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June 7, 2021

American Rescue Plan Resources Could Help House Hundreds of Thousands of Households Experiencing Homelessness

Photo of a group of volunteers putting canned and bagged food in donation boxes.Lack of resources, along with tight rental markets and lack of affordable housing, remain the biggest obstacles in overcoming homelessness. Credit: istockphoto.com/Vladimir Vladimirov

In this article, Aaron Shroyer, William Snow, and Richard Cho discuss federal resources to help reduce homelessness.

Evidence from the past decade shows that concentrated resources and efforts can reduce homelessness. For example, the continued support of the HUD-Veterans Affairs Supportive Housing program, paired with the creation of Supportive Services for Veteran Families (SSVF) permanent housing opportunities, reduced homelessness rates among veterans. Similarly, as rapid rehousing programs focused on serving families with children were developed nationwide, rates of homelessness among families declined steadily. But the lack of resources dedicated to nonveteran single individuals, who constitute the largest subpopulation of those experiencing homelessness, along with tight rental markets and the shortage of affordable housing, resulted in large increases in the number of people experiencing homelessness over the past decade, particularly the number of people who are unsheltered.

Resources in the American Rescue Plan (ARP), when combined with CARES Act resources targeted to people experiencing homelessness, can reduce homelessness rates in the near term. ARP allocated $5 billion through the HOME Investment Partnerships program that state and local governments can use to provide rental assistance, develop affordable rental housing, and acquire and develop structures (such as hotels and dormitories) for use as noncongregate shelter. These shelters can later be converted into affordable housing, including permanent supportive housing. ARP also provided $5 billion for emergency housing vouchers for qualifying individuals or families experiencing or at risk of homelessness. This one-time allocation of additional vouchers is available to households for as long as they need assistance; HUD estimates that these vouchers could assist up to 70,000 households. In addition, CARES Act allocated $4 billion through HUD’s Emergency Solutions Grant Coronavirus (ESG-CV) program to provide emergency shelter, homelessness prevention, and rapid rehousing resources to communities to serve people experiencing or at risk of homelessness.

Our estimates indicate that American Rescue Plan and CARES Act resources could help up to 211,000 households experiencing homelessness to exit homelessness into stable housing over the course of the next few years.
Line graph showing changes in the homeless population from 2010 to 2020.

Although individual communities will make their own decisions about resource distribution, this analysis highlights what HUD believes will be the most effective way to use these critical resources to address homelessness. This approach balances the immediate need to house people with the longer-term need to create additional affordable housing opportunities.

For the purposes of this analysis, we assumed the following allocation of the $5 billion in HOME resources based on historical spending trends and current factors related to the COVID-19 pandemic. We assume:

  • 80 percent toward the construction or conversion of units and shelters,
  • 5 percent toward tenant-based rental assistance, and
  • 15 percent toward the costs of administering these funds.
  • For the construction or conversion of units and shelters, we assumed an average cost of $150,000 per unit.

For both HOME tenant-based rental assistance and ESG-CV rapid rehousing, we used state-level average costs with a national average cost of roughly $10,000. Although we assumed that most resources would serve unique households resulting in one intervention per household, we acknowledge that some overlap will exist in households served, so we adjusted the total number of unique households to reflect this overlap. We assumed that one-third of all households receiving an emergency housing voucher also had received either ESG-CV rapid rehousing or HOME tenant-based rental assistance, and we removed that group, which consisted of more than 23,000 households, when determining the final estimate of unique households that these resources would target.

Graph showing a breakdown of the households that HOME resources could target.

Using HOME resources in this way could allow HUD to assist approximately 25,000 households through tenant-based rental assistance and another 26,000 households by creating new units through conversions or construction. Communities could serve an additional 113,000 households through ESG-CV rapid rehousing assistance. Together, the vouchers, tenant-based rental assistance, and ESG-CV rapid rehousing could provide units or vouchers for approximately 211,000 households experiencing homelessness. To put this figure in perspective, imagine if we had applied these resources to the homeless population just before the pandemic began spreading in this country. According to 2020 Point-in-Time count estimates from the Annual Homeless Assessment Report conducted immediately preceding the pandemic, 463,000 unique households experienced homelessness on any given night. Our estimates indicate that American Rescue Plan and CARES Act resources could help up to 211,000 households experiencing homelessness to exit homelessness into stable housing over the course of the next few years. If deployed effectively, these resources could lead to an unprecedented number of positive exits from homelessness nationwide. Moreover, depending upon the timing of those housing placements and provided that the number of households that newly fall into homelessness does not significantly increase, there could be a significant reduction in the number of people experiencing homelessness nationwide as reflected in the Point-in-Time count.

 
 
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