County agrees to pitch in to San Diego’s plan to buy hotels and OB apartment building for homeless housing

Ramada Inn along Midway Drive
The San Diego Housing Commission is applying for state funds to buy this Ramada Inn on Midway Drive to house homeless people.
(Adriana Heldiz / The San Diego Union-Tribune)

The Board of Supervisors will authorize up to $32 million in loans toward the city’s potential purchase of four properties, including a Midway District hotel, that could be used to house more than 300 homeless people.


The San Diego County Board of Supervisors agreed May 23 to authorize up to $32 million in loans toward the city of San Diego’s potential purchase of four residential properties that could be used to house more than 300 homeless people.

The properties being considered include the 62-unit Ramada Inn on Midway Drive in the Midway District, which the San Diego Housing Commission agreed to pursue at its May 12 meeting when it unanimously agreed to apply for $18 million from the state’s Project Homekey program. The estimated purchase price would be $11.6 million, equating to about $182,000 a unit, but adding kitchenettes and other upgrades would increase the overall cost to $29.5 million, or $469,000 a unit.

The two properties could create 75 permanent housing units. The San Diego Housing Commission is applying for state funds.

The city also is submitting a joint $4 million application with Wakeland Housing and Development Corp. to buy a vacant 13-unit apartment building on Abbott Street in Ocean Beach. Purchasing the building would cost $4.5 million, but rehabilitation expenses would increase the cost to $6.8 million, bringing the per-unit cost to $525,000.

The two other properties being considered are a 107-unit Extended Stay America Hotel on Murphy Canyon Road for $40.7 million and a 140-unit Extended Stay America on Mission Valley Road for $52 million.

In all, the city is applying for $88.7 million in Project Homekey funds, and the purchases are contingent on receiving the grants. The city would contribute $32.2 million.

The latest round of Project Homekey funding provides $736 million in competitive grants statewide, with $34 million set aside for San Diego, which also is eligible to apply for a share of the total funds.

Construction of any housing with Project Homekey funds must be complete within 12 months of receiving the money, and units must be fully occupied within 15 months. The Housing Commission has unanimously backed the purchases as a way of quickly finding permanent housing for homeless people at a much cheaper cost than building new units.

The Board of Supervisors majority said the purchases are worth pursuing. Supervisor Terra Lawson-Remer, whose District 3 includes Midway, Ocean Beach and Point Loma, said it would be “silly to leave money on the table.”

Supervisor Jim Desmond cast the only opposing vote, saying he disagreed with the housing-first approach, which does not require residents to undergo treatment for substance abuse or mental health issues.

In a statement issued shortly after the vote, Desmond also said the cost of the properties is too high and that the board’s action “lacks the necessary accountability for taxpayer funds.”

The city Housing Commission began investigating the purchase of the Ramada Inn last year and already has conducted “due diligence” on the property, including reviewing preliminary title reports, obtaining appraisals, conducting a market study and physically inspecting the property.

Due diligence still is being conducted on the other properties, and the Housing Commission is expected to apply for Project Homekey funds next month if they are found to be in good shape and appraisals and other factors are favorable.

With this week’s action, the Board of Supervisors agreed to enter a memorandum of understanding with the city to authorize up to $32 million in combined funds from the American Rescue Plan Act and Behavioral Health Impact Fund. The action also authorized issuing competitive solicitations for behavioral health supportive services for the projects.

The county would provide up to $4.6 million annually for at least five years for tenant supportive services, including outreach, case management and clinical case management for people who had experienced chronic homelessness and have behavioral health issues. The Housing Commission will provide 320 housing vouchers for all units, valued at $68 million.

Board of Supervisors Chairwoman Nora Vargas said the project is an example of a successful partnership and addressed a top priority in the county.

“What’s really important for us about this is it’s the creation of permanent affordable housing, and I think that’s important to help our most vulnerable populations,” she said.

Desmond said he would not support the purchases because they don’t require tenants to commit to alcohol and drug treatment.

“As a county entity, I think we really should be focusing our money on treatment and services, not on taxpayer hotels as homeless housing that do not require treatment,” he said. “Any effort to reduce homelessness must require treatment and care.”

A representative of Desmond’s office said that wouldn’t apply to people who are homeless solely for economic reasons or because they are domestic violence survivors. His office also cited a statistic from the Substance Abuse and Mental Health Services Administration that more than 80 percent of chronically homeless people struggle with drug and alcohol abuse.

Luke Bergmann, director of county Behavioral Health Services, said at the meeting that all tenants of the properties would be screened and offered any care needed. He said research has shown that the housing-first approach gets people into treatment, with successful outcomes.

“The idea here behind the Homekey initiative isn’t to ignore the significance or consequence of behavioral health conditions,” Bergmann said. “It’s to provide a space that optimizes the likelihood that people actually engage in care and then be successful.”


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