Homelessness in a Progressive City

Targeting causes, proposing solutions
SPUR Report
July 17, 2002

executive summary


For the same amount of money spent today, the crisis of homelessness in San Francisco could be solved.

SPUR formed a task force in late 2001 to identify solutions to the problem of homelessness in San Francisco. What we found was startling: the City spends hundreds of millions of dollars each year on programs that deal with symptoms of homelessness—street cleaning, emergency room care and jail—but very little to none on programs that would address the underlying causes of homelessness such as affordable housing with supportive social services. The provision of affordable housing with supportive care could keep people off the streets without having to spend additional public money.


Over the last several decades Federal and state governments have steadily cut funding to programs that provide support to the poorest members of our society, including those who suffer from extreme mental illness or physical disabilities.

At the same time, much of San Francisco’s ultra-affordable housing was lost. Redevelopment tore down the residential hotels that were affordable to functioning alcoholics and the mentally ill, especially in the South of Market area. Many other units were converted to higher priced housing or hotels. This housing shortage coupled with rising rents has left many people homeless. Many of the working poor forced to move out of neighborhoods and “buy down” into the remaining stock of Single Room Occupancy hotels (SROs), which in turn displaced the lowest income residents.

One chief reason for this “slippage” in ability to purchase housing stems from the fact that San Francisco’s General Assistance (GA) payments have failed to keep pace with the costs of rents in San Francisco and as a result fail to even cover the average cost of one of the city’s most basic SRO rooms—let alone a studio or one-bedroom apartment.

Unfortunately, analysis indicates that without housing, people’s problems deepen. If someone does not have an addiction when he or she becomes homeless, chances are that he or she will develop an addiction living on the streets. The stress and exposure of living on the streets causes medical conditions, including mental health problems, to worsen.

The manifestation of mental illness and drug abuse in the homeless often creates havoc for the rest of the city’s population. That is why the expense of dealing with the homeless today is about the cost of treating the miseries of those who live on the street, rather than eradicating homelessness. And because most medical problems are treated in acute care settings—emergency rooms and jails—they happen to be the most expensive services to provide. Even shelters are costly to operate due to the high level of staffing and security that is required.

In order to make progress on homelessness in San Francisco we need to redirect our funds into more productive channels. For a sum of money comparable to what we spent today we could provide homeless people with housing and supportive services (drug treatment and/or mental health counseling). Our analysis and research indicates that the need for acute care drops significantly when people receive treatment in residence. Over time, this drop in use of expensive emergency services would save the City enough money to pay for supportive housing for everyone who needs it.

Daily Costs for Various Housing Alternatives

While there are many changes this report could probably make to improve how existing programs work, our recommendations focus on a shift in public policy towards prevention-based services. Our main recommendations follow. More detail on these recommendations is provided at the end of the report.


Increase the supply of supportive housing

Supportive housing is housing with services for the residents such as drug counseling, job training, or medical help. Providing supportive housing is the single best solution to the problem of homelessness because it has shown to be the most effective way to keep people off the streets permanently. We estimate that the cost for providing enough supportive housing units to accommodate today’s homeless population to be between $80 million and $145 million. The majority of the funding would not come from new expenditures but would come from a shifting of expenditures from current programs to supportive housing over a period of years as units come on-line.

Enforce standards of civil behavior

San Francisco’s lack of enforcement and prosecution of “quality of life” laws breeds contempt for the law and frustration amongst its citizens, law enforcement agencies and even amongst homeless people. This lack of enforcement must be corrected immediately. Civil behavior can be required without making homelessness “illegal.” Standards of behavior can be enforced equally for all citizens, without singling out poor people. And violators can be directed into support services rather than the prison system.

Improve shelter conditions

Conditions in some shelters are so bad or perceived to be so bad that many homeless people find the streets a cleaner and safer alternative. Admissions procedures can also be time-consuming and may offer only a chance at shelter for a single day. Many shelters also have operating hours that require their occupants to leave, even if they are ill.

Shelters must improve their operations in order to be successful (i.e. providing a viable alternative to the street for the homeless). This means among other things, creating easier intake procedures and dramatically improving safety. The City should encourage experimentation in developing shelters targeted to different client populations.

Provide vouchers for services instead of cash payments

San Francisco is one of the few counties that provide cash-based assistance to the homeless directly. Although GA payments do not cover city rents, they do exceed what surrounding counties pay. While not all GA recipients are substance abusers, many are. Studies show that substance abuse is correlated to income—the more income an addict has, the more drugs or alcohol he or she will abuse.

Instead of providing cash grants to homeless individuals, the county should provide the majority of support in the form of vouchers for housing and other services. Cash payments for individuals who are housed, even in “casual” rental situations should be maintained (this is the idea behind the Care Not Cash proposal on the November 2002 ballot). And finally, any money saved by providing grants should be diverted to supportive housing programs.

Increase funding for affordable housing

A lack of affordable housing is one of the greatest contributors to homelessness. San Franciscans need to build more affordable housing and lobby for state and Federal funds to accelerate development. The City should also authorize a new affordable housing bond that can pay for affordable housing and supportive housing.

Encourage construction of new residential hotels

Expanding the city’s supply of residential hotels is of crucial importance because this “lowest” rung of the housing ladder provides housing for people who can’t afford larger units. New residential hotels could be built by non-profits with public subsidies or they might even be able to be built by market-rate developers as studio apartments, just as market-rate developers built the older stock of residential hotels.

Increase the overall housing supply

Anti-development policies and NIMBYism contribute to the homeless problem. San Francisco’s housing market is broken. Buyers in every income level are forced by scarce supply to “buy down” into lower levels of housing. The people at the very bottom of the housing market are forced out entirely and become homeless. San Francisco must increase the development of housing at all levels.

