The Brief

Proposition 36, which passed in November 2024, promised California voters a new era of “mass treatment” for people struggling with addiction and a crackdown on repeat petty thieves amid a spike in retail theft.

The debate around the measure, called “The Homelessness, Drug Addiction and Theft Reduction Act,” was fueled in part by a series of videotaped smash-and-grab robberies splashed across local TV news and images of unhoused residents shooting up drugs in the streets.

Voters signaled they wanted a crackdown and they approved Prop. 36 with nearly 70% casting ballots in favor of it.

A little more than a year later, the measure is getting mixed reviews.

Supporters say it's been effective in holding repeat offenders accountable. Critics say it's been a return to mass incarceration without the promised treatment for people with substance abuse.

How Prop. 36 works

Prop. 36 stiffened penalties for repeat theft and drug offenders.

Here’s how the measure works: If you have been convicted of two misdemeanor thefts of $950 or less, prosecutors have the option of charging your third petty theft as a felony, which carries up to a three-year prison term.

Before Prop. 36, petty theft was a misdemeanor, regardless of how many times you did it.

When it comes to drug offenses under Prop 36, if you have been convicted of two possessions of a small amount of hard drugs (fentanyl, heroin, cocaine, methamphetamine), prosecutors have the option of charging your third possession as a felony. But you don’t have to go to prison if you agree to go into drug treatment.

In 2025, California prosecutors filed more than 19,000 Prop. 36 felony drug cases and more than 15,500 felony theft cases, according to a study by the Center on Juvenile and Criminal Justice released in March. Most people were released on bail pending the outcome of their case.

Nearly 900 Californians have been sent to state prison under Prop. 36, since it went into effect in December 2024. County jail populations have grown by nearly 3,000 since the measure passed, driven by a surge in felony bookings of people who have not yet been sentenced.

In Los Angeles County alone, there are about 1,150 individuals in jail because of Prop. 36 — about a 9% increase in the jail population, according to county Public Defender Ricardo Garcia. The surge in defendants is adding caseloads to his already overworked attorneys, he said.

The same is happening across the state.

“This is really compounding the workload crisis,” said Kate Chatfield, executive director of the California Public Defenders Association.

The data represents a reversal of yearslong declines in incarceration, and they are occurring amid all-time lows in California’s crime rate.

“It really is a return to mass incarceration,” Chatfield argued.

Black people overrepresented

Black people are dramatically overrepresented in Prop. 36 charges, according to the study. In Contra Costa County, for example, Black residents account for more than half of all Proposition 36 theft charges, despite making up less than one-tenth of the population.

Prosecutors say the law has been effective.

“It’s been a valuable tool to go after chronic and repeat thieves,” Los Angeles County District Attorney Nathan Hochman said.

Hochman said his office brought more than 3,300 Prop. 36 felony cases against people charged with their third petty theft in 2025.

He said his office brought over 1,900 felony cases against people charged with their third possession of hard drugs.

He said he couldn’t immediately provide numbers on how many of the drug defendants opted for rehabilitation over prison.

Statewide, fewer than 1 in 5 people arrested on Prop. 36 drug charges have been ordered to treatment, and fewer than 1 in 100 have completed a program, according to the Center on Juvenile and Criminal Justice study.

Lack of treatment beds

One reason for the low treatment numbers is a scarcity of treatment beds throughout the state.

“There just isn’t enough treatment to meet the need,” said the center’s Maureen Washburn. “People aren’t getting connected to treatment. They aren’t succeeding in treatment programs once they’re in them.”

Treatment, a major promise of Prop. 36, has been an “abject failure,” she said.

Hochman agreed treatment is lacking.

“We do not have anywhere close to enough drug treatment and mental illness beds in a county of 10 million people,” he said.

The district attorney argued the state needs to provide more funding for treatment beds.

“Sacramento has not funded at any meaningful level,” he said.

In a March letter to the chair of the Senate Budget and Fiscal Review Committee, the co-author of Prop. 36 — Senator Tom Umberg (D-Santa Ana) — said at least $400 million dollars in new funding is needed for treatment facilities.

“I think spending taxpayer dollars on drug treatment — both in the short term and in the long term — is a smart way to address public safety issues,” Umberg told LAist.

Gov. Gavin Newsom has requested in his budget $100 million dollars for treatment over three years.

But Chatfield said people facing Prop. 36 charges shouldn't be locked up in the first place. Drug offenses should be handled as a public health issue, she argued.

“Even the low level misdemeanors for theft are economic crimes,” she said. “These are crimes of poverty.”

Unequal application of Prop. 36

In addition to a paucity of treatment beds, the Center on Juvenile and Criminal Justice study found charging rates vary dramatically by county. Orange County alone accounted for nearly 20% of Prop. 36 drug charges and 40% of theft convictions in 2025 despite representing just 8% of the state’s population.

“This inconsistency across counties exacerbates California’s longstanding problem of providing differing ”justice by geography,” the report stated.

Empirical evidence of the effect of Prop. 36 on the crime rate is lacking. But Umberg said he believes it has reduced retail theft.

“I have been told by a huge number of folks in law enforcement and also in the business community — particularly in the retail community — that it has had an effect on retail theft,” Umberg said.

Hochman said it's too early to tell if people are being deterred by Proposition 36.

“We’re waiting on statistics that we’ll probably get sometime this year to see if the deterrent aspect is also working — that we actually have fewer people going ahead and committing these crimes,” Hochman said.

But crime was on the way down before Proposition 36 passed. Violent crime fell 6% and property crime dropped 8.4% in California in 2024 — the year Prop. 36 passed.

Chatfield of the California Public Defenders Association maintains voters were “sold a bill of goods” on the measure.

“They were told this was about homelessness. They were told this was about treatment. And it absolutely was not," she said. "It was about increasing incarceration.”

