250805 Item J.7_Vista Ridge Petition — Fairfield City Council, August 5, 2025

PETITION
TO THE CITY OF FAIRFIELD COUNCIL MEMBERS, MAYOR AND VICE MAYOR:

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Local Residents

PETITION

SIGNATURES
NOTE: Due to insufficient notice by the City of Fairfield for community involvement and participation, this is only a partial list of those residents and businesses in the area that are opposed to this zoning change and approval of the Homekey project.

This response to date has been acquired in a 3 day period.

PETITION

TO THE CITY OF FAIRFIELD COUNCIL MEMBERS, MAYOR AND VICE MAYOR

SIGNED NOTICE TO OPPOSE THE PROPOSED PROJECT
The undersigned are opposed to the approval of the city rezoning and conversion of the Surestay / Vista Ridge proposed Homekey project:

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SIGNED NOTICE TO OPPOSE THE PROPOSED PROJECT
The undersigned is opposed to the approval of the Surestay / Vista Ridge proposed project:

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SIGNED NOTICE TO OPPOSE THE PROPOSED PROJECT
The undersigned is opposed to the approval of the Surestay / Vista Ridge proposed project:

Name
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SIGNED NOTICE TO OPPOSE THE PROPOSED PROJ
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The undersigned is opposed to the approval of the Sure
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SIGNED NOTICE TO OPPOSE THE PROPOSED PROJECT
The undersigned is opposed to the approval of the Surestay / Vista Ridge proposed project:
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SIGNED NOTICE TO OPPOSE THE PROPOSED PROJECT
The undersigned is opposed to the approval of the Surestay / Vista Ridge proposed project:

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SIGNED NOTICE TO OPPOSE THE PROPOSED PROJECT
The undersigned is opposed to the approval of the Surestay / Vista Ridge proposed project:
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SIGNED NOTICE TO OPPOSE THE PROPOSED PROJECT
The undersigned is opposed to the approval of the Surestay / Vista Ridge proposed project:

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SIGNED NOTICE TO OPPOSE THE PROPOSED PROJECT
The undersigned is opposed to the approval of the Surestay / Vista Ridge proposed project:

Name
Address Date
Name
Address Date
Name Address Date

SIGNED NOTICE TO OPPOSE THE PROPOSED PROJECT
The undersigned is opposed to the approval of the Suresta / Vista proposed project: Y a Ridge
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SIGNED NOTICE TO OPPOSE THE PROPOSED PROJECT
The undersigned is opposed to the approval -of the Surestay / Vista Ridge proposed project:

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SIGNED NOTICE TO OPPOSE THE PROPOSED PROJECT
The undersigned is opposed to the approval of the Surestay / Vista Ridge proposed project:

Name
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Address Date
Address Date
Address Date

SIGNED NOTICE TO OPPOSE THE PROPOSED PROJECT
The undersigned is opposed to the approval of the Surestay / Vista Ridge proposed project:

Name Address Date
Name
Address Date
Name Address Date

SIGNED NOTICE TO OPPOSE THE PROPOSED PROJECT
The undersigned is opposed to the approval of the Surestay / Vista Rid e proposed project: 9
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The undersigned is opposed to the approval of the Surestay / Vista Ridge proposed project'.

Name
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Date
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Local Businesses

PETITION

SIGNATURES

TO THE FAIRFIELD CITY COUNCIL MEMBERS

MAYOR CATHERINE MOYAND VICE MAYOR PAM BERTANI

LOCAL BUSINESS

PETITION

THE UNDERSIGNED ARE OPPOSED TO THE PROPOSED HOMEKEY PROJECT THAT IS BEING PROPOSED AT THE SURESTAY HOTEL. THIS CHANGE COULD NEGATIVELY IMPACT OUR LOCAL BUSINESS.

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TO THE FAIRFIELD CITY COUNCIL MEMBERS

MAYOR CATHERINE MOYAND VICE MAYOR PAM BERTANI

LOCAL BUSINESS

PETITION

THE UNDERSIGNED ARE OPPOSED TO THE PROPOSED HOMEKEY PROJECT THAT IS BEING PROPOSED AT THE SURESTAY HOTEL. THIS CHANGE COULD NEGATIVELY IMPACT OUR LOCAL BUSINESS.

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TO THE FAIRFIELD CITY COUNCIL MEMBERS

MAYOR CATHERINE MOYAND VICE MAYOR PAM BERTANI

LOCAL BUSINESS

PETITION

THE UNDERSIGNED ARE OPPOSED TO THE PROPOSED HOMEKEY PROJECT THAT IS BEING PROPOSED AT THE SURESTAY HOTEL. THIS CHANGE COULD NEGATIVELY IMPACT OUR LOCAL BUSINESS.

