on Tuesday voted to return a $5.6 million state grant meant to pay for the design, construction and initial operation of a 33-unit modular tiny homes campus that would have hosted people transitioning out of homelessness.
The decision to refund came after “exhausting all possible locations” to place the homes, according to a city report.
“Ultimately it’s just not a good cost-effective model for what we were looking at,” City Manager Tom Modica said at the meeting.
Of the $5.6 million sum, the city spent more than half — about $2.9 million — on the tiny homes and a citywide search for where to place them. In its decision to return the grant, the city will have to pay for those costs itself.
In a statement provided Tuesday, a California Department of Housing & Community Development spokesperson said Long Beach was the “first jurisdiction” unsuccessful in completing the awarded project. The state Homekey program has led to the development of 10,040 units to date.
The city first received the $5.6 million — $4 million for capital construction costs and $1.6 million for operation — in June 2022, and purchased the prefabricated tiny homes in February 2023.
They were one of several options Long Beach pursued to stem the sharp rise in its homeless population during the coronavirus pandemic.
In their application to the state, the tiny homes campus was originally placed in the parking lot of the Long Beach Multi-Service Center, a hub for city homelessness programs. That was scrapped after it was found that pollutants and noise from the nearby rail construction made the space unfit for living.
Plans to move the campus to a 6-acre parcel next to Willow Springs Park were canceled after a land survey found it would cost $7.5 million to remove “unsuitable” soil, construct an office and install utility lines.
A later report found this would have cost the city four times more per bed to build, compared to a newer shelter at the Long Beach Rescue Mission.
The planned units were 120 square feet, assembled quickly at a fraction of the cost to construct permanent homes. But they require existing infrastructure and open land, something Modica said is difficult to find in a built-out city like Long Beach.
“These are like your house,” Modica said. “They have plumbing, they have bathrooms, they have showers so they need sewer connections, they need electricity connections so they can’t just really be set somewhere that you might see a tent — they have to be really planned.”
Finally, the city shifted toward interim housing for students enrolled at Long Beach City College. But that plan was halted five days after it was pitched to the LBCC Board of Trustees on July 31, due to issues with the design and “state permitting rules” related to on-campus housing.
The city spent about $700,000 trying to find an appropriate location for the shelter homes, according to the report, and another $146,000 on salaries and wages. Combining salaries, shelters and design costs, the city spent about $2.9 million. Those costs “were transferred to the General Fund in the Health and Human Services Department,” the city report said, adding it will “affect the amount available to fund additional priorities from FY 24 year end savings.”
The purchased units remain in storage, Modica said, as city leadership looks for a buyer, be it another city, nonprofit or church, so they can recover the costs.
“The good news is, though we’re returning this grant, those remain our assets, we have those tiny homes and we’ll be looking at all the different options — we can sell them, we can work with nonprofits, we can work with churches, we can work with other cities and jurisdictions,” Modica said. “We’ll continue that work and at the same time build other houses that are more cost-effective for us.”
Councilmember Mary Zendejas recommended that they sell the homes or “think outside the box” of where they could place them.
“We had to come to the conclusion that Long Beach is not the right place for that,” Zendejas said. “I know that that was a hard conclusion to come to.”
Officials weaved into the discussion reminders of their accomplishments since before the coronavirus pandemic.
This includes 446 permanent shelter beds, another 150 beds under construction, a 50-spot safe parking program and a 60-bed inclement weather shelter, among others mentioned.
“Prior to the pandemic, we didn’t even have our single shelter in the city. We basically had the winter shelter every winter and that was it,” Modica said.