Increase Federal funding

The financial burdens of caring for the homelessness should be borne by our whole society, not just people who live in cities. This means that as much funding as possible should come from the state and/or Federal level. We need to build a coalition among cities throughout the state and the nation to eliminate the root causes of homelessness. The core message is simple: housing for everyone should be a goal of our nation.


Our local government spent $104 million in fiscal year 2001-2002 on homeless prevention, shelters and temporary housing.1 This represents a substantial increase over previous years.

Despite continual budget increases the number of homeless in San Francisco continues to grow. Estimates of the homeless in San Francisco now range from 7,000 to 15,000. This explosion in the homeless has pushed waiting lists for some services, including those for homeless families, to beyond six months. In 1999, the last year that the data was collected, 163 homeless people died on our streets.2 The complexity of homelessness and past failures to solve it have created a sense of resignation in the city that the problem can’t be solved.


SPUR formed its Homeless Task Force to identify solutions to the problem of homelessness in San Francisco. Ultimately the goal of the task force is to end homelessness in San Francisco. We hope to find common points of agreement between various groups and work to develop rational solutions to the problem that can obtain political support and be implemented by the City and its partners.



“The homeless problem” in America made its way into the public’s consciousness in the early 1980’s and was thought by many to be a temporary condition caused by a poor economy. As the economy improved, however, homelessness worsened. Today, even having come through one of the greatest economic boom cycles in the history of the nation, San Francisco and the rest of the country continue to see an increase in the number of homeless.

In reality, homelessness is not just a matter of economics. It is a cumulative condition brought on as a result of significant reductions in state and Federal government spending priorities, an alarming deficit of affordable housing at all income levels, as well as a steep rise in the cost of living and poverty levels.

Below is a brief review some of the changes that have contributed to the increase in homelessness over the last several decades.

Loss of Residential Hotels

Residential hotels, better known as “flop houses,” were once the primary housing option for the poorest members of the community. Neighborhoods with residential hotels had existed for years and thus provided a somewhat transient population with a fixed location for reliable low-cost accommodations.

Alcoholics could work at day labor markets when they were sober and manage to pay their rents. Friends, relatives and neighbors would help out when their problems peaked. Most people remained housed even with serious alcohol addictions. A 1963 survey conducted in Chicago, for example, found that of the 12,000 people without permanent housing in the city, only 100 slept on the streets. The rest slept in flop houses. By 1986, that number of people sleeping on the street increased to 50 percent of the population because there were not enough residential hotels to accommodate the population.3

Between 1960 and the end of the 80’s, most of the residential hotel units across the country were lost to urban renewal, conversion, fire and demolition. This was also the case for San Francisco, which in the 60’s began clearing the SOMA area for what eventually became the Moscone Convention Center and the Yerba Buena Gardens, resulting in a loss of 4,000 residential hotel rooms.4 From 1975–1980, San Francisco lost 6,085 SRO rooms, or about 20 percent of its remaining rooms, to conversions, teardowns, or closures.5

Lack of Affordable Housing

Simply put, many people cannot afford to house themselves. The entire country faces a shortage of affordable housing, however the situation in California is most acute. California leads the nation in the severity of its shortage and has suffered a shortage of housing at all income levels for more than a decade. Surveys show that the state’s builders have produced 100,000 units too few, on average, each year over the last 10 years. The Bay Area situation is even worse than the state-wide average.

• Only 16 percent of Bay Area households can afford a median priced home in the region (10 percent in San Francisco) 6.

• The Bay Area created 500,000 new jobs between 1990 and 2000 but created less than 200,000 new housing units7.

• Renters in San Francisco would need to earn hourly wages of $38.50 or work 195 hours per week at a minimum wage job to afford the average two-bedroom unit. In a functional market, supply keeps pace with demand, and people move up to the next level of housing available, as is illustrated in the diagram below:

Functional Housing Market Supply and Demand

When supply problems arise there is a backup throughout the pipeline causing displacement and homelessness. With a shortage of housing at all income levels, people are forced to “buy down” into the next level of housing, each sector displacing the previous population along the way. In San Francisco, for example, many former renters of studio apartments in low-income neighborhoods have been forced into SRO housing—which used to be available for the homeless—creating a climate for rents to rise to more than $600 per month. This increase ultimately makes SRO housing too expensive for the previous tenants, leading to homelessness. Increase in Poverty and Depth of Poverty The rate of poverty and the depth of poverty have increased nationwide since the 70’s. For more than 30 years individuals and families living in poverty have fallen further behind their counterparts. The following chart shows how the wealth of the bottom 90 percent of society has fallen dramatically behind in the last several decades.


Distribution of Household Wealth in the United States, 1976 and 1998


Almost 2/5 of all poor are in extreme poverty, up from about 1/3 in 1975.9 The following
graphs show the gap between poor individuals’ and poor families’ income levels vs. the
appropriate poverty line.

Trend in Family Poverty Gap


Trend in Individual Poverty Gap




Trend in Extreme Poverty


Mental Health Care System: Loss of Funding, Changes and Gaps in Care

Up until the 1960’s mental health care in the United States was provided in state-funded institutions. Unfortunately conditions inside these institutions were often grim. A desire to improve conditions and cut costs spurred de-institutionalization.

Between 1960 and 1973, 30,000 patients were transferred out of mental health facilities in California. Most patients who left the institutions went straight to residential hotels, whose operators were not equipped to handle the problems and needs of this new population. Other patients released from institutions went to government-supported facilities called board and cares, which provided places to sleep and eat but had little or no rehabilitation or treatment services.

By the 70’s, community mental health programs funded by state and Federal governments started providing services to those with mental illnesses. But these new outpatient services did not match the needs of the patients who were no longer in institutions. Problems such as severe medication side effects that would have been resolved by monitoring patients and changing medication inside a hospital simply resulted now in a patient choosing not to take their medications at all while on the streets.

