The city’s plan to acquire distressed hotels and turn them into permanent housing for homeless residents is coming into focus.
The San Diego Housing Commission is proposing spending $19 million in its new budget on hotel acquisitions, the first indication of the size of an investment the mayor has framed as a way to take advantage of the economic crisis facing hotel owners to make headway on the city’s stubborn homelessness crisis.
It’s unclear if the cost of converting the hotel rooms into apartments is included in that that $19 million expenditure. The Housing Commission is also planning to spend another $10 million on rental assistance for residents in the newly acquired hotels. That expenditure would be a so-called rapid rehousing program, a type of spending that provides rental assistance for up to two years for someone who had been homeless.
The commission would also hire three new full-time staffers to focus on rehousing homeless people in converted hotels, according to the agency’s budget presentation.
Scott Marshall, the Housing Commission’s vice president of communications, said the nearly $30 million to acquire hotels and provide rental assistance for homeless people to live in them would come from federal Community Development Block Grants and the commission’s existing Moving to Work funds . Mayor Kevin Faulconer and his staff had likewise said those sources would fund the hotel acquisition program .
At the time, Faulconer said the goal was to lock up “hundreds and hundreds” of hotel rooms to house homeless San Diegans, especially those currently sheltered at the Convention Center to halt the spread of COVID-19. The city’s need for permanent housing options has never been greater, due to the pandemic, Faulconer argued, but it has also never had such an opportunity to pick up the hotels at steep discounts, due to the economic pain the pandemic had inflicted on hotel owners.
Marshall said the commission could not comment on anything discussed in the board’s April 17 closed session, where it greenlit negotiations with the owners of 10 different hotel properties for potential acquisitions.
“If items related to the identified properties are presented to the SDHC Board of Commissioners in an Open Session, SDHC at that point would be able to discuss them,” he wrote in an email.
The plan for now calls for the city to strike lease-to-own deals with the hotels. That arrangement would let the city take control of the properties quickly and potentially control them long term, while still offering a way out of the deals if the need arises.
But Council President Georgette Gómez has said she has significant questions about the plan  and will bring the program before the full City Council in mid-May.
She wants to know why the city is bothering with lease-to-own deals – which it has had problems with in previous real estate transactions – instead of assessing the conditions of the properties harshly and buying the ones that represent the best deal.
“Why not just go do a purchase, and do our due diligence?” Gómez said. “I don’t want to get into another fiasco of leasing to own, only to find that a property requires more resources than we were told.”