$100 million fund to convert Bay Area hotels to homeless housing draws 20 applications — none in SF

California’s new Homekey program, which will dish out $100 million to convert Bay Area hotels and motels into permanent homeless housing, has attracted about 20 applicants in its first three weeks as cities and counties race to beat next Thursday’s tight filing deadline. And though there has been just one solid bite in San Francisco, there may soon be more.

As the coronavirus crisis stretches on and many hotels remain shuttered, some antsy owners are becoming more open to the idea of selling rather than hanging on to see how long they can survive the crippled economy. In hyper-expensive San Francisco, where plummeting tourism has led to 40% of the hotels temporarily closing, some owners might feel more confident than those in other regions in recovering financially once the pandemic eases.

But it doesn’t mean they’re not thinking about selling, officials said. San Francisco homeless policy leaders have said since early summer they are hoping to buy two or more hotels for conversion, and some leading players in the city’s Homekey process say several properties are in play — including one that sent in an application to the state on Friday.

The challenge, they say, is finding buildings that don’t need prohibitively expensive updating — in-unit bathrooms, disabled access and the like — whose owners are willing to sell at a fair price. All of that is no small ask, considering that while rents have dipped significantly during the pandemic, real estate prices have not.

Then there’s the follow-up cost. Overseeing a supportive housing operation costs about $30,000 a year — per person — so a modest, 50-unit complex alone would require $1.5 million a year. Most Bay Area counties say this doesn’t counteract the benefit of getting help buying real estate, particularly in San Francisco where Mayor London Breed’s office sees the program fitting neatly into her plan to add 1,000 supportive housing units in the city over the next 12 months.

 $100 million fund to convert Bay Area hotels to homeless housing draws 20 applications — none in SF

Breed has several divisions, including the Department of Homelessness and Supportive Housing, scouting for prospective properties, and Supervisor Aaron Peskin played a leading role in convincing the owner of a 237-room residential hotel in his northeastern district to submit an application on Friday.

“Every once in awhile, things line up right,” he said. “This is great news.”

He said another building in his district is also in the running, and he hopes others in the city will also send in Homekey applications.

“Before and during the pandemic people have been buying and selling stuff for affordable housing and supportive housing, and I’m not seeing marketplace desperation,” Peskin said. “It’s very promising.”

Rebecca Foster, head of one of the key funding organizations helping arrange Homekey deals in the city, said she was optimistic about finding projects “with this opportunity to bring tens of millions of dollars to San Francisco.” The pressure is on, though: The first deadline for applications is Aug. 13. And though subsequent bids will be taken up to the end of September, everyone is encouraged to get in before the money runs out.

“There are definitely a few possibilities in San Francisco,” said Foster, CEO of the San Francisco Housing Accelerator Fund, a public-private fund that raises money to build new affordable housing. “When there are state funds like this available and you have a huge need like we do, you have to work really hard to get that application in. This is a sprint.”

The state’s Homekey fund consists of $550 million in federal coronavirus aid and $50 million in state general funds. The federal money must be spent by the end of December, and properties accepted into the program must be occupied within 90 days. Those deadlines, tight by housing industry standards, have created a near frenzy as cities, counties and nonprofit agencies race to assemble their prospects.

Of that money, $100 million is aimed at the Bay Area’s nine counties.

 $100 million fund to convert Bay Area hotels to homeless housing draws 20 applications — none in SF

Throughout the state, about 100 applications — actually pre-applications, with further paperwork to follow — have been received, according to Gov. Gavin Newsom’s office. The program builds on Newsom’s Project Roomkey, which has rented hotel and motel rooms for more than 14,000 vulnerable or coronavirus-stricken homeless people statewide. Homekey will accept not just hotels and motels, but vacant apartment complexes and other buildings as well.

Homekey’s money could buy more than 3,000 or more units of housing around the state — hundreds of those in the Bay Area — and the aim is to make them permanent supportive housing, though interim housing can also be allowed. Considering there are 151,000 homeless people in California, the biggest such population in the nation, several thousand rooms of new housing seems small. But in the perpetual struggle to house street people and never enough money, homeless policy leaders say the program is a big plus.

“I am confident we will use this as a great resource,” said Vivian Wan, CEO of Adobe Services, a homeless aid nonprofit that oversees programs, including Roomkey complexes throughout the Bay Area. “It’s a crazy tight deadline, but if COVID-19 has taught us anything in California, it’s taught us that we can move quickly when we have to.”

She said she is helping agencies in Santa Clara and Alameda County with several Homekey applications, and county officials in Contra Costa and Marin counties are vigorously pursuing several properties as well. Calls to several hotels for comment went unanswered.

Tomiquia Moss, CEO of the All Home nonprofit that works on Bay Area-wide strategies for ending homelessness, pointed out that converting existing buildings can cost half or less that of new construction, depending on the area — “which is quite a savings, considering it can cost about $700,000 a unit to build new in San Francisco.”

Moss advised state planners as they crafted the Homekey program, and her organization is helping counties with applications. “There’s an incredible appetite for this,” she said, and not just for the money but for the prospect of housing people within 90 days.

“You can’t keep telling homeless people to wait five years for a unit to be built new,” she said. “We have to be creative.”

San Francisco Supervisor Hillary Ronen, who with other supervisors has been urging the mayor to lease more hotel rooms to temporarily shelter homeless people, said there should be few holds barred in the hunt for properties.

“If we can’t find willing sellers, we should consider addressing this major problem by eminent domain,” she said. “Homekey is a solution, but we need much more like it. We have to do everything we can.”

Kevin Fagan is a San Francisco Chronicle staff writer. Email: kfagan@sfchronicle.com Twitter: @KevinChron

Article source: https://www.sfchronicle.com/bayarea/article/100-million-fund-to-convert-Bay-Area-hotels-to-15465521.php

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