The Morning Report
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Faced with an ongoing homelessness crisis and new challenges presented by the COVID-19 pandemic, Mayor Kevin Faulconer sees an opportunity in the city’s near-vacant hotels.
The city, working together with the San Diego Housing Commission, is looking to permanently acquire “hundreds and hundreds” of hotel rooms from owners feeling the pinch from the shutdown of the tourism industry. Faulconer is eyeing the rooms as long-term housing options for the hundreds of homeless people currently sheltered at the Convention Center to blunt the spread of the novel coronavirus.
Faulconer and other local leaders have pledged to make the Convention Center shelter a path to move those who come into the facility off the streets permanently, and has even dubbed the effort “Operation Shelter to Home.”
“There’s never been this much of an opportunity, and there’s never been this much of a need,” Faulconer said of the fast-moving plan to turn visitor accommodations into low-income housing options. “All of the things that we’re doing, what we need is capacity, is a place for people to transition. Done right, it can be a real game-changer.”
The San Diego Housing Commission has called a special meeting for Friday morning, where its board could greenlight negotiations for the properties. The commission’s agenda lists 10 hotels – in downtown, Hillcrest, Midway, Sports Arena, Shelltown and the Grantville area – as potential options. The city is unlikely to acquire all of them.
“The Housing Commission is exploring right now the possibility of doing a leasing with potential for acquisition of hotels and motels throughout the area,” said Housing Commission CEO Rick Gentry Thursday, in a Zoom webinar for the Downtown Partnership. “If we can turn this crisis into an opportunity to expand our supply then I think that would be an ideal tertiary solution to what is now a terrible problem.”
Gentry declined to comment before the board’s decision.
The city, now facing the largest budget deficit in its history, would acquire the properties with money already in its possession from existing programs – like the Moving to Work program controlled by the Housing Commission and Community Development Block Grants – and potentially new stimulus money from the state or federal governments.
“We’re advocating state and federal officials to consider this with any upcoming stimulus, and there’s talk of an infrastructure bill – certainly housing fits as part of infrastructure,” said Adrian Granda, public policy manager in the mayor’s office, who is working on the program. “The mayor has been pushing on this and thankfully a lot of people get it.”
Faulconer said he discussed the idea on a call with Sen. Kamala Harris and other mayors from around the state Newsom and his deputy secretary of homelessness have also said leased hotel rooms to stop the spread of coronavirus among homeless people could become permanent housing solutions once the crisis is over.
“We’re a region that’s moving quickly on this,” Faulconer said. “We have to, there’s a window of time, there’s a sense of urgency to transition people out of Convention Center into a permanent place.”
Many details remain in flux. Faulconer said the primary goal is for the properties to offer permanent supportive housing – low-income housing that includes services like mental health or addiction treatments for its residents.
“You need to ensure you have wrap-around services, and that’s what we’re doing,” he said.
The acquisitions could be lease-to-own deals, or leases with an option to purchase at the end of the term. The overall budget available isn’t clear, though Faulconer acknowledged it would be expensive, given the “ambitious goal of adding hundreds and hundreds of units.”
“We’ve had the need to add new units, and if there’s any potential silver lining here, it’s that we can add to our capacity, add new units quickly” compared with how long it normally takes to build permanent supportive housing, Faulconer said.
Stay-at-home orders in California and across the country have nearly shuttered the tourism industry, leaving many hotel owners with little revenue coming in for the last month and potentially much longer. In the week that ended on April 4, hotels countywide filled just 24 percent of their rooms, but downtown hotels and Mission Bay fared even worse – 11 percent and 15 percent, respectively.
Faulconer said it’s that downturn that’s created an opportunity for the city. It could lead to depressed prices for the properties, or simply motivate owners to sell when they otherwise wouldn’t.
The city’s effort is distinct from San Diego County’s existing program to lease up about 2,000 hotel rooms for particularly vulnerable homeless San Diegans and those who have or may have the virus and lack a place to isolate. The majority of rooms are set aside for the latter group, which can include unsheltered homeless San Diegans.
The county will, however, have a role in the new program administering behavioral health services for any of the rooms positioned as permanent supportive housing.
Last week, Faulconer and County Supervisor Greg Cox celebrated a $25 million agreement between the city and the county to create a fund to help behavioral health providers bankroll new facilities.
Granda said other county and federal funds could be used on services for the newly acquired hotel rooms.
Lisa Halverstadt contributed to this report.