In the 80’s, funding for community-based mental health services was slashed. Between 1977 and 1995, the number of board and care rooms in San Francisco dropped from 1,278 to 465.13 As a result, many low-income people with mental illnesses ended up in prisons. Today, the largest provider of mental health services in the state is the California Department of Corrections.

For the homeless that are mentally ill, living on the streets often means waiting months for treatment. Many mental health programs do not treat patients who also suffer from substance abuse problems. This leaves many people without access to treatment.

Without proper preventative treatment and ongoing treatment, a homeless person’s mental health problems typically worsen to the point where he or she requires expensive acute care or incarceration.

This shortage of mental health care in San Francisco is evident in the number of people who are involuntarily committed under section 5150 of the California Welfare and Institutions Code. San Francisco has the highest rate of involuntary commitment in the state.14

A Lack of Coordinated Substance Abuse Treatment

The number of homeless who are mentally ill and who have substance abuse issues is great. But for a homeless person living on the street, the choice is often to get treatment for one problem or the other. Very little coordinated care exists. Since the two problems often coexist, many people are left with no access to services.

Another problem with treating homeless addicts is timing. Programs to treat substance abuse typically have long waiting lists. Some programs require participants to be sober on entry.

While people are ready for treatment one day, by the time they can enroll in a treatment program they may be unwilling or unable to enter it.


Many people envision the homeless as a single population of people. In reality the homeless come from a diverse set up backgrounds and circumstances. We attempt to offer brief profiles of the most prevalent groups.

The Working Poor

Approximately one quarter of all homeless people are employed,15 but live a precarious existence, surviving from one paycheck to the next. For this population, one setback—the loss of a job or a major illness—could cause them to lose their source of rent money and be evicted. Once people lose their housing, they must essentially “start over,” collecting enough money to pay for a security deposits and the first month’s rent. These tasks often prove to be impossible; and while government support is available to many working poor, it is usually not enough to pay for rent in San Francisco.16

Single, Immigrant Workers

Like all large cities, San Francisco attracts a large pool of immigrants, anxious to find employment to support their families back home. Many immigrants look to “day labor” jobs to earn money but come to learn that such work provides wages that are insufficient to pay housing costs in San Francisco, particularly if most of their earnings must be sent back home. Additionally, many homeless immigrants are not legal immigrants, so they are distrustful of government-provided services, fearing they will be deported.

Substance Abusers

National studies show roughly 25–50 percent of homeless people are addicted to drugs and nearly 50 percent are addicted to alcohol.17 In many cases substance abuse problems caused people to lose their housing in the first place. But while no study can successfully distinguished between those who started out as abusers and those who started using on the streets, one thing is clear: homeless people often turn to drugs and alcohol to numb their suffering. And the longer a person stays homeless the more likely he or she is to become addicted to one or more substances.

The Mentally Ill

Approximately one third of the homeless population is thought to suffer from mental illness.18 Many of these people were previously taken care of by institutions or their successor programs. Others have never received any formal treatment for their afflictions.

The Physically Disabled

Approximately 25 percent of homeless people suffer from physical disabilities.19 SSI (Supplemental Security Income), which provides assistance for the disabled, is just enough to cover the monthly rent of an SRO room, but not the rent of a studio apartment in San Francisco. Getting on SSI is often difficult for homeless people because it is a long and complex process. If the person also has a substance abuse problem or mental illness, this process can be nearly impossible. Few facilities in San Francisco provide services for homeless people who are incontinent or need assistance bathing or using the bathroom.

Homeless and Runaway Youth

There are approximately 2,500–3,000 homeless youths on the streets in San Francisco each year.20 Nearly all suffer from serious neglect or abuse. The average education level for this group is approximately eighth grade, which is insufficient to maintain employment that provides self-sufficiency. Homeless youths over 18 are sometimes forced into adult service programs because Federal housing law prohibits age discrimination for adults from some programs. Social service agencies cannot use age to discriminate between adults for permanent housing programs. Adult shelters and programs are too intimidating and complicated for many youth or lack youth-appropriate services and an understanding of their service needs. Many young homeless adults turn to prostitution to escape the shelter environment.

Homeless Families, Including Single Mothers

Married couples make up a relatively small percentage of the homeless, largely because couples have twice the earning power of singles and can therefore afford housing more easily. (This extra income power and stability can be seen in the poverty rates for intact husband-wife families in the United States, which is half that of all families (about 5 percent).21)

The number of homeless children and single mothers has been rising steadily over the past several decades, however. Single mothers are especially vulnerable to homelessness for several reasons. Many have low levels of skills and/or education, and thus are employed at low-wage jobs. Daycare is often not available or accessible. When medical or other problems arise with their child or they cannot find daycare, they may be forced to miss work, and lose their job. If they are living paycheck-to-paycheck, this could cause them to lose their housing as well. Single homeless mothers face a three- to four-month waiting list at San Francisco’s shelters for homeless families.22

The Elderly Homeless

Approximately 20 percent of the homeless population is elderly.23 The elderly are vulnerable for many reasons. Some are of retirement age and cannot obtain employment. Many have medical conditions that require heavy expenditures on medications or medical treatment. For many homeless, the normal support structures of family and friends are no longer available to provide needed assistance. Many have outlived spouses, family and friends. For seniors who have not worked long enough to collect social security, the SSI payments are not adequate to pay rent in all but the most abject housing in San Francisco.

Homeless People with HIV/AIDS

The homeless population has been hit very hard by the AIDS epidemic, because of high rates of intravenous drug use and unprotected sex. Homeless youth, in particular, often rely upon sexual encounters for money and shelter. Because current AIDS treatments rely upon a regular schedule for taking medications, it is difficult for homeless individuals to maintain treatment.


Below is a snapshot of how the City deals with homeless issues today. Our analysis indicates that some programs work, some should be expanded, many need to be modified and others, while well-meaning, fail to do as much as people might think.