When I went to the Natural Products Expo West earlier this year, a conference that highlights innovations in food and drink, I learned two things. One is that I could get my 10,000 steps by walking the Anaheim Convention Center. And two, that tea is really popular right now. As I walked around, I was given dozens of samples for teas from various flavors and brands, many of which were unknown to me.

Later, when I got home, I realized I had far more tea than I could drink. I have a pet peeve about waste, so I went to the one person I knew who could help……my mother, Jacqueline Richie.

Ryan's mom, Jacqueline Ritchie.

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Courtesy Ryan Ritchie

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My mom drinks multiple cups of tea a day, and has a wooden sign in the dining room that reads “A cup of tea and all is fine.”

While I have a background as a a food writer, I’m not a massive tea drinker, so I figured getting her perspective would help. It would also give me a good reason to spend quality time with my mother and get to know her better, perhaps through a different lens.

So we set up multiple afternoons and evenings to get through them all.

Ryan Ritchie on his tea drinking journey with his mother

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Courtesy Ryan Ritchie

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For the first session, I brought three teas for us to try: Lord Bergamot Full Leaf Black Tea by Steven Smith Teamaker, Moroccan Mint by Numi and Sapphire Bay by Bigelow.

First the bergamot tea. “This one is really good,” she said. "It has bergamot oil from Italy, not like some cheapo off brand. The bergamot is not overpowering. Some cheap teas hit you like 'ooh.'”

Next was the Moroccan mint. “It’s, uh, minty,” my mother said, “and I’m tasting the cinnamon and vanilla. Cinnamon can be overpowering, but this one is a faint, light taste. It lingers at the bottom of the cup as the water decreases. They did a good job of blending. A perfect combination.”

Two thoughts occurred: One, my mother knows way more about tea than I imagined. Two, she seems to have a strong palate, a term I’d never think to use when describing her. Most of the meals we had growing up were store-bought items she could heat up in the oven.

We ended our session with the Sapphire Bay tea. It was, unexpectedly, a majestic purple-blue, apparently from butterfly pea flower. My mom, a black tea lover, surprised herself — and me — by liking it.

The blue-purple hue of Bigelow's Sapphire Bay is only slightly stronger than the tea's floral taste.

Her adventurous palate was news to me. Could there be more adventure to a woman who wears holiday-themed sweaters?

For the next session, we started with Dandelion Masala by Yaygit. “I have no idea what dandelion tastes like,” she said, warily.

Apparently the dandelion root was blended with cardamom, cinnamon, ginger and clove as "an ode to chai," as it says on the website. Her verdict after she sipped it? She approved of its "earthy, sweet taste. This is a nice afternoon or after-dinner tea as a palate cleanser.”

“Palate cleanser?” "Earthy"? I’d never heard my mother use those terms. She described another tea we had later as “robust” and “malty.” Had my mom been the Anthony Bourdain of tea for decades and I was just now realizing it?

What I don’t know about my mother could fill volumes of encyclopedias. But, to be fair, I’ve never inquired about things like her first boyfriend or why her bathrooms don’t have hand towels. Perhaps I don’t want to know the answers to these questions. Perhaps I’ve always assumed my mom doesn’t have an adventurous side, that she’s happy baking desserts for my dad and reading on the couch.

But now she’s drinking dandelion tea like a pro.

We ramped up the new discoveries next time with Magiktea’s Palo Azul. What is Palo Azul exactly? I didn't know, and I eat nutritional yeast with my salads. Neither did my mom.

Turns out it is, according to a Google search, a medicinal shrub found in the Southwestern United States and Mexico.

And the tea it makes is also blue (clearly a color of the moment), but with a florescent sheen. It came not as a packet of tea leaves, but as two wooden sticks she poured hot water over.

“It looks like wood pulp,” she said. “All I can say is it’s interesting. I guess the more you drink it the more you’d get used to it. The first sip was not what I expected — not that that's bad. Maybe we should have used alkaline water as they recommend on the packet?”

I would have bet good money that my mother would have hated any tea that looked like wood pulp, but I was wrong. What else had I been wrong about?

Another session, we wanted to end with a nightcap and turned to Pure Chamomile from Twinings.

“It’s chamomile, alright,” she said. “It’s soothing and good if you’re sick or want to take a two hour nap and forget about everything. I prefer my chamomile mixed with something else. It’s not like I hate it, but it’s not my cup of tea.”

Hmmm. What is “everything” my mom wants to forget, exactly? She’s a retiree who gardens, practices yoga and enjoys time with her two grandchildren. Also, her use of “It’s not my cup of tea?” My mom is Anthony Bourdain and Jerry Seinfeld.

23 cups of tea later, (ginger, Lady Grey, wild berries to name a few) over a few sessions, we finally finished our tea time with mother sessions. And it did, in fact, bring us closer together. We don’t normally schedule much time to see each other… but she texted me a few days later with another idea.

“When is our next tea time?😀Maybe next time we can sample chocolates! 🍫I'll do the eating. You do the writing! 😂”

It sounded great, but I had to remind her I had two housesitting gigs that would keep me busy for three weeks.

“Okay,” her text read. “So you're gone until the 16th? I'm going to miss my tea buddy.🙉.”

Me too, mom. Me too.

The California State University Board of Trustees voted on Wednesday to approve three new bachelor’s degree types, including one for people interested in becoming teachers.

The new degree types could be achieved with fewer credits than what’s typically required for Bachelor of Science and Arts degrees. They were designed to be flexible for adults, people returning to higher education and those who have a job while in school.

It’s the first time in 30 years that the university system is introducing new bachelor’s degrees.

At a committee meeting earlier in the week, Associate Vice Chancellor of Academic Affairs Nathan Evans said the new degree types aren’t meant to replace traditional bachelor's degrees.

“They will provide more options for more nimble innovative program designs for a broader set of new learners,” Evans said during a presentation at the May 5 committee meeting.

Evans cited lowering rates of high school graduation in California, more competition and changing technology, including AI, as challenges facing higher education.

