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By Marisa Kendall

It seemed like a simple and speedy way to address the Bay Area’s massive homelessness problem— use pandemic funding to turn hotels into low-cost housing for people with nowhere else to go.

But it turns out, it’s not quite that easy. Nearly a year after cities and counties in the region spent Gov. Gavin Newsom’s Homekey funding to buy properties for their homeless residents, some of the buildings still aren’t ready to provide long-term housing.

Efforts to turn a motel near the San Jose airport into permanent housing have stopped in their tracks after a state lawmaker accused the city of proposing rents that would displace the people it’s supposed to be helping. In Alameda County, plans to convert two hotels stalled because officials haven’t found nonprofit developers and service providers to take on the projects. And in the North Bay, a developer is scrambling to come up with money for extensive renovations on the buildings it

Cheryl Fleming speaks about the living conditions at the Best Western Surestay in San Jose on Oct. 30. As the city works to transform the hotel to a permanent Homekey project, residents are upset with the slow process of repairs that has left holes in the ceiling and elsewhere.


Traffic cones circle the empty pool at the Best Western Surestay, one of the regional locations struggling to become a permanent Homekey location for homeless people.


“This is part of Homekey round one, and frankly the state did a great job about getting it out quickly, but I think the flip side of that is they’remaking it up as they go along,” said Vivian Wan, chief operating officer of Abode Services, the nonprofit overseeing the transition of the San Jose motel. “So I think a lot of the regulations and whatnot come after that fact. And I think the city and the state are just trying to figure it out.”

Homekey was Newsom’s unprecedented, warp-speed push to ramp up the state’s supply of affordable housing as the homelessness crisis spiraled out of control and health professionals worried about people catching and spreading COVID-19 in encampments or crowded shelters. Most of the nearly $850 million was doled out by October 2020, and by December, all 94 projects in the state had closed escrow.

Experts agree the program was a boon for homeless housing. Cities, counties and developers already are lining up to apply for new funds in Homekey 2.0. But a look at some of the Bay Area’s original Homekey projects shows the challenges that came with the innovative model.

The Best Western SureStay Hotel in San Josewas occupied when the city bought it using Newsom’s funding. For nearly two years, it has provided free shelter to homeless people for whom COVID-19 poses an especially grave risk, such as elderly people or those with medical conditions. Earlier this year, those residents started receiving letters warning them that in October they’d either have to start paying $627 a month or find new accommodations. Even though the rent was far below market rate, for some people it still seemed impossible.

Cheryl Fleming, who has COPD and chronic back problems, receives $974 a month in Social Security. She pays between $350 and $400 for a storage unit, car insurance and cell phone.

“I’m not going back on the street,” Fleming, 65, said. “I won’t make it if I go back on the street. I won’t live.”

Fleming, her neighbors and local activists began speaking out about the new rent, and asking why the city wouldn’t set rents on a sliding scale so everyone would pay one-third of their income. That’s how many homeless housing programs operate. The questions caught the attention of Assemblyman Alex Lee, D-Milpitas, who said he was “quite appalled” by the situation. He notified the state’s Department of Housing and Community Development.

After HCD stepped in, San Jose froze theHomekey project while it works with the state to re-examine its rent prices. Now, the site won’t transition to Homekey housing — or charge rent — until February.

In the meantime, SureStay residents are frustrated with how long it’s taking the city to renovate the property. The city cut large holes in hallway ceilings to check the condition of the building’s interior last spring. Months later, the holes are still there and residents say they’re sometimes sprinkled with debris when they pass underneath.

“While the holes may be unsightly, they pose no structural concerns,” city spokesman Jeff Scott wrote in an emailed statement, adding that repairs to the property are expected to take a few months.

Alameda County received Homekey funding last year to turn two hotels near the Oakland airport — both of which are being used as temporary pandemic shelters— into long-term housing. But neither transition has started. By now, the county had hoped to find nonprofit developers and service providers to take over the projects, said Kerry Abbott, director of the county’s office of Homeless Care and Coordination. But so far, they’ve had no luck.

“This still has been such an amazing influx of opportunity, and we’ve been doing our best to really use the opportunities as well as we can,” Abbott said. “But not to say it doesn’t come with challenges.”

In the North Bay, nonprofit Burbank Housing Development Corporation is still trying to fill in funding gaps from the two Homekey awards it received last year. The Homekey grants typically cover the cost of buying a building, but not necessarily the cost of renovations or staffing, upkeep and other ongoing expenses.

“They just wanted to give you money to get folks housed quickly, and you were kind of on your own with how to make it pencil for the next few years,” said Jocelyn Lin, Burbank Housing’s associate director of housing development.

That’s a particular challenge with old motels that need extensive renovations — such as the vacant Economy Inn in Santa Rosa. Burbank Housing bought the property with theKashiaBandof Pomo Indians of the Stewarts Point Rancheria. Now, they have to install new electrical and plumbing systems, add kitchenettes to each room, and make the property accessible for people with disabilities before it can be used for long-term housing — in February at the earliest.

“It’s been a struggle,” Lin said. Other projects have been moving slowly in part because there’s still a need to use some buildings as temporary homeless shelters while COVID remains a threat. Homeward Bound of Marin plans to apply for a building permit this month to convert its Corte Madera hotel into long-term housing. A year-long renovation project to turn a San Rafael office building into housing won’t start until next summer. Meanwhile, both sites have been serving as shelters.

“In the interim, they have provided a viable service and they’ve been able to help a lot of very vulnerable homeless people stay off the streets, but also not living in congregate settings where they may have got and spread COVID,” said Homeward Bound Deputy Director Paul Fordham. “So they’ve already helped a lot of people already.”

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