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Bay Area officials are racing to put together proposals to buy hotels and motels as the state prepares to hand out hundreds of millions of dollars for properties that can be turned into permanent housing for homeless people.

The Homekey program, created in the recently passed state budget, will give California cities and counties $600 million to build on another state initiative that has moved thousands of homeless people into hotel rooms during the coronavirus pandemic.

But there’s a catch: The money must all be spent by the end of the year, turning a typically prolonged development process into a sprint. Officials in Alameda, Contra Costa and San Francisco counties said they are putting out requests for interest, evaluating properties and negotiating prices so they can submit applications by Aug. 13, when the state will begin awarding grants.

“But that’s how COVID is. Everything is operating in hyper-speed,” said Kerry Abbott, director of Alameda County’s Office of Homeless Care and Coordination.

Back in early April, Gov. Gavin Newsom announced Project Roomkey, funded largely by federal coronavirus relief aid to the state. It gives money to counties to move homeless people who were infected or exposed to the coronavirus, or are particularly vulnerable to it, into hotel rooms to isolate.

The program has been criticized for making slow progress in placing people and having strict requirements that exclude the vast majority of the state’s homeless population, which surged to more than 151,000 people last year.

Contra Costa County is also looking at purchasing the Courtyard Marriott in Richmond for supportive housing for the homeless. Counties and cities must spend the money coming in under a new Homekey program by the end of the year.
Photo: Brittany Hosea-Small / Special to The Chronicle

But at a news conference last month, Newsom said more than 14,200 people were now staying at 293 hotels throughout the state because of Project Roomkey. With that foothold in addressing California’s homelessness crisis, county leaders are hoping to avoid sending those people back to the streets — and the new state funding to pay for long-term housing with on-site supportive services could provide the first step.

“If we’re going to solve the magnitude of this crisis,” Newsom said, “we’ve got to do something faster, with more intention. We’ve got to do something much more aggressively, differently.”

When Alameda County began leasing hotels this spring to shelter people, it was already considering buying them to create long-term housing. Abbott said several hotel owners signed purchase options in their leases, while others who did not want to temporarily rent rooms for homeless people expressed interest in selling to the county.

Her department is talking with cities about properties Alameda County might want to acquire with the new Homekey money and seeking appraisals on half a dozen sites. She would not say which hotels and motels are under consideration, but said they ranged in size from fewer than 50 rooms to more than 200.

Abbott said the process has been like “budget Tetris,” trying to figure out how to make the money stretch the furthest while also considering the geographic diversity, safety and condition of sites and whether the county can close a deal on the accelerated timeline. The Homekey funding primarily comes from aid that Congress approved for California in a coronavirus relief bill, which requires the state to spend it by Dec. 31.

Alameda County has leased 862 hotel rooms so far, with pending leases for 226 more, Abbott said. Officials hope they can use the new funding to buy many of them.

“This is a great opportunity,” Abbott said, “and it’s a small portion of what we all need to bring together to close the gap.”

The state expects that about $100 million of the Homekey money will be available for the nine Bay Area counties to buy hotels and motels, as well as vacant residential buildings — enough to add at least several hundred new permanent supportive housing units in the region. To get the aid, cities and counties must show they can provide services to residents.

It’s a start, but far short of what is needed for a homeless population that topped 35,000 in the region in the past official count, and has probably been driven higher by the pandemic.

“The biggest issue is that there’s not enough funding for all the worthy applications that will be submitted,” said Contra Costa County Supervisor John Gioia.

DJ and Ashley Haynes take down their tent on McAllister Street while being relocated to a shelter-in-place hotel in San Francisco in June. A new program created in the state budget will provide cities and counties with millions of dollars to buy hotels to house homeless people.
Photo: Scott Strazzante / The Chronicle

Gioia said Contra Costa County has leased close to 600 hotel rooms through Project Roomkey. It is looking at bidding to buy two properties that each have between 150 and 200 rooms: the Courtyard Marriott in Richmond and a Motel 6 in Pittsburg, where Newsom held a June news conference.

Gioia said many people who live in encampments say they would move to their own room, but not a shelter. Although the new funding is far short of what’s needed, he said, “we really have an opportunity to make major progress in housing those that are unsheltered.”

San Francisco Mayor London Breed unveiled a plan last week to add 1,500 permanent supportive housing units in the city over two years, including 1,000 during the next 12 months.

Abigail Stewart-Kahn, interim director of the city’s Department of Homelessness and Supportive Housing, said 200 of the first-year rooms will be paid for with philanthropic money. The city is hoping to buy as many of the remaining 800 as possible with the new Homekey funding.

As the pandemic has depressed property values, Stewart-Kahn said she’s been inundated with offers from property owners to sell hotels and apartment buildings to the city. The need to spend the Homekey money quickly gives her department an opportunity to strike while the cost is cheaper in San Francisco.

“I keep likening this to the mayor setting a moon shot,” Stewart-Kahn said. “But we now need to be like NASA and figure out how to make it happen.”

Alexei Koseff is a San Francisco Chronicle staff writer. Email: Twitter: @akoseff Alexei Koseff is a state Capitol reporter for The San Francisco Chronicle, covering Gov. Gavin Newsom and California government from Sacramento. He previously spent five years in the Capitol bureau of The Sacramento Bee, reporting on everything from international recruiting by the University of California to a ride service for state senators too drunk to drive. Alexei is a Bay Area native and attended Stanford University. He speaks fluent Spanish.