The homelessness crisis is leading to frustration among residents and municipalities, which must deal with sprawling tent cities and growing disorder. The current approaches – building publicly funded affordable-housing units, imposing eviction moratoriums and using police to clear out parks – fail to make a dent in the problem.
Governments do a poor job dealing with this issue. The cost of building stopgap housing often tops $800,000 a unit because of inefficiencies in the public-contracting system. Eviction bans force property owners to shoulder the cost burden, which discourages market-based rental housing. Shooing away the homeless doesn’t provide them with a place to go.
California still is known for its innovation, so it’s frustrating to see a lack of creative solutions. We were therefore heartened to hear about am admittedly small privately funded program in Los Angeles that offers help to people who are living on the edge.
West Los Angeles entrepreneur Adam Miller created the Short-Term Eviction Prevention Fund, which provides no-interest “microloans” up to $2,500 to low-income residents who are on the verge of losing their apartments. The revolving loan fund has a skeletal staff. After 60 days, borrowers make payments spread out over three years.
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A Los Angeles Times article noted that Miller and his wife, Staci, “decided to focus their intervention narrowly on people who face imminent eviction because of a crisis but have the means to pay their rent going forward.” The non-default terms raise questions about whether the program is sustainable – and repayment rates so far are below 70 percent.
As a private program, the donors can set the terms and have the flexibility to experiment with the rules. Microloans have a long history of success, especially in developing nations. Poor people have almost no access to credit, but these loan programs have helped people become self-sufficient.
Obviously, the homelessness problem is multi-faceted. Most homeless people in California have addiction and mental-health issues, which requires a different approach. This program is small and targets only one small part of the problem. We hope it sparks more creative, private-oriented solutions.