The Continuum of Care

The Continuum of Care is the City’s plan for addressing homelessness. It was developed and is maintained by the Local Homeless Coordinating Board. The Local Board consists of service providers and homeless individuals. The Federal government requires such a plan before it will provide funds for the City’s programs.

The continuum of care model is designed to provide multiple entry points and a variety of services to address homeless persons’ individual needs. The continuum is designed as a series of integrated services that help a homeless person transition into independent living. Prevention is also a major component of the continuum of care.

The continuum of care model can be visualized as follows:

Continuum of Services for Addressing Homelessness


Prevention services aim to keep people from becoming homeless by providing rental assistance to families, providing legal assistance to tenants who face illegal evictions, improving discharges from jails and hospitals, and ensuring housing for youths emerging from foster care.


Outreach aims to connect homeless people on the streets with services.

Intake and Emergency Shelters

Emergency shelters are often the first place where service providers make contact with homeless person. During intake shelters collect information to help clients obtain the appropriate services.

While at emergency shelters, people are assessed for entry into other programs that will help them along the path towards independent living. Smaller shelters exist to serve clients with specific needs. There are shelters in San Francisco to serve homeless and runaway youth, such as those at Larkin Street Youth Services. There are shelters for women and for families as well. Dolores Street Community Services (DSCS) has over one hundred beds targeted for Spanish-speaking men. An inventory of shelter beds by classification is presented in the table below.

Inventory of Shelter Beds in San Francisco24

Clients Served
Number of Beds
Single Adults
Families and Pregnant Women
Victims of Domestic Violence
Young Adult
Winter Shelter Beds


Admissions to shelters in San Francisco can be challenging and time-consuming process. Some shelters operate on lottery systems which require people to apply at the shelter for space before noon and then wait until the afternoon to see if they have received a space. Those who lose the lottery can call back after 10pm to see if any space has opened up.

Many homeless people feel that the shelters are worse than sleeping on the streets. When asked in a 2000 survey what clients did not like about shelters, the following responses were the five most popular: Shelter staff (53 percent), dirty and insufficient facilities (45 percent), noisy facilities (27 percent), lack of privacy (23 percent) and drug and alcohol use by staff/clients (14 percent).25

Transitional Housing

Transitional housing is temporary housing coupled with services designed for its target population, including mental health services, addiction treatment services, and job readiness programs. Transitional housing is a step towards permanent housing for those who are not ready for independent living when they arrive in the system.

Permanent, Supportive Housing

The ultimate goal of the continuum of care is to get every homeless individual into stable, permanent housing. Some homeless individuals will eventually find market-rate or subsidized housing. Others may always require some level of supportive services and may move instead into supportive housing.

Supportive housing is permanent housing coupled with services such as medical services, mental health services, job readiness training, or life skills training that are targeted to the residents’ needs.

There are many models of supportive housing in the city. Three providers that we spoke with were: Tenderloin Neighborhood Development Corporation (TNDC), Community Housing Partnership (CHP) and the City’s master lease programs through the Department of Public Health (DPH) and the Department of Human Services (DHS). Each offers a different set of services and housing types for its population. There are many other programs also that are not mentioned here. The Corporation for Supportive Housing (CSH) provides support for organizations attempting to develop supportive housing.

Existing Housing Programs

The Federal Government

The Federal government previously built public housing, but it has stopped doing so over the last several decades. Federal assistance programs for renters (Section 8 Vouchers) are used to help low-income families rent market-rate apartments, but finding housing using vouchers is difficult because market rents are currently higher than the value of the vouchers.

The following graphs shows the funding for homeless programs, public housing development and HOPE VI Severely Distressed and Federal subsidies for homeowners versus the amount spent of housing for low income individuals and families.

Federal Spending on Low-Income Housing and Homelessness

Federal Tax Expenditures for Homeowners v. Low-Income Housing Assistance

The following graph shows the distribution of Federal housing subsidies by income quintile for 2001.

2001 Housing Subsidies by Income Group

Recent changes in Federal housing policies have actually led to a decline in the number of affordable housing units available to the poor. Under the HOPE VI program, old, dangerous and dilapidated housing projects are being torn down and replaced with more traditional housing types. Unfortunately, the new projects tend to contain fewer units and contain a mix of market-rate, affordable and extremely low-income housing.

Nonprofit Housing

There are many organizations in San Francisco and the Bay Area that are building or operating affordable housing and supportive housing. Non-profit organizations operate many rehabilitated SROs and some newly constructed units.

The nonprofit organizations that we interviewed indicated that funds were typically available for capital costs associated with projects. These funds are largely from Proposition A, the 1996 housing bond, and the San Francisco Redevelopment Agency.

The nonprofit housing services could provide more affordable and supportive housing with more dependable funding. Lining up funding sources is a long, slow process during which opportunities can be lost.

And while the nonprofit sector has built or renovated thousands of units of affordable and supportive housing in San Francisco, it has failed to replace the number of units lost during that same period. Affordable housing units are have been lost to fire, conversions and even government-sponsored demolition. The following table shows how the number of SRO rooms has declined even as the nonprofit sector has doubled its inventory of SRO rooms.

Changes in San Francisco Residential Hotel Stock, 1995 - 199926


For-Profit Residential Rooms
Non-Profit Residential Rooms
Total Residential Hotel Rooms


DPH and DHS Master Lease Programs

Both the Department of Public Health (DPH) and the Department of Human Services (DHS) operate supportive housing through master lease programs. Under master lease programs, the City negotiates rents with a building owner and guarantees payment for ten years. The City department then manages and operates the building and provides the tenants with the supportive services they require. Master lease facilities provide services including mental health services, substance abuse services, case management and vocational counseling.

