San Diego to pursue Midway hotel and Ocean Beach apartment building to house homeless people

The San Diego Housing Commission is applying for state funds to help buy a Ramada Inn on Midway Drive and a vacant apartment building in Ocean Beach to provide permanent housing for homeless people.

Commissioners unanimously agreed at their May 12 meeting to apply for $18 million toward the purchase of the Ramada Inn at 3737-3747 Midway, which would create 62 affordable units, and up to $5 million to help buy the apartment building at 2147 Abbott St., which would create 13 units.

Funding for each project would come from the state’s Project Homekey competitive grant program, which is intended to quickly create housing for homeless people. The latest round of funding has $736 million available statewide, with $34 million set aside for San Diego.

Last month, the Housing Commission voted to pursue Project Homekey funds for the purchase of three extended-stay hotels that together would create more than 400 units for homeless people.

Under state guidelines, Project Homekey money must be spent within eight months of being awarded, and construction or rehabilitation of properties must be completed within 12 months. Full occupancy must be achieved within 15 months of receiving the award.

The Housing Commission approved the purpose and sale agreement for the Ramada Inn last year and since has been reviewing the property through preliminary title reports, appraisal, peer appraisal, a market study, construction cost assumptions, physical inspections and other steps.

According to a report to the board in July, the estimated acquisition cost of the two-story Ramada property would be $11.6 million, or about $182,000 a unit.

Unlike the extended-stay hotels the Housing Commission also is pursuing, the Ramada Inn rooms do not include kitchenettes, which would make them more like homes. Adding kitchenettes and other upgrades would increase the cost to $29.5 million, or $469,000 per room.

The Housing Commission is still reviewing information on the three extended-stay hotels, with a plan to submit Homekey applications in June.

Those hotels are the 107-unit Extended Stay America at 3860 Murphy Canyon Road (cost of $40.7 million), the 140-unit Extended Stay America at 7440-7450 Mission Valley Road ($52 million) and the 165-unit Extended Stay America at 2085-2095 Hotel Circle South ($65.2 million).

Altogether, the average per-room price would be $383,000.

Scott Marshall, vice president of communications and government relations for the Housing Commission, said 75 properties were considered before identifying the four hotels being pursued.

Purchase of all four is contingent on receiving the state funding. If the Ramada Inn purchase does go through, the property would be renamed Pacific Village.

Commissioners also agreed May 12 to submit a joint application for $5 million in Project Homekey money with the nonprofit Wakeland Housing and Development Corp. to buy the vacant apartment building in Ocean Beach.

Wakeland has created 7,800 affordable homes at 56 properties throughout the state and has already completed its review of the Abbott Street property.

The site has a history with the Housing Commission, which in 1997 restricted 14 units to be affordable for households with income at or below 80 percent of the city’s median. It later allowed 10 units to be transitional housing for survivors of domestic violence.

The property has been vacant since January 2022. If purchased, it would have 13 units for people who had experienced chronic homelessness and whose income is up to 30 percent of the area median, which is $27,350 a year for a one-person household.

The Housing Commission would provide a $1.5 million loan and 13 federal project-based housing vouchers for residents of the apartments, and Wakeland would raise money for its purchase and rehabilitation. The county also would provide a $1.5 million loan.

The expected acquisition cost is $4.5 million, or $347,000 per unit, but rehabilitation expenses would increase the cost to $6.8 million, or $525,000 per unit.

Also at last week’s meeting, the Housing Commission approved its proposed $595 million budget for the new fiscal year that starts July 1. The budget is about $100,000 more than the current one.

Proposed expenditures include $272 million to help 17,000 households. The plan includes $10 million for emergency housing vouchers to assist 500 households, $29 million for gap financing for developers to create 290 new permanent affordable-housing units, $14 million toward acquisition of affordable-housing properties and $7 million to rehabilitate up to 800 units owned by the Housing Commission.

The budget also includes $4.5 million to help up to 35 households become first-time homebuyers and $2 million for San Diegans to create up to eight accessory dwelling units, also known as “granny flats.”