Apr 16, 2024 - Politics

San Diego hits a snag in opening its 1,000-bed shelter

A "Rush Press" building downtown with cars parking in front along the road.

The site of the proposed homeless shelter in the Midway District near the airport. Photo: Andy Keatts/Axios

City Hall is pumping the brakes on Mayor Todd Gloria's expensive plan to open the city's largest homeless shelter — a new 1,000-bed facility near downtown.

Why it matters: A City Council committee was poised to review the lease Thursday, but that has been canceled with no timeline to resume after a consultant hired by the city's independent budget analyst's office identified concerns in its initial review, Voice of San Diego reported Friday.

  • Charles Modica, the independent budget analyst, told the Voice his office has "significant questions" on the deal, including whether the lease payments are market rate, and needs more time for review.

By the numbers: The city's annual rent for the former print shop at the corner of Kettner and Vine was set for $1.9 million per year, with annual 3% increases, for the next 35 years.

  • That would put the city on the hook for $92 million over those 35 years, as the Union-Tribune reported.
  • The city would also foot the bill for $18 million in improvements to the property to make it a suitable shelter.
  • Gloria's office currently estimates it would cost another $30 million a year to operate the shelter.

Between the lines: Douglas Hamm, the property's owner, just completed the purchasing process earlier this month, paying $13.25 million for it.

The intrigue: The scrutiny on the lease follows years of bad real estate deals by the city, which were the focus of both IBA and city auditor reports.

  • The most extreme of those was a lease-to-own deal of a downtown high-rise that resulted in criminal charges and multiple civil suits that were settled two years ago.

The other side: Rachel Laing, a spokesperson for the mayor, said in statements to the UT and the Voice that the deal is consistent with market rates for similar space.

What's next: Laing told the Voice that the issues the IBA raised required additional analysis and possibly new negotiations.

  • Whenever the Council's review resumes, its president, Sean Elo-Rivera, said he's requesting a closed hearing to fully vet the proposal.
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