DHS operates 803 units of master-leased housing in San Francisco in five buildings. The housing is primarily targeted to individuals with lower service needs who are participating in DHS’ employment and job readiness programs. DPH, under its Direct Access to Housing Program (DAH), operates 254 units of supportive housing in three residential hotels and another 33 beds in a licensed care facility. In summer, 2002, two new hotels will open with an additional 109 beds. DPH targets its housing to homeless individuals who have serious health or other problems and who require more services.

The cost to provide the room, board, and services in DPH’s master lease program is approximately $1,100 per month. Roughly half the cost is for the services that are provided to residents.27 Tenants pay rent (no more than 30 percent of their income), but are provided with subsidies if eligible.

Prevention Programs

The City provides many prevention services to help keep people from becoming homeless. Rental assistance programs and tenant advocacy programs are examples of these preventative services.

In fiscal year 2001–2002, the City and County of San Francisco provided eviction prevention services to 6,533 low-income individuals who were at risk of becoming homeless at an estimated cost of $2,406,133. Services provided include legal counseling, money management, eviction defense, and direct financial assistance.28

Government Assistance Programs

Several government assistance programs that provide money to live on are available to homeless people and the poor in San Francisco. These City, state, and Federal programs serve many people, including those who are not homeless. The programs are defined below:

Supplemental Security Income (SSI)

Supplemental Security Income (SSI) is a Federal cash benefit program that provides benefits to low-income people who are blind, over 65, or disabled. California’s State Supplemental Payment (SSP) program augments Federal SSI benefits by adding a state payment to approved claims for SSI benefits. Both programs are administered by the Federal Social Security Administration (SSA).

For all adult individuals applying for disability benefits, the law defines disability as the inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment(s) which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 10 months.29

Under welfare reform, passed during the Clinton Administration, SSI cut off payments to people with drug addictions or alcoholism. The money was to be channeled to substance abuse treatment programs instead. At any time, there are well over 1,000 people on the waiting lists for substance abuse services in San Francisco.30

County Adult Assistance Program (CAAP)

CAAP is San Francisco’s umbrella program for providing assistance to adults in San Francisco. Within CAAP there are 4 sub-programs that tailor to specific needs:31

Sub-Program 1: General Assistance (GA)

GA is the safety-net program for indigent adults. It provides a monthly cash grant. In exchange, able-bodied recipients are expected to perform Workfare, which is community service. GA gives a Muni Fast Pass or tokens to recipients with Workfare jobs. It can also provide a small Supplemental Rent Payment.32 Two thirds of GA participants are homeless, the highest percentage among the four CAAP programs.

Sub-Program 2: Personal Assisted Employment Services (PAES)

PAES is a City-sponsored program operated by DHS that provides a cash stipend to employable adults along with the education, training and supportive services necessary to gain lasting employment. Participants, unless exempt because of a verifiable, temporarily disabling condition, or because of age develop and follow an employment plan leading to work and self-sufficiency. PAES supportive services may include psychological and vocational assessment, substance abuse and mental health counseling, expenses for work-related clothing, tools and supplies, a housing subsidy and transportation assistance to and from work. PAES employment services are limited to 27 months, with a possible sixmonth extension if this is likely to lead to employment.33

Sub-Program 3: Supplemental Security Income Pending (SSIP)

SSIP provides temporary support to disabled individuals while their applications for Supplemental Security Income (SSI) is being processed. The county is reimbursed if the application is successful. 40 percent of SSIP participants are homeless.

Sub-Program 4: Cash Assistance Linked to Medi-Cal (CALM)

CALM provides financial assistance for individuals receiving Medi-Cal benefits because they are either aged or disabled, but who do not qualify for SSI. Only about one percent of CALM participants are homeless.

Current Debate on County Assistance Programs

General Assistance payments have come under fire recently. San Francisco’s monthly payment is greater than that of other counties as shown in the following chart.

County General Assistance Payments

In San Francisco, the assistance is provided as cash payments. In most other counties in the Bay Area and the state, assistance is provided largely in services with minimal cash benefits. Marin County is the only other bay area county that provides its assistance in cash. Its payment of $200/month is much lower than San Francisco’s average payments of $385 for PAES, $345 for GA, $274 for SSIP and $354 for CALM.34 The cash portion of other counties’ assistance programs for the homeless are: $138 in Santa Clara County, $58 in San Mateo County and $18 in Alameda County.35

The annual budget for General Assistance in San Francisco is approximately $9.5 million, with payments to an average monthly caseload of 2,472 homeless individuals.36 The average duration for an individual to receive CAAP payments is 34-37 months, depending upon the program.37

Critics of cash grants believe much of the money received is used to purchase drugs and alcohol, and in fact, studies on homeless substance abuse have shown that the more income a person with substance abuse problems earns, the more drugs or alcohol he or she will consume38. Homeless advocates, however counter that the money is often used for food and shelter, sometimes helping pay friends or relatives for sharing their housing.

The “Care not Cash” ballot measure is a positive step in the direction of replacing San Francisco’s cash payments with direct provision of services. This measure should help more people get the care they need and reduce the incidence of drug overdoses associated with general assistance.

Gap in Assistance and Costs of Living in San Francisco

Even with the various assistance programs available to the poor and disabled, the amount of assistance fails to cover average rents for housing in San Francisco. The following graph shows the discrepancy between the cost of housing in an SRO units cost more than the two assistance programs available for adults who are not disabled.

Rental Costs v. Housing Subsidies in San Francisco

For the disabled, blind, or elderly who are unable to work, the situation is about the same. SSI payments are enough to cover the cost of an SRO room, but only leave $180 per month for food, clothing, transportation, and other expenses. The SSI payments fail to cover the average cost of a studio apartment in San Francisco as shown below. Even if the SSI recipient is housed in an SRO, the rent takes approximately 78 percent of their income–which is much greater than the 30 percent HUD standard for housing affordability.

