No quick solution

Despite its bland exterior, the North Park Inn, now closed, sported a collection of mismatched carpeting that would make Martha Stewart cry: In one room, blue and yellow squiggles are set off by a bright purple background and, just across the hall, the floor’s covered in a deep red with a green-and-pink floral pattern. The Inn was home to a few long-term tenants; most guests weren’t there long enough to fully appreciate the décor.

“They were ultimately running it like a brothel,” said Mark Lukacs, CEO of Diamond One Construction, whose company is overseeing the rehab of the former motel. When Lukacs did his first walk-through, he found cellophane-wrapped “Do Not Disturb” door hangers in each room containing complimentary packets of Astroglide lubricant.

By next spring, the motel will reopen as a 17-unit supportive-housing development (housing that includes on-site social services) for graduates of the Pathfinders program for formerly homeless men recovering from a drug or alcohol addiction. Diamond One’s plans call for a kitchenette to be added to each room to allow occupants to live independently, and a house next door that was used for motel overflow will become Pathfinders’ new headquarters. Not only will the buildings get interior overhauls, but when they re-open next April, the former neighborhood eyesores will be two of the prettiest structures on the block. Lukacs estimates that the cost-savings of working with an existing structure is at least $4 million, not to mention the time-savings. The project’s total price tag is a little more than $4 million, paid for by loans from the San Diego Housing Commission and the city’s Redevelopment Agency. Rent will be subsidized by the federal Shelter-Plus-Care program with residents expected to pay a portion.

The idea of turning older hotels into supportive housing isn’t a new idea, said Jonathan Hunter, western region managing director for the Corporation for Supportive Housing. It’s how nonprofits like L.A.’s Skid Row Housing Trust and SRO Housing Corp.—both of which have converted hundreds of units into supportive housing—got their start.

“Virtually all of it was acquisition and rehab of SRO [single-room occupancy] hotels,” Hunter said.

San Diego has more than 100 residential hotels, according to a list maintained by the San Diego Housing Commission, the majority of them located Downtown. Some are newer-construction, like Affordable Housing San Diego’s three SROs (the Baltic, Island and J Street inns) that are often pointed to as models of well-run residential hotels. Other Downtown SROs, however, are decades-old buildings where the rent is affordable solely because the buildings are so run-down.
Because older SROs are often housing of last resort for people who’d otherwise end up on the street (and, likewise, sometimes the only option for folks coming off the street), state and local laws, strengthened in 2004, restrict what an owner can do with the building. For every affordable SRO unit an owner takes off the rental market, there’s a one-to-one replacement requirement. The owner must also pay each long-term tenant the equivalent of two months’ rent to cover relocation costs.

“One of the reasons [SROs] are so rundown is precisely because of the replacement rules,” Hunter said. “For-profit owners don’t have any incentive to rehab and, in fact, some disincentives.”

In 2006, the city’s Redevelopment Agency worked out a deal with the owners of the Southern Hotel, an 89-unit historic building. In exchange for a $1.6-million loan to cover rehabilitation costs, the owners agreed to keep 50 of the 89 units affordable to people making less than $28,000 a year. And in late 2007, the Housing Commission reached a settlement with the owners of the Hotel Churchill, a 92-unit SRO located along the C Street trolley tracks. As CityBeat reported in October 2005, the Churchill’s owners, J & J Properties, tried to evict tenants in hopes of shutting the place down. J & J unsuccessfully challenged the city’s SRO protection law in court and ultimately agreed to a settlement under which J & J will have to complete a renovation of the hotel by the end of November and set aside 57 of the 92 units for low-income tenants.

While there’s no question that affordable rentals are needed Downtown, so, too, are supportive-housing units, which are held up as the best way to get homeless folks suffering from addiction and / or mental illness off the street and stabilized. The regionwide Plan to End Chronic Homelessness calls for roughly 1,500 new supportive-housing units to be built during the next few years, though where they’ll go and how they’ll be paid for isn’t clear.

This push for more supportive housing comes amid growing pressure from Downtown residents for the city to do something about the homeless. Ben Mason, a real-estate agent who focuses on Downtown, told CityBeat that a coalition of business owners and residents has been organizing around the issue of homelessness and that a solution “is overdue.”

But for large-scale supportive-housing projects—even rehab projects—funding, right now, is scarce. “That’s the major barrier,” said Amy Benjamin, director of housing and homeless services for the city. One new-construction supportive-housing project, Cedar Gateway, located on Cortez Hill, was stalled until federal stimulus money came through this week to cover construction costs.

Until recently, the state Mental Health Services Act, also known as the “millionaire tax” because it imposed a 1-percent tax on personal income exceeding $1 million, was seen as a way to boost supportive-housing production, but “millionaires aren’t making as much money right now,” said Jeff Graham, vice president of redevelopment for the Centre City Development Corp. “That program’s funding level has dropped by 30 to 40 percent. That’s huge.”

State cuts to mental health and housing programs have only compounded the problem, Graham said. And, of the funding streams still available, many require each supportive-housing unit to have its own kitchen and bathroom. Older SROs usually have shared bathrooms and no kitchen facilities.

Beyond MHSA, San Diego County’s “had a very difficult time figuring out what kind of service funding it could attach to housing,” Hunter said.

In San Francisco, he pointed out, the county Department of Public Health uses general-fund dollars to help cover building renovation and support services. Unlike San Diego County, San Francisco has a county hospital (as does L.A.), where homeless people can rack up tens of millions of dollars in emergency-room costs.

“They know in the long run it’s going to save them money,” Hunter said. “If you can cut all those people’s use of the ER by almost 60 percent—which supportive housing does—you’d save a huge amount of money. So [San Francisco] County’s been willing to invest general-fund dollars to provide the services that enable people to stay in housing.”    

Write to kellyd@sdcitybeat.com and editor@sdcitybeat.com.