“Additional undergraduate degree frameworks … can better align with particular career goals, reduce the time required for students to earn a degree or … to offer more immediate access to economic and social mobility,” he said.

The degree types

One of the new degree types is a Bachelor of Education. CSU campuses could design programs through the degree to “complement other pathways to the teaching and education profession,” according to a CSU news release. California has had persistent issues with teacher staffing, a result of teacher turnover and the expense of getting certification, among other issues.

Another one of the new degree types is a Bachelor of Professional Studies, which would include courses of study that are interdisciplinary and focused on management, communication and leadership. CSU said in its news release that this degree type is flexible and would allow people to “integrate prior college coursework, professional certifications, military training and work experience.”

In board documents about the new degree types, CSU officials said universities across the country offer such programs, including Syracuse University. The private university in central New York offers several programs ranging from cybersecurity to project management as a Bachelor of Professional Studies.

The Bachelor of Applied Studies is focused on “students with backgrounds in applied, technical or vocational fields.” Programs offered through this degree type at other universities in the country cited by CSU, like the University of Pennsylvania, include data analytics, communication and physical and life sciences.

When do these new programs start?

CSU campuses are not required to offer programs through the new degree types; the new policy instead allows each individual campus to “begin to envision and design” such programs, the university system said in a statement. Those that choose to do so have flexibility in determining the number of credits required to achieve the degree.

Katie Porter is taking her L’s in stride.

The Democratic former congressmember from Orange County released an ad this week addressing her lowest moment so far in her race for governor: a video showing her yelling at a staffer who came into the frame of her Zoom interview, telling her to “get out of my f–king shot.”

The video came out in October on the heels of another viral video in which Porter argued with a reporter and threatened to walk out of an interview.

Porter was widely panned as being unable to control her temper. She took a hit in the polls and hasn’t climbed back since.

In the new ad, she references it: “Now, could you guys please get out of my shot?” she says lightheartedly with a crowd of laughing, whiteboard-wielding supporters behind her.

It’s a risk for her campaign, designed to show Porter can make fun of herself and isn’t avoiding talking about her perceived weaknesses. If the yelling incident was the worst thing about her, the ad suggests, there’s not much to be afraid of.

But it’s also a reminder that she doesn’t have much to lose in the final weeks of a race that has largely passed her by.

Last fall, Porter, a UC Irvine law professor, was one of the more recognizable names in the field, with national liberal accolades for refusing corporate donations, flipping a Republican congressional seat in the 2018 blue wave and for grilling CEOs in Congressional hearings.

But the progressive, who supports single-payer health care, free child care and college tuition and higher taxes on large corporations, has struggled to sustain a liberal base. Many coveted factions of the state’s Democratic establishment, including major labor unions, have coalesced around former U.S. Health Secretary Xavier Becerra, billionaire Tom Steyer, or at one point, now-disgraced former Rep. Eric Swalwell.

Addisu Demissie, a Democratic strategist who ran Gov. Gavin Newsom’s 2018 campaign and his successful campaign against a recall in 2021, said he’s surprised Porter hasn’t won more Democratic support after Swalwell’s exit a month ago. In polls, voters have instead flocked to Becerra while Sacramento power players like Planned Parenthood of California, SEIU, the California Medical Association and the California Teachers Association have split between him and Steyer.

The videos “arrested any momentum she may have had,” Demissie said. “That matters in a race like this, where fundraising matters and elite opinion certainly matters. I think that has hamstrung her.”

Now, Porter is the only woman left in a crowded field of eight, apparently losing the race based on personality. Her fundraising over the past four months has been lukewarm, with campaign donors giving her just under $3 million — less than she raised in the second half of last year.

To experts, it shows voters and political insiders continue to hold female candidates to higher standards than men.

“One thing that has hurt her is evidence of her anger coming out,” said Sacramento State University professor Kimberly Nalder, who researches gender and politics. “There’s this perception that women should not exhibit anger, but it’s perceived as strong when men do it.”

Porter tries calculated restraint

The videos were particularly damaging for Porter because they appeared to confirm longtime speculation that she’s a harsh boss and a “scold.”

She’s repeatedly asked about them during forums and debates. One political strategist told CalMatters Porter could secure the “angry woman vote” but not much else.

Porter has said the incidents captured on video were mistakes, that she apologized to the staff member she yelled at and that they continued to work together. She told the San Francisco Chronicle that the staffer recently sent her a text expressing support. Last month, the Washington Post reported, 30 former staffers signed an open letter calling the videos “a caricature built from a few clips on a bad day.” The letter’s organizer, Maine congressional candidate Jordan Wood, did not respond to an interview request made to his campaign.

In recent weeks she’s sought to more directly counter the temperament questions. During two televised debates in the past two weeks, she made calculated displays of restraint, holding back several times as the other candidates — all men — squabbled around her, and, at times, interrupted her.

“I can’t believe that on a stage with 30 minutes of interrupting and bickering and name-calling and shouting and disrespect for everyone up here who’s stepping into public service, that anyone wants to talk about my temperament,” she said during a debate Tuesday night on CNN.

“You are actually interrupting them, too,” Republican candidate Chad Bianco retorted, though Porter had waited for the moderators to call on her.

In an interview last month, Porter would not say whether she thinks sexism has stalled her, but said as the only woman in the race, and a single mother of three, she relates to voters.

“I can’t really comment on how every voter thinks about everything,” she said. “Women understand better what it’s like to push the shopping cart, what it’s like to have to write that check for that permission slip. Those are decisions that I’ve made. I think I have an ability to relate to Californians precisely because I’m a mom.”

Progressives have questions

She’s also struggled to attract solid liberal support as she appeared to vacillate on key progressive issues.

In Congress, Porter was a vocal supporter of “Medicare for All,” but last year she told Politico single-payer health care was unrealistic for California.

The proposal is estimated to cost the state nearly $400 billion and would need federal approval — a non-starter with President Donald Trump. Yet supporting single-payer remains a progressive rallying cry, and a litmus test for the left.

