Taxpayers Association Joins in Opposition of Proposed Kettner and Vine Shelter Lease - Times of San Diego
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| Bigger is not Better - Figure from IBA Report shows Shelters with >100 beds tend to have less Positive Outcomes, with <15% compared with smaller shelters around 35% |
Taxpayers Association Joins in Opposition of Proposed Kettner and Vine Shelter Lease - Times of San Diego
Ahead of the City Council’s meeting Monday afternoon, the San Diego Taxpayers Association is the latest group to call for a delay in approving the proposed 30-year lease for a 1,000-bed homeless shelter.
The planned lease of the former print shop at Kettner Boulevard and Vine Street in Middletown would create the city’s largest homeless shelter yet. But an analysis released Friday by Independent Budget Analyst Charles Modica and City Attorney Mara W. Elliott has raised concerns.
The report acknowledges the need for shelter space, but says that the cost of the shelter would be above market rate. Over the course of the 30-year lease, San Diego would pay $72 million in rent.
Additionally in the proposal being presented to the council, the city would have authorization to spend up to $18 million to renovate the structure for planned utilities. These utilities include a commercial kitchen, laundry facilities, dining areas, indoor and outdoor recreation areas, showers and restrooms.
Annual operating costs are estimated to be at $26.4 million with onsite services including job training, meals, housing navigation and behavioral health services.
The taxpayers association, a nonpartisan group of individuals who work to promote effective government on behalf of all taxpayers within the county, have their own concerns surrounding the report. In a statement released Monday morning, the association declared that taxpayer interests are one of the many issues not considered by the current plan.
“Delaying and going back to the drawing board is an opportunity for the city of San Diego to show taxpayers it is learning from its past real estate blunders,” said Haney Hong, president and CEO of the taxpayers association. “But the fact that we’re here nonetheless shows the city has a long way to go to earn taxpayers’ trust with their dollars.”
The taxpayers association is urging the council to address multiple concerns, including how the cost of the lease was assessed and the failure to issue a request for proposals to explore more competitive options. And, like other critics, the association urges reconsideration of whether the property’s temporary lease term is the best way to reach the city’s long term goals around homelessness.
The City Council is scheduled to vote on the Kettner and Vine lease on Monday, July 22. at 2 p.m.
City News Service contributed to this report.
Summary of IBA Report Number: 24-18 Review of Proposed Lease for a 1,000-Bed Shelter at Kettner and Vine Site
- Lease Terms: The proposed 30-year lease is above market rates, with a starting rent of $1.95/sq ft/month (vs. market rate of $1.45-$1.55) and a high 3.5% annual escalator.
- Upfront Costs: The City would pay an estimated $13 million for tenant improvements, on top of $5 million from the landlord.
- Ongoing Costs: Annual operating costs are estimated at $25-30.7 million. Up to $29.8 million in new ongoing funding would be needed, which has not been identified.
- Site Selection: The property was not identified through the City's normal search process. An RFP for shelter sites may have yielded more competitive options.
- Due Diligence: Independent appraisal and building assessments were not conducted.
- Alignment with Strategy: The proposal diverts funds from affordable housing development, which the City's homelessness plan prioritizes over emergency shelter.
- Bed Capacity: It's unclear if all 1,000 beds would be new or if some would replace existing shelter beds slated for relocation.
- Outcomes: Larger shelters tend to have worse outcomes than smaller ones. Monitoring outcomes will be critical.
- Funding Risks: Without new revenue, existing City services may need to be cut to fund operations.
Key tables and charts
1. Initial Property Costs, Proposed Lease Terms, City Investment, and Value/Return for Owner:
This table breaks down the financial aspects of the proposed lease deal. It shows the property purchase price, tenant improvement costs, lease terms, and compares the City's investment to the owner's return. It illustrates that the City's investment ($46.9 million present value) significantly exceeds the property's purchase and improvement costs ($31.3 million).
2. $13.8M in City Funds Identified for Tenant Improvements:
This table details the funding sources for the tenant improvements. It shows that most of the funds ($10.4 million) come from Community Development Block Grants, which would otherwise go towards affordable housing development.
3. Anticipated FY 2025 Shelter Relocations:
This figure visually represents the planned relocations of 701 shelter beds in FY 2025. It illustrates the potential impact on the city's existing shelter capacity if replacement beds are not identified.
4. Community Action Plan Update Intervention Need Estimates:
This graphic shows the estimated needs for various homelessness interventions. It highlights that while emergency shelter is needed (465-930 beds), other interventions like diversion (2,700) and permanent housing (6,940) have higher estimated needs.
5. Positive Exits by Shelter Size for Single Adults (FY 2023):
This chart compares the percentage of positive exits (to permanent or long-term housing) between smaller shelters (<100 beds) and larger shelters (>100 beds). It shows that smaller shelters tend to have better outcomes (35.5% positive exits) compared to larger shelters (12.5% positive exits).
