Committee forwards $71.1M loan package to finish Granada Hotel rehab as permanent supportive housing

City housing staff asked the Budget & Finance Committee to approve a loan package to complete rehabilitation and provide permanent financing for the Granada Hotel, a 214‑unit single‑room occupancy building in Lower Nob Hill originally acquired under the state Homekey program.

Sophie Rubin of the Mayor’s Office of Housing and Community Development said construction revealed extensive galvanized plumbing failures and other conditions that drove scope and budget increases. The city has already allocated state Homekey funds (~$42M) and the updated total city commitment brought the project to roughly $71.1M in loans and rehabilitation financing, funded primarily by the Homeless Gross Receipts Tax and general funds. Rubin said taking out the housing accelerator fund loan now will save the project nearly $1M in interest compared with waiting until later loan maturities.

The Budget and Legislative Analyst noted the project remains within city per‑unit preservation guidelines even after upsizes but flagged roughly $39M in opportunity cost that could have funded other acquisitions. BLA recommended approval while urging improvements to inspection consistency and capital needs estimation for acquisitions made under exigent timelines.

Supervisor Melgar described the item as “frustrating” because the upsizes reflected inspection gaps during emergency Homekey purchases; department and developer representatives said those acquisitions were time‑sensitive and that the city has since improved coordination and added project management capacity to HSH. The committee voted to forward the loan authorization to the full Board with recommendation.