This sounds like Boleta Bay is a stand-in for Santa Cruz, which was the setting for "Santa Carla" in The Lost Boys. I've been there several times and it does indeed have its creepy side--and it was all the more creepy 30 years ago, when they still had many attractions from the 1920s. .

I love carnivals also, and horror stories set at carnivals. However, I must point out, you forgot to mention Something Wicked This Way Comes, the granddaddy of creepy carnival novels. Where do you think I got my screen name? :)

PS -- I agree that we are dire in our approach to mental health in this country, but one of the reasons why cuts were made to mental health facilities were the "landmark" civil rights SCOTUS decisions in the 70s which severely curtailed the ability of local authorities to commit mental cases to proper facilities against their will. They were told they were free to go and as a result, many of them went. No need for a lot of mental health facilities if there's no customers.

In California there are legions of homeless living in unbelievable conditions of filth and degradation in all major cities and even in wealthy suburbs.

A few years ago, 20 people dropped dead in San Diego from Hep A infections spread by the homeless pooping on the sidewalk. Local authorities are helpless to force them into shelters if they don't want to go. Every time they try, there's a phalanx of lawyers and "activists" fighting them tooth and nail, and they usually lose. We call the lawyers and activists the "Homeless Industrial Complex" and they make money and political bones off of the homeless. The homeless themselves get nothing. It's unbelievable what these homeless encampments look like, it's like a leftover set from Mad Max.