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California Budget Allocates $550 Million to Counties to Buy Hotels As Permanent Shelters

State Has Filled More Than 85% of Hotel Rooms Set Aside for Homeless People During Pandemic

By Randyl Drummer

CoStar News

California Gov. Gavin Newsom has started focusing on a new phase of a statewide initiative aimed at moving homeless people off the streets: getting counties to buy hotels and other buildings that can be used as shelters or for support services.

The governor this week signed a state budget that provides $550 million to help counties buy hotels and other buildings that were leased as part of a program dubbed "Project Roomkey," which is meant to provide shelter to the state's homeless population during the coronavirus pandemic. The funding allows the emergency lease program to potentially become a permanent solution to part of the state's growing homelessness crisis.

Newsom said California has leased 293 hotels in 52 of the state’s 58 counties, and the state has moved an estimated 14,200 homeless people into hotels and motels since April as part of a program. In total, the state has procured 15,678 rooms for unhoused people who either tested positive for COVID-19 or may be more susceptible to the virus because of their age or underlying medical conditions, he said in a news conference on Tuesday in front of a Motel 6 in the East San Francisco Bay city of Pittsburg, California, where 164 people are receiving shelter.

The governor this week began referring to the program as “Project Homekey” to focus on the next iteration of the initiative, which calls for counties to begin buying hotels and other buildings with state funds. The Federal Emergency Management Agency, which has been financially assisting the state in the program, has agreed to extend its support on a month-to-month basis and is reimbursing 75% of the cost of the program.

The budget signed by Newsom on Monday also includes $50 million to help cities and counties set up services in the newly acquired hotels and an additional $300 million in support for homeless people.

California has the nation's highest population of people without homes and highest population of homeless people without shelter, according to federal figures. About 151,000 people were homeless in California as of last year, a number that housing experts believe will increase in the coming months as people forced out of work by the pandemic lose their housing.

The Project Roomkey program got off to a slow start, with only about half of the 15,000 rooms leased by the state occupied as of the third week in May, according to review of state records by the Los Angeles Times.

Some cities haven’t rolled out the welcome mat for hotels and motels signed up for Project Roomkey. Residents have held demonstrations in several cities and at least one city, Laguna Hills, filed a lawsuit to block hotels from being used as homeless shelters.

But Newsom said that the program has largely overcome those challenges, adding that 85% of the rooms set aside are now occupied by formerly unsheltered people who are also receiving meals and mental health services.

Connecticut and Hawaii are attempting to replicate the program, Newsom said.

“I couldn't be more proud of an effort just in a few months to get 14,200 individuals off the streets, out of encampments and into units like this,” Newsom said.

Newsom also said he plans to announce new restrictions on Wednesday ahead of the July 4 holiday weekend, continuing to reverse course on reopening California as COVID-19 cases and hospitalizations rise.

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