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State officials rebuke Marin for ditching homeless project


State officials are criticizing the Marin County Board of Supervisors for ending controversial negotiations to buy a Novato hotel for apartments for the homeless.

In a letter to the board, California Housing and Community Development Director Gustavo Velasquez said the decision not to proceed with purchasing Inn Marin and Suites was “very troubling” given the time and the $11.9 million in funding the state was willing to provide to complete the deal.

The supervisors voted to end negotiations with the hotel’s owners on Tuesday. The county said it could not agree on a price.

“The cost of the project, to the best of the State’s knowledge, has been consistent,” Velasquez wrote in his letter on Thursday. “If there was an issue regarding the financial support of the project, the county failed to engage with the state to discuss.”

The Inn Marin and Suite’s owners, Dipak and Rita Patel, were asking $18 million for the property. The county conducted an appraisal of the building and is able to release it to the public under state disclosure laws, but has declined to do so.

The state had approved an $11.9 million grant for the county to use to purchase the 70-room inn as part of the state’s Homekey program. Under the program, which launched in July, the state is providing $800 million in grants to cities and counties to buy hotels to convert to housing for homeless residents impacted by the coronavirus pandemic.

The county planned to use the Novato inn as transitional housing for homeless families, namely women and children, for one year. The program would have included on-site social services as well as hot meals.

After that, the hotel rooms would have been retrofitted into permanent housing with kitchenettes and on-site services such as mental health treatment, drug rehabilitation and employment aid.

“The Administration is very disappointed that Marin County backed out of this Homekey project, especially since the county has such a great need for permanent housing for individuals experiencing homelessness,” Russ Heimerich, deputy communications secretary for the state Business, Consumer Services and Housing Agency, wrote in an email on Friday. “The state had been working closely with the county since July, so we were also dismayed that we had no indication of any problems, real or perceived, until just this week. The Homekey dollars that would have gone to this project will now go to a project or projects on the waiting list.”

In a response letter on Friday, Supervisor Katie Rice, the president of the board, wrote that the county regrets that it did not acquire the Novato inn and expressed gratitude for the state offering the funding.

While the county rejected the Novato inn purchase, the board approved two other Homekey purchases on Tuesday. The county bought a Corte Madera motel and a San Rafael office building for $11.3 million, of which $8.6 million will be covered using state grants.

“Going forward, we will continue working to identify right-priced properties, and we will also continue to demonstrate our commitment to provide ongoing supportive services to make the two Homekey projects in Corte Madera and San Rafael successful over the long term,” Rice wrote.

If the Novato project were approved, the city would have met its state-mandated housing target of permitting 111 units of very low-income affordable housing, Velasquez wrote. Only 41 units have been permitted so far, he said.

“In both the City of Novato and County of Marin, more than 40 percent of lower income households spend more than half their income on rent, making them severely cost burdened,” Velasquez wrote. “One catastrophic event, like an illness or a job loss, could put them at risk of homelessness.”

The project faced strong opposition from residents. Critics said it could lower nearby property values and bring more crime into the area.

The Novato City Council considered suing the county to slow or stop the project. The proposal would have bypassed any city review process and would have cost the city about $320,000 in tax revenues when it is facing a $2.5 million budget deficit.

County officials said there was no evidence to support the claim that homeless housing would raise crime rates and lower property values.


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