During the state Democratic Party convention this spring, Porter reversed herself again and resumed her support for single-payer.

Democratic gubernatorial candidate Katie Porter speaks during The Western Growers California Gubernatorial Candidate Forum in Fresno on April 1, 2026.

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Larry Valenzuela

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CalMatters

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She also raised eyebrows by courting the support of billionaire crypto executive Chris Larsen, who is spending his money this year fighting proposals to raise taxes on the wealthy. He donated to Porter’s campaign last year before revoking his support in March when she endorsed a San Francisco ballot measure to raise taxes on corporations with highly paid CEOs. Larsen, who supports Republican Steve Hilton, declined to comment through a spokesperson.

And she shocked labor leaders last month when she criticized the state’s agricultural overtime law. In a room full of farmers in Fresno, she got applause for saying regulations like the law that grants farmworkers overtime after 8 hours each day “don’t make sense.” Growers have tried for years to overturn or limit that law; early studies have found many have responded by cutting workers’ hours and hiring other contractors.

Lorena Gonzalez, president of the California Labor Federation, which has jointly endorsed Porter, Steyer and former Los Angeles Mayor Antonio Villaraigosa, saidPorter had previously given the federation a different answer about farmworker rights.

The comments prompted a flurry of weekend phone calls with union leaders before Porter clarified on social media that she supports the eight-hour workday.

“It was an educational experience for her,” said Gonzalez, who said she agrees Porter has been judged too harshly on temperament as a female candidate. “You can’t just be told something by business and just change your position on something, especially without coming and talking to us.”

Labor groups were also perplexed earlier this year when an independent political spending group supporting Porter’s candidacy received a $150,000 donation from Uber, which also gave to Hilton and a group supporting Swalwell. In response, the California Teamsters, which has endorsed Porter but opposes autonomous driving that Uber supports, withdrew its own $100,000 contribution. The union spent that money on its own ads supporting Porter.

A spokesperson for the political action committee, Danny Kazin, would not answer questions about who was directing the PAC’s activities. Uber spokesperson Zahid Arab did not respond to questions about the PAC or explain why the company supported Porter.

Porter denied that soliciting support from business has hurt her standing with progressives.

“I will talk to every Californian, every union, every business, every nonprofit, every entity, every local leader,” she said. “The job of the governor is to listen and to learn and then to make good decisions. I think it’s important that I’ve been talking to entities, including some that I haven’t had the chance to work with before.”

In the meantime, many progressives — even those who previously backed Porter — have flocked to Steyer. Assemblymember Alex Lee, a Cupertino Democrat, was one of Steyer’s earliest progressive backers in the race. Two years ago, he supported Porter in her quest for a U.S. Senate seat but said Steyer won him over this year campaigning against “the corporate status quo.”

“I have no regrets endorsing Katie Porter for the U.S. Senate where I think she would’ve been a great senator,” Lee said in a text message.

Steyer previously opposed single-payer but in December became a vocal proponent, earning him the endorsement of the Nurses Association. The state’s two major teachers unions also back him and SEIU jointly endorsed him and Becerra.

“It’s disappointing to me that some organizations and people that I really respect are not supporting Katie and are supporting Steyer,” said Sal Rosselli, president-emeritus of the National Union of Healthcare Workers, a longtime Porter backer.

Rosselli said he anticipated some of Porter’s perceived weaknesses and said it’s good that “she’s not so tight in Sacramento.” He said he hopes Porter’s new ad addressing the video would help turn things around.

“If a guy did that, this would not be happening, in terms of that reaction,” he said.

This article was originally published on CalMatters and was republished under the Creative Commons Attribution-NonCommercial-NoDerivatives license.

As COVID-19 tore through California, Jennifer Hark Dietz had a decision to make. The state was making perhaps its biggest push ever to get people off the street, offering up billions of dollars for cities and organizations like hers to turn old motels into new homes.

It was risky. The Homekey program came with up-front cash and a promise to move fast and cut red tape. But it also meant taking on old buildings with little vetting, which had the potential to put a developer in a deep financial hole.

At first the gamble paid off. In just a few months, Hark Dietz’s nonprofit, People Assisting The Homeless, was housing people in the old 40-room Hollywood Orchid Suites in Los Angeles. She called it a “shining light” for what seemed possible with the radical new program.

But then came a pale pink Travelodge in the suburb of Gardena. The city of LA had already bought the motel for $9 million, and Hark Dietz said her team didn’t have a chance to vet or tour the site. They’d only seen online photos and basic inspection reports before they took it over in December 2020. A city consultant estimated that it would take about $50,000 to start moving people into the roadside motel.

“Of course,” she said, “we know now that’s not the case.”

More than five years and nearly $3 million later, the motel — which turned out to need all new windows, plumbing and electrical, among other issues — was still vacant earlier this year. There was plywood over some of the windows, and someone graffitied a ghost on one side.

The boom-or-bust results in Los Angeles underscore how little is known publicly about a generational project with a high price tag and even higher stakes. Some projects were huge successes. Others were total failures. Dozens remain stuck in limbo. CalMatters found there’s been little public accountability for any of it.

Launched by Gov. Gavin Newsom in the summer of 2020, Homekey awarded more than $3.8 billion to local governments to convert motels and other buildings into homeless housing, thrusting many local governments into a new role running multimillion-dollar real estate projects. Cities and counties could hire outside contractors to help or do the work themselves, skipping some of the usual building process for the sake of speed.

It was unlike anything the state had ever done, largely because it sprang from desperation. Homekey launched during peak COVID, five months before vaccines were available, and after cities had already moved thousands of unhoused people into motels through Project Roomkey, another Newsom program. But those rooms were temporary, and officials were scrambling to prevent a mass exodus back to the streets.

