Los Angeles case study: “Affordable” homeless housing is pretty darn unaffordable—and unfinished
Image by Midjourney AI
Newsom launched Project Homekey in 2020 with the goal of cheaply converting hotels into interim homeless housing. Today, the millions of dollars taxpayers have invested in grants continue to disappear, due to lack of oversight (L.A.'s real estate partner Shangri-La Industries is now being sued for “conspiracy to defraud”) and delays from CA's Housing Dept. Meanwhile, many renovations remain uncompleted. KCRW's report below, with Sen. Cortese's (D-SJ) comment.
The Los Angeles real estate developer Shangri-La Industries, a major recipient of Gov. Gavin Newsom’s Homekey program, received more than $114 million in state funding to convert seven motels in San Bernardino, Ventura and Monterey counties into housing for homeless people. But instead of creating hundreds of apartments for some of California’s neediest, the company has left a trail of unpaid debts, properties facing foreclosure, buildings in receivership, and lawsuits accusing Shangri-La principals of running a financial shell game. …
So far, four Shangri-La Homekey projects sit empty and unfinished, according to records and lawsuits. Shangri-La’s three other Homekey buildings are occupied, although court documents show that a 103-room property in Salinas housed just 13 residents as of October — all in unrenovated units.
[Shangri-La owner and CEO Andy] Meyers blamed Shangri-La’s financial predicament on unexpected budget overruns, permitting delays, rising interest rates, and sluggishness on the part of the state Housing and Community Development Department, which oversees the Homekey program. Specifically, he said, the state housing department has been slow to approve agreements the developer needs to record the buildings as affordable, preventing Shangri-La from getting millions in property tax breaks. …
Shangri-La’s financial troubles are quickly unfolding in court proceedings. On Friday, a Monterey County Superior Court judge appointed a receiver to take over a vacant, partly renovated motel in Salinas, one of three Homekey projects Shangri-La has in that city.
While some of Shangri-La’s other defaults and disputes with state officials have been recently reported, a months-long investigation by KCRW and The California Newsroom finds allegations of wrongdoing buried in court documents that have not yet been brought to light.
The emerging scandal speaks to a question on a lot of Californians’ minds: If Newsom’s fight against homelessness is costing more than $20 billion, why isn’t the crisis getting better?
“It’s not just voters that are concerned, it’s the entire state legislature,” said Democratic State Sen. Dave Cortese of San Jose, who was part of a bipartisan group of lawmakers that asked the state auditor to analyze homelessness spending earlier this year. Cortese said he wasn’t familiar with Shangri-La or its troubles, but he’s hopeful the forthcoming report will shed more light on how money for the homelessness crisis is being spent.
“We’re going to find out if there’s a lot of stories like the one regarding Shangri-La, or if that’s an unusual situation,” he said.
This article originally appeared in KCRW. Read the whole thing here.
Related:
Follow Opportunity Now on Twitter @svopportunity
Opp Now enthusiastically welcomes smart, thoughtful, fair-minded, well-written comments from our readers. But be advised: we have zero interest in posting rants, ad hominems, poorly-argued screeds, transparently partisan yack, or the hateful name-calling often seen on other local websites. So if you've got a great idea that will add to the conversation, please send it in. If you're trolling or shilling for a candidate or initiative, forget it.