This post has been updated.

Voice of San Diego’s story “Housing Commission Is Spending $20M on a Project it Said Was Not Worth $20M” omitted key facts, which was a disservice to readers.

Letters logoThe San Diego Housing Commission’s decision on Sept. 14, 2012, to reject three proposals from developers for the rehabilitation of the historical Hotel Churchill was the most prudent decision the Housing Commission made at the time. It is evident in what is being built today — 72 livable spaces for homeless San Diegans, mainly veterans — that the SDHC board’s initial decision was the right call.

The Housing Commission rejected the three proposals because, as stated in the SDHC board’s report, the developers did not adequately address serious concerns about their potential investments should a major earthquake occur, “which may result in the loss of the $20,000,000 rehabilitation investment of the Hotel property.”

Eight months later, however, the Housing Commission approved a rehabilitation plan that utilizes a state-of-the-art seismic structural reinforcement.

“It’s at least as good as a new building,” said Tony Morgan, the structural engineer for New York-based firm Exponent, who reviewed the Hotel Churchill plans for the city of San Diego. But VOSD reporters buried this critical piece of information, and placed it at the very end of their story.

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In addition, the proposals by the developers were baseline proposals, with the understanding that their costs could increase as they finalized their research, plans and bids.

VOSD also failed to mention that the units proposed by the private developers were significantly smaller than the rooms now being developed. The cost per unit is higher because we’re providing a more livable environment. (Editor’s note: VOSD published a separate post detailing the size difference between the private proposals and the units now being built by the Housing Commission.)

The reconfiguration of Hotel Churchill from 94 units of 100 square feet each to expanded livable spaces of 72 affordable apartments, averaging 350 square feet each, with their own bathroom and kitchenette and a manager’s unit, was not mentioned in VOSD’s article.

On May 10, 2013, the Housing Commission’s board also approved the development agreement between the commission and its nonprofit development arm, Housing Development Partners. The board also approved investing $8.2 million of “Moving to Work” funds to finance the rehabilitation of Hotel Churchill.

These federal funds are restricted to public housing authorities that have received the “Moving to Work” designation from the U.S. Department of Housing and Urban Development. The Housing Commission is one of only 39 “Moving to Work” agencies, out of 3,400 public housing authorities in the nation, which provides the commission with flexibility in the creation of its programs, including the development and preservation of affordable housing.

As stated in VOSD’s article, the developer fees included in the 2012 proposals were up to $2 million. The potential fee that Housing Development Partners may receive — $400,000 — is a substantial savings in comparison. The savings are being invested in Hotel Churchill. Housing Development Partners will only be paid its fee if there are additional cost savings identified for the rehabilitation. There is no guarantee the nonprofit will receive these fees.

For the record, Housing Commission CEO Richard C. Gentry receives no compensation for his service on the Housing Development Partners Board of Directors. Furthermore, none of the nonprofit’s volunteer board members has a financial interest in this development that would legally preclude their participation under state law. Housing Development Partners has also been determined to be a public agency by the city’s Ethics Commission, which requires each board member to file an annual statement of economic interest with the City Clerk, in compliance with the Housing Commission’s conflict of interest code.

Omitted from VOSD’s article was why the Hotel Churchill development required additional funds. One of the main reasons was the expense of removing and replacing the seventh floor, which was not a part of the original 101-year-old structure. The removal of unreinforced masonry was not included in the costs for the three proposals in 2012, even though all three respondents toured Hotel Churchill before finalizing their proposals. Had it been included, their proposals, most likely, would have been much higher than $20 million.

VOSD uses this colorful assessment that Gentry made in 2012 of the Hotel Churchill: “We’ve got a sow’s ear here we cannot make into a silk purse very easily.”

Well, it has not been easy. But we’ve done the research. We know the actual conditions and limitations of the building.

The Housing Commission and Housing Development Partners have developed the staff and expertise to make the Hotel Churchill rehabilitation become a reality.

We will soon have quality apartments for 56 homeless veterans, eight youth aging out of foster care and eight adults recently released from the correctional system. These units will remain affordable for 65 years.

We’re proud of what is happening at Hotel Churchill, and we will make sure VOSD is invited to the grand opening next year.

Correction: An earlier version of this post misidentified the “Moving to Work” designation.

Gary Gramling is chairman of the board for the San Diego Housing Commission. Gramling’s letter has been edited for style and clarity. See anything in there we should fact check? Tell us what to check out here.

    This article relates to: Corrections, Growth and Housing, Letters, Opinion

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    Mark E. Smith
    Mark E. Smith subscriber

    It might be of interest to know that HDP (Housing Development Partners) is an offshoot of the Housing Commission itself. They do seem to win a lot of bids, but I'm sure that's just coincidence.

    Geoff Page
    Geoff Page subscribermember

    Mr. Gramling,

    I have to seriously question the following excerpt from your comments:

    The “plans” that the respondents submitted in 2012 were baseline proposals.  The San Diego Housing Commission’s estimation of their square footage was based on their scaled dimensions of drawings that were only slightly better than sketches.   These sketches provided no written dimensions or square footages. Those units measured in size from less than 100 square feet to approximately 130 square feet based upon calculations performed using the respondents’ scaled dimensions.