For poor families, including those headed by single mothers, the disparity is even worse. Assistance for a family of three barely covers the cost of rent for one room at an SRO and falls far short of what is needed for the 2-bedroom apartment that a family of three should occupy. A family of three would spend approximately 96 percent of its income on rent for an SRO if no other income is earned.

For many people, the disparity in assistance and rental costs leads to at least partial homelessness each month. Many people can afford housing for the first days of the month, but are forced out when they’ve exhausted their assistance payments. This also precludes the residents from obtaining legal tenancy in their housing.

Law Enforcement

San Francisco’s lack of enforcement and prosecution of “quality of life” laws breeds contempt for the law and frustration amongst its citizens, law enforcement agencies and even amongst homeless people.

This lack of enforcement must be corrected immediately. Civil behavior can be required without making homelessness “illegal.” Standards of behavior can be enforced equally for all citizens, without singling out poor people. And violators can be directed into support services rather than the prison system.

"Quality of Life" Laws in San Francisco

"Quality of Life" Laws in San Francisco, con'td.

Currently, some of these laws are not enforced, such as the state law banning possession of shopping carts. Other laws are not prosecuted by the District Attorney’s office. Because services for homeless people are so overwhelmed, law enforcement cannot direct people to services instead of incarceration if they choose to enforce and prosecute crimes. The only option typically available is fines, which homeless people cannot pay, or incarceration, which is expensive and wasteful.

The City spends $30.5 million annually on incarceration of homeless people. This amount is outside of the $104 Million the City spends on direct services for the homeless. The daily costs of incarceration are $50 to $60 for the general jail population and $300 to $400 for medical or psychiatric jail population.40 SPUR believes that these funds could be directed into more productive channels with a better homeless policy.

Medical Treatment

The primary venue for providing medical treatment to San Francisco’s homeless population is the emergency room at San Francisco General Hospital. Medical services are also provided at the City’s medical clinics. Some nonprofit agencies also provide medical services to homeless people.

Homeless people are far more likely to end up hospitalized than the general population. In one study in San Francisco in 1992 and 1993 found the hospitalization rate for homeless persons was 2.7 times greater than that for the general population.41 Another study found that homeless veterans were seven times more likely to be hospitalized than other low-income veterans.42

San Francisco General Hospital Emergency Room

San Francisco General Hospital handles the majority of the medical needs of homeless people in San Francisco. This is the most expensive venue to provide medical services. This amount of money is outside of the $104 million that the City spends on direct services for homeless people.

Neighborhood Medical Clinics

There are several neighborhood medical clinics in San Francisco. Two often used by homeless people are the Tom Waddell Clinic in the Tenderloin neighborhood and the new Mission Neighborhood Resource Center which opened on May 18, 2002. The Mission Neighborhood Resource Center provides laundry facilities, showers, voice mail, lockers, and nutritional support in addition to health care. Homeless people and those at risk of becoming homeless are its target clients. The center receives most of its funding from the San Francisco Department of Public Health ($750,000/year) and the Health Care for the Homeless Federal fund ($270,000/year). Medical services for homeless and runaway youth are provided by Larkin Street Youth Services. Larkin Street operates facilities that serve the Tenderloin and the Haight neighborhoods. It offers services including shelters, case management, and medical services for homeless youth including those with AIDS.

Costs and Opportunities

Medical services provided to homeless people are extremely expensive because they are provided mostly in the emergency room once problems have reached a crisis state. In fiscal year 1998-1999 charges for inpatient care to homeless people were $69 Million. 70 percent of this was not paid by Medicaid or insurance.43 The money spent on medical care for homeless people is outside of the $104 Million that the City spends on direct homeless services.

Mental Health Care

There are several venues for mental health care in San Francisco. For those with the most severe problems, there are institutions that provide services in a locked-down environment. There are also acute residential treatment programs designed to help keep people out of hospitals. Transitional housing with mental health care services are another option. Finally, supportive housing and similar programs provide access to mental health care services either on or off-site. The duration of each program is inversely proportional to the cost per day.

Most City programs for mental health care, however, are overwhelmed by the demand. In the 1996–1997 reporting period, over 3,000 people who sought mental health treatment were turned away due to lack of space.44

Mental Health Services, Durations, and Costs


Program Type
Hospitalization / Institutionalization
1 day - permanent
$1,000 - $1,200 / day
Incarceration in Special Medical / Psychiatric
$300 - $300 / day
Acute Residential Treatment
2 weeks
$260 - $280 / day
Transitional Residential Treatment
2 - 3 months
$140 - $180 / day
Supportive Housing or Similar
Permanent housing
$37 / day



In summary, the current system isn’t working for anyone.

Lack of Vision

San Francisco’s many nonprofits and City departments do not share a unified vision for treating the homeless. In fact, their views are often contradictory.

This disagreement can be seen in the politically-charged nature of making changes to the services provided for the homeless. Without a high-level roadmap there can be no comprehensive vision strategy for programmatic and policy development. This disconnect wastes huge amounts of time, money and energy and keeps the City from moving forward to resolve the problem of homelessness.

Programs Focus on Symptoms Instead of Problem

On the whole, we spend more money treating the symptoms of homelessness—when they’ve reached a crisis level—than on providing housing and needed services. For example, the City spends millions of dollars each year cleaning up after homeless people, confiscating their property, storing their property, and treating street illnesses. These are symptoms of the problem of homelessness. This money does nothing to solve the problem of homelessness.

Lack of Information on Homelessness

The City has no idea how much money is spent on homeless services. Estimates range from $100 million to over $200 million per year. The budget analyst office’s report found that the City spent $104 Million on direct services to homeless people. This estimate does not include medical costs for visits to San Francisco General Hospital, for policing and incarceration, or for costs to the Department of Public Works.


