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Novato delays decision on homeless project lawsuit


Novato city leaders want more information before deciding whether to sue to stop the sale of a local hotel to convert to housing for the homeless.

The City Council directed the city attorney to gather more information about Marin County’s proposed purchase and conversion of Inn Marin and Suites into supportive homeless housing.

The decision was made following a nearly two-hour closed-door discussion on Friday in which the council discussed whether to file a legal challenge.

“The council, its staff and the community have many unanswered questions regarding the Homekey proposal,” City Attorney Jeff Walter said. “The council is urging the Board of Supervisors to hold community workshops as soon as possible and before the board takes any final action.”

The council plans to continue weighing its options at its Tuesday meeting when it is also expected to adopt a formal stance on the proposal and hear from county officials, Walter said.

The county proposes to purchase Inn Marin at 250 Entrada Drive near the Pointe Marin neighborhood as part of the state’s Homekey program. The program is providing $800 million in grants to cities and counties to use to purchase hotels and motels at market value for the purpose of converting them into permanent supportive housing for homeless residents impacted by the coronavirus pandemic.

The county is considering purchasing a Corte Madera hotel and a San Rafael office complex as part of the program. The Board of Supervisors takes up the issue on Tuesday.

The Homekey program allows for the county to bypass any city review of the purchase, which has frustrated both the City Council and residents who were notified of the proposed sale in mid-October. Supervisors are set to vote on whether to purchase the Novato inn on Nov. 17.

City officials say Novato would lose more than $320,000 in hotel use and property tax revenue each year if the inn is sold. City voters just approved a hotel use tax increase in Tuesday’s election meant to generate more money for the city as it faces a $2.5 million budget deficit.

Before the council’s discussion on Friday, several residents urged the council to file the lawsuit.

“It would be unconscionable if the city of Novato did not spend whatever it takes to protect $300,000 a year in tax revenue,” Pointe Marin resident Mark Smith told the council before its vote on Friday. “That’s $3 million over the next 10 years.”

If the 70-room inn is purchased, the county plans to use it as transitional housing for homeless families for one year before converting the units into permanent supportive housing with on-site services. These services would cost the county about $500,000 per year, according to County Administrator Matthew Hymel last month.

County officials said they weren’t expecting to receive grant funds for the Novato inn until being notified otherwise on Oct. 10. The grant funds, which were provided through the federal Coronavirus Aid, Relief, and Economic Security Act, can only be used before the end of the calendar year.

“There is a great need for permanent supportive housing in Novato, which provides continuous wrap-around services such as medical and social health,” Novato resident Ralph Purdy told the council on Friday. “For the homeless, this is life-saving.”

The inn’s owner, 250 Entrada Drive LLC — a San Francisco-based corporation run by Dipak Patel and Rita Patel — is asking $18 million for the hotel. A county appraisal could change the price. The Homekey grants are expected to cover two-thirds of the purchase price.

Under state law when governments buy land in California they must disclose the appraisal report upon request. But state law also allows — but does not require — them to release the appraisal before buying the land. The county declined this week to release the appraisal report, stating it could jeopardize competitive advantage in the sale negotiations.

Novato is not the first city to consider a lawsuit against a Homekey project. The Milpitas City Council voted in September to file a lawsuit challenging a similar project before changing its mind on Thursday in a split vote. The reversal occurred about a week after the Law Foundation of Silicon Valley issued a stern letter to the council on Oct. 27 stating the city would be violating fair housing and anti-discrimination laws if it filed a lawsuit.

Developers in Sacramento have also filed a lawsuit challenging a project there.


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