1,000-bed homeless shelter in San Diego hits first setback, lease review pulled

A plan to create the City of San Diego's largest homeless shelter has already hit its first setback, less than two weeks after the project was initially announced to the public.

Mayor Todd Gloria announced his intentions to repurpose a nearly 65,000-square-foot Middletown-area warehouse, near Kettner Boulevard and Vine Street, as the city's largest homeless shelter that would have the "monumental opportunity to get more than 1,000 people off the streets."

Following the April 4 announcement about the expected landmark deal, the city shared that staff from the city’s Economic Development and Homelessness Strategies and Solutions departments would present the project to the Land Use and Housing Committee on April 18, and to the full City Council soon after.

After the agenda for the April 18 meeting had been posted online, several San Diegans noticed that the item was not scheduled for committee review, as originally presented.

"We pulled it to address matters raised by the [Independent Budget Analyst] IBA in their evaluation of the agreement," Rachel Laing, communications director for Mayor Todd Gloria wrote Friday in a statement to NBC 7.

Upon asking for clarification on what concerns were shared, Laing said she was unable to provide NBC 7 with the IBA’s comments because they may potentially be a closed session item.

Charles Modica, the city's Independent Budget Analyst (IBA), shared in an interview Friday afternoon that his office reviewed the project as part of new checks and balances put in place following the city's failure to conduct sufficient due diligence in previous property acquisitions.

Modica shared that his office had the project reviewed by a real-estate consultant they regularly use to review the lease to not only make sure it’s consistent with overall market rate, but to review the project to ensure the city is not opening itself up to other risks.

The consultant shared several concerns, some of which were minor and are already being addressed while others were more significant.

There was a lease for the Middletown property that had already been negotiated, however, the city may be reentering into negotiations that are now ongoing again, Modica confirmed, therefore he was unable to share exactly what concerns were raised regarding the terms with the previous lease.

"They raised potential issues on a few terms, and also had questions about the rent payments called for in the lease," Modica wrote in a statement to NBC 7.

Laing confirmed that the project was still included in the city's upcoming budget for the next fiscal year, as presented Friday by Mayor Gloria, and said she believed the project was still expected to go through this year.

Following the April 4 announcement, NBC 7 asked the mayor's office what the cost of the projected lease would be but has not yet received a reply.

According to Gloria, the owner of the Kettner and Vine facility has agreed to lease the warehouse property for 35 years, with two five-year renewal options. The building improvements and shelter operations will be funded through a combination of local, state and federal funds, along with contributions from local donors.