One Way to Get People Off the Streets: Buy Hotels

For homeless people, a place to live is life changing to a degree that almost no other intervention can provide.

Gregory Sanchez outside the Hotel Diva in the Tenderloin district of San Francisco. Mr. Sanchez lived in a tent for six months before moving into the hotel in November.Credit…Bryan Meltz for The New York Times

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By Conor Dougherty

SAN FRANCISCO — The inside of the van was lined with plastic. The driver was masked and ready to go. There was a seat for just one passenger.

Gregory Sanchez eyed the setup warily. Mr. Sanchez was 64 and homeless, and the van was there to ferry him from a sidewalk tent to a room where he could shelter from the pandemic. It was good news, blessed news, he said. It was also a little creepy.

Mr. Sanchez didn’t know where he was going, and the sheets of foggy plastic, which coated the seats and windows to prevent the spread of disease, made it impossible to see out the window. Riding away from his longtime home in San Francisco’s Mission District, he cycled through dark possibilities — “It felt like I was in one of those movies where they take you to an army base or something” — before the door opened in front of a boutique hotel. He stepped down from the van and walked to a curved granite reception desk where he set a bin of clothes on a luggage cart.

“I go like, ‘Is this real? Can this be real?’” he said. “And they take me to the room, and the room is beautiful.”

Mr. Sanchez’s new home, on the fourth floor of San Francisco’s Hotel Diva, came courtesy of a state and federal effort to rent rooms for homeless people as Covid-19 spread. The program began in March 2020 at a pair of hotels near the Oakland Airport, and at its peak extended to hundreds of properties from Crescent City to San Diego, allowing 35,000 homeless Californians to take refuge from the streets.

Covid-19 is the proverbial crisis that became an opportunity — one that advocates and politicians say allowed them to treat homelessness like the national disaster that it has long been. Over the past decade, as the state’s median home value has risen to $700,000, the number of people sleeping on the streets has jumped 40 percent to about 113,000 residents, or a little over half of the nation’s unsheltered homeless population. This happened despite various multibillion-dollar initiatives to curb it. The sight of freeway-side shanties and parks full of tents has simply become part of the California landscape.

But the pandemic, which according to a dire early projection could have killed 25,000 homeless people in the state, added two sorely needed ingredients — federal money and an excuse to move fast. With the travel industry hobbled and stimulus money continuing to flow, Gov. Gavin Newsom has since doubled down by creating a program to buy hotels in hopes of creating permanent homeless housing en masse. “This is going to put us on a trajectory to do in literally a couple of years what would have easily taken us a decade or two,” he said in an interview.

In a blizzard of transactions that sidestepped many of the local rules that make California one of the nation’s hardest places to build, the state spent $800 million on 94 projects that will become permanent supportive housing, or housing that is paired with on-site social services. It has been a clear success for Mr. Newsom, a Democrat who was popular statewide but is now facing a potential recall. What was once a half-baked idea that in February 2020 got a sentence in his State of the State speech has since created 6,000 new supportive units, or about triple the usual pace of around 2,000 units a year. Hotel Diva, which in December was bought from an investment group by the nonprofit Episcopal Community Services of San Francisco with help from a state grant, accounts for 130 of them.

California’s hotel buying program, officially called Homekey, is both a drop in the bucket and a remarkable achievement. The state, which has 40 million residents, still has a crippling housing affordability problem, and even the most successful outcome would do little more than buy time to confront the decades-old structural issues — high housing costs, low wages, poor mental health care — that keep new people falling into homelessness faster than those on the streets can get out.

It has also set up a national model to fashion tens of thousands of new homeless quarters for less than the cost of new construction, and in a fraction of the time, by repurposing hotels, strip malls and other distressed real estate that has been heavily discounted by the pandemic and its economic fallout. Several other state and local governments, including Oregon, Austin and King County, Washington, have since begun similar efforts. The $1.9 trillion American Rescue Plan, signed by President Biden in March, allocates $5 billion to fund efforts to provide housing for homeless people, including through conversions.

“Whether they intended to or not, the State of California ran this very thorough proof of concept,” said Mary Tingerthal, a consultant who used to head Minnesota’s housing finance agency.

Ms. Tingerthal, who has spent the past few months studying hotel-buying programs for the National Alliance to End Homelessness, said that over the next to two to three years, governments should be able to convert 50,000 to 100,000 hotel rooms to supportive housing — if they can raise the money to buy them. Much of that opportunity lies at economy hotels whose rooms will not be as nice as Mr. Sanchez’s place at the Diva, where he has propped his 49ers pillow against a sculpted steel headboard. But when the various hotel conversion programs are combined with efforts to transform other commercial real estate to housing, it becomes a once-in-a-generation opportunity to, if not exactly solve homelessness, at least make a dent.

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