With Homekey, local officials across the state bought and gutted Motel 6s, Best Westerns and roadside inns. They got more creative as the program evolved: Tiny homes sprouted in Silicon Valley, and Santa Cruz retrofitted an old dentist’s office. In Southern California, housing took shape in a former Tri-Delt sorority house, an earthquake-stricken church and a hostel that once served as a refuge for Japanese Americans returning from World War II internment.

Live Oak Apartments in Ukiah on Feb. 26. Live Oak offers its residents access to common spaces, such as a community garden and meeting rooms for visitors.

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Manuel Orbegozo

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CalMatters

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“What we’re doing here today is multiples of what any state in American history has committed to address this crisis of homelessness,” Newsom said at a 2021 press conference announcing a major Homekey expansion.

The program came with little built-in oversight. Earlier this year, state lawmakers killed a bill to audit Homekey. No state agency has publicly analyzed the program in detail to find out what’s working and what’s not.

The challenge now: A new and more complex phase is already underway with up to $2 billion from the voter-approved Prop. 1 mental health bond. But no one has publicly accounted for how many of the program’s original projects stalled out and how many succeeded.

To find out what happened, CalMatters filed more than 100 public records requests with cities and counties that were awarded Homekey funds. We asked for key details on 250 projects announced through the end of 2024, covering all but a handful of projects for which less public data was available. Those state and local records — along with dozens of visits to Homekey sites, plus interviews with people who built and lived in them — create a first-of-its-kind window into how it all played out.

Among our findings:

• Homekey made producing housing simpler. But it came at a cost. Homekey provided billions of dollars in housing funding up front, allowing some developers to sidestep the usual webs of investors and lenders and finish much faster than normal. But fewer funders also means less oversight. With rushed vetting, some projects got bogged down in delays, blown budgets or worse. At least one Homekey developer was forced out of business by an unwieldy project. Another is facing fraud charges.

• When Homekey worked, those involved stress that it really worked. Nearly 13,500 people now live at Homekey sites, according to the state Housing Department. For small and rural communities, such as Glenn County, the program provided crucial cash for their first-ever homeless housing. Officials from Mendocino County to Ventura say they were able to stabilize people longer term by adding stronger ties to public services and extra investment in resources such as counseling.

• Those successes magnify the opportunities squandered. Projects involving about 3,000 homes — roughly 1 in 5 promised by the program — weren’t finished as of the end of last year. Another 2,000 units have people living in them on a temporary basis but haven’t been converted into permanent housing, the program’s main goal. In 10 instances involving 500 more units, the state publicized grants that later were canceled or that never materialized because local officials or developers backed out.

• A lack of transparency raises familiar questions about the program’s future. State officials stress that they have extended deadlines and improved vetting for the program’s latest bond-funded iteration, Homekey+. But they refused to publicly provide details about that vetting process. And as homeless services providers have long warned, there remains no guaranteed state funding to keep existing or planned Homekey projects going. 

Yes, many Homekey projects opened late or over budget. But, officials emphasize, they still opened.

Newsom said he considers the program a “phenomenal success.”

“We’re talking about hundreds and hundreds of projects all across the state of California that they’re trying to manage and organize and operate,” he said when CalMatters asked about it at a recent press conference. “And I imagine each one of them brings its own opportunities and own challenges as we move forward and implement at a scale we’ve never implemented in the state’s history.”

Taryn Sandulyak knows that better than most. The Bay Area developer thought Homekey might be her big break, but it ultimately put her out of business. She sees a fundamental mismatch at the heart of the program. It wanted high quality, high speed and low budgets.

“You can only have two of those,” Sandulyak said. “You really can’t ever have three. That’s the issue with Homekey, is they give you not quite enough money to do it, and they want you to do it really, really fast and really, really well.”

The chasm between Homekey successes and failures isn’t a simple, one-size-fits-all story. But it does provide an outline of what it will take to make good on California’s big effort to finally make a dent in its homelessness crisis.

‘Failing was not an option’

On the west side of Ventura, just as the surf town creeps up into the hills toward Ojai, sits what used to be one of the city’s worst nuisance properties: a nearly 100-year-old apartment building once known, in a nod to local drug slang, as the “Booyah Mansion.”

The city’s housing authority, Ventura Housing, cobbled together enough money in 2019 to buy the building. But it didn’t have enough cash to fix all 300-something code violations at the crime-ridden property — until Homekey came along.

“We had some scary stuff go on here,” said Karen Flock, Ventura Housing’s real estate development director. “This property failing was not an option.”

Now known as El Portal, the 29-unit apartment complex today serves as a lifeline for a mother with 9-year-old-twins, one severely autistic. It’s a refuge for a woman who lived for six years in a city-funded Tuff Shed. Another neighbor still keeps his shopping cart from the street in his apartment as a reminder of what he’s been through, and why he can never go back.

Cynthia Gomez, 60, at her home in El Portal apartments in Ventura on Feb. 26. Gomez, who was formerly homeless, now lives in a studio apartment.

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Julie Leopo-Bermudez

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for CalMatters

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Ventura and other cities and counties that were able to pull off Homekey projects relatively on time and on budget credit a variety of factors for their success. Some grantees provided services themselves rather than contracting them out, better integrating public resources. Others raised extra money for on-site social services or worked closely with first responders to head off concerns about crime and stabilize residents.

Jeffrey Lambert, CEO of Ventura Housing, said the crucial thing was realizing early that Homekey money alone isn’t nearly enough. Instead, the city combined it with other public and private funding, staffing and resources. Projects that failed or got stuck in limbo often fell apart after they ran out of money.

“Homekey works,” Lambert said, “because of all the stuff added on top of it.”

For housing researchers such as Ryan Finnigan, deputy director of research at UC Berkeley’s Terner Center for Housing Innovation, the real strength of Homekey was not the building minutiae. It was the attempt to challenge the state’s status quo of painstakingly slow housing development while people keep pouring onto the streets.

“If we’re not willing to try a new approach,” he said, “then we’re not going to learn as much about how we can be more creative, how we can work with more urgency than the current systems.”

