Midway Shelter Caught in City, County Funding Dispute

A long-simmering city and county battle over their respective roles addressing the region’s homelessness and behavioral health crises just got hotter. 

At the center of the latest battle: the future of a 150-bed Alpha Project shelter serving homeless San Diegans with behavioral health conditions outside the county’s Midway District health complex that could now be forced to close. 

As first reported by the Union-Tribune, Mayor Todd Gloria opted against including nearly $5 million in operations funding for the shelter the city and county teamed with the nonprofit Lucky Duck Foundation to open almost three years ago in the budget proposal he unveiled on Tuesday. 

Gloria said he made that decision after a series of conversations with county Chief Administrative Officer Ebony Shelton and Supervisor Terra Lawson-Remer. He had hoped to discourage a county plan to demolish the building just steps away from the shelter in March 2026, a move that will simultaneously shut off utilities at the shelter. 

Gloria, who amplified his call on the county to step up its homelessness and behavioral health responses in his January State of the City address, at least for now has unsuccessfully urged the county to postpone the project – and to start paying for the shelter on its own. 

Lawson-Remer pushed back Tuesday, arguing that the shelter could remain at the site with potential support from philanthropists before and after the demolition. She also contended that the county is already exceeding its “traditional responsibilities” with the Midway shelter. 

Now the future of a shelter once billed as a paradigm-shifting model for the city, county and philanthropists hangs in balance – and so does the future of the dozens of residents and 41 staff members at the Alpha Project shelter.  

“Once again, the folks in the most vulnerable position are being traumatized and staff that are down there 24/7 with folks that are the most vulnerable,” said Alpha Project CEO Bob McElroy, who learned of the proposed cuts early Tuesday. 

McElroy said he and his team spent Tuesday morning briefing staff and residents on the scant details they have about the situation. Alpha Project’s contract to run the shelter is for now set to expire June 30. 

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In 2022, Gloria, county officials and philanthropists long frustrated by city and county disputes over the homelessness crisis cheered the opening of the so-called Rosecrans shelter behind the County Health Complex. 

The county provided the land, utilities and onsite behavioral health services via contractor Vista Hill. The city and its Housing Commission oversaw the shelter operated by contractor Alpha Project.   

The Lucky Duck Foundation donated the tent structure that the city and county filled with 150 beds. 

The partnership was especially notable for the county. The county has long maintained that cities are solely responsible for shelters within their boundaries. While the county can provide behavioral health services at those shelters and elsewhere throughout the county, it has long said it’s only responsible for shelters in unincorporated areas – something it’s struggled to deliver. 

Lawson-Remer, who represents Midway District on the county board, expressed her excitement about the county’s stepped-up collaboration with the city back when the Rosecrans shelter opened in 2022. 

“San Diegans are looking for tangible solutions to the homelessness crisis, and this shelter demonstrates that our region’s public agencies are partnering to bring new solutions to the table that provide immediate help,” Lawson-Remer said at the time.  

Last fall, she featured the Rosecrans shelter in a campaign ad describing county moves to bolster homeless shelter offerings across the region. 

The budget outlooks at the city and county have gotten less rosy in the months since. 

Gloria faced a $258 million budget deficit for the fiscal year that begins in July following the failure of a city sales-tax measure. County staff have also forecasted a $138.5 million shortfall. 

As the city and the county grappled with darkening budget situations, they began talks to renew their expiring 2022 agreement covering operations of the Rosecrans shelter. 

The county plan to demolish its Health Services Complex became a major point of division. The county says it notified the city and the Lucky Duck Foundation of its plan to eventually tear down the building before they signed their 2022 agreement. 

Spencer Katz, a spokesperson for Lawson-Remer, said the demolition is part of a long-standing plan to expand services at the next-door County Psychiatric Hospital. He wrote in a statement that the now-shuttered facility “no longer meets the needs of a modern public health building and lab.”  

Whenever he may have learned of it, Gloria was skeptical. 

In a Tuesday interview with Voice of San Diego, he said county officials have not shared specific plans and reasons for the demolition. He questioned why it was necessary and whether county officials understood how it would affect next-door shelter residents. 

“It’s astounding to me that for people who work professionally in helping those dealing with severe behavioral health issues would think that it’s appropriate to leave people with acute mental illness in an active construction site for a period of weeks or months. Make that make sense, cause I can’t,” Gloria said. “The tent is 16 feet away from the building they want to demolish.” 

The mayor said the county recently shared an updated proposed agreement calling for the city to foot the bill to reconnect the shelter to utilities that would be cut off once the demolition moves forward next March. That would be on top of nearly $5 million the city expected to spend on the shelter in the upcoming year. 

The county – not the city – should foot that bill or better yet, pay the millions of dollars it would take to relocate the tent structure elsewhere, Gloria said. “The additional costs are their fault, not the city’s and should be borne by the county.” 

More recently, Gloria said he asked the county to take on the entire cost of the Rosecrans shelter. He didn’t get a good reception. 

“They point to their budget situation, their political circumstances currently and for all the reasons why it can’t be done, I hear about what they can’t do, while they can continue to do a construction of a project that is making this shelter difficult to continue,” Gloria said. 

After those conversations, the mayor decided not to include funding in his proposed budget to continue Rosecrans shelter operations. If the shelter must close, Gloria said the city and the Housing Commission, which oversees the Alpha Project contract, will ensure shelter residents aren’t forced onto the street. 

The city typically spends months preparing for shelter closures, halting new intakes and making arrangements for shelter residents to move into housing or other shelters. 

In separate statements, Katz and county spokesperson Tammy Glenn argued the shelter can remain open at its current location during and after the project, and that the city-county partnership should continue. 

“The county is committed to continuing this innovative partnership that expands shelter bed capacity and supportive services for those experiencing homelessness in the city of San Diego,” Glenn wrote in an email. 

She also wrote that the “demolition will not impact care and safety provided at the tent shelter.” 

Lawson-Remer’s office argued that’s possible too. 

“Supervisor Lawson-Remer is committed to ensuring that, with proper planning and coordination, the upcoming demolition can proceed without compromising the safety or well-being of shelter residents,” Katz wrote in an email. “This kind of parallel work happens frequently on complex public projects — from hospital renovations to school upgrades — where construction and ongoing operations must safely coexist.” 

Lawson-Remer’s office hopes philanthropists can cover estimated costs of up to $2 million for “new water, sewer, fire main, and electrical hookups to allow the shelter to continue to receive county-funded utilities and operate without interruption.” 

“With demolition slated for March 2026, the supervisor’s office is hopeful there (is) significant lead time to secure grant and philanthropic funding to support construction of the dedicated shelter utility connections,” Lawson-Remer’s office wrote in a Tuesday morning press release. 

Drew Moser, CEO of the Lucky Duck Foundation, is among the philanthropists already being courted. 

Moser said the county alerted the foundation to the possibility of the budget dispute over the shelter late last week. As of early Tuesday, he said he hadn’t heard from the city for a couple weeks. 

For now, Moser said his foundation is focused on how to “rectify the situation as quickly as possible” by trying to bring together the city and the county rather than immediately getting out its checkbook. Moser said he was startled by Gloria’s proposal to pull funding for the shelter. He still believes the collaboration between the city, county and the foundation should be a model that gets replicated elsewhere in the region. 

 “It truly does take multiple entities starting with local government coming together to find common ground and work together to help those in greatest need,” Moser said. “If politics get in the way, it’s only going to perpetuate the issue and worsen the issue, and we’re prepared to do what we can to try to bridge any divide to ensure that this shelter does not come offline – bottom line.”