These visuals and data points support the IBA's analysis by illustrating the financial implications of the lease, the impact on existing shelter capacity, the alignment with the city's homelessness strategy, and potential concerns about shelter size and outcomes. They provide crucial context for the Council to consider when evaluating the proposal.
Criticism grows over proposed mega shelter after IBA report
SAN DIEGO (FOX 5/KUSI) — Community members and homeless advocates gathered at Kettner Boulevard and Vine Street Thursday morning, the proposed site for a mega shelter, to oppose the project.
“There’s no good case for putting a 1,000 homeless people into a shelter like this, ” said John Brady, a homeless advocate. “This is a disaster waiting to happen.”
“They have to stop, they have to figure out a way to start this project first with community input and second with details answer to very questions raised by the expect analysts,” said Paul Krueger, a District 9 resident.
The growing concerns over the shelter come after a report from the city’s Independent Budget Analyst showed criticism of the plan overall. The report said the project could cost the city up to $30 million a year to operate, going beyond the budget, and the report claims that without new funding, the city would need to cut existing programs or services to pay for this shelter.
In an interview in Gloria’s office Wednesday afternoon, the mayor said, “with all due respect to our independent budget analyst, he’s wrong” regarding the report’s finding that the building is more than market value.
Mayoral candidate Larry Turner slammed the proposal Thursday.
“So much of this has been done in the dark that we don’t get to see the discussions that are going on, all the negotiations and the price of this,” said Turner. “We can come up with something better than this, we just got to think and talk to people and don’t be in such a rush before November 5th.”
Opponents say homelessness is an issue that needs to be addressed but the proposed plan is not a solution.
‘Wrong,’ San Diego mayor says of analysis of proposed mega shelter
SAN DIEGO (FOX 5/KUSI) — A criticizing report on the City of San Diego’s plan to build a 1,000-bed homeless shelter in Middletown is being met with criticism from Mayor Todd Gloria.
There are conflicting messages within city hall regarding the city’s proposed 1,000-bed homeless shelter at the corner of Kettner Boulevard and Vine Street.
A report from the city’s Independent Budget Analyst showed criticism of the plan overall, but the mayor is pushing back.
In an interview in Gloria’s office Wednesday afternoon, the mayor said, “with all due respect to our independent budget analyst, he’s wrong” regarding the report’s finding that the building is more than market value.
The independent review shared the upfront cost of the project is $13 million to turn the 64,000-square-foot property into a place to house 1,000 homeless.
The analysis reports the 30-year lease is above market rates. The mayor refutes that.
“It’s not above market it is not too expensive, and this is the right thing to do for the most pressing issue for our city right now,” the mayor said.
The report said the project could cost the city up to $30 million a year to operate, going beyond the budget, and the report claims that without new funding, the city would need to cut existing programs or services to pay for this shelter.
“That’s also incorrect,” the mayor said, disputing the claim that the city would have to cut other programs or services.
“I have every confident the independent budget analysts would not put forward a memo on an issue of this gravity without feeling confident in the experts that they’ve hired to provide guidance,” Council President Sean Elo-Rivera said, adding the IBA report is based on expert, third party analysts, and the position itself exists to perform these analyses, after previous bad deals within the city.
“We want to be guided by expertise not by feelings,” the council president added.
“There’s a true and significant cost to taxpayers to leaving people unsheltered on our sidewalks that folks don’t talk about and that is not reflected in the IBA’s report, that is homeless individuals utilizing paramedics and ambulances, utilizing our emergency rooms,” the mayor said. “It is cheaper to house people permanently and that is why we are pursuing this approach.”
“I don’t question the numbers from the IBA and I have no reason to believe its wrong,” Elo-Rivera said.
Charles Modica, the city’s independent budget analyst, said the mayor has not reached out to his office to discuss what he finds inaccurate.
“I am confident of the analysis we put forward, it is informed by folks in our offices own expertise as well as outside expertise from real estate consultants,” Modica said in an interview with Fox 5/KUSI News Wednesday afternoon. “Unfortunately the mayor has not reached out to me or my office so i don’t know the particulars of what he thinks my report is wrong about.”
Key financial elements of the final lease terms are summarized below, according to the report:
- 30-year term
- $1.95 per square foot as the starting basis for monthly rent
- 19-month rent abatement
- 3.5% cost escalator for year-over-year rent increases, commencing 12 months after the
Substantial Completion Date of the Tenant Improvements - $5.0 million allowance for/landlord contribution towards Tenant Improvements
The report also claims the proposal doesn’t fully align with the city’s Community Action Plan on homelessness, which called for more prevention and permanent housing. It also found the city would spend $15 million more to rent the property, instead of purchasing one.
“Council should also consider how program outcomes will be regularly monitored, the timing of
this proposal given both the need for additional efforts to combat homelessness as well as the
City’s limited budgetary resources, and whether a more competitive process for identifying
permanent emergency shelter sites could result in more financially beneficial terms for the City,” the report reads.
Despite the conflicting statements, the city council will vote on the proposal during its council meeting Monday.
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