This post has been updated.
Voice of San Diego’s story “Housing Commission Is Spending $20M on a Project it Said Was Not Worth $20M” omitted key facts, which was a disservice to readers.
The San Diego Housing Commission’s decision on Sept. 14, 2012, to reject three proposals from developers for the rehabilitation of the historical Hotel Churchill was the most prudent decision the Housing Commission made at the time. It is evident in what is being built today — 72 livable spaces for homeless San Diegans, mainly veterans — that the SDHC board’s initial decision was the right call.
The Housing Commission rejected the three proposals because, as stated in the SDHC board’s report, the developers did not adequately address serious concerns about their potential investments should a major earthquake occur, “which may result in the loss of the $20,000,000 rehabilitation investment of the Hotel property.”
Eight months later, however, the Housing Commission approved a rehabilitation plan that utilizes a state-of-the-art seismic structural reinforcement.
“It’s at least as good as a new building,” said Tony Morgan, the structural engineer for New York-based firm Exponent, who reviewed the Hotel Churchill plans for the city of San Diego. But VOSD reporters buried this critical piece of information, and placed it at the very end of their story.
In addition, the proposals by the developers were baseline proposals, with the understanding that their costs could increase as they finalized their research, plans and bids.
VOSD also failed to mention that the units proposed by the private developers were significantly smaller than the rooms now being developed. The cost per unit is higher because we’re providing a more livable environment. (Editor’s note: VOSD published a separate post detailing the size difference between the private proposals and the units now being built by the Housing Commission.)
The reconfiguration of Hotel Churchill from 94 units of 100 square feet each to expanded livable spaces of 72 affordable apartments, averaging 350 square feet each, with their own bathroom and kitchenette and a manager’s unit, was not mentioned in VOSD’s article.
On May 10, 2013, the Housing Commission’s board also approved the development agreement between the commission and its nonprofit development arm, Housing Development Partners. The board also approved investing $8.2 million of “Moving to Work” funds to finance the rehabilitation of Hotel Churchill.
These federal funds are restricted to public housing authorities that have received the “Moving to Work” designation from the U.S. Department of Housing and Urban Development. The Housing Commission is one of only 39 “Moving to Work” agencies, out of 3,400 public housing authorities in the nation, which provides the commission with flexibility in the creation of its programs, including the development and preservation of affordable housing.
As stated in VOSD’s article, the developer fees included in the 2012 proposals were up to $2 million. The potential fee that Housing Development Partners may receive — $400,000 — is a substantial savings in comparison. The savings are being invested in Hotel Churchill. Housing Development Partners will only be paid its fee if there are additional cost savings identified for the rehabilitation. There is no guarantee the nonprofit will receive these fees.
For the record, Housing Commission CEO Richard C. Gentry receives no compensation for his service on the Housing Development Partners Board of Directors. Furthermore, none of the nonprofit’s volunteer board members has a financial interest in this development that would legally preclude their participation under state law. Housing Development Partners has also been determined to be a public agency by the city’s Ethics Commission, which requires each board member to file an annual statement of economic interest with the City Clerk, in compliance with the Housing Commission’s conflict of interest code.
Omitted from VOSD’s article was why the Hotel Churchill development required additional funds. One of the main reasons was the expense of removing and replacing the seventh floor, which was not a part of the original 101-year-old structure. The removal of unreinforced masonry was not included in the costs for the three proposals in 2012, even though all three respondents toured Hotel Churchill before finalizing their proposals. Had it been included, their proposals, most likely, would have been much higher than $20 million.
VOSD uses this colorful assessment that Gentry made in 2012 of the Hotel Churchill: “We’ve got a sow’s ear here we cannot make into a silk purse very easily.”
Well, it has not been easy. But we’ve done the research. We know the actual conditions and limitations of the building.
The Housing Commission and Housing Development Partners have developed the staff and expertise to make the Hotel Churchill rehabilitation become a reality.
We will soon have quality apartments for 56 homeless veterans, eight youth aging out of foster care and eight adults recently released from the correctional system. These units will remain affordable for 65 years.
We’re proud of what is happening at Hotel Churchill, and we will make sure VOSD is invited to the grand opening next year.
Correction: An earlier version of this post misidentified the “Moving to Work” designation.
Gary Gramling is chairman of the board for the San Diego Housing Commission. Gramling’s letter has been edited for style and clarity. See anything in there we should fact check? Tell us what to check out here.