Divided or united? Debate over a hotel sale and homeless housing has forever changed Millbrae

The debate began more than a year ago, in June 2023, when county officials began scoping the purchase of the 100-room La Quinta Inn and Suites to house formerly homeless individuals. 

The project was advanced as part of Project Homekey, a statewide program offering local governments funding to convert hotels into housing for formerly homeless individuals. It’s been successfully implemented in other San Mateo County cities like San Mateo, Redwood City and Half Moon Bay with little pushback. 

A proposal to house around 99 single men and women at La Quinta proved contentious, culminating in a tense August 2023 meeting with hundreds of angry residents. The county lowered the room number to 75 and presented it as for formerly homeless families and seniors, County Executive Mike Callagy said. That specification has been stated by Callagy and other county officials repeatedly in the past year after the purchase was authorized by the San Mateo County Board of Supervisors. Still opponents question whether the demographic designation can be trusted since the language of the resolution doesn’t specify — revealing the level of ongoing and sometimes growing distrust and disconnect on the issue.

That disconnect has resulted in contentious City Council meetings, a voting rights lawsuit as city officials allege the project violates Article 34 of the state Constitution and even a scathing opinion piece in The New York Times. 

In August, councilmembers Angelina Cahalan and Maurice Goodman were recalled by a sweeping margin after a grassroots campaign. The reason? Cahalan abstained and Goodman voted no on the City Council sending a September 2023 letter expressing concerns about the purchase.

The site now has an uncertain future as the state declined to fund the project altogether, citing a “lack of site control” — active litigation is making the Department of Housing and Development wary, Callagy previously said. 

Amid the funding uncertainty, lawsuits and recalls, what’s next for Millbrae depends much on who you ask.

Recall

Cahalan and Goodman were ousted from their positions by decisive margins — 70% of voters were in favor of removing Cahalan and 77% in favor of removing Goodman, with a 46% voter turnout. 

Only having three acting councilmembers due to recall is rare — at an Aug. 27 City Council meeting, City Attorney David Lim cited a situation in 1930s Arcadia as relevant legal precedent. 

Millbrae Councilmember Ann Schneider has been an active voice against La Quinta since the project’s inception, citing the loss of hotel tax as potentially crippling should the building be turned into affordable housing. As mayor in 2022, she rallied the community against the project. 

Listing the litany of issues La Quinta brought upon Millbrae, chief among them a lack of focus on citywide issues, the recall also comes to the forefront — “people that I cared for, that I helped get elected, are gone” — alongside an acknowledgment that Cahalan and Goodman were unfairly blamed for the project. 

“It’s been horrible. The recall was horrible. It’s hurt people. It’s caused so much division amongst friends of mine on both sides of the issues,” she said. 

But to Schneider, it’s not community opposition to the La Quinta plan that’s to blame for the recall. Residents turned to the recall process after the county didn’t listen to them, she said.

“I blame the county completely,” she said. “Massive disruption in the election process in Millbrae — that would not have happened, if not for the county’s actions.” 

Other councilmembers have taken a different tack. In her position as an elected member of the Democratic Central Committee, Millbrae Councilmember Gina Papan voted against a resolution the group put out denouncing the recall. The resolution was released on grounds that elected officials who haven’t committed criminal or unethical conducts shouldn’t be subjected to recall attempts. 

“I don’t think people from the Central Committee should be involved in what happens, what the residents decide,” she said. “The resolution was not accurate — it did not state the reason for the recall.” 

Papan wasn’t involved in the recall itself, she emphasized, but completely disavowed the idea that it had been divisive. 

“I think just the opposite. I think it brought the community together,” she said. “I wasn’t a part of it, but look at the results. Look at the facts, [the] voter turnout in the middle of summer.” 

Recall organizer Albert Yam concurred. He sees the recall as a unifying effort, he said, one that engaged constituents in the democratic process and ousted representatives that weren’t aligned with the community’s values. 

“It means people care about local matters,” he said. “Also, the results from the recall shows the  sentiment of the people, what they thought about the whole performance.” 

Goodman, as the subject of the recall, has been fairly unyielding about the decision that incentivized his removal. Not every community member was unsupportive of La Quinta’s potential transition into affordable housing, he said, and his vote — as well as Cahalan’s abstention — reflected that perspective. 

“Do they not have a voice? And was I and was Angelina not their voice? And if that is their voice, then where’s the concern?” he said. “So that was the first misconception, that somehow we went against the voice of the people. It was not unanimous of the people, to not help others.”  

His personal experience with the recall was painful, he recalled. As a Black man, there was oftentimes no winning — “if you have an opinion, you’re considered angry, if you’re intelligent, then you’re uppity,” — and he often resisted calling out instances of racism, as to not be accused of playing the “race card.” 