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TO THE FAIRFIELD CITY COUNCIL MEMBERS

MAYOR CATHERINE MOYAND VICE MAYOR PAM BERTANI

LOCAL BUSINESS

PETITION

THE UNDERSIGNED ARE OPPOSED TO THE PROPOSED HOMEKEY PROJECT THAT IS BEING PROPOSED AT THE SURESTAY HOTEL. THIS CHANGE COULD NEGATIVELY IMPACT OUR LOCAL BUSINESS.

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PETITION
TO THE CITY OF FAIRFIELD COUNCIL MEMBERS, MAYOR AND VICE MAYOR:

We the undersigned are opposed to the approval of the city rezoning and conversion of the Surestay / Vista Ridge proposed Homekey Project for the homeless with severe mental illness, behavioral issues, drug addiction or alcohol abuse. u'Q V 6 (Slrlxq�� 00Z S
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PETITION

Name of Business Signature Date
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PETITION

TO THE CITY OF FAIRFIELD COUNCIL MEMBERS, MAYOR AND VICE MAYOR We the undersigned are opposed to the approval of the city rezoning and conversion of the Surestay / Vista Ridge proposed Homekey Project for the homeless with severe mental illness, behavioral issues, drug addiction or alcohol abuse. (::22i arX 4 "e f
Name of Business Signature Date
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PETITION
TO THE CITY OF FAIRFIELD COUNCIL MEMBERS, MAYOR AND VICE MAYOR-.

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PETITION
TO THE CITY OF FAIRFIELD COUNCIL MEMBERS, MAYOR AND VICE MAYOR:

We the undersigned are opposed to the approval of the city rezoning and conversion of the Surestay / Vista Ridge proposed Homekey Project for the homeless with severe mental illness, behavioral issues, drug addiction or alcohol abuse. f iIC elo1 AlIfic tc
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SURESTAY / VISTA RIDGE

HOMEKEY PROPOSED PROJECT

ZONING CHANGE
The local citizens and businesses in the area are opposed to the proposed zoning change and conversion the Surestay to the Vista Ridge Homekey project.
(Note: Partial petition responses are enclosed in the packet with only 3 days to respond) Many of the residents were not aware of the project and were upset and objected to this proposed change. This plan would add over 100 plus individuals to the current homeless street population in our area.

Inviting people with severe mental challenges, behavioral issues, drug and alcohol addiction is not a welcome change to our local community.

These individuals could still wander the streets, commit crimes and negatively impact the business community. Other cities have experienced closure of businesses, loss of tax revenue, lower property values and increased crime.

The community meeting has been scheduled on Wednesday, August 6th at 5:00 p.m.

Residents are commuting home from work or having a meal with their family at this time. Unaware citizens had no opportunity to give input or objection in advance to this city plan. The City has already approved funding in the amount of 1.4 million dollars from the local housing trust fund to Danco Homes to fast track this Homekey project.

Other cities have voted "No" to these Homekey projects. Vacaville City Council and Police Chief CHRIS POLEN were primarily concerned with safety issues for the public. Vallejo City Council voted against efforts to acquire funding for local projects. The prior "Broadway Project" per MRG audit finding resulted for cost overruns, complexities of the project state grant funding and limited experience by city staff resulted in a 6 million dollar bailout by the City of Vallejo.

The State of California has a 20 billion dollar budget deficit (July 23, 2025 Daily Republic Newspaper). Does the city have adequate funds to support Homekey expenses, cost overruns or any required legal action? Will the City of Fairfield hire additional police officers to protect our community?
An executive order was signed on July 24, 2025 by President Trump.

Federal funding changes will impact funding priorities for the homeless with a 44% reduction in HUD funding. Goal will be to abolish federal support for "Housing 1st" and place people in drug/ alcohol treatment centers or mental institutions.

Additional information is enclosed in the packet for your review and consideration.