As fraught and full of delays as the construction process can be, getting a project completed is often just the first hurdle for Homekey. Once a project opens its doors, it typically needs significant resources in addition to the state funding. Mendocino County credits much of its project’s success to extra services for residents, which aren’t paid for by the state grant, said Megan Van Sant, a senior program manager for the county who oversees the Homekey site.

At the former Best Western hotel now known as Live Oak Apartments, there’s a therapist on retainer for tenants, plus a dog trainer paid to work with problem pets. Both try to help residents resolve any issues that come up before they escalate into grounds for an eviction.

To provide those extras, the county runs the project itself, rather than contracting with an outside service provider as many Homekey projects do. Two county staffers work full-time inside the building, using their connections to do everything from enrolling residents in Medi-Cal to pairing them with mental health services.

All that is expensive.

“I think the state should continue to support these projects,” Van Sant said. “The state asked communities to do these projects, and they cost more to do well than what you can earn in rent.”

Resident Sherry Collins inside her room at Live Oak Apartments in Ukiah on Feb. 26. Photo by Manuel Orbegozo for CalMatters

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Manuel Orbegozo

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Sherry Collins, 66, moved into the project three years ago, at a time when she was terrified of what would come next. Her husband had died, her health was failing, she couldn’t work, and she couldn’t afford to keep living in her cabin in the tiny coastal city of Fort Bragg.

Now she feels like she’s home. Collins decorated the window of her room with little red and pink hearts and adopted a kitten with extra toes, whom she named Mr. Handsome. She continues to deal with health challenges after losing a leg to diabetes about a year ago. The building has only four units accessible for people with disabilities, making it a challenge to accommodate everyone, but one recently opened up for Collins, where she can more comfortably shower.

“They have been awesome to me,” Collins said. “They’re more like family.”

Never-ending projects

For Sandulyak, Homekey was too good to refuse.

Five years earlier she had co-founded Firm Foundation Community Housing, which helped Bay Area churches turn their parking lots and backyards into tiny homes for homeless residents.

Homekey was a once-in-a-lifetime opportunity to dramatically scale up that vision by using millions in state funds to house dozens of people in Vallejo. It would be the small nonprofit’s most ambitious project by far.

Sandulyak never suspected that by applying for Homekey, she had doomed her organization.

Firm Foundation was awarded $12 million in 2022 to build a 47-unit modular apartment building called the Broadway Project. Over the next four years, nearly everything that could go wrong did.

Some problems had nothing to do with Homekey. The general contractor went bankrupt, and the nonprofit tapped to operate the facility squabbled with the city, leaving the project in limbo for a year. The state wouldn’t let Firm Foundation pick a new partner to run the housing, which Sandulyak says further delayed the opening.

Other problems were directly related to Homekey. By design, the program forced cities to take a much more hands-on role with housing development than they were used to. Vallejo wasn’t prepared for that responsibility. It fumbled its attempt to get a key federal grant and failed to set up important safeguards that protect affordable housing projects from financial risks.

Soon, Sandulyak had $2 million in bills and no way to pay them. With construction three-quarters done, the project ran out of money. Firm Foundation was forced to stop work.

It became such a nightmare that the Vallejo City Council asked for an independent audit to find out what went wrong and why. The audit blamed both the city and Firm Foundation for allowing the project to run out of money before it was finished. Firm Foundation vastly underestimated the project’s cost, and the city bungled efforts to secure additional funds.

In some ways, the audit found, the very nature of Homekey helped set the project up for failure.

One big problem was the timeline. Homekey required projects to finish construction within one year of their award, and to move people in 90 days after that. To meet those deadlines, Firm Foundation created budgets before the architectural drawings were even done, contributing to serious cost underestimates, the audit found.

The audit also found a lack of oversight at the Broadway Project, which it said is typical of Homekey projects. Normally, a single affordable housing project uses funding from multiple sources, including the city, the county, the state, federal funds, tax credits, private banks and more. The more funders and investors, the more eyes watching and holding the developer accountable. With Homekey, the city applying for the grant typically takes on all those risks by itself, the audit found.

The official ribbon cutting at the grand opening of Broadway Village in Vallejo on March 5.

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Nathan Weyland

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On a recent Thursday morning, Sandulyak gathered with city officials and her construction partners in front of a crowd to celebrate what they, at times, had thought would be impossible: the Broadway Project was finally open. Behind them rose the terracotta-colored wall of the sleek, new, modular apartment building. A red ribbon waited in front of them.

On the count of three, Sandulyak helped Vallejo’s assistant city manager snip the ribbon. The crowd cheered.

The project ended up coming in two and a half years late and 70% over budget. Despite those setbacks, the audit found it still cost less per unit and was built more quickly than the region’s average affordable housing project.

At right, Firm Foundation Community Housing Executive Director Taryn Sandulyak at the grand opening of Broadway Village in Vallejo on March 5. Photo by Nathan Weyland for CalMatters But it cost Sandulyak everything. She laid off three of her four employees, and she plans to lay off the last one and dissolve her organization. The nonprofit is still on the hook for more than $1 million in unpaid bills related to the project.

Despite her pride in the finished building, Sandulyak wonders how much more housing her nonprofit could have built — if only she’d never applied for Homekey.

Still, 52 people now have somewhere to call home.

“I’m unshaken in my belief that that is worth it,” Sandulyak said.

One of those people is 62-year-old Terrence White, a former refinery worker who was forced into early retirement by an injury and can’t afford market-rate rent. Now, he pays $294 a month and finally has his own place.

“It feels wonderful,” he said.

The Homekey gold rush

During the frantic first two years of Homekey, when many experienced affordable housing developers were sitting out the untested new program, an LA company called Shangri-La Industries stepped in to help fill the void. It scored nearly $115 million in contracts to build 500 homes for homeless Californians in cities from Salinas to San Bernardino.

