Nearly two months after San Diego missed an easy shot at $61 million in state money reserved for local homeless housing in the region, Mayor Todd Gloria and two City Councilmembers are urging the city’s housing agency to look at a broader array of projects in hopes of not missing out altogether.
Gloria, Council President Sean Elo-Rivera and Councilman Chris Cate in a Monday memo called for the Housing Commission to look beyond hotel acquisitions like the two it executed in 2020 amid a more challenging real estate market and the collapse of two projects it recently eyed.
The three city leaders asked the Housing Commission to consider options including purchases of abandoned commercial buildings, prefabricated or mobile homes, and the funding of so-called master leases that could be overseen by the city in a last-ditch effort to try to tap the latest round of state Project Homekey funds designed to provide a swift shot in the arm to efforts to house California’s homeless residents.
The state pledged to deploy more than $1 billion in the latest funding round. Local governments just needed to find shovel-ready projects and willing partners to make them happen. Despite the region’s crushing homelessness problems, there have been major cracks in the process. City and county officials have said projects they initially pursued haven’t come together despite significant efforts.
“While we are grateful for the substantial efforts made by SDHC staff to prevent homelessness and offer shelter and housing, we remain in a state of crisis and there is considerable risk that crisis will grow,” Gloria and the two councilmen wrote. “With this in mind, we are offering the full support of our offices for SDHC staff to pivot to evaluate additional options eligible for Project Homekey Round 2.0.”
A Housing Commission spokesman wrote in an email that the options the trio cited are “important potential project types deserving of ongoing consideration” that the agency had been and remains open to exploring.
The memo from Gloria and the two councilmen comes about six weeks before an expected deadline for competitive Project Homekey submissions statewide. State officials have said the funding window could close before May 2 if the latest round of funds run out before then.
The city of San Diego isn’t alone in potentially missing out on the state money.
A county spokeswoman said Tuesday the county also has yet to submit a Homekey application and is continuing to “explore opportunities” ahead of the May 2 deadline.
“We are considering all eligible project types for Homekey and not limiting consideration to hotel acquisitions,” county spokeswoman Sarah Sweeney wrote in an email.
The state’s housing agency confirmed Tuesday it has yet to receive any applications from the San Diego region during the latest Project Homekey funding round.
Project Homekey is an initiative championed by Gov. Gavin Newsom aimed at using federal COVID relief funds and state dollars to convert hotels and other properties into thousands of homes for homeless Californians. The program requires government agencies to submit requests to the state to pursue those projects and allows them to partner with developers and nonprofits to make those projects happen. Both interim and permanent housing projects including modular units, hotel purchases and commercial building acquisitions are on the table – and have been funded elsewhere in the state –during the second funding round of the state initiative.
Commission spokesman Scott Marshall acknowledged a Project Homekey application from his agency during this second funding round isn’t a certainty but said the agency is continuing to work to identify projects.
“It is premature at this time to say what applications, if any, may be submitted by May 2,” Marshall wrote in an email.
Marshall has said the Housing Commission is also already preparing for the expected release of a third round of Homekey funds this summer.
Gloria and other city officials say they are determined to try to avoid a missed opportunity.
Gloria spokesman Dave Rolland said the mayor’s team is working with the Housing Commission and other city departments to vet possible projects.
That push – and the joint memo – come weeks after the Housing Commission stopped working with an out-of-town developer it had hoped to partner with on up to two projects due to issues the agency said came up during its due diligence process.
“The memo is designed to give specific direction to the Housing Commission to seek Project Homekey 2.0 funding and express, in no uncertain terms, how critical it is for San Diego to seek these dollars to address a growing crisis,” Rolland wrote in an email. “We want the Housing Commission to cast as wide a net as possible when it comes to the types of projects that would qualify.”
Councilman Chris Cate said the trio agreed that Homekey funding was an opportunity that the city couldn’t let pass.
“We want to really lift up every rock to figure out how to make this happen,” Cate said.
Housing Commission board chair Stefanie Benvenuto said broadening the potential projects was a good idea.
“If anyone out there in the market can make it work, this is a great invitation to them,” Benvenuto said.
She said Housing Commission staff have put significant effort into finding workable projects but emphasized market and timeline challenges associated with the program that she said have been voiced to state officials – and the need for the city agency to balance speed with due diligence.
Indeed, a handful of developers told Voice last month that the current dynamics of the real estate market and requirements of the Homekey program meant some who wanted to pursue hotel projects were unable to. City officials were also rocked by the revelation that a broker who helped the city buy one of the two hotels it purchased in 2020 had an allegedly criminal conflict of interest and that the Housing Commission had relied on a pre-pandemic appraisal to assess the value of the property.
“We’ve got to really push the accelerator here, but we have to do so much due diligence to make sure the deals hold up and we’re doing right by the taxpayers as well,” Benvenuto said.
Fellow Housing Commissioner Mitch Mitchell said he also appreciated the three city officials’ calls to shift to existing realities to reap state funds.
“This memo is a great statement of encouragement of be aggressive, be creative, bring us solutions –and they don’t have to be hotels,” said Mitchell, who is also a Voice board member. “That is what the Housing Commission staff should be focused on to take advantage of this opportunity where the state is going to provide funding and we in turn can provide shelter.”
Going forward, Mitchell and Cate said they want to rally the Housing Commission to be more proactive about lining up potential homeless-serving projects before funding materializes so the city can make the most when it does.
“We can’t let up even for a second because these opportunities don’t always present themselves,” Cate said.