The San Diego Housing Commission voted unanimously 4–0 to purchase three hotel properties for nearly $158 million to be converted to permanent affordable housing—dependent upon receiving state funds—during a meeting on April 20.

The Housing Commission is hoping to receive a grant from Homekey—a statewide program by the California Department of Housing and Community Development to hasten construction of affordable housing units for the homeless.

According to staff, the application for the grant will be submitted sometime in the next two months and will hopefully be granted by September.

“I’m excited for the application process to move forward,” chair of the Housing Commission Board, Eugene Mitchell, said during the meeting. “I want to say thank you to the city and the county. It’s a great example of partnership.”

Since the acquisition is dependent on grant funds, the purchase from ESA P. Portfolio, LLC will not be final until July 2024.

This decision is a part of the city’s Community Action Plan on Homelessness—a 10-year plan adopted in October 2019 to fund and build housing for the homeless.

The plan revealed the city needs another 2,659 permanent affordable housing units by 2029, 60 percent of which would need to be built this year.

Hotel Locations

The properties include a three-story Hotel Circle South building with 165 rooms on 4.5 acres that would be purchased for around $40.5 million. A two-story hotel on Murphy Canyon Road offers 107 units on 4.8 acres and would cost $52 million. Another 140 units in a three-story hotel would cost around $65 million, located on a 4.3 acre site off of Mission Valley Road.

The Extended Stay America hotels—located at 2085-95 Hotel Circle South, 3860 Murphy Canyon Road, and 7440-50 Mission Valley Road in San Diego—are all near bus stops and major freeways, with pharmacies and grocery stores within walking distance.

According to the purchase agreement, other fees include a finder’s fee of $783,469 paid to real estate company Marcus & Millichap for finding the properties, and $750,000 to the same company for identifying potential risks with buying and converting the three hotels.

The city will be conducting a due diligence review until October for further consideration of these properties.