Fixing America’s Homeless Crisis

 Arizona’s Director of Housing, Tom Simplot

Can America’s homeless crisis be solved? What can the government and local real estate investors do to provide affordable housing to those in need, especially after this pandemic? Join Ken McElroy and the Arizona Director of the Department of Housing, Tom Simplot, as they discuss Governor Ducey’s appointment to the position, the current issues of homelessness in America, and some strategies to resolve the rising homeless rates.

Ken McElroy:
Hey everybody. It’s Ken McElroy here. I’m on with my longtime friend, Tom Simplot. I’m very, very excited to have him on for those of you guys don’t know he’s got a long career as an advocate for housing. Um, and right now he just got appointed as the director of the Arizona department of housing. Tom, welcome to the show.

Tom Simplot:
Hey Ken, thanks for having me on. I appreciate it.

Ken McElroy:
It’s it’s, uh, I’m really excited to have you back in Arizona. I know you’ve been in Washington DC working on a bunch of other things, but when I read that, um, governor Ducey appointed you as the director, I was like, well, that’s just going to be just phenomenal for the state. Uh, you know, it’s interesting, you know, like so many areas of the American life, this Corona virus, pandemic, it’s exposed kind of the depth and the severity of our nation’s how homelessness crisis. And I think I’m, I’m really, this is really, really an interesting topic. Don’t you believe?

Tom Simplot:
Uh, yes. It’s interesting nationwide. Everybody has housing is now forefront of everybody’s conversation nationwide. No one has no one can escape the fact that we need more housing, more affordable housing. It’s really amazing. I think a lot of that was brought on by the pandemic.

Ken McElroy:
Yeah. Yeah. Well, let’s start, let’s start right at the beginning, you know, so obviously, you know, I’m a longtime friend of Doug’s as well. And so are you and, and, um, and he’s been a big, big advocate for our industry. Let’s, let’s start by, you know, how the job came about and, and how you felt after, uh, when Doug asked you to, uh, fall into this position. And when you accepted.

Tom Simplot:
I, I did not see it coming. And so when the, when the offer in the, in the suggestion came forward, uh, honestly, Ken, I thought, wow, if you would offer me any other job, I probably would have hesitated, but, but when you offer me the director of the department of housing and to be able to, to really get my arms around and dig in deep with our, our, uh, public and private partners on the homeless issue, it, it was, um, it was kind of a dream, a dream job. You know, it’s as if my background and history in housing for 30 years has finally led to this where I really hope I can make a difference while I have this opportunity to do so.

Ken McElroy:
Well. That’s exactly how I felt when I read it, because I I’ve known your background. I know, you know, what you’ve done, and specifically more involved with me at the Arizona multi-housing association, but also at the NAA, the national apartment association, the NMHC and all those things you had your hands in. So this is a great, great appointment. Uh, I’m very excited to see what you have, um, you know, coming, I know you have a lot of ideas.

Tom Simplot:
There, there is a lot going on, and I’ll tell you, I, uh, for the past 30 days I’ve been talking about three different lanes or buckets that I’ve been focused on simultaneously. And, and the first Ken is, is simply, um, triaged. We have to, we have to triage the homeless situation that we have in Arizona right now up to 7,500 people are on the street every night, every day. And, and I can’t think of any other word than triaged to be able to tackle that, that issue, that challenge. So we have a lot of folks, uh, coming to the table to talk about how we’re going to do that. Uh, the second lane that I talk about a lot or the second bucket is, uh, the need to, uh, increase our communication links, increase our partnership opportunities and leverage resources with our healthcare and our, uh, in our mental health care providers.

Tom Simplot:
And that includes private and public. So we have folks like mercy care and United healthcare and others who have been at the table talking about housing now for the past 5, 6, 7 years. And can, you know, this 10 years ago that didn’t happen. Our industry talked about housing and healthcare talked about healthcare, and now I think we all realize that you can’t have one without the other. So really developing those communication links and finding those partnerships and leveraging those resources are so important. And so we’ve been working very fast and laser-focused on, on, uh, that, that lane or that bucket. And then can, you know what our third bucket is our third lane, and that is kind of the traditional role of the department of housing. And that is at the end of the day to, to develop, uh, the pipeline for new affordable housing units throughout Arizona.

