Discussion on San Diego’s plan to lease and convert a commercial building into a long-term 1,000-bed homeless shelter and resource center is now postponed until September, the mayor announced July 25.
The San Diego City Council voted 7–2 on July 22 to revisit the topic later, and Mayor Todd Gloria said Thursday that the decision to further delay the discussion was made to allow additional time for project review.
Concerns that have been raised by the council include property rent, operational cost, and insufficient analysis of the leasing terms.
According to Mr. Gloria, during the delay, city officials will work with the city attorney’s office regarding such feedback and will also convene a working group to develop a design and preliminary operations plan.
“As Mayor, I am resolute in further expanding shelter because the status quo on our streets is unacceptable,” Mr. Gloria said in a statement.
Under a 30-year lease agreement, the city plans to renovate a commercial building in the city’s Middletown area, near the airport, into a homeless shelter campus. The facility will include a commercial kitchen, laundry facilities, dining areas, recreation spaces, and showers.
In addition to providing shelter, the project will offer job training, meals, housing navigation, and behavioral health support.
The 65,000-square-foot property, located at Kettner Boulevard and Vine Street, covers 1.8 acres and includes a two-story building with 134 parking spaces.
The city council’s vote on July 22 instructed city attorneys and staff to prepare an analysis of the lease before its July 30 meeting.
While some councilors remain open to further discussions on the project, councilors Vivian Moreno and Kent Lee both voted against doing so, citing concerns that the terms presented in the lease are financially irresponsible.
“The real estate transaction that is at hand is not one that truly does protect the taxpayers,” Mr. Lee said during the meeting. “The only responsible thing to do to protect our taxpayers, in not simply just to prolong this discussion, it would be to actually reject these lease terms.”
Councilors who voted to continue deliberations also expressed concerns about what they said was aninsufficient analysis of the lease terms and the project’s costs.
Last week, the city’s Office of Independent Budget Analyst raised questions about the project’s affordability.
Over the city’s lease term, the cost is expected to be $72 million.
Instead, the budget analyst proposed that the city could save $15.7 million by purchasing the property and then renovating it.
However, according to the mayor, the property is currently not available for sale.
The analysts’ report highlighted concerns about “significant upfront and ongoing costs,” including rent, lease operations, tenant improvements, and program expenses.
The mayor’s office estimates that facility maintenance costs will reach $12.5 million over the lease term, with an additional $26.4 million needed annually for operational expenses.
The report also detailed a monthly cost of $32,000, covering property taxes, maintenance, utilities, and insurance.
Analysts also said that these costs exceed the budget currently allocatedfor homeless programs for the 2025 fiscal year.
Currently, under the lease agreement, the city is responsible for upgrading the structure to meet the shelter’s needs. However, the councilors argued that such upgrades should not be the city’s responsibility as a tenant.
“I do not believe that we should be using taxpayer money to fix [the property owner’s] roof,” Councilwoman Marni von Wilpert said.
Some councilors indicated they might support the project if the terms were revised.
The mayor asked the council for more specific bargaining points the following day.
“My administration is happy to continue refining the current proposal, but council members must provide specific negotiating points, which I am immediately requesting from them,” Mr. Gloria said in a statement on July 23.
No specific date has been set for further discussions. The council is in recess in August.
