How did a cooling housing market prompt ‘doomsday’ fears for Pierce County’s homeless?
When diminished funding for Pierce County’s Homeless Housing Program was recently announced, the Tacoma Rescue Mission warned of a mass exodus of people in shelters onto the streets.
Money through the program, a key mechanism for supporting emergency shelters and other homeless services, had been reduced by about $6.5 million, or cut by more than half, for the fiscal year beginning July 1. In response, the rescue mission said late last week it was contemplating severely limiting shelter capacity and operations. Other area emergency shelters reliant on the funds, it warned, were considering doing the same.
“This is an absolute worst-case scenario,” the mission’s executive director Duke Paulson said in a statement June 9.
Since then, it’s emerged that additional money coming from the state would avoid the Tacoma-based nonprofit’s feared “doomsday scenarios,” but the rescue mission said Wednesday it still was expecting to be forced to make significant cuts, having received roughly 80% of the dollars it had requested for shelter and outreach operations even with the boost in aid.
The Homeless Housing Program’s recent downturn in funding can be traced to what is often its largest revenue source: Document recording fees (DRF). They’re charged by local and state agencies during real estate transactions such as purchasing or refinancing a home, according to county Human Services spokesperson Kari Moore, who called the fees “the backbone funding of the homeless crisis response system across the state.”
“The (real estate) market has slowed down over the last few years resulting in funding changes,” she said in an email.
The funding situation for providers that serve the county’s most vulnerable people — a decrease that the county suggested was felt across the state — evolved over the past several days. On Monday, Moore told The News Tribune that county staff were working to award organizations about $10.5 million in the additional state funds that would assist in filling the gap left by the reduction in Homeless Housing Program money.
“While this will not fully fund the crisis system to the capacity that it did during the last few years, we are confident it will have minimal impact on the system,” Moore said.
At first glance, the state’s supplemental aid would appear to be more than enough to make up for the reduced HHP funding in fiscal year 2024. However, the county will use some of those new state dollars to partially restore services to coordinated intake and landlord-related housing programs for people experiencing homelessness, according to Moore, who also noted that funding-allocation committees chose not to renew some applicant projects.
The Homeless Housing Program is the largest notification of funding availability (NOFA) advertised each year by the county for homeless and housing services. It enables organizations to apply for important dollars in a competitive process. For the Tacoma Rescue Mission this fiscal year, the program’s dollars supported 77% of its shelter and outreach operations and nearly one-quarter of its overall budget, according to Myron Bernard, the nonprofit’s senior director of community engagement.
This fiscal year, HHP supplied nearly $12 million to organizations for shelters, outreach, safe parking and certain housing to support people experiencing homelessness, according to a county document outlining the awards. There was less than $5.5 million in Homeless Housing Program dollars awarded for the upcoming fiscal year, a county document shows, excluding additional state funding that soon after was revealed.
The implications had been dire: Such a steep financial reduction could have meant expulsions from shelters in the county, including its own, for 500 men, women and children by the end of June, according to the rescue mission, which had held conversations about potentially laying off 50 staff members.
With the additional state funds, the rescue mission’s projections are less extreme, although still serious, while it grapples with an estimated budget shortfall of more than a half-million dollars.
It said Tuesday that its expected cuts included reducing capacity of the nonprofit’s 400 shelter beds by 65, curtailing meals served each month by roughly 3,000 and drawing back capacity and staffing for services that facilitate transitioning people out of homelessness.
In a statement Tuesday, Bernard said that the organization was working with other service providers that receive HHP funding to ascertain the impact countywide.
“We don’t want to be stuck in this position again next year,” Bernard said in an interview.
Market dip
The use of document recording fees to finance specific homeless services is enshrined in state law. According to county figures, its portion of DRF revenue decreased 49% between 2021 and 2023.
“DRF fees are widely recognized by the Legislature and local jurisdictions across the state as the foundational source of funding for both homeless services and some affordable housing,“ Moore said. “Volatility may be an issue, but that’s true for almost every transaction-based fee or tax.”