Tom Simplot:
And I got to tell you, somehow we really fell behind. We have really fallen behind and we need to open that pipeline back up. We need to open up the flood gates and get more affordable housing units, uh, under construction throughout Arizona, without new units, without new supply, the demand simply continue to overwhelm what we have available. You can’t pull somebody off the street or, or even hire somebody with one of these great new, um, companies moving to Arizona if we don’t have any housing for them to live. So it’s, it’s a real, it’s a real challenge, but we’re up to it. And I know we’re going to be able to streamline our processes and, and leverage our resources and build new housing units, new affordable housing units, as quickly as we can over the next 18-24 months.

Ken McElroy:
Yeah. That, that is for sure. I’m very, very excited. Those are three great, great ideas. So, um, you know, can we talk a little bit about, excuse me, the, kind of the severity of the situation, cause that bef- you know, before the interview here, I was, uh, over the last few days, I’ve been kind of, uh, you know, looking at articles and reading things about housing first and, you know, the program that’s come out of LA back in the, I guess it was the seventies or the eighties, and, uh, you know, the pros and cons of that. And of course I’m from Seattle. I was just up there, uh, you know, they had kind of have their own programs going, but, but I know, and then I got onto an article with the department of education. They said that, uh, their study said that there was at least one and a half million kids that were potentially homeless just inside of the education system. And so I’m seeing these numbers at 500,000 a million, and I know these are national in Arizona, certainly isn’t, um, is actually better, better managed than most, but, but, you know, as Arizona grows, we have this potential to, to, to, you know, be in some of those top numbers, if we’re not proactive, wouldn’t you agree?

Tom Simplot:
Absolutely. You’re you, you nailed it where we are now at the top of those numbers nationwide. And the most recent studies that have been coming out have indicated that Arizona, which didn’t use to be at the top of those lists now truly is. And can you, you mentioned housing first, which of course for those who aren’t familiar with, it is permanent supportive housing, regardless of where you are on the, uh, on the recovery phase, uh, in your, in your life. So if you have addiction issues, housing, first model says, we’re going to give you a home. We’re going to give you a permanent roof over your head and let and give you the time and space and tools to work on the addiction issues or the other issues that you may have now, housing versus a fantastic model. Matter of fact, there’s one in, in central Phoenix called Encanto Point.

Tom Simplot:
Uh, and, uh, we developed that when I was on the city council and it is proven phenomenally successful phenomenally, however, it’s not the only model that works. And so we have to be sure as we’re looking at tools in the tool chest, that we are, that we can adapt to the needs of the individuals. So if somebody needs a housing first model, we need enough units available to provide that and partnering with our sister agencies like access. We have the wraparound services to do that, but then we have other models like in Tucson center for opportunity, uh, which is a phenomenal model. Now that’s, that’s a recovery model where you can’t even go on the campus unless you were clean and sober. So it’s really w we take each individual as we find them. And, and hopefully we have the right housing stock available to meet those needs. And that’s, that’s a real challenge.

Ken McElroy:
Yeah, I bet. You know, I, it’s interesting. I’ve really dug into this topic. I think that’s why I reached out to you so quickly. Cause I was all over this topic, you know, as, as a company, we were trying to figure out how to be partners, uh, around this. And I think that, um, there’s a massive opportunity here for, for real estate investors and landlords and people that are investing into this affordable housing model and, and, and, you know, and it’s interesting, a lot of people kind of focus on the old skid row, you know, they see the movies and, you know, and I think perhaps, you know, it started, you know, way back during that time. But my experience Tom has been that, you know, these are, these are working families. These are, these are, these are women that have suffered domestic abuse with kids.

