‘Wrong,’ San Diego mayor says of analysis of proposed mega shelter

SAN DIEGO (FOX 5/KUSI) — A criticizing report on the City of San Diego’s plan to build a 1,000-bed homeless shelter in Middletown is being met with criticism from Mayor Todd Gloria.

There are conflicting messages within city hall regarding the city’s proposed 1,000-bed homeless shelter at the corner of Kettner Boulevard and Vine Street.

A report from the city’s Independent Budget Analyst showed criticism of the plan overall, but the mayor is pushing back.

In an interview in Gloria’s office Wednesday afternoon, the mayor said, “with all due respect to our independent budget analyst, he’s wrong” regarding the report’s finding that the building is more than market value.

The independent review shared the upfront cost of the project is $13 million to turn the 64,000-square-foot property into a place to house 1,000 homeless.

The analysis reports the 30-year lease is above market rates. The mayor refutes that.

“It’s not above market it is not too expensive, and this is the right thing to do for the most pressing issue for our city right now,” the mayor said.

The report said the project could cost the city up to $30 million a year to operate, going beyond the budget, and the report claims that without new funding, the city would need to cut existing programs or services to pay for this shelter.

“That’s also incorrect,” the mayor said, disputing the claim that the city would have to cut other programs or services.

“I have every confident the independent budget analysts would not put forward a memo on an issue of this gravity without feeling confident in the experts that they’ve hired to provide guidance,” Council President Sean Elo-Rivera said, adding the IBA report is based on expert, third party analysts, and the position itself exists to perform these analyses, after previous bad deals within the city.

“We want to be guided by expertise not by feelings,” the council president added.

“There’s a true and significant cost to taxpayers to leaving people unsheltered on our sidewalks that folks don’t talk about and that is not reflected in the IBA’s report, that is homeless individuals utilizing paramedics and ambulances, utilizing our emergency rooms,” the mayor said. “It is cheaper to house people permanently and that is why we are pursuing this approach.”

“I don’t question the numbers from the IBA and I have no reason to believe its wrong,” Elo-Rivera said.

Charles Modica, the city’s independent budget analyst, said the mayor has not reached out to his office to discuss what he finds inaccurate.

“I am confident of the analysis we put forward, it is informed by folks in our offices own expertise as well as outside expertise from real estate consultants,” Modica said in an interview with Fox 5/KUSI News Wednesday afternoon. “Unfortunately the mayor has not reached out to me or my office so i don’t know the particulars of what he thinks my report is wrong about.”

Key financial elements of the final lease terms are summarized below, according to the report:

• 30-year term
• $1.95 per square foot as the starting basis for monthly rent
• 19-month rent abatement
• 3.5% cost escalator for year-over-year rent increases, commencing 12 months after the
  Substantial Completion Date of the Tenant Improvements
• $5.0 million allowance for/landlord contribution towards Tenant Improvements

The report also claims the proposal doesn’t fully align with the city’s Community Action Plan on homelessness, which called for more prevention and permanent housing. It also found the city would spend $15 million more to rent the property, instead of purchasing one.

“Council should also consider how program outcomes will be regularly monitored, the timing of
this proposal given both the need for additional efforts to combat homelessness as well as the
City’s limited budgetary resources, and whether a more competitive process for identifying
permanent emergency shelter sites could result in more financially beneficial terms for the City,” the report reads.

Despite the conflicting statements, the city council will vote on the proposal during its council meeting Monday.

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