But a federal indictment and a separate civil lawsuit allege that millions in state funds instead went to fund a lavish lifestyle for the company’s chief financial officer.

Among the charges attributed in court records to Shangri-La’s former CFO, Cody Holmes: $46,000 in monthly rent for a Beverly Hills house with a pool. Designer gifts for a girlfriend, including a $127,000 diamond necklace and a $111,000 crocodile Birkin bag. A $5,000-a-month lease on a Ferrari Portofino. Another $53,000 for Coachella passes, and $44,000 for flights on private jets.

All this while many of the desperately needed motel rooms sat empty.

Homekey set a low bar for contractors to qualify: They had to have worked on at least two affordable housing projects that included at least one homeless tenant.

Shangri-La easily cleared that hurdle. But had any state or local officials done more digging, they might have seen warning signs.

Shangri-La’s construction business was sued twice for breach of contract in 2018 and 2019, court records show, after two firms alleged that it failed to pay them. The company was also a contractor on a troubled LA veteran housing project, where records first reported by KCRW show Shangri-La partners sold the property to themselves, increasing the project’s budget by $8 million.

With Homekey, federal prosecutors allege that Holmes “knowingly submitted fake bank records” to the state Housing Department to boost Shangri-La’s credentials — financial claims that state officials apparently failed to verify with the banks. Holmes has pleaded not guilty, and an attorney representing him declined to comment.

As the company took on the Homekey projects, property records show that entities connected to Shangri-La or its partners paid around $13 million for actress Milla Jovovich’s Beverly Hills mansion, adding to a portfolio that included a $7 million oceanfront home in Long Beach purchased two years earlier.

In a separate civil fraud case, state prosecutors allege in court records that Shangri-La went behind the state’s back and took out undisclosed loans on the Homekey buildings, giving up control of the sites and violating their contract with the state. That became a major problem when the company defaulted on the loans.

For several of the properties, no one had filed crucial paperwork to ensure that they remained affordable housing. After the buildings ended up in foreclosure, some were scooped up by companies with no commitment to homeless housing.

Homekey contracts tasked local officials with vetting projects and reviewing contractors’ organizational documents, budgets and other key details. But records show state officials also reviewed Shangri-La’s financials, and once they paid out the Homekey money, they failed to verify that paperwork was completed to restrict the buildings to affordable housing.

The state Housing Department and several local governments that hired Shangri-La for Homekey projects declined to comment, citing ongoing litigation.

Andy Meyers, the former CEO of Shangri-La, acknowledged in an interview that he had “a lack of control” over his company. He has sued Holmes for fraud. He also blamed the local and state officials.

“My CFO had a lot of wrongdoing,” he said. “But it was a confluence of events that caused each project to go bad.”

Meyers said officials’ failure to file the proper affordable housing restrictions, which were also required by his lender, triggered a financial disaster that led his company to default on some of the properties. On two projects that Shangri-La did open in San Bernardino and Salinas, he estimated that the company incurred around $11 million in unexpected costs.

“We have spent so much money following their guidelines and following their timetables,” he said, “and they never followed their guidelines or timetables.”

Monterey County Supervisor Chris Lopez rallied support for a Homekey project in his hometown of King City. He thought Shangri-La made sense for four projects in the county, since it had already opened one Homekey site in Salinas.

But it didn’t take long for constituents to start asking why rooms were sitting empty behind chain-link fences.

“The longer it went on without seeing any movement, the flag started to get raised,” Lopez said. “I was starting to hear less and less communication and more sort of finger pointing.”

Local officials like Lopez had to start from scratch, raising millions more dollars to revive the projects as encampments swelled. It took 10 different deals totaling $16 million to open the King City project in March, three years behind schedule.

The full trail of Shangri-La’s deceit stretches from the state’s agricultural heartland to the edge of the Southern California desert. A $27 million Thousand Oaks hotel project sits abandoned today, robbing a region of 77 homes while it had a decade-long housing waitlist. Another $16 million project scrapped in Salinas would have provided 58 homes. Officials still plan to salvage 200 homes in other parts of Monterey County. The only two Shangri-La projects that stayed open during the legal battle, two motels in Southern California, were full of people who were plunged into messy foreclosure disputes.

The Quality Inn & Suites building, a former Shangri-La project, stands vacant in Thousand Oaks on Feb. 26.

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Julie Leopo-Bermudez

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Carrie Harmon, San Bernardino County’s director of community development and housing, said in an email that “the county entered into this effort in good faith, relying on representations that later proved to be inaccurate.”

Even some of those whose Homekey projects went well say they’re not surprised that things went sideways. In Mendocino County, Van Sant said the state’s oversight was limited to quarterly progress reports. Once the money was spent, the state stopped asking for any information at all.

“They gave us a bunch of money, made us do some paperwork, and then they’re out of here,” Van Sant said.

For Colleen Robinson, public officials’ failure to see the red flags with Shangri-La was life-changing.

Robinson, now 62, survived years on the street after losing her job and fleeing a bad relationship. The All Star Lodge in downtown San Bernardino was her chance to start over. Shangri-La did manage to renovate and open that project in late 2022.

Two years later, the bank foreclosed. Because no one had put the affordable housing restriction on the property, the new owner told Robinson and other tenants that it was going to quadruple the rent. She said the new owner neglected the building; weeds and stray cats reclaimed the parking lot, police sirens blared, and neighbors died with little explanation.

“This would give hell a run for its money,” Robinson said.

Harmon said the county was still trying to buy the building and figure something out, but Robinson didn’t wait around to see how the saga ended. On a Thursday in February, she packed up and boarded a Greyhound bus for Iowa, where one of her children lives.

Homeless veterans still waiting

An unfinished motel conversion in the Encino neighborhood of Los Angeles on Jan. 27. The project is expected to finish more than a year after the original deadline, city records show.

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Lauren Hepler

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Some Homekey projects still haven’t opened.

