Tenants at the 232-unit Granada Hotel at Sutter and Hyde streets raised concerns about displacement after it was bought last year. (Kevin N. Hume/S.F. Examiner)

City hopes to convert Granada Hotel to supportive housing

State grant could allow purchase of 232-unit Lower Nob Hill SRO

San Francisco is moving to turn a Lower Nob Hill hotel into permanent supportive housing using a rare state grant that could yield up to $45 million.

Supervisor Aaron Peskin introduced a resolution on Tuesday to authorize the Department of Homelessness and Supportive Housing to execute an agreement to buy the Granada Hotel for supportive housing. The grant would come from California’s $600 million HomeKey program to buy and rehab housing.

Residents of the 232-unit single-room-occupancy building on Sutter Street, many of them seniors, sounded the alarm when the building was sold last year, fearing they were at risk of displacement. Their concern led Peskin to seek a potential city acquisition, which the grant would make possible.

“Ultimately the fortuitous Homekey offer only drew 20 applications in the Bay Area — including one here in San Francisco, which I am proud to say is in my district and a site that our office has been working to preserve for over a year,” Peskin said Tuesday. “That hard work and investment on the front end has paid off in this application today — we were ready.”

The grant is being sought on behalf of Episcopal Community Services, which would buy the building from the current owner. The City would commit up to $23 million over five years for operational subsidies as part of the required local match, delivered to Episcopal Community Services.

The deadline to apply and use funds for the Homekey program was so tight, just one other project in San Francisco made it; that project is currently on the waiting list, according to the San Francisco Housing Accelerator Fund, which could provide about $20 million in bridge funding.

Homekey allocated $100 million for Bay Area projects on a first-come, first-served basis. The Granada and projects in Alameda and Santa Clara counties have initial approval.

“The Granada has a preliminary reservation [of funds] and assuming that it can meet all the program requirements of Homekey then it’ll get those funds,” said Kate Hartley, HAF chief lending and investment officer. “It’s on track. These deals are never closed until they’re closed.”

Whether the Granada turns into permanent supportive housing to serve existing and future tenants depends not only on the state’s grant, but ongoing negotiations with the property owner. But should the grant come through, ECS would be required to buy the building by Dec. 30 and the state’s occupancy requirements must be satisfied 90 days after the acquisition.

“Thanks to the many partners involved in supporting San Francisco’s first step under Project Homekey to get keys into the hands of people experiencing homelessness,” said Deborah Bouck, a spokesperson for the Department of Homelessness and Supportive Housing. “The mayor and governor believe that housing is not only the solution to homelessness, but it is basic fundamental healthcare. As part of the mayor’s Homelessness Response Plan we look forward to beginning the largest expansion of resources in 20 years.”

Part of that homelessness plan includes acquiring 1,500 units of permanent supportive housing, a proven solution to chronic homelessness, for the next two years. San Francisco currently has about 8,000 units of supportive housing that house about 10,000 residents.

“We are realizing our dream of helping local jurisdictions acquire thousands of motel rooms and convert them into housing for individuals and families experiencing homelessness,” said Gov. Gavin Newsom in a statement this week. “Homekey is the first effort of its kind in the nation and is a once-in-a-generation opportunity to protect the most vulnerable people in our state.”

imojadad@sfexaminer.com

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