Ken McElroy:
These are, you know, this is, these are not, um, it’s a very small percentage, has drugs and alcohol. It’s a big percentage as they lost their dwelling, they lost their job or they lost their, you know, some kind of assistance and, you know, but everybody likes to kind of talk about, you know, that issue. And I understand that, you know, and it certainly is a piece, but it’s not like it used to be, you know, we’re getting, these people are getting squeezed, they’re getting squeezed on, on, uh, the home prices are getting squeezed on the rents and, and the inflation is just going crazy right now. And so the, this is, these are normal folks, the people that are out there. And I think there’s, there’s really some kind of a, there’s a way that I think we could all just extend our hand out here and work together and be super proactive in Arizona.

Tom Simplot:
Yeah, absolutely can. And by the way, one of the best ways to curb homelessness is to ensure that somebody doesn’t become homeless to begin with. And that’s why when we look at the funding that Congress appropriated to the states for, uh, for rental assistance, uh, it, it, it helps in two ways, if not more, number one is it provides the tenants, the renters, the ability to pay their rent, right. And then background at the same time though, and this is important for folks to remember is no segment of our business community. You should be expected to bear the burden of, of the entire community. And that’s where, and that’s why it’s so important that that funding make its way to landlords so that they can make their financial obligations as well. And so it’s a two-step process and a lot of folks rightfully focus on the renter’s assistance, but the renter’s assistance goes to the landlord so that they can meet their obligations. So important to keep in mind.

Ken McElroy:
It is, it is. And I noticed that, uh, you’ve got, uh, uh, uh, $508 million budget. I think it was, uh, you know, for the, for the state, uh, which I think is a great start. Um, w w w w w where do you feel like most of that money will be appropriated to, and, and what are some of the, you know, short-term and long-term, uh, issues and initiatives that, that, um, that you guys are going to be tackling?

Tom Simplot:
Well, in that 500 million, we have almost 200 million that’s dedicated to mortgage relief. And when I say mortgage relief, that means, um, mortgage mortgage payments that are in arrears, but also, um, HOA homeowner association dues that may be in arrears, uh, or taxes, local property taxes, utilities. We can use that almost 200 million in a variety of ways, and it’s going to be up to the homeowner to apply just like it was for the most part for renters to apply for their rental assistance mortgage owners, homeowners will need to take the initiative and apply for these funds and can, we’re just now interviewing third-party vendors with Des, uh, in partnership with Des to get that system in place here in Arizona, that money hasn’t actually made it to Arizona yet, but, but we’re going to be prepared to hit the ground running once it does get here.

Tom Simplot:
Now, now, Ken, there’s one other part of that funding. There’s quite a few other parts, but one other part in particular is 21 million, which is dedicated to homeless services and homeless outreach with, with very, um, flexible, uh, usage, which is really good. And so we’re working with our stakeholders at the community level, uh, private and public, uh, non-profit, for-profit our cities, our mayors, uh, guide the mayors throughout miracle bay county in Tucson. So important to have them at the table with us. And they are because every, every pool of money is going to make a huge difference. So we have the 21 million that is dedicated to homeless funding, but we also have hundreds of millions of dollars that could be diverted to that use as well. And so we’re, we’re going to be working with our stakeholders to make sure that we spend that money wisely and leverage the funds as much as we can.

Ken McElroy:
Oh, that’s wonderful news. That’s wonderful news. Okay. So we’re going to take a quick break and we’ll come back we’re to talk about the massive increase in homelessness across the country to stay with us.

Ken McElroy:
Uh, so Tom, welcome back. So I know Arizona’s homelessness has gone up. It’s a big issue by gosh, almost 32%. Um, I was reading that it looks like, um, California, Washington, Oregon, you know, Hawaii, even DC, you know, where you’re just moving from now. These are all big, big, big issues. Where do you think that those states have dropped the ball?