“Being a Black elected official here in the county for almost two decades now, not that it’s par for the course, but there’s certain things you get used to that you shouldn’t have to get used to,” he said. “If I didn’t love the community and didn’t want my kids to see me as a quitter, I probably would have quit. That’s how bad it was.” 

Misinformation 

Those opposed and those in support of the La Quinta conversion have also grown increasingly frustrated with what they deem as intentional and vindictive misinformation, deception and propaganda. 

Jess Hudson, a Millbrae resident who is also public policy manager at the housing and poverty nonprofit United Way Bay Area, sees city-led misinformation campaigns as a major impetus for the vitriol.  

“I think what really happened here is there’s a lack of education in Millbrae and the county and beyond on what policies actually are effective to solve homelessness,” she said. “That’s something we really saw in the ground in Millbrae — a lack of education and a City Council that really led with fear and misinformation.” 

While canvassing, both in favor of the project and against the recall, she came up against several instances of commonly-touted, fear-based arguments, she said — in particular, that the housing, located near a school, would promote drug and substance abuse issues. 

In one case, she had a conversation with a woman who herself was formerly homeless, and was only opposed because she was concerned children would be subjected to the same proximity to illegal substances she was at a young age. 

Yam maintained that resident’s concerns around drug use were valid, citing a 2023 grant application to the California Interagency on Homelessness in which the county responded to a question on harm reduction principles by stating sobriety is not required for county-issued services, and individuals using substances would be “supported in creating plans to reduce,” but wouldn’t be required to do so. 

Drugs are against the rules, and always have been, at county-operated facilities, Callagy said, emphasizing that the La Quinta facility would not operate as a shelter, but for formerly homeless families and seniors ready for long-term housing. 

“To the extent that someone is an alcoholic in recovery or have addiction issues in recovery, we’re going to take them and support them with the services we have,” he said. “We’re not going to allow drugs there. In fact, it would be illegal for them to use drugs there. … People are constantly working on issues throughout their lives. I don’t think addiction ever goes away, but we give support necessary to overcome it.”  

In contrast to privately-owned housing, where someone struggling with addiction issues might not be receiving help, county-operated properties have 24/7 support to address issues that may arise. That includes having illicit substances on property, which Callagy said has resulted in eviction in the past. 

Millbrae resident Caryn Kali, canvassing against Cahalan’s recall, encountered another resident who believed Cahalan to be personally responsible for bringing Project Homekey to Millbrae. 

“That was a flat-out lie,” she said. 

While campaigning against the recall, resident Gina Miranda heard allegations Goodman didn’t live in his district but also demoralizing statements. 

“One person said to me, ‘we have to take care of us first,’ meaning, you people can focus on those homeless people, but I’m not going to do that. We have to take care of ourselves first,” she said. “I’m like, OK, I don’t have a comeback for that one.” 

Yet, Yam said he finds the suggestion that residents were misinformed about the La Quinta issue simply insulting. 

“To say it is misinformation in this recall election is an insult to the intelligence of the voters and disrespect to the residents who just wanted to have a voice,” he said. 

From Roomkey to Homekey

The Project Homekey initiative evolved from Project Roomkey, a COVID-era program meant to get homeless residents into safe shelters and will now be transitioning to the Homekey+ program, using voter-approved Proposition 1 funds rather than the mix of coronavirus relief and general fund dollars previously deployed. 

Since the pandemic, Homekey projects have been developed in the county for various populations, including three in Redwood City — Shores Landing, a 95-unit permanent housing site for formerly homeless seniors, Casa Esperanza, a 71-unit permanent housing site for formerly homeless individuals, and Pacific Shelter, a 74-room interim housing site — and one in San Mateo.

A 45-room South San Francisco Ramada Inn also recently received Homekey funding from the state in the program’s last funding cycle.

While the proposal originally suggested housing for single individuals, the county clarified on the record several times — including the Board of Supervisors meeting where the purchase was approved on Sept. 12, 2023 — that, based on feedback from residents, only formerly homeless families and seniors would reside there, Callagy said.

Schneider dismissed the language of the intended project as designed for “seniors and families,” because the Board of Supervisors resolution doesn’t specify who, exactly, would be housed in the building. And she has no faith in the county’s word, she said, and feels the repetitive use of the county-designated language by media outlets covering the story only serves to villainize Millbrae. 

“Horrible, horrible treatment of the city by the media, which makes us look like we’re horrible human beings,” she said. 

Negotiations and lawsuit

Changing the resident demographic was only one change the county proposed while in negotiations with the city. Another was supporting three $600,000 annual payments to offset hotel tax losses. Still another was funding the placement of two additional sheriff’s deputies in the city for three years and a two-year deployment of a mental health clinician embedded with the department and deployed on calls where an individual is experiencing a mental health crisis.