The problem of homelessness is not one that can be solved immediately. The conditions that have created this problem have grown over decades, so time will be needed to correct them. The ultimate goal of course is to help individuals achieve independence and selfsufficiency. However, for many people the transition will not be immediate, and for some it will not happen at all. The key is to move away from paying for emergency services to long-term programs such as affordable housing with support services. This kind of strategy will help alleviate homelessness and lower the City’s costs. To begin this transition we have developed a series of key recommendations. They are divided into activities which should be undertaken immediately (within the next year or two) and those which will require a longer timeframe. (Note: additional recommendations are contained in Appendix B.)


Increase Funding for Supportive Housing

Supportive housing offers the long-term solution to homelessness. It is a cost-effective solution that improves the lives of homeless individuals and improves the condition of the community at large. The cost of providing housing and services to homeless people is comparable to the cost of providing shelters, emergency medical services, acute mentalhealth care services, drug-rehabilitation, and incarceration.

When homeless people become housed, especially in supportive housing environments, their rates of incarceration drop dramatically. One California study of formerly homeless people who were housed in supportive housing found that their rate of incarceration dropped by 50 percent in the first year they were housed versus the year prior to obtaining housing.45 A study from San Antonio, Texas, found that each homeless individual cost the city’s state-funded systems $14,480 per year, primarily in overnight jail costs.46 This cost exceeds the cost of providing supportive housing for the individual for an entire year.

Additionally, once homeless people are housed in supportive housing environments their usage of expensive emergency room services declines dramatically. One California study found that patients in supportive housing for one year had a 57
percent decrease in emergency room visits and a 58 percent drop in the number of
inpatient days compared with the year prior to obtaining housing.47

When homeless substance abusers are housed upon completion of substance abuse programs, they are far more likely to remain sober. In a Minneapolis study of 201 graduates of residential substance abuse treatment programs, they found the following relationships between types of housing after graduation from the treatment program and sobriety:

• 56.6 percent of those living independently remained sober

• 56.5 percent of those living in a halfway house remained sober

• 57.1 percent of those living in an unsupported SRO remained sober

• 90 percent of those living in supportive housing remained sober48

Additionally the State of California conducted a study to determine the effectiveness of combining permanent housing and mental health care for homeless individuals across several counties. The study found the following results:

Decline in Service Utilization for Study Participants49


Evaluation Criteria
12 Months Prior
to Enrollment
Number of Days Homeless
Number of Days Incarcerated
Number of Days Hospitalized


The State of California spends approximately $400 million annually on incarceration and treatment of people suffering from severe mental illness. The Department of Corrections and the criminal justice system also house a combined total of approximately 4,500 persons in the state mental hospitals, for an additional annual state cost of over $300 million.50

The study states:

“Even though it is still to early to make substantive claims regarding the long term effects of these services upon the use of hospital services, the law enforcement costs formerly associated with this population have dropped significantly. With daily jail costs ranging from $50 to $60 for the general jail population, and a range of $300 to over $400 for the medical/psychiatric jail population, any substantial reduction in the number of jail days produces an important local savings and/or cost avoidance.”51

The Size of the Need

Estimates from various service providers and city departments are that the city needs between 5,000 and 7,500 new units of supportive housing to solve the homeless problem. The biggest need is for services for dually diagnosed people, meaning those with two or more major problems like substance abuse problems, mental illness, and HIV/AIDS. All avenues of providing supportive housing should be utilized, but master leasing offers the best short-term strategy for increasing the number of supportive housing units. Because the city does not have enough vacant units to be master-leased without displacing existing tenants, new construction will be needed. New supportive housing could be built by the nonprofit builders or by for-profit builders teamed with nonprofits or public agencies to provide services.

It is estimated that there are approximately 2,000 units of vacant or severely underutilized SRO housing in San Francisco that could be master-leased without displacing existing tenants. The building owners typically pay the up-front capital costs of renovation, using loans secured by the ten-year City leases.

The following table defines the annual cost for obtaining 5,000 to 7,500 new units of supportive housing.52

Cost of Providing New Units of Supportive Housing Utilizing Master Leasing and Nonprofit New Construction

Based on past studies, most of these costs will be recouped through reductions in existing services currently provided by the City. This means that money currently spent to address the symptoms of homelessness would be reallocated over time to providing supportive housing, the long-term solution to homelessness. Construction of the new units as shown above would require the City to issue bonds to pay for construction costs or would require the nonprofits to raise money based upon long-term leases with the City.

If for-profit developers build the new housing, with private funding, the scenario is different. It costs the private sector more to borrow money than it costs municipal governments, increasing the annual payments for capital costs. Lease payments also rise accounting for the developer’s profit, which is required to entice a developer to operate in any market. While this scenario increases annual operating costs, it precludes the City
from having to sell bonds. Utilizing for-profit developers yields the following costs:53

Cost of Providing New Units of Supportive Housing Utilizing Master Leasing and For-Profit New Construction

Enforce Standards of Civil Behavior

Right now, the City’s rules for what’s acceptable behavior on our streets are not well defined. Laws that are in place are not enforced or prosecuted. This lack of clarity is both confusing for all citizens and promulgates the notion that the city is lawless.

Citizens are frustrated because some laws are not enforced. Additionally, the police are frustrated by the lack of prosecution of laws that they enforce.

The city’s leaders must define what is acceptable behavior on our streets and what is not. This should be an inclusive, citywide debate that includes input from homeless people. The Supervisors must then pass or repeal laws to make a consistent, enforceable policy. The City must then support enforcement and prosecution of these laws.

The ultimate goal should not be to make homelessness illegal. Homeless people are members of the community. If laws are passed, alternatives to the banned behaviors must be available and the goal of any law should not be incarceration but entry into programs that provide treatment. Although an easy solution, our studies indicate incarceration does not help individuals solve their problems and it is one of the most expensive options for dealing with the homeless.

Improve Shelter Conditions

Shelter conditions must be improved so that homeless people will want to use them instead of sleeping on the streets. At a minimum, they need to be safe and clean.