HOMEKEY PROJECT
ISSUES

Google problems with homekey program California
All
* Al Overview
The Homekey program in California, intended to rapidly expand housing for the homeless, faces several challenges. These include low rates of successful tong -term housing placement, habitability issues at some sites, and concerns about drug and alcohol use. Additionally, some projects struggle with funding for long-term operations and renovation costs. There are also questions about the program's state oversight and lack of measurable objectives. d
Here's a more detailed breakdown:

1. Low Housing Placement Rates: While Homekey provides shelter, a significant portion of individuals do not transition to permanent housing. For example, in the Bay Area, only about 37% of those moving through Homekey shelters secured long-term housing. o

2. Habitability and Safety Issues: Some Homekey sites have experienced habitability complaints, code violations, and even deaths related to drug and alcohol use. For instance, at least 27 deaths were recorded at eight Homekey sites across the Bay Area,

3. Funding and Oversight: The state relies heavily on self -reported data from local officials and site operators, leading to a lack of consistent oversight and potentially hindering the program's effectiveness. Furthermore, securing ongoing funding for operations and renovations remains a major obstacle for rnany projects. &

4. Incomplete Approach: Some argue that the "Housing First" approach, which prioritizes immediate housing, is not sufficient on its own. Its argued that addressing underlying issues like addiction, mental illness, and the root causes of homelessness is crucial for long-term success. Giv

5. Legal and Regulatory Challenges: Lawsuits, like the one against ShaDgri-La Industries, have highlighted potential issues with financial management and compliance with state regulations. There are also legal challenges to the program's constitutionality, particularly regarding the use of public funds for projects that might not require public votes. ?
In conclusion: While Homekey has provided much -needed shelter, it's not without its problems, Addressing these challenges through improved oversight, enhanced funding mechanisms, and a more comprehensive approach to tackling homelessness is essential to ensure the program's long- term success. o
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All
Google homekey problems in solano county ce
In Solano County, California, the Project Homekey program, designed to address homelessness through rapid housing acquisition and conversion, has encountered several .challenges. These problems reflect issues seen in Homekey projects statewide, along with some local specifics. & Here are some key problems identified:
• Community Opposition: Several proposed Homekey projects have faced strong opposition from local residents and community groups concerned about potential impacts on their neighborhoods. For example, the Vacaville City Council recently voted against pursuing a Homekey facility due to concerns about potential increases in crime and related issues. Opposition also arose in the past in Vallejo concerning environmental concerns related to Project Homekey proposals. • Funding and Operations:
o One of the most significant and recurring challenges for Homekey projects in California, including Solaro County, is the lack of sufficient ongoing operating subsidies to cover the long-term maintenance of the buildings and provide essential supportive services for residents.
o Some projects also require significant renovations, exceeding the initial Homekey grant amounts, and securing additional funding for these conversions proves difficult and can introduce new regulatory hurdles. • Project Delays and Failures:
o Vallejo has experienced significant delays and cost overruns with its Broadway Project, a Homekey initiative aiming to provide 47 units of permanent supportive housing. The project was long -delayed and required a $b million bailout last year, according to the Vallejo Sun.
o Statewide, some Homekey contractors, like Step Up on .Second Street and Shangri-La Industries, have faced lawsuits for alleged fraud and misuse of grant funds, leading to foreclosures and unfinished projects. • Staffing and Capacity: Concerns have been raised about the capacity of local staff to effectively oversee the implementation and long-term success of Homekey projects, especially given past difficulties and delays. • Balancing Urgency and Process: Homekey's expedited timelines, designed to address homelessness quickly, have sometimes clashed with the need for community input and environmental review processes (like CEQA). While streamlining is vital for rapid housing, it can also lead to tensions with local control and resident concerns about transparency and environmental impacts, according to SFGATE.
• Limited Services: There's a persistent need for robust and readily accessible supportive services, such as case management, mental health, and substance use counseling, to ensure the long-term stability and well-being of Homekey residents.

These services are often below the needed levels, according to the Terner Center. 41
These problems highlight the complex nature of addressing homelessness x v ^ q 0 ...

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Vacaville.Council closes door on Project I
_
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Apr 9. 20-15 — The'•Ipcaville City Cuuncil .rteJ
nct to con,tirnu� pursuing a Piolect Rom:-ko
Show all

Vacaville Council closes *door on Project Homekey — The Vacaville Reporter 8/2/25, 9:05 PM

LATEST HEADLINES
Vacaville Council closes door
on Project Homekey
By NICK MCCONNELL I [email protected]
PUBLISHED: April 9, 2025 at 4:34 PM PDT
https://www.dailyrepublic.com/news/no-vote-lots-of-questions-for-proposed-vacaville-homekey- project/article_33a06adc-d2e4-11 ef-8e60-97ac240095cb.html No vote, lots of questions, for proposed Vacaville Homekey project
Amy Maginnis-Honey
,J Jan 15, 2025
https://www.thereporter.com/2025/04/09/vacaville-council-closes-door-on-project-homekey/ Page 1 of 15

8/2125, 9:06 PM
Vacaville Council closes door on Project Homekey — The Vacaville Reporter The Vacaville City Council voted not to continue pursuing a Project Homekey facility at 1050 Orange Drive in the former Quality Inn and Suites. The project could have created a variety of resources for low-income and unhoused people in the community, but councilmembers expressed concern
about the possibility of drugs, drunkenness and illegal activity in the facility.