Tom Simplot:
Well, wow. That’s, that’s a big question, Ken. Um, so how about if, um, I’m going to, I’m going to phrase it this way. I think in the past were very well-meaning policy leaders, uh, at the city and state level and in a variety of states have unfortunately perhaps taken the path of least resistance have taken, perhaps what appeared to be the easier route to, to solve the issues, uh, of, of homelessness. And, and as you talked about earlier, you know, there’s not one reason why somebody who’s homeless, there are so many different reasons in so many different ways that people find themselves on the streets. But unfortunately in some cities, they turn to, to the easy way out, which was for example, what if we give everybody a sleeping bag and they can just camp out wherever they can. And unfortunately, that’s what we found, uh, on the west coast. And that’s not an answer. And as I like to remind people, we don’t build parks to house people. We don’t build overpasses at the freeway to house people. We build housing to house people, and somewhere over the past couple of decades can, it seems like our policy leaders and a lot of cities and states lost track of that. And I think it’s important that, that we in Arizona come back to that and commit to simply building affordable housing with services to take care of this issue.

Ken McElroy:
Yeah, that’s a really, really good point. I know that a lot of people might not know that back in 2009, the Supreme court issued the Boise decision. And for those of you guys don’t know, the Boise decision basically says that unless there’s enough shelter for the homeless, that you cannot enforce vagrancy laws or any kind of, you know, you can’t prohibit. And, um, basically, uh, you know, uh, I, uh, so that’s why you see people congregate in parks or on the streets, or et cetera, et cetera. Right,

Tom Simplot:
Right. You’re absolutely right. And unless that decision is going to be revisited, uh, in a different way, uh, we, we have to live with that and throughout the country.

Ken McElroy:
Yeah. Yeah. So, and I know that a lot of people, you know, might be wondering why, you know, I’m talking to you now. I actually think this is a big, big issue for, um, for real estate values. I think it’s a big issue for real estate taxes. I think it’s a big issue for businesses. I mean, there’s article after article, after article about that. Um, and, and I think that it’s something that everyone needs to be involved in. They need to be aware of. Um, you know, one of the things Tom is, you know, as a, as a real estate developer, uh, like we are one of the, one of the issues we’ve had, um, obviously is, uh, not, not as, uh, some of the zoning issues, some of the density issues, some of the parking requirement issues, you know, some of the impact fees.

Ken McElroy:
And so for those of you guys might not know that in what’s happening right now, you’re seeing these lumber prices are jacking the cost of a home up. Well, when, when, when, when somebody goes to build a home in a particular city, there are a number of costs associated with doing a development in a city too, and they can vary widely. And so, you know, kind of have you guys looked at any of this, you know, call it, you know, deregulation of some of these, uh, policies, you know, I know that they’re there for a reason, so I don’t want to discount that, but, but, uh, it does drive the costs up significantly. Yeah. Have you explored that at all?

Tom Simplot:
Well, in my past I have of course, um, because let’s face it at the end of the day, uh, these issues boil down to land use policy and land use decisions. And those are our mayors and city councils, uh, in cities and towns throughout Arizona. And at the end of the day, those members, those elected members are going to look to their neighborhood leaders and their constituents for direction on, on, uh, whether people will accept higher density housing in their neighborhoods. And Ken boy, it’s, it’s a real issue. I I’ll tell you right now, there’s, uh, a workforce housing development that is trying to go in on the west valley here in Maricopa county. And they are struggling because the neighbors showed up and mass complaining that they’re going to build workforce housing in their community and workforce housing in case people forget, those are our teachers, our firefighters, our police nurses. These are, these are people in, in our communities. These, these are just people. And yet that sort of, nimbyism not my neighborhood. It’s, it’s just pervasive. So boy, can you nailed it? I mean, how do we educate folks within the neighborhoods about the, uh, the issues and the nimbyism that they don’t even sometimes realize they’re doing or they’re exhibiting?

Ken McElroy:
I agree. I tell you what I, we were, we were looking at doing some stuff in Seattle and San Francisco, and one of the things that was remarkably, uh, frightening was that the, if you lived in, let’s say downtown San Francisco, the response time for a fireman of police, you know, uh, policemen let’s say, or even, um, you know, somebody else like an ambulance, you know, was a lot longer because they had the, they had the live outside of the city because there was no affordability inside of the city. And, and, uh, you know, the same thing as you said, you know, these are, these are, these are, uh, you know, teachers they’re, you know, they’re, they’re, they’re middle managers and, and, and, and, you know, on some of these bigger urban cities guys, you know, we’re looking at a one hour commute. Um, they, there’s no way that they can live anywhere near and, and prices have really jumped in Arizona, Tom, we were laughing before the show, you know, like you moved from Arizona and then moved back, like time warp and, and, you know, prices have doubled

Tom Simplot:
Sticker shock.

