The homeless-industrial complex strikes it rich

A controversial project to convert an abandoned hotel in Eagan was denied last night by the Dakota County board of commissioners. KARE 11 reports that commissioners did not take a formal vote on the project in the face of widespread community opposition.

Had it gone forward, the conversion of the former Norwood Inn and Suites would have cost an estimated $24 million. $10 million of that amount was expected to come from a state grant. The county would have had to match the state grant with an additional $1 million.

Furthermore, the Star Tribune reports,

County officials estimated the cost to operate and staff the hotel as a shelter would be about $2.8 million a year. The county is currently spending $3.2 million on its various shelter options, including a lease at an Extended Stay America in Eagan for $1.7 million.

The hotel has 121 rooms. The operating cost alone works out to be over $1,900 per room per month.

Yesterday’s vote was to be on the question of whether to apply for the $10 million initial state grant.

The money would have come from a gusher of cash in a $1 billion budget passed by the state legislature back in May to address housing and homelessness. The $1 billion amount merely represents the increase in state spending on the subject. The 2023 budget bill created 15 new programs and activities. Before the new programs were created, this 2021 document produced by the legislature took four pages just to list the existing homeless programs, spread over four state agencies.

It should be noted that other 2023 budget bills (tax, bonding, etc.) added an additional $470 million to the pot.

All told, state government will spend more than $1.5 billion on housing and homelessness over the next two-year budget cycle. And that figure doesn’t include a penny from Federal or local taxpayers.

To put this in perspective, a pre-pandemic study of homelessness in Minnesota found a nightly average of 20,000 people.

Dividing $1.5 billion (over two years) by 20,000 individuals, produces an amount of $3,125 per person, per month. That should be more than enough to rent everyone a nice apartment and pay the utilities. The newly-passed budget should have ended homelessness in Minnesota, immediately.

But that’s not how this works. The money goes to fund an army of bureaucrats at the state level. The state Housing Finance Agency employs nearly 300 FTEs. The division of the state Dept. of Human Services that covers housing issues adds another 300.

That money is then passed down to counties and cities who address homelessness more directly and the scores of nonprofits working in this area.

The cabinet-level state of Minnesota Interagency Council on Homelessness, led by the state’s Lt. Governor, includes no fewer than 14 state agencies.

I count 54 nonprofits as members of the statewide Minnesota Coalition for the Homeless, who just wrapped up their annual conference in Duluth. 600 people were expected to attend. They gave out awards. 18 sponsors supported the event, including three state agencies.

Speaking frankly, no institution involved in solving homelessness has any incentive to solve homelessness, lest it lead to reduced future budgets.

And what we describe as the homeless problem has little to do with too many people chasing too few housing units.

Solving homelessness involves taking on the far more difficult subjects (all interrelated) of drug addiction, mental illness, and urban crime.