Committee approves $47.4 million permanent loan for Hotel Diva (440 Geary) to preserve 122 units of supportive housing

The Homelessness and Behavioral Health Select Committee voted Sept. 22 to forward to the full Board a resolution approving a permanent loan agreement of approximately $47.4 million to pay off interim financing for 440 Geary (the Hotel Diva), a Homekey conversion that provides 122 residential units.

Sophie Rubin, a project manager in the mayor's office of housing and community development (MOHCD), described the project history: the site was used as a shelter-in-place hotel during the COVID-19 emergency, the city and Episcopal Community Services (ECS) applied for Homekey funds in 2020, the Homekey award was granted, and the city closed on the purchase in December 2020. A structural engineer later identified the need for more extensive seismic and code upgrades, prompting HSH and MOHCD to commit additional interim financing to upsize the loan; the permanent loan now before the committee would replace that interim financing.

Project details presented to the committee: 122 units (121 permanent supportive housing units, 1 manager unit), units restricted at 50% MOHCD AMI and subject to a 30% AMI state restriction tied to Homekey funds; two ground-floor commercial spaces (one leased to Starbucks until 2027). Rubin said the permanent loan must close quickly because the interim financing expires at the end of the month; the rehabilitation finished in August 2023.

The Budget and Legislative Analyst (Nick Menard) questioned the scope of due diligence and flagged that roughly $20 million more was spent than board members were told in 2020 because of the unanticipated rehabilitation scope, calling it a missed opportunity to use those funds elsewhere. MOHCD and HSH staff responded that the Homekey procurement and pandemic-era timelines curtailed standard due diligence and that the housing accelerator fund enabled rapid acquisition to preserve units during an emergency.

ECS said the property's service model budgets six full-time services staff (four case managers, one assistant site manager, one site manager) with 24/7 coverage; ECS acknowledged two vacant case manager positions in recruitment. Supervisors asked about resident needs and service levels; HSH and ECS explained higher levels of clinical and wraparound services are planned for 100% PSH buildings.

After public comment none were on the call and no in-chamber callers spoke, the committee voted unanimously to forward the loan agreement to the Board as a committee report (Mandelmann, Walton, Ronan voting aye).