More shelters should be open 24 hours a day so that homeless people are not kicked out onto the streets each morning. Case workers should also be available during the times when the shelter population is present, instead of limiting their hours to 9 to 5 shifts, as some shelters do.

Shelter safety must be improved. Right now, there is a perception among many homeless that the shelters are more dangerous than living on the streets. This needs to change so that homeless people will utilize shelter services.

A variety of shelter types should be employed tailored to the specific needs of different populations. Most importantly, the special needs of the mentally ill must be accommodated when updating the shelter intake system.

Provide Vouchers for Services instead of Cash Payments

San Francisco is one of the few counties to provide cash-based assistance programs to homeless people directly. Our monthly support also exceeds that of surrounding counties. While not all GA recipients are substance abusers, many are. Studies show that substance abuse is correlated to income—the more income an addict has, the more drugs or alcohol he or she will abuse.

Instead of providing cash grants to homeless individuals, the county should provide the majority of support in the form of vouchers for housing and other services. Cash payments for individuals who are housed, even in “casual” rental situations should be maintained. In general terms, this is the idea behind the “Care not Cash” proposal.

Any money saved should be diverted to supportive housing programs, providing longterm solutions for many homeless individuals.

Increase Funding for Affordable Housing

A lack of affordable housing is the most important contributor to homelessness. San Francisco needs to build support for the local, state, and Federal proposals to provide more money for affordable and supportive housing. On a local level, the City should add supportive housing through an expanded master lease program. We should also fund the construction of new affordable housing units through local revenue sources including bonds and, possibly, an increased real estate transfer tax.

Recently, the Board of Supervisors passed a city ordinance mandating below market-rate housing be included in new developments of ten units or more. This means that ten to seventeen percent of the units in market-rate projects will be rented or sold at deep subsidies. Over time this will make a substantial additional to the stock of affordable housing.

On a state level, we should try to pass an affordable housing bond. And on a national level, we should support efforts to create a national housing trust fund that would allocate $5 billion annually to affordable housing. This trust fund would provide 1.5 million rental homes affordable to people with extremely low incomes over ten years and would be funded with surpluses from the Federal Home Administration (FHA) and the Government National Mortgage Association (GNMA).


Encourage Construction of New Residential Hotels

The City should encourage new residential hotels to be built, both by for-profit developers and non-profits. New SRO construction in San Francisco runs approximately $100,000 - $110,000 per unit. Because of the high cost of building new units and the long timeline required to acquire funding and develop new housing, this approach will not be able to make a large impact in a short time. It is a major component of the long-term solution to homelessness.

Increase Supply of Housing at all Levels

San Francisco needs more housing at every level. The current shortage affects every resident of San Francisco and makes some people homeless. If enough market rate housing was being built in the city, the prices would be lower and we wouldn’t need subsidized affordable housing. It is unlikely, however, that the City can provide enough new housing to make housing affordable through the private market alone. Therefore we
need both more market-rate housing and more subsidized affordable housing.

The following are ways to increase the supply of housing in San Francisco:

• Increase opportunities to build housing without applying for conditional use permits. For example, any building over forty feet high requires one¾even if the zoning code allows a building 300 feet tall. The risk of going through the conditional use permitting process discourages builders from taking full advantage of the zoning envelope.

• Allow greater densities (up-zone) around public transit hubs such as BART and Muni stations and corners where several bus lines converge. This will encourage more housing, and greater use of public transit.

• Rezone industrial areas for housing. (Instead, San Francisco is doing the opposite¾zoning large stretches of South of Market for industry, for example.) San Francisco has lot of underutilized land, and zoning it for housing would help alleviate the housing crisis. Despite rumors to the contrary, San Francisco is not full. There’s lots of space for new housing.

• Regulate buildings not by the number of units they contain, but by their height, width, and length. This will encourage the construction of smaller, more affordable units.

• Require people to give reasons when they request discretionary review of a project. Today, all residents have to do is ask for the review, and pay a small fee¾a formula for NIMBY behavior. Requiring reasons rather than larger fees ensures that all San Franciscans have equal access to the review process.

• Decrease-and in some cases eliminate-minimum parking requirements. People who verify that they don’t own a car and won’t get a residential parking permit should be allowed to have units without parking spaces assigned to them. San Francisco has the lowest car ownership rates in the United States, outside of New York City, and should reflect that in its building code.

• Legalize existing in-law units, and encourage the creation of new ones. Because they have a minimal visual impact on neighborhoods. In-law units are a relatively painless way to increase the rental housing stock.

• Allow planned unit developments on smaller parcel sizes. This means more units on less land.

• Build consensus about where to add new housing through comprehensive neighborhood plans. Neighborhoods should discuss and agree on plans in advance, and then automatically allow any project that fits into these plans. The California Environmental Quality Act (CEQA) allows cities to prepare master environmental reviews for whole neighborhood plans instead of project by project, which is a more logical way to study environmental impacts. San Francisco has already done it in the Van Ness corridor and South Beach. The City is working on three such plans, for the area around the Balboa Park BART station, the Central Waterfront, and Hayes Valley, and needs more.


For the same amount of money spent today the crisis of homelessness in San Francisco could be solved.

The City spends hundreds of millions of dollars each year on programs that deal with symptoms of homelessness—street cleaning, emergency room care, jail—but very little on programs that would address the underlying causes of homelessness such as affordable housing with supportive social services.

In order to make progress on homelessness San Francisco must redirect its funds into more productive channels. For a comparable sum of money we could provide homeless people with housing and supportive services (drug treatment and/or mental health counseling). Our research indicates that the need for acute care drops significantly when people receive treatment in residence. Over time, this drop in use of expensive emergency services would save the City enough money to pay for supportive housing for everyone who needs it.Spur logo

About the Authors: 

SPUR Homelessness Task Force