Council fails to accept $20.1M Homekey award for University Terrace Homes after heated public hearing

A contentious public hearing on Jan. 13 ended with the Riverside City Council declining to accept conditional Homekey grant terms and related city loans for the University Terrace Homes project after a divided seven‑member vote.

City staff and Riverside Housing Development Corporation (RHDC) described a plan to acquire and rehabilitate the Quality Inn at 1590 University Avenue into 114 studio units, converting 94 rooms to Homekey permanent supportive housing (PSH) restricted at 30% of area median income and 20 units restricted at up to 80% AMI. The state Department of Housing and Community Development (HCD) issued a conditional Homekey award of approximately $20,137,410; staff said total capital and operating costs are estimated at about $29.67 million with additional local soft commitments of about $9.5 million. HCD’s award requires a 55‑year affordability covenant.

RHDC CEO Bruce Culpa said the developer would provide intensive property management, 24/7 on‑site security, an onsite activity space and six full‑time case managers (an increase RHDC agreed to after council concerns) to support residents. “We manage with zero tolerance for disruptive behavior,” Culpa said in his remarks, noting long experience operating affordable properties in the region.

Speakers were strongly divided. Supporters — including housing advocates, nonprofit service providers, veterans groups and many formerly unhoused residents — urged acceptance to take advantage of $20.1 million in state funds and to convert a frequently problematic motel into housing near transit and services. Opponents — including motel employees worried about losing jobs, several nearby business owners and neighborhood associations — argued the site is incompatible with University Avenue’s planned redevelopment, pressed for legally binding prioritization guarantees for seniors and veterans, and sought firmer operational controls (for example, enforceable restrictions on eligibility, binding service requirements, reporting and eviction/remediation triggers).

Council debate focused on several themes: whether the project concentrates PSH near active business and student housing; whether operational commitments (security, case management ratios, nuisance and eviction procedures) are sufficiently binding in loan and regulatory documents; and whether the city should accept the Homekey funding now or seek alternative sites. Staff and RHDC confirmed: (a) the Homekey award and related loans include a 55‑year affordability covenant; (b) RHDC increased case management to six staff for the site; (c) the site requires sewer upsizing to 8‑inch lines prior to rehab; and (d) the city would document loan and regulatory conditions in the agreements suggested for council action.

In final action, Councilmember Perry moved to accept staff’s recommendations and authorize the associated loan and regulatory agreements; the motion failed on a 3‑4 vote (Motion fails; 3 affirmative, 4 no). Councilmembers voting in favor cited the magnitude of state funds and RHDC’s commitments; those opposed cited concerns about siting, enforceable assurances and concentration of services.

Why it matters: The decision rejects conditional acceptance of $20.1 million in Homekey funds for this site. Staff indicated the award is conditional and that HCD had granted short extensions during review, but the missed acceptance could mean the city relinquishes the specific Homekey allocation for the project unless a subsequent council majority moves to reopen or reapply for funding or HCD extends/redirects the award.

Speakers quoted in the hearing include Bruce Culpa (RHDC CEO), Michelle Davis (Housing Director), multiple firefighters and housing advocates, motel employees and small business and neighborhood representatives. The transcript records vigorous questions about operational enforcement, eviction thresholds and reporting mechanisms.