The Morning Report
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This post has been updated.
A plan backed by Mayor Kevin Faulconer to acquire low-cost hotels and turn them into long-term housing for homeless people is on hold.
The San Diego Housing Commission, which was pursuing the proposal, decided in closed session Friday not to move forward with any of the 10 properties with which its board of directors had previously approved negotiations.
Because discussions in closed session are confidential, a commission spokesman could not describe why the board decided to walk away from deals with any of the properties.
“However, SDHC performs due diligence on any property it considers leasing or buying,” wrote Scott Marshall, the Housing Commission’s vice president of communications, in an email. “This occurred with these hotel sites as well. Due diligence involves assessing many factors, including but not limited to zoning requirements, property conditions and potential costs.”
But that doesn’t mean the idea is dead.
The commission could still move to identify new properties and negotiate a lease-to-own deal with the owner, to begin renovating them and moving in formerly homeless residents.
The Housing Commission’s proposed budget for the upcoming fiscal year includes $19 million to acquire hotels and convert them into permanent supportive housing for homeless people, and another $10 million for rental assistance to put homeless people into those new housing options.
That money is still budgeted and available.
“While SDHC has decided not to proceed with these 10 hotel properties, SDHC continues to explore opportunities to lease and/or purchase hotels in the city of San Diego to provide housing for San Diegans experiencing homelessness,” Marshall wrote. “As opportunities are identified, SDHC will perform due diligence and present potential leases with options to buy to the SDHC board and Housing Authority for consideration.”
In one way, the idea of acquiring financially distressed hotels during the pandemic and repositioning them as long-term housing for homeless people is stronger now than it was a week ago, in spite of the Housing Commission’s decision not to pursue any of the previously identified properties.
That’s because this week Gov. Gavin Newsom included a similar idea in his latest proposed budget. Newsom wants the state to buy hotels using federal money, and then hand them over to local governments or nonprofits to be operated as homeless-serving housing options.
Faulconer championed the proposal early on as an opportunity to tackle the region’s persistent housing shortage and stubborn homelessness crisis.
He said the idea could lead to the city acquiring “hundreds and hundreds” of hotel rooms, because they would be available at slashed prices while owners were grappling with a nearly shuttered tourism industry.
“There will probably never be a better opportunity to make bold moves and do things that have never been done before on homelessness, and it’s encouraging to see the capitol pick up on San Diego’s efforts this week,” Faulconer said in a statement sent after the Housing Commission’s decision. “We are committed to seeing this through. Staff is only going to sign off on deals that work from a financial and operational perspective and will continue to search the hotel market for properties that can be used to house the homeless.”
Not everyone signaled immediate support for the concept, however.
Council President Georgette Gómez, for instance, said she was open to the idea but needed to hear more details from the mayor and Housing Commission before she got on board.
She had previously said she would bring the idea for a hearing before the City Council, tentatively scheduled for next week, before it could finalize any decision.
But next week’s City Council meeting does not have anything scheduled on the proposal. And the Housing Commission has now walked away from potential deals for the 10 properties with which its board had previously greenlit negotiations.