Santa Cruz County has three badly delayed Homekey projects, one of which will be more than four years late when it is slated to finally be finished at the end of next year. For that project, the county obtained more than $6 million to convert rustic vacation cabins under a grove of redwood trees into housing for homeless veterans. The state initially set a completion deadline of 2023, but the project ran out of money before it crossed the finish line, forcing construction to stop.

There were many reasons why, but one stands out: underestimating the cost, said Robert Ratner, director of Santa Cruz County’s Housing for Health division.

The developers had never undertaken a project this large, and that inexperience contributed to the budgeting error, Ratner said. But so did the design of Homekey, which capped what the state was willing to pay per unit at about half what it takes to build affordable housing in some parts of California.

The idea was that projects would be cheaper because they were converting existing buildings, while also cutting out extra layers of bureaucracy that add time and expense. That led developers to low-ball budgets, which came back to bite them when the savings weren’t as great as anticipated, Ratner said.

Once the budgeting error was made, neither the state nor the county caught it, Ratner said. The county assumed that the state would scrutinize all Homekey applications and throw out any that didn’t seem viable, Ratner said. But it appears that in reality, the state was relying on the counties to do that vetting.

Santa Cruz County had little experience analyzing whether a construction project was adequately budgeted. Typically, the county relies on other funders, such as construction lenders and tax credit investors, to do that job. But those investors weren’t present here.

When asked whether he and his colleagues had done their due diligence to make sure the projects were realistic, Ratner was straightforward.

“I would say no,” Ratner said. “I can’t say yes with a straight face at this juncture.”

Other projects just never happened.

A $14 million Homekey award was supposed to help breathe new life into the Hotel Travelers, a rundown, century-old building in Oakland’s Chinatown, as housing for people returning from incarceration. But once the developer got a look at the building, that plan fell apart. An inspection revealed such severe issues with the building’s construction that the developer determined it would be “morally untenable” to proceed. Oakland returned the grant.

In total, CalMatters found at least 10 cases where a Homekey award was announced, only for the grantee to later withdraw their application, return or redirect the money, or have the state claw it back. Some instances had more public explanation than others.

City officials in Fresno voted down their own project. Long Beach was unable to come up with a suitable location for $2 million worth of brand-new tiny homes left sitting in storage. Projects in Marin and Mariposa counties evaporated when real estate deals fell through, and the state rescinded its grant for a project in Salinas after a nonprofit partner pulled out.

Newsom's legacy and a financial cliff

Despite the vastly different outcomes at Homekey projects around the state, there’s no plan for a comprehensive audit to see what worked and what didn’t — a decision that raises the question of whether the state has done enough to grapple with Homekey as it forges ahead with the new version of the program, Homekey+.

Earlier this year, lawmakers nixed a public accounting proposed by Assemblymember Leticia Castillo, a Republican from Corona.

“While the program has expanded housing options, critical questions remain about its long-term impact and cost-effectiveness,” a summary of Assembly Bill 505 said. “It is unclear how many Homekey-funded units remain occupied after one year, how many individuals successfully transition to stable, long-term housing, and whether Homekey’s cost per unit is competitive.”

The bill was never publicly debated. It died in January.

The state did do one audit of multiple homeless services programs in 2024. It didn’t get into Homekey delays or what actually happened to people living in the buildings, but it analyzed the costs of eight projects. Based on that small sample, the auditor concluded that Homekey was “likely” cost-effective, with an average cost of $144,000 per unit, compared to the hundreds of thousands of dollars more it can cost for new construction in California.

The challenge is that when Homekey plans fell short of ambitions at job sites around the state, the consequences were often murky. In extreme cases, where cities acknowledged that projects failed to materialize, the state has clawed back grants. But usually, the main penalty for blown deadlines or other missteps is that the state may hold it against a local government or developer the next time it applies for funding — a dynamic that provides no public transparency.

Gary Wish stands outside El Portal apartments in Ventura on Feb. 26, 2026. Photo by Julie Leopo-Bermudez for CalMatters What happens next will be left up to a new state housing agency set to be launched this summer, the California Housing and Homelessness Agency. That effort is expected to include a new development committee to “provide centralized, coordinated guidance to state housing policy and funding decisions.”

For now, the state’s Housing Department maintains that it “monitors each project closely” if issues arise or deadline extensions are granted. Even with widespread delays, the agency maintains that “Homekey has helped build more and faster.”

The state said it is learning as it gives out the new Homekey+ funding. After seeing so many projects miss the one-year deadline, the state doubled the timeline for new construction to two years. Homekey+ projects that serve veterans now can propose bigger budgets for new builds, potentially addressing the issue of under-budgeted projects running out of money.

Officials also said they’re scrutinizing applications more closely now, including looking carefully at whether applicants are budgeting enough funds for their proposed projects, said California Health and Human Services Secretary Kim Johnson.

“We are improving our own vetting process, if you will,” she said during a recent news conference, “to ensure these projects are successful in delivering.”

The state’s housing department maintains that Homekey accomplished a major feat: building thousands of units despite a global pandemic, labor shortages, supply chain issues and other challenges.

“It is tremendously rewarding to see so many vulnerable Californians housed so quickly, and to have voters expand the successful Homekey model to house and support veterans and others facing behavioral health challenges,” Assistant Deputy Director Cari Scott said in a statement.

As the state’s housing policies shift, there’s one big question left for people like Van Sant in Mendocino: Will there be enough money to keep Homekey projects running?

Most of the projects have a pay-as-you-go model, versus standard 10- or 15-year affordable housing financing — a calculation that leaves a financial cliff looming for thousands of Homekey homes.

“If [Homekey] is going to be a long-term, permanent, successful program,” Van Sant said, “I think the state’s going to have to find a way to find some ongoing funding for it.”

Data reporters Erica Yee and Kate Li contributed to this story.

This article was originally published on CalMatters and was republished under the Creative Commons Attribution-NonCommercial-NoDerivatives license.