    This must surely have been one incredibly informal proposal exercise on the part of the Housing Commission, perhaps designed for the very outcome we now see.  As a construction professional, I find it extremely difficult to believe that private developers submitted worthwhile proposals that contained drawings only slightly better than sketches” and no additional information regarding measurements or square footage.  The very idea that proposers would expect an agency or an owner to obtain the information by “calculations performed using the respondents’ scaled dimensions” is ludicrous.  If that information was not on a drawing it surely should have been in the written proposals.  And your statement that the drawings were only slightly better than sketches would not be an accurate description of purposefully scaled drawings. 

    If this description of what the Housing Commission received is accurate, the fault lies with the Housing Commission, not the proposers, because this was badly handled.  These private developers would not deliberately provide substandard proposals, and, if all of them submitted similar proposals lacking the square footage information, well, that could not be coincidence.  No, this sounds a lot like the City of San Diego allowing its water department or wastewater department bid against private contractors for work and consistently outbidding private contractors.  Having experienced both private and agency work of this type, the idea that the City bids contain all of the required project costs is a farce. 

    It sounds like the Housing Commission stacked the deck and set this proposal effort up to ensure the Housing Commission looked like a winner.     

    Gary Gramling
    Gary Gramling

    Since my commentary was published, I’d like to respond to the questions that were asked by readers.

    I previously stated that the plans submitted by the private developers were significantly smaller than the rooms now being developed:  94 units measuring approximately 100 sq. ft. compared to Housing Development Partners (HDP), the nonprofit affiliate of the San Diego Housing Commission, developing 72 residences averaging 350 sq. ft., plus one manager’s unit, for total of 73 units.

    It was correctly pointed out by one of the readers that these two sets of numbers were significantly different as to total square footage.

    The “plans” that the respondents submitted in 2012 were baseline proposals.  The San Diego Housing Commission’s estimation of their square footage was based on their scaled dimensions of drawings that were only slightly better than sketches.   These sketches provided no written dimensions or square footages. Those units measured in size from less than 100 square feet to approximately 130 square feet based upon calculations performed using the respondents’ scaled dimensions.  

    In addition, HDP’s new design utilizes the hotel’s old common areas to create larger living spaces, and those areas include the 7th floor, the shared bathrooms and corridor spaces.

    HDP’s plans are complete and approved by the City of San Diego for the actual construction of the Hotel Churchill, which has already begun.  In addition, the first floor will have commercial space, and office space will be provided in the basement for the on-site mental health and counseling services that will be provided at the Hotel Churchill. 

    Mental health and counseling brings us to the second question. That question challenges the need to create the units at Hotel Churchill when efforts like the United Way’s Project 25 have been so successful, while appearing to spend so much less money per individual. This is a fair question.

    The San Diego Housing Commission (SDHC) is a major partner of the United Way Project 25 program, which includes St. Vincent de Paul Village.

    SDHC is providing the housing for Project 25 through the 25 federal rental housing vouchers that we awarded to the program, which launched on January 12, 2011. Project 25 provides permanent housing with supportive services for chronically homeless San Diegans who are among the most frequent users of emergency rooms, hospitals and jails. These 25 federal rental housing vouchers have an annual value of $282,600, based on the monthly cost of the voucher, $942. It’s an on-going commitment.

    However, for programs like Project 25 to continue to succeed, additional affordable rental housing units are needed in the City of San Diego.

    Our rehabilitation of Hotel Churchill will provide 72 affordable rental housing units with supportive services for homeless San Diegans, utilizing the Housing First model, which is also utilized by Project 25.

    SDHC is a driving force of the Housing First model in the City of San Diego – provide homeless individuals with housing as quickly as possible, with supportive services as needed.  Last year, SDHC made a commitment to award 1,500 federal housing vouchers to affordable housing developments that will provide supportive services for homeless San Diegans.

    No single approach is sufficient to eliminate or even reduce the need for permanent housing with supportive services.  There are many organizations that are a part of this effort. And, the San Diego Housing Commission looks forward to future partnerships like Project 25.

    Derek Hofmann
    Derek Hofmann subscribermember

    @Gary Gramling 100 square feet per unit doesn't sound so small when it only counts the size of the bedroom.

    So demolishing those 94 units and building 73 would cost $280,000 per unit. How much would it cost per unit to renovate those 94 units plus build another 94 on the 7th floor? Would it be less than $100,000 per unit?

    Mike subscriber

    Pardon me Mr. Housing Commission, but I don't understand the math.  This $20M building can house 72 homeless people.  I assume efforts to help them get back on their feet would cost extra.  Over the last few years, various news outlets have reported on the United Way Project 25 which helped 36 homeless people for $1.5M total (and saved the county $3.5M).  Here's the PBS article, but there are plenty of others: 

    What's wrong with Project 25's model?  Why is this $20M building a better way?  I don't work for the United Way and I don't care if the city wants to implement their own program called something else.  I just think the reports on this Project 25 have been great and seems like a much better idea than spending $20M for 72 people (not even counting other expenses).  What's wrong with this picture?

    michael-leonard subscriber

    Speaking of the numbers, 72 units X 350 sq. ft. = 25,200 which doesn't quite jibe with 9400. Please explain the difference, Mr. Gramling.

    msginsd subscriber

    Thank for these numbers.  VoSD failed readers by not including even the most important of details: square footage.  If the original size was indeed 100 sq ft per unit,  then a reconfiguration to something more livable was certainly in order (as well as apologies to the Counsel).  350 on average, including a kitchenette and bath is reasonable.  Also thank you for clarifying Richard Gentry's HDP compensation.

    I wouldn't call this piece "opinion" so much as "clarification".  Too bad the original VoSD journalists couldn't do it themselves.