Scathing report on San Diego shelter deal issued by independent analyst
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The site of the proposed shelter in Middletown, north of downtown and near the airport. Photo: Andy Keatts/Axios
Mayor Todd Gloria's proposal to turn a warehouse into the city's largest homeless shelter is overpriced and could force cuts to other city services, an independent financial analysis found.
Why it matters: The proposal for a 1,000-bed Middletown shelter came as the city's unhoused population increased last year, but it received intense scrutiny in light of the city's lengthy history of bad real estate deals.
Follow the money: The independent budget analyst, which examines proposals for the City Council, issued a late-Monday report that is scathing by its standards.
- The initial annual lease rate of $1.95 per square foot (on a 65,000-square-foot property) is about 25% above market rate, per the analysis.
- And that's likely to worsen because the 3.5% annual rent increase is also above market (below 3% would be standard, the report said).
The city's total investment to lease the property for 30 years and make necessary upgrades is expected to be $15.7 million more than just buying and improving it.
What they're saying: "In sum, the proposed lease terms represent a premium above competitive market rate," the report reads in a conclusion set in boldface.
- Yes, but: The independent analyst says overpaying may make sense if officials determine it's worth more to the city than anyone else, but the public should be told that's what's happening.
- The idea has also received mixed reviews from advocates for the homeless, who cite the difficulty of effectively operating such a large shelter.
Between the lines: Gloria's pursuit of the project started with his State of the City pledge to add 1,000 beds in one project, but the independent analyst says this project might add far less.
- It's expected to cost $30 million each year to operate the mega shelter — the city has not identified any new revenue, so services might have to be cut to cover expenses.
- The city could relocate existing beds to the warehouse and rely on funding from those shelters, but that would raise the total beds by only 571.
Zoom in: The deal also calls for the city to spend $13 million turning the warehouse into a shelter, but the scope of that construction isn't yet available for review.
The other side: Gloria spokesman Nick Serrano said in a statement that council members should support the deal because it could be a game changer on homelessness.
- "This is a worthy proposal that will tackle the biggest challenge in our city right now in getting up to 1,000 people off the street, connected to services," he said.
- "However, we will make clear to the City Council that doing nothing is not an option," he said. "We must add more shelter beds to our system and the mayor is resolute in ensuring that happens."
What's next: The City Council is set to vote on the mayor's proposal Monday, following multiple closed-door negotiations, and the independent analysis is bound to frame that discussion.