The recent financial hit to the program, which is also bankrolled by state grants and other sources, has highlighted the fickleness of DRF as a major revenue stream for homeless services in a sector where operational funding is frequently unpredictable year to year.
Mike Curry, vice president and agency director for Catholic Community Services, told The News Tribune that he believed the county “has been a good and sincere partner,” and he also hoped that its officials were open to holding dialogue with service providers about how to improve the stability of services offered to people who need it most.
“While I recognize that government has limited ability to predict future revenue streams and funding priorities, I also believe it is important for government to work collaboratively with providers in finding ways to improve predictability of funding,” Curry said in an email Tuesday. “This not only brings stability to providers, but to our very communities and their most vulnerable members.”
Catholic Community Services, which operates the Tacoma-based shelter Nativity House, initially assessed that the reduction in HHP funding would lead to laying off about 16 employees and slashing overnight shelter capacity from 167 beds to 11, he said. It was not immediately clear what the effect would be to the nonprofit after factoring in the additional state money to be awarded to service agencies.
Bernard stressed that the county has routinely vowed publicly that homelessness was a significant issue.
“So then to tie the funding to something that can fall off a cliff ... well, that just doesn’t sound like a wise way for anyone to manage their budget,” he said.
Bernard suggested that the county adopt lessons learned elsewhere, specifically Clark County, which he said has found room in its budget to supplement funding for the Homeless Housing Program. He added that Pierce County’s recently passed 0.1% sales tax to support affordable housing and homeless services would be a good place from where to pull.
Moore said that county Human Services would be proposing to use a share of the tax, which goes into effect next month, to financially support homeless services.
Eighty percent of the tax revenue is dedicated to building new income-restricted housing, with the remaining 20% open for “related services” — a category that aligns with the work being funded through HHP, county Council Chair Ryan Mello said in an interview Wednesday.
Mello tied the program’s funding shortfall to the county’s own shortcomings.
“This is what happens when we have historically under-invested in the system, and we’re showing our vulnerability right now,” he said.
Written concerns
In a draft letter to county Executive Bruce Dammeier, discussed during a council study session Tuesday, Mello suggested that the county seek to stabilize homelessness funding by vetting possible additional sources, including the recently passed sales tax, unused American Rescue Plan Act dollars and county reserves, during upcoming budget talks.
The letter requested that the county’s executive branch immediately inform the council and stakeholders on the plan to fill the HHP deficit and also improve accountability on financial reporting, including how and where dollars toward addressing homelessness are spent and what results that spending produced.
Mello, who said he hoped to be able to send out the letter by Friday, expressed frustration as well that service providers and the council weren’t notified earlier that HHP funds would be significantly scaled back.
The county’s notice in late February that solicited applications for the program conveyed that roughly $5.6 million — significantly less than the prior year’s pool of funding — was anticipated to be available, with additional dollars possible.
While Bernard said that the rescue mission had anticipated receiving less funds than it historically did, it was “very, very shocking” when the nonprofit’s shelter and outreach operations had been reduced year over year from a $2.4 million award to nothing. With the addition of new state dollars, he said, the rescue mission will now see $1.9 million for those operations this upcoming fiscal year.
In years’ past, the rescue mission had been notified of HHP funding awards in early May, according to Bernard. The nonprofit was informed this year during the second week of June.
Staff reductions that were initially contemplated at Catholic Community Services would had to have occurred quickly, Curry told The News Tribune, with “the timing of the funding award notices being so close to the beginning of the new funding cycle.”
In a statement broadly addressing concerns over HHP funding on Monday, the county noted that it has been in touch on the issue with groups that serve people experiencing homelessness over the past year.
“We’ve been tracking DRF reductions since 2022,” it said, “keeping providers in the loop along the way.”
In the emailed response to questions from The News Tribune, Curry said that the nonprofit understood the possibility there could be decreased funding. It’s a general and regular concern.
“That said, it’s always a shock to see large-scale funding reductions,” he wrote.
This story was originally published June 16, 2023 at 5:00 AM.
