On June 30, 2020, Governor Newsome announced the $600 million Homekey Initiative, a hotel/motel conversion strategy designed to bring permanent housing for the homeless online quickly and cost effectively. An additional $200 million was made available by the Joint Legislative Budget Committee on October 23, bringing the total funding available to over $800 million. Awardees from a pool of applications have been announced in 6 phases totaling 5,068 units. The average per-unit cost to Homekey is $139,000 – well below the average cost in California to build new housing units. Four Homekey projects have been funded in Santa Clara County. Hotel vouchers have long been a tool in emergency rapid re-housing programs. Making the transition to adapting hotel and motel spaces as permanent housing is not simple, but the opportunities afforded by these new resources make some of these projects feasible. 

The Homekey initiative builds on the state’s current COVID-19 emergency housing response effort, Project Roomkey, which has provided state funding to rent local hotel and motel rooms to medically vulnerable unhoused people. Over 14,200 people have been served by Project Roomkey motels since the pandemic began, according to estimates from the California Department of Social Services. 

The need for permanent supportive housing in Santa Clara County pre-dated the pandemic and will continue to be a high priority.  The January 2019 Homelessness Census and Survey Comprehensive Report identified 9,706 unhoused county residents, almost 8,000 of whom were without any shelter. Because many people who are homeless are older adults or have underlying medical conditions, they may be more vulnerable to severe illness compared to the general population. In March of 2020 it became clear that the congregate settings of shelters and the unsheltered outdoors or encampment living carry increased risks for Covid-19 spread and transmission. Locating stable, single-occupancy or family unit shelter is critical for protecting medically vulnerable homeless people from Covid-19. The serious health risks faced by unhoused people poses both human and financial costs to County government. Conversion of hotels and motels to permanent supportive housing has the potential to streamline the availability of these housing units during the pandemic and beyond.

 Under Homekey, counties and cities across the state have had the opportunity to identify which buildings they intend to purchase and apply to the state for $600 million in grant funding dedicated to this purpose, much of which comes from the State’s direct allocation of the federal Coronavirus Aid Relief Funds. The final deadline for applications was September 29, 2020. These funds must be spent and project escrow must close by December 30, 2020, a requirement of federal Coronavirus Aid Relief funding, creating a highly challenging deadline. HCD, which administers the Homekey program, will provide ongoing support to assist grantees in meeting the expenditure deadline, and has already developed an accelerated application and award process.

The attempt to purchase as many hotels and motels as possible in such a short period of time has never been tried in California. Affordable housing builders say they’re generally excited about Newsom’s proposal, which according to the administration’s preliminary, rough cost estimates could purchase as many as 6,000 units of new housing. However, veterans of these types of motel conversions also warn the process is more complicated, time-consuming and expensive than is commonly understood, and that prices vary considerably from region to region and according to the quality of motel. The purchasing and permitting process that must be completed within six months often takes two years or more. Read an excellent explanation of the process in this CalMatters article.

In order to shorten the regulatory process, acquisitions and conversions undertaken as part of Homekey will also benefit from a CEQA exemption and automatic zoning compliance to new homeless housing utilizing newly available state and federal funding.

Once acquired, the local governments will plan for the long-term social services and subsidy needs of the Homekey buildings, with access to $50 million in dedicated Homekey support and an additional $300 million in general local homelessness support which can be used for Homekey, among other priorities. In addition to these fund sources, counties and cities can access additional federal stimulus funding which, while available for a variety of purposes, is eligible to be used to provide safe shelter for homeless individuals during the pandemic.

Homekey Projects in Santa Clara County

Four projects in Santa Clara County have been awarded Homekey funds:

  • The City of San Jose has been awarded $14,516,000 to turn a 76-unit property currently operating as a Project Roomkey project into permanent housing.
  • The City of Mountain View will receive $12.3 million to acquire land to site 100 manufactured units that will serve as interim housing with wraparound services and a coordinated exit strategy, more than doubling shelter beds in the city. Overall cost is under $100,000 per unit.
  • Santa Clara County will receive $29.2 million to acquire an occupancy-ready, 146-room property with in-room kitchenettes for permanent residencies.
  • Santa Clara County will receive $9.5 million to acquire a 54-unit property that will serve as permanent housing and interim housing, both with supportive services for people who previously experienced homelessness. The property will eventually be developed into 110 units of new permanent supportive housing.

Additional Resources:

UC Berkeley Terner Center for Housing Innovation: Addressing Homelessness Through Hotel Conversions – December 2021

Santa Clara County Homelessness Census and Survey Comprehensive Report 2019