Ken McElroy:
Yeah. Yeah. And so, so we’re going to start to see that more and more guys, you just haven’t seen the ripple effects of it yet. And, and, um, you know, I think that, uh, you know, we try Tom as you know, to build affordably. And I think a lot of people don’t realize that, you know, the, the, everything above ground is going to be the same, whether you build it in one city or the next literally, I mean, the price of, you know, obviously if the exact same floor plans, you know, you got concrete, you got lumber, you got, you know, all the things that you would put inside of there, uh, what, what varies greatly as the price of the land and the price of the impact fees, we’ll be able to put that property on the land. And that’s what drives prices for homes, prices for rent, all of those kinds of things.

Ken McElroy:
And so, you know, if you take the material piece, you know, everything that you see above the ground completely out of it, and you drop that property anywhere on the country, it’s not going to be that much different. Maybe labor might be a little bit different, but the impact fees and the zoning requirements and the density and all that kind of stuff, that’s what actually drives a lot of the costs up. And so that’s kind of what we’re talking about here. And, and the, you know, it’s, it, it’s frustrating because I know there’s a massive D we already have a housing shortage, as you know, uh, you know, I think last, I looked to you, you know, we’re like 3.8 million housing units behind you, you know, and now the pandemic just kind of put the brakes on that. And the, the material costs put the brakes on that.

Ken McElroy:
So in addition to that, now we have this, the regulations and the policies, you know, to be able to build. So what are some of the things that you feel we can do, you know, in these public private you’d mentioned in the beginning, and I know this is how you work. That’s why I was excited to get you on the show. These, uh, there are these public private partnerships that exist all over the country, and there are people just like me, you know, that are looking for ways to help solve the problem. You can, you can be an entrepreneur, you can still build, and you can be socially responsible at the same time. And it’s a win-win for everything. Right,

Tom Simplot:
Right, right. And, you know, can I have every belief that everybody is well-meaning when they’re talking about how to address this issue. Right. But as we know, we have a lot of policy leaders at the local level who believe that, well, if you add a 10%, 5% or a 10% tax onto a market rate apartment community, and then force them to provide that money for affordable housing, that’s going to solve the problem. The problem is it exacerbates the problem, because now you’ve created higher, more expensive market rate housing artificially, and you haven’t solved the affordable aspect because you’re never going to build enough units using that model. So it’s frustrating when we see at the local level, how people, how our leaders artificially increase the cost of housing while at the same time are well-meaning trying to create more affordable housing. So now’s the time with all of this federal money coming into all of the states that we need to be, uh, we need to be strategic, and we need to leverage all of that funding with our state, local and state and local money and public and private money and do it right without exacerbating the problem.

Ken McElroy:
Exactly. Right. Is there something that we can do, you know, like there’s a lot of people listening outside of Arizona, you know, what are some of the things that they can do potentially to one look for the opportunities that, because I’m telling you guys, this is not going to stop. The pandemic has just getting over where we’re still looking at. I know the numbers are saying, you know, somewhere between eight, nine, 10 million unemployed or unemployed still, I think it’s actually higher than that. We’re heading into high inflation numbers and we have prices rising all over the place. So, uh, this is going to be at the tip of the iceberg here. And what are some things that people can do and their individual states, municipalities, how could they get involved to be part of the solution?

Tom Simplot:
Well, first and foremost, if there’s a new development going into your community supportive, I mean, that’s the, that’s the final answer, right? And if you can’t support it, educate yourself about why you can’t support it. What is it exactly that you’re upset with? And, and can I go back to, uh, a permanent supportive housing community? I talked about earlier in canceled point in Midtown Phoenix, primarily serving veterans on the street. And, and because we took the time to reach out to the neighborhood and really talk about, okay, what is your resistance to, to this sort of housing in your community, in your micro neighborhood? What we discovered was rightfully so they said, look, we have 50 people who are homeless in our neighborhood. If you build this, you’re going to attract more, you know, what, whether right or wrong. I respect, I respect the fact that they were able to articulate that as a concern.

