San Diego’s plan to turn a rundown hotel near Imperial Beach into temporary housing might first require a showdown with the Coastal Commission.

A City Council committee voted Wednesday to support purchasing the hotel. The project is part of a city initiative spearheaded by the city attorney’s office to provide diversionary treatment to people convicted of nonviolent misdemeanor offenses.

The Coastal Commission this month said the project runs the risk of violating its requirement that cities preserve cheap hotel rooms near the state’s beaches and bays. City Councilman David Alvarez had sent the state agency a letter alerting it to the project.

In a letter, the Coastal Commission said the city could be forced to replace every hotel room it takes off the market. The city doesn’t have the budget for that, so such a ruling would effectively kill the project.

City staff doesn’t seem concerned.

The city attorney’s office said it doesn’t believe the project requires Coastal Commission approval, since turning the hotel into transitional housing wouldn’t intensify the site by creating a need for things like more parking. City Councilwoman Barbary Bry also emphasized that only 20 percent of the hotel rooms at the site serve tourists – alluding that the rest are instead used for things like prostitution. An SDPD representative said there were 73 service calls at the hotel since the start of 2015.

In a memo, the city attorney addressed other concerns related to getting appropriate approvals from the city’s development services.

The mayor’s office remains confident.

“The Coastal Commission was responding to the letter by Councilmember Alvarez, who painted the project in the most negative light possible,” mayoral spokesman Craig Gustafson said. “We are confident that once the Coastal Commission hears from the project proponents, including City Attorney Mara Elliott, they will better understand the benefits this project will provide to the city and region.”

Alvarez, though, said the Coastal Commission’s letter raised serious concerns that should alarm the city.

“If the Coastal Commission staff letter is correct, but the city chooses to ignore it and purchase the Super 8 Motel site anyway, we could end up in the worst possible situation: spending millions of dollars on a property and facility that will not be able to be utilized,” he wrote in a statement.

This wouldn’t be the first time the Coastal Commission’s protection of cheap visitor accommodations intervened in local politics.

The Coastal Commission reminded the city in a 2015 letter that any policy it passes regulating short-term vacation rentals like Airbnb needs to pass muster with its protections of affordable visitor accommodations near the beach. Likewise, the commission rejected in 2015 a deal by the Port of San Diego to build three hotels on Harbor Island because they didn’t offer enough cheap places to stay.

But the Coastal Commission isn’t the project’s only opposition.

The project is part of the San Diego Misdemeanants At-Risk Track program by the city and county in response to Proposition 47, a voter-approved 2014 measure that reclassified many nonviolent and drug-related felonies as misdemeanors. The measure was supposed to divert savings from incarcerating fewer people into treatment programs throughout the state, but it took two years for money to start flowing.

For SMART, the city and county won $6 million in the first grant process for Prop. 47 money. SMART is intended as an intervention program for low-level offenders who repeatedly commit those crimes, cycling through the criminal justice system but never receiving treatment that could break the cycle.

The city would buy the hotel on Palm Avenue, just west of I-5 near the Imperial Beach city border, with $6.6 million in federal Community Development Block Grant funds it has on hand, and use the Prop. 47 grant to run services at the hotel. The city’s going to spend another $4.5 million turning the property into a transitional housing facility.

The SMART program itself is broadly popular – Alvarez and two other Democratic Council members supported it in their budget memos this year – but Alvarez nonetheless stepped in on the project in his district by sending a letter to the Coastal Commission.

Alvarez said his office was flooded with concerns over the project and was surprised to learn the city was pursuing it in the first place, which is why he wrote to the Coastal Commission.

Two weeks ago, residents packed an Otay Mesa-Nestor Community Planning Group meeting to oppose the project. They said the city hadn’t talked to the community beforehand, and were concerned the facility wouldn’t be adequately supervised.

Alzarez also said the facility will be far from others like it, which are typically in East Village, and clients might not have enough support.

SMART is currently in a pilot phase, so it’s only available to people arrested in the city’s central division, which covers downtown and the neighborhoods south of Balboa Park and surrounding Barrio Logan. The new project would expand it to clients from the South Bay.

“There was just a feeling that this was a dumping ground,” said Alberto Velasquez, the planning group chair. “Whatever no one else wants gets dumped here.”

Gustafson said the facility would be the first SMART project in the Council district.

“The city conducted an extensive search of available properties throughout the city to expand the SMART program,” he said. “Of the seven sites identified, this was the only one that provided a significant number of additional beds and could be converted in a relatively short amount of time.”

City Councilman Chris Cate said the city should try to expand the program into every district as opportunities arise.

Michael McConnell, a homelessness advocate, said some of the concerns expressed at the community meeting were expected “not in my backyard” sentiments, but said he doesn’t think the SMART program itself make any sense.

“I don’t think it’s very smart,” he said.

To him, it looks like the city is still committed to transitional housing even though experts have concluded an approach called housing first – where residents are given a permanent residence, as opposed to a temporary residence attached to mandatory services – are more effective.

For nearly two years, the percentage of clients in transitional housing programs who have exited into permanent housing of their own has hovered around 30 percent, according to data from the Regional Task Force on the Homeless.

“It doesn’t perform very well,” he said. “Why do we keep putting money into an intervention that doesn’t perform very well?”

Gustafson said the city isn’t looking at it as an either-or proposition — the SMART program can take people who would previously be destined for jail and help them get into position to succeed in permanent housing.

“There is a reason why the state gave the city/county its highest possible rating and a $6 million grant to expand it,” he said. “It works.”

McConnell suggested the city instead look at trying two separate programs in the facility. One could be a transitional housing program using a portion of the space, with the other rooms available for permanent housing. Then the city could commit to whichever one produces the best outcomes.

Correction: An earlier version of this article misstated the geographic area covered by the SMART program. The new facility would potentially allow the program to expand to the South Bay.

Andrew Keatts is a former managing editor for projects and investigations at Voice of San Diego.

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