Some Seattle City Council members want to buy a hotel to shelter the homeless and then turn that hotel into affordable housing units once the pandemic is over.
To that end, Councilmember Andrew Lewis sponsored a budget proviso that would take $2.5 million from the Emergency Solutions Grant (ESG) program for homelessness assistance to buy a 100-room hotel. But, buying a hotel is a bit more complicated than it sounds at first blush.
According to Lewis and Councilmember Kshama Sawant, who brought forward a similar proposal last week but who is now co-sponsoring this proviso, homeless providers came to them with this idea, and they have already identified potential hotels to buy. The tricky part: though the $2.5 million would potentially cover a down payment on a hotel, the hotel's ultimate price and maintenance costs are unclear.
Complicating matters further is the fact that the $2.5 million proviso money would come out of Mayor Jenny Durkan's budget plan to lease 300 hotel rooms during the pandemic. Durkan plans to lease those rooms for 10 months, using $15 million from ESG and CARES Act money. Lewis wants the city to buy one-third of those rooms to "take full advantage of temporary money" for a "permanent solution."
The council is faced with a dilemma. Should they use the money to pursue hotelling as a long-term solution, or should they only use hotelling in the short-term?
"Hotelling," as the people are calling it, has been a popular and successful pandemic shelter solution.
According to a KOMO report, "researchers found fewer clusters and outbreaks of COVID-19 among individuals who stayed in hotels than among those who remained in traditional, large-group shelter settings."
On Friday I asked King County how many COVID-19 cases public health officials recorded from hotel shelters. A spokesperson told me they're still working on it, so I'll update this post when I hear back. But in the meantime, since the pandemic began, the Washington State Department of Health recorded 12 outbreaks across homeless shelters. However, in the last week, the DOH reported no outbreaks in homeless communities.
Hotel rooms have been effective at getting people off the streets and into individual rooms. Part of that is hotelling is more attractive than normal shelter options, as the Seattle Times reported, because it "houses people before asking them to get an income or agree to change their behavior."
Leasing hotel rooms does cost money, of course. King County leased four entire hotels and motels this year. As of mid-September, leasing and operating those hotels cost $12 million, with over $4.5 million spent on rent alone, according to KOMO News. Federal CARES Act funds will cover most of those costs.
Seattle dabbled in hotelling as well, albeit less successfully. As PubliCola reported, the city blew through $3 million of federal funding in one month of a three-month lease on the 155-room Executive Hotel Pacific downtown. That space was supposed to be used for frontline workers. Only 17 workers stayed in the hotel over the first month.
For the future, the county will pivot from the leasing strategy. The current plan, as announced by Dow Constantine, is to bond against up to $400 million of a newly proposed 0.1% sales tax to buy hotels for affordable housing that will house up to 2,000 people. Recently, that number has been complicated by suburban cities doing what the suburbs do and moving to keep the tax money for their own projects.
Seattle doesn't have the same bond capacity the county has, Lewis said. To pay for the hotel, the city could bond against the newly passed JumpStart Seattle payroll tax, Lewis said. However, JumpStart likely has some legal battles ahead, and the first year of the funds the tax raises will go toward balancing COVID-19 budget hole and—if Durkan gets her way—investing $100 million in BIPOC communities.
"The ultimate goal is how to get as many shelter spaces online as fast as we can," Lewis told The Stranger.
That's why Sharon Lee, the executive director of the Low Income Housing Institute (LIHI), came to Lewis and Sawant with the proposal to use ESG funds to buy a hotel. She's already in conversations with the Holiday Inn Express in North Seattle that's looking to sell. Lee told The Stranger the rooms could be operational by January or February of next year if this budget proviso is passed.
Lee said hotels are not doing well during the pandemic, and owners are looking to sell because they’re suffering from low occupancy rates. All told, LIHI is currently looking to buy three hotels.
This isn't LIHI's first rodeo. The organization already bought and converted into affordable housing two hotels—the Aloha Inn in Queen Anne and the Pine City Inn in Georgetown. In those cases, the hotels were downtrodden and required maintenance work, Lee said. The hotels LIHI is interested in are in good working order and come with "nice-sized rooms," and a private bathroom. Lee said typically these rooms also come with microwaves and mini-fridges.
Those features make hotels perfect affordable housing prospects, too. Lewis said the market cost for building an affordable unit is $320,000 per unit. For hotel rooms, it could cost as low as $170,000.
Lewis and Lee agree that now is the time to buy hotels. Typically, the government restricts spending ESG grants on buying a building for shelter. During the pandemic, that restriction was lifted. Additionally, while the economy is shit for hotels right now, it won't always be. The tourism industry could snap back.
But of course, as with all things, funding remains an issue. Securing $2.5 million in a proviso is one thing, but paying for a hotel in full is another.
The $2.5 million could function as a downpayment to facilitate a lease-to-own strategy, Lee said. The city could also request a bridge acquisition loan from the county to "purchase the hotel quickly," apply to "other funding sources to pay off the loan," or cover the purchase with more CARES Act funding depending on how the election shakes out.
During the council meeting on Friday, when Lewis presented this proviso, Councilmember Lisa Herbold expressed concern over the funding source. Herbold didn't want the proviso to take away shelter space already identified by Durkan's leasing plan. She also didn't like that the proviso didn't identify an exact figure for how much the hotel would cost to buy in total.
Sawant said she wouldn't be opposed if council members wanted to find a funding source other than the ESG. What's important, Sawant added, is that the city buys a hotel so it can have dedicated shelter space and future affordable units.
"We have so much need in our community," Sawant said, "I'm just taken [aback] by how much debate there is on small amounts for very real problems that need to be solved."
The proviso received additional co-sponsorships from Dan Strauss and Tammy Morales. The council will continue discussions on this proviso this month.