Tom Simplot:
So, you know what we did at that time, we went out and canvas that neighborhood and found out. In fact, there were about 50 homeless individuals living in their neighborhood. So what we promised to those neighbors was when we build this, we being the city and the, and the nonprofit developer, when we build this, we’re going to give those individuals, those long-term homeless residents, first chance to move into this facility. And we made that commitment. We kept that commitment. And I’ll tell you, Ken, to this day, that neighborhood, uh, loves that apartment community, both of those apartment communities, to the point where they even have their neighborhood association meetings located in that apartment community, it can be successful. But I think a lot of it can is, is, uh, communicating and educating folks, um, and listening to see what the, what the concerns are from the neighbors.

Ken McElroy:
Yeah. Guys, let me tell you something like, this is something that we all have to be ahead of and be supportive and, and help, uh, you know, the additional directors of housing in the, in some of these other states. Um, you know, I was just interviewing some of the other day, Tom, and they converted nine hotels in New York city, you know, to homeless shelters. And, uh, obviously there’s ripple effects around all of that. So that’s, you know, that’s, that’s like, um, you know, that’s like a reactive issue and what we’re trying to do here, that’s why really excited that you’re now the director and, and, and, you know, cause we can get ahead of this, you know, do you guys have like 5, 10, 20 year plans here and, and how are you rolling those out? And, and, and, and, and what’s the best way to get involved as a, um, you know, from the private sector?

Tom Simplot:
Well, we’re going to have those mid-term and long-term plans. I’ll tell you that for sure. 30 days in on the job, we don’t have it yet, but I have a series of series of round tables with various segments of the development community, including nonprofit developers, for-profit developers, lenders, uh, uh, non-traditional lenders, uh, let’s let’s, don’t forget low-income housing tax credits or federal low-income housing tax credits. That’s a huge part of building a low, excuse me, affordable housing and extremely low income or, or extreme affordable housing. Can’t we do it without low-income housing tax credits, private activity, bonds play a large role in that. We’re reaching out to all segments of the development community to get their feedback so that we can talk about what the barriers are to developing more housing. So we hear their input, which quite frankly, is something that, uh, that needs to be done. It’s long overdue and, and we’re committed to doing that. And so Ken, if we, if you invite me back next year, I will promise you, I will have a five-year plan and a ten-year plan in place.

Ken McElroy:
Well, I, I know your background. I know you’ve done that before at the other places you’ve been at and that’s, um, that’s why they were successful. And I’m, I’m really excited that you’re here. I’m really excited that you’re back. I’m really, I felt when I read, you know, that you were appointed by Doug, um, I was like, man, this is like, like all roads lead to this and, and, uh, and your experience into the housing community. And, and, and, and, and guys like, everybody looks at this as a negative issue. This is an opportunity. I think this is an opportunity for, for people to provide housing and be socially responsible. Uh, and, and, you know, it can be a win-win for everyone. If everyone just kinda wraps their head around this, because the way Phoenix is growing, I believe, and the way Arizona is growing. If you just take a look at it, we’re one of the top growing states in the country, uh, thanks to the leadership I believe. And, and, um, it’s going to get worse unless we are proactive in this. And I can’t thank you enough for your service and you know, for what you’re about to do, cause I know you’re going to deliver

Tom Simplot:
Well, thank you, Ken. I really appreciate the opportunity to chat today. And, and again, you invite me back, I’ll be here

Ken McElroy:
Tom, I’ll tell you what I’d love. We’re going to do this one year and we’ll jump right out some of these topics. And we’ll see if we move the needle. And of course I want to be involved at whatever, however I can be to help as well.

Tom Simplot:
Thank you, Ken.

Ken McElroy:
Tom, thanks to you and your team. And as always, I appreciate you being on. Thanks. Take care.