Grand jury report suggests success metric for San Mateo County’s Homekey hotels

But the county has “not yet clarified” what data will be used to determine long-term success of the converted hotels in getting formerly homeless individuals into permanent housing, the report said. Project conversions began in 2020.

County Executive Mike Callagy said the county is looking into the information provided by nonprofit and housing organizations that run the housing projects.

“We look at it holistically,” he said of the county’s approach to homelessness. “We drill down into hotels, to bring nonprofit providers in, really drill down into information … what are statistics looking like, how we’re moving people through the system.”

The report asked for a long-term strategic plan to be presented to the community by June 2025 and communication programs, closer collaboration with nonprofit agencies, property condition reports, and regular collaborative meetings by the end of 2024.

Millbrae City Manager Tom Williams said the grand jury report “vindicates” the city’s concerns on the hotel conversion project, including a lack of communication from the county, public safety issues and a loss of hotel tax.

“These are all the things we’ve been concerned about. We identified and tried to communicate with the county — all of these items that need to be addressed,” he said.

The report acknowledged that “cities raised concerns that loss of hotel taxes would result in significant revenue reduction that would affect their budgets,” although it said the county had attempted to alleviate those losses with reimbursement agreements.

Numbers provided in the report also emphasized the financial benefits to converting hotels into housing through Project Homekey, rather than building ground-up construction: of the five completed hotels, the average cost per unit, including purchase and development, was around $362,000.

By contrast, conventional new construction in San Mateo County and comparable areas cost around $632,000 per unit — double the price, per a 2023 MidPen Housing report cited in the report.

Williams said, however, that La Quinta’s $33 million purchase cost and $15 million renovation cost would create a per-unit price point of around $656,000 per room, higher than either figure.

The county should withdraw the La Quinta project and pursue more economically feasible housing units elsewhere, he said.

“The feasibility of La Quinta, we always questioned that. Not only high cost per unit, then you talk about job loss per unit, revenue loss per unit,” he said.

Per San Mateo County data, the total development cost per unit to build ground-up affordable housing is, on average, $912,000 — making the purchase of La Quinta a cheaper financial investment than building ground-up, Callagy said.

The numbers discrepancy in the civil grand jury report versus San Mateo County’s own data could potentially be attributed to quoting the construction cost versus the total development cost, county officials said.

Additionally, remodeling for long-term housing is much more expensive than remodeling previous interim housing projects, Callagy said.

“We do feel it’s a fair price, given the price of housing in the county. We’re not going to find hotels like this, where 50% of the rooms have full kitchens in them. It’s just very, very difficult,” he said. “We’re talking about the most expensive land prices in the state.”

In Half Moon Bay, where interim shelter Coast House is located, and Redwood City, which is home to long-term housing projects Shores Landing and Casa Esperanza as well as interim housing at El Camino House, city officials are pleased with the county’s involvement, the grand jury report said.

“Redwood City continues to implement and support initiatives aimed at providing housing solutions for our unhoused and senior community members,” Deputy City Manager Jennifer Yamaguma said. “We recognize the transformative impact that these hotel conversions can have in offering safe and stable living conditions for those most in need.”

Half Moon Bay City Manager Matthew Chidester did not respond to request for comment on the impact, but the report denoted the town’s response as “notable,” aptly addressing potential community concerns with a detailed action plan.