San Diego misses deadline for homeless housing dollars set aside for region – Voice of San Diego

Homeless residents have lunch and chat with each other in downtown San Diego on June 14, 2021. / Photo by Adriana Heldiz

The county and area cities had known for months that they had a chance of getting about $61 million in public funds earmarked for homeless housing projects in San Diego County if they applied before the January 31.

Still, the deadline has come and gone without any bids from the San Diego area, the state housing department confirmed to Voice of San Diego. Local governments will instead give up money earmarked for San Diego to compete with other areas of the state ahead of the last round of funding exhausted.

Regional leaders, including San Diego Mayor Todd Gloria, have pledged to aggressively pursue Project Homekey funds to help move more homeless San Diegans off the streets. The city in 2020 earned nearly $38 million in Homekey dollars for quickly buy two hotels to permanently house hundreds of homeless residents as a county proposal hoped collapsedleading some county officials to promise they wouldn’t miss the chance next time around.

But county and city officials in San Diego and Escondido said the housing projects they were considering for the state’s second round of Homekey funding failed to come together despite significant efforts. Now they hope to settle on viable projects in a statewide competition that offers less certainty that San Diego projects will be funded.

Project Homekey is an initiative championed by Governor Gavin Newsom to use federal COVID relief funds and state dollars to convert hotels and other properties into thousands of permanent residences for homeless Californians. The program requires government agencies to submit requests to the state to pursue these projects and allows them to partner with developers and nonprofits to bring these projects to fruition.

“We have rigorously pursued opportunities and will continue to pursue every opportunity possible,” said Nathan Fletcher, Chairman of the Supervisory Board.

Stefanie Benvenuto, chair of the board of the San Diego Housing Commission, struck a similar tone.

“I’m disappointed that we don’t have a project to submit, but it’s not for lack of effort and interest,” Benvenuto said. “Nothing happened.”

The challenges could persist unless changes are made to the Homekey initiative – and despite the region’s pressing need for supportive housing projects for those currently living on the streets.

A handful of local affordable housing developers told Voice of San Diego that the state program needed a quick construction timeline and continued pressure to focus on hotels despite significant market shifts since Homekey launched in 2020. , which hampered potential projects.

homeless outbreak san diego
Homeless residents’ tents line Island Avenue in downtown San Diego. / Photo by Adriana Heldiz

While Homekey can fund other types of projects, developers said the requirement to move quickly on renovations has inspired a continued focus on hotel purchases.

This presented challenges for local governments who needed relatively quick cooperation from developers and existing landowners.

County spokeswoman Sarah Sweeney said the county was working with 11 developers it had hoped to partner with, including one who submitted a proposal for five developments. The county ultimately decided that none of the projects were feasible.

A project and property that looked promising, for example, has been sold to another entity and is therefore not available to Homekey, Sweeney wrote in an email.

And Escondido deputy city manager Rob Van De Hay said the North County town had two properties in mind, but the owners ultimately decided not to sell.

The San Diego Housing Commission, meanwhile, said it could not complete due diligence on two projects it still hopes to pursue with just one developer new to San Diego.

Gloria said last week he was eager for the city to get Homekey dollars, but said beyond city ​​real estate failures highlighted the need for the city to ensure it is performing proper due diligence.

Indeed, elected officials learned after the fact that a broker who helped the city buy one of the two hotels it acquired in 2020 with the help of Homekey funds had a allegedly criminal conflict of interest and that the agency had relied on a pre-pandemic assessment to assess the value of the property.

Housing commissioners and others have since called for more scrutiny of the plans before the agency goes ahead.

“While this development is disappointing, we still intend to seek public funds through the competitive process,” Gloria said. “I think we will be successful in this regard, but we will have done so with properties that have been fully checked and are less likely to have issues once the transaction is complete.”

At least a few cities — El Cajon, Chula Vista and San Marcos — told Voice of San Diego they’ve decided not to apply for public funds to focus on other priorities.

Some affordable housing developers have also opted out of the Homekey program.

A handful of developers told VOSD that current real estate market dynamics and Homekey program requirements are preventing some who want to pursue projects from doing so.

They said the program requires all necessary upgrades to be completed within one year of receiving Homekey funds, the need to focus on hotels due to the turnaround time required by the program, and the associated risks to developers trying to put together a project that will work in the long run. gave them a break.

“It’s not just about getting Homekey money,” said Ted Miyahara, CEO of the San Diego Community Housing Corporation. “You enhance these properties and then you have to harness them in perpetuity, more or less.”

Miyahara said his development nonprofit had reviewed several hotel properties in hopes of partially funding a rehabilitation project with Homekey dollars.

Still, Miyahara said his team never submitted proposals to the city or county of San Diego because they couldn’t come to an agreement with any landlord.

“We searched for assets, we went so far as to send letters of intent to the owners and we could not agree on the purchase of the assets,” Miyahara said.

Rebecca Louie, chief operating officer at Wakeland Housing and Development Corporation, said her nonprofit had taken a close look at a property in Escondido and responded to the county’s demand for qualifications of the month before the sale fell through.

The struggle, Louie said, was finding a reasonably priced hotel that a developer could also afford to renovate in a year.

“It would be great if we could bring those public funds into the county,” Louie said. “It would be great if we could find projects that fit into these programs because the resources for affordable housing are so limited to begin with.”

Benvenuto and Housing Commission spokesman Scott Marshall acknowledged that the city has also recognized these challenges — and hopes to overcome them so they can submit proposals to the state.

For one thing, Marshall wrote in an email, Residence Inn hotels like those the commission purchased with Homekey Funds more than a year ago are no longer available.

“Clearly the market has tightened considerably and the opportunity to reacquire high end extended stay hotels that are zoned for use as apartments is unlikely to present itself in this or future rounds of Homekey unless market conditions change significantly,” Marshall wrote in an email. “However, other types of hotel properties may also be viable.”

Given the challenges, the Housing Commission is already preparing for Homekey’s third round.

At the end of last month, the commission posted a review on its website urging developers to start preparing projects ahead of the expected release of another round of public funds this summer.

“Based on experience with the competitive application process for previous cycles of Homekey funding, SDHC understands that a determining factor in receiving Homekey funding is the readiness of the proposed project, including an early date for the completion of the project and the occupation of the project”, writes the agency.

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