Why LA’s $1B Homeless Housing Plan Left Thousands of Units Empty

Imagine walking through the streets of Los Angeles, where the sun shines bright but casts long shadows over shuttered motels and vacant lots. These buildings, once buzzing with life, were supposed to be a lifeline for the city’s homeless population. Yet, they stand empty, locked behind chain-link fences, while just beyond, tents and tarps dot the sidewalks. How did a billion-dollar plan to house the unhoused go so wrong? This is the story of Project Homekey, a California initiative launched with bold promises but now mired in bureaucracy, scandal, and unfulfilled potential.

The Broken Promise of Project Homekey

In 2020, California unveiled Project Homekey as a beacon of hope. The plan was simple yet ambitious: convert motels, hotels, and other properties into permanent housing for the state’s growing homeless population. Backed by federal and state funds, Los Angeles County and the city itself poured over $1 billion into acquiring properties. The goal? Provide immediate shelter and long-term stability for thousands living on the streets. But five years later, the reality is starkly different.

According to recent reports, a staggering 71% of the 2,157 units purchased by Los Angeles County remain unoccupied. The city’s track record isn’t much better, with 44% of its 1,237 units sitting empty despite an $820 million investment. These numbers aren’t just statistics—they represent missed opportunities, broken trust, and a growing sense of frustration among residents and advocates alike. So, what went wrong?

Bureaucracy: The Silent Saboteur

One of the biggest culprits behind Project Homekey’s failure is bureaucracy. Converting a motel into permanent housing isn’t as simple as handing out keys. Properties need renovations, permits, and compliance with a labyrinth of regulations. In my experience, government-led projects often get bogged down in red tape, and Homekey is no exception. Delays in construction and permitting have left many sites untouched years after their purchase.

Construction takes time, but five years is inexcusable when people are living on the streets.

– Local housing advocate

Take, for example, a Mid-City apartment building acquired for $36.5 million. It was meant to be a flagship project, but contractor liens and legal disputes have stalled progress. Meanwhile, the costs keep climbing—security contracts, maintenance, and staff salaries pile up, all to keep empty buildings from falling into disrepair. It’s a vicious cycle: the longer these properties sit unused, the more they cost taxpayers, and the less faith people have in the system.

• Permitting delays: Local regulations require extensive approvals, slowing down renovations.
• Renovation costs: Unexpected structural issues in older buildings inflate budgets.
• Staffing shortages: Lack of personnel to manage and operate facilities.

Perhaps the most frustrating part is the human toll. While bureaucrats shuffle papers, thousands of Angelenos remain on the streets, their hope for a roof over their heads fading with each passing day.

Questionable Deals and Financial Mismanagement

Beyond bureaucracy, Project Homekey has been plagued by questionable financial decisions. Some properties were purchased at inflated prices, raising eyebrows among analysts. One facility, for instance, was bought by a private entity and flipped to the city just days later for double the price. Deals like this don’t just smell fishy—they erode public trust in the program’s integrity.

Then there’s the issue of outright scandal. A prominent developer and its nonprofit partner are now facing foreclosure, lawsuits, and allegations of fraud. Reports suggest that over $114 million in funds may have vanished, prompting investigations by both the California Attorney General and federal prosecutors. It’s the kind of news that makes you wonder: how could such a well-intentioned program go so far off the rails?

These financial missteps aren’t just numbers on a spreadsheet. They represent missed opportunities to provide shelter, stability, and dignity to those who need it most. It’s hard not to feel a pang of frustration when you see how much money has been spent with so little to show for it.

The Human Cost of Empty Promises

While politicians and officials point fingers, the real tragedy is playing out on LA’s streets. The homeless population continues to grow, with encampments sprouting up near the very properties meant to house them. Some sites, ironically, have become makeshift camps themselves, complete with tents and fire pits. It’s a stark reminder that the gap between policy and reality can be as wide as an ocean.

We were promised homes, but all we got were more fences.

– A Los Angeles resident experiencing homelessness

I’ve walked past these empty motels myself, and the sight is jarring. Boarded-up windows, overgrown lots, and a sense of abandonment hang heavy in the air. Meanwhile, families and individuals sleep on sidewalks, their belongings stuffed into plastic bags. How do you explain to someone that the building they’re camped outside of was bought to help them—but it’s still empty?

The psychological toll is immense. For those experiencing homelessness, the promise of housing is a lifeline. When that promise is broken, it breeds distrust and despair. It’s not just about a bed or a roof—it’s about restoring hope and dignity, something Project Homekey has so far failed to deliver.

What Went Right? Glimmers of Hope

It’s not all doom and gloom. Some Project Homekey sites have succeeded, at least partially. A handful of properties have been renovated and are now housing residents, offering a glimpse of what the program could have been. These successes, though, are overshadowed by the sheer scale of the failures. For every occupied unit, there are two or three sitting empty, collecting dust instead of offering shelter.