The council voted 4-3 on a motion from Councilmember
Greg Ritchie to kill the initiative and go back to the drawing board on transitionary housing. Vice Mayor Sarah Chapman and Councilmembers Michael Silva and Jeanette Wylie voted against the motion. r,v ai u secure.

Tamara Colden presented on the is
collaborated with homelessness sE
Opportunity House, Vacaville Police uepartment's
Community Response Unit and Solano County Behavioral
Health.

Option one would have built 85 units of permanent
supportive housing funded in part with state -allocated Homekey funds for low-income households. The staffing
would have required about eight full-time employees, and would cost about $25 million in total.

Option two would have built a phased project, the first phase with 25 to 30 permanent supportive units and the
second with 55-60 affordable housing units. The service provider in this model would have been Opportunity House.

Option three would have offered no permanent supportive housing, but would create 85 low-income housing units.

The city has negotiated with the property owner across two developers and several months, Colden said, The most
recent developer, MPI Homes, sent a representative to the meeting.
https://www.thereporter.com/2025/O4/O9/vacaville-council-closes-door-on-project-homekey/ Page 2 of 15

Vacaville Council closes door on Project Homekey — The Vacaville Reporter 8/2/25, 9:05PM
Councilmember Roy Stockton asked if the permanent
supportive housing element of the project could be slowly increased. Because the project would have been completed with grant funds, staff said, this is not possible.

Stockton said that he had been in contact with the
developer, and called this housing type a "big step" for the city because it currently has none of this kind.
"I recognize that there is a portion of our community that needs this type of housing," he said.

Stockton also raised the potential of people driving
unhoused people from other communities to Vacaville to
take up rooms in this facility.
"I'm not going to suggest that's going to happen, but I have heard of that happening," Stockton said.

Councilmember Silva said he was open to family -sized units in the project.
"What I hear from folks is that most folks, no matter how you feel on this issue, most people can tolerate helping people who want to help themselves," Silva said.

Police Chief Chris Polen said the department will not be able to dedicate special resources to this project.
"We're going to rely on CRU a lot, especially in the morning and afternoon," Polen said.
https://www.thereporter.com/2025/04/09/vacaville-council-closes-door-on-project-homekey/ Page 3 of 15

Vacaville Council closes door on Project Homekey — The Vacaville Reporter 8/2/25, 9:05 PM
Colden noted that sex offenders would not be able to live in the units, and that individual housing is more needed than family units. Polen said
Stockton said his tour of a similar facility in San Francisco concerned him regarding drug use in the facility.
"There were vending machines with Narcan and fentanyl
test strips," he said.

Councilmember Ted Fremouw noted that many elderly
people live in a nearby facility. Persons will not need to be clean or sober, Colden said, and while cannabis is illegal in Section 8 housing it is highly accessible in California. "What I see is the beginnings of a ghetto, for lack of better terminology," Fremouw said.

Councilmember Greg Ritchie said he saw no incentive in the facility for someone to follow financial literacy and improve their life.
"They can be drunk, stoned, you can't really do anything; it's allowed," Ritchie said.

Ritchie and Fremouw both expressed a willingness to send the city -provided funds to Opportunity House rather than spending them on this project.
"If you throw a family next to someone whacked out, my
conscience couldn't live with that," Ritchie said.

Gail Thomson opposed the project in public comment. She said she has been working with the homeless for over 10 years now. She said the people she works with are not
always able to pay their bills, and she believes transitional housing would be a better pathway for the city.

MayorJohn Carli said he is not interested in chasing grant money for the sake of it, and thus opposed the project. https://www.thereporter.com/2025/04/09/vacaville-council-closes-door-on-project-homekey/ Page 4 of 15

Vacaville Council closes door on Project Homekey — The Vacaville Reporter 8/2/25, 9:05 PM
Silva said he shared concerns about the design of the
community, and wasn't quite clear how it could be safe for families as well as people trying to get sober.
"I don't agree that they're trying to party and stuff, I think the mental status is completely different in that state," Silva said.

Councilmember Wylie expressed frustration about the loss of the project but admitted there was "no way" the facility could pass as is. She asked staff what the city could actually accomplish to help unhoused people.
"I feel like Vacaville has a long history of projects trying to help the homeless and it gets thwarted by the public or the council," she said.

Councilmember Chapman said the CAP Solano CountyJPA is
supposed to be helping the city with homelessness. She
expressed frustration that the city and council worked so hard on this issue and found no