San Diego seeks $100 million to turn hotels into homeless housing

The city of San Diego is hoping to again use state funds to transform hotels into housing for its homeless population.

Driving the news: The San Diego Housing Commission voted Tuesday to ask the state for up to $105.8 million to buy two hotels, just before the program's Friday application deadline.

• The city is eyeing the 105-unit Extended Stay America in Kearny Mesa, and the 161-unit Extended Stay America in Mission Valley.

Why it matters: If the state greenlights the money, the city could turn the hotels into 266 apartments with on-site services for an unhoused population that grew 22% last year.

By the numbers: Housing commission staffers and board members argued at Tuesday's meeting the acquisitions would add units faster and cheaper than the affordable housing industry could build them.

• The Kearny Mesa hotel, after renovations, would cost $400,000 per unit, commission staff estimates.
• Meanwhile the Mission Valley lodging would come in near $500,000 per unit, staff said.
• The cost of recent permanent supportive housing projects approved by the housing commission has averaged around $630,000 per unit.

What they're saying: "It's a great price compared to what we've been seeing … before people get up in arms about what we're spending," said Eugene "Mitch" Mitchell, chair of the housing commission's board.

Yes, but: Since the Homekey program started in 2020, the housing commission has faced scrutiny over hotel units costing less than permanent supportive housing, despite often being pricier than other comparable hotel purchases.

Context: The city has so far received $49.5 million in state funds to create 372 affordable units under the state program.

What's next: San Diego has already applied for $23 million for a 62-unit Ramada Inn in Midway, and a 13-unit property in Ocean Beach. Chula Vista asked for $13 million to buy a 31-unit hotel.

• California has reserved $34.3 million for the San Diego region.
• Beyond that, local projects need to compete for funding, with grants to be announced in September or October. Projects must be occupied within 15 months.