Those compromises proved futile — and subjectively incremental — in November of 2023, when Millbrae took its fight to court, filing a lawsuit against the county asserting Article 34 of the state Constitution prevents the county from purchasing the site for low-income housing without a ballot vote. 

Although Project Homekey developments are exempted from Article 34, the city’s attorneys argued the exemption is invalid because the county has not yet guaranteed the funds.

That lawsuit was dismissed because it’s not yet “ripe for determination” on grounds the county has yet to receive Project Homekey funds or legally specify it’ll be used for low-income residents, Superior Court Judge Nancy Fineman ruled June 17. Millbrae filed an appeal against the decision last month. 

As the project itself is currently without a funding source, concerns about the legal battle have drifted into a far murkier and more far-reaching sphere.

Some, like Hudson, are seriously concerned that if Millbrae wins its appeal, the case could set a precedent for other jurisdictions to take other state-funded Project Homekey developments to the voters, eliminating its current exemption status. 

Across the state, public development of affordable housing projects have been stymied by Article 34 since its inception, forcing counties and cities to work with private developers rather than undergoing costly ballot measures to meet housing requirements. Some cities circumvent those restrictions by bringing blanket development requests to voters, but many do not. 

Project Homekey’s legislative Article 34 exemption allows projects funded by public developers to move forward without those ballot measures.  

“The Homekey Program could be eliminated if Millbrae is successful in their appeal,” Hudson said. “We lose the Homekey Program, and we significantly slow production of affordable housing for the whole state.” 

Millbrae City Manager Tom Williams dismissed the suggestion as pure propaganda. 

“I don’t think it has any implications for Project Homekey statewide. Our lawsuit doesn’t have anything to do with Project Homekey,” he said. 

The way Williams sees it, the lawsuit isn’t challenging the legality of the funding source, but maintained the county doesn’t as a public agency under Article 34 have a right to approve the La Quinta without taking it to the voters. 

Papan concurred the lawsuit result would settle the issue in Millbrae alone. 

“This is a decision that will only impact Millbrae,” she said. “No other jurisdiction.”

Future 

The Desai family has owned the hotel since 1977 and wanted to take the county’s $33 million purchase agreement. They are increasingly frustrated with what they feel is their complete exclusion from the conversation around La Quinta. 

The city hasn’t communicated with them or responded to their concerns about residents coming to the hotel, yelling and angry about the purported purchase and making employees feel threatened, Anita Desai said. The revenue and occupancy numbers the city is presenting as potentially debilitating losses if the hotel sells are, in their estimation, incorrect. 

And, ultimately, the family feels used by the city as a cash cow for hotel tax — with little empathy or understanding for how unprofitable the hotel business, coming out of the COVID-19 pandemic, will be in future years, or the emotional toll the issue has taken. 

“We cannot explain. There are no words for this,” Anita Desai said of the distress. 

Arvid Desai, the owner of the hotel, also takes issue with the city’s purported focus on the financial futures of their employees — which they too care about, and would take steps to address should the hotel sell, he said — when little attention was paid to the employees of other shut-down businesses, like a nearby Lucky. 

When asked if they’re looking at other developers to purchase the property, the answer is an immediate yes. 

“The city of Millbrae people have a right to fight whatever they feel. I understand, but we are running a business, and we want to run our business peacefully,” Anita Desai said. “It was our business decision, and if it comes again, we will have that decision again.” 

When it comes to the future of La Quinta as permanent supportive housing, Millbrae is clear — per a letter sent to the Board of Supervisors, they’d like the county to drop it. The county’s next steps are far less transparent: They’re weighing all possible next steps, Callagy said. 

Some, like former Redwood City Mayor Giselle Hale, now the Redwood City lead for Peninsula for Everyone, a pro-housing group, are also frustrated about the broader implications the fight has for the county — including the emerging anti-housing narrative and cost of the recall itself. The La Quinta conversion would be a successful way to deal with San Mateo County’s homelessness crisis, she lamented. 

“It costs a lot of resources to assist somebody who’s living on the streets … it’s really better for everybody. It’s better for housed residents. It’s better for unhoused residents. It’s better for police and fire to have folks in a more stable home where they can receive services,” she said. “They’re being presented with free money and a great opportunity, and they’re turning it into an expense that the rest of the county is bearing.” 

The city is interested in positioning itself in a different light, one that isn’t anti-affordable housing at all. It’s the fastest-growing city in San Mateo County, officials consistently tout, with a recently-approved 97-unit housing project in the works and a state-approved housing element. 

“Millbrae is a city of passion and a city of compassion,” Mayor Anders Fung said. “We’re at the table to provide a solution that is impactful, immediate and cost-effective. [We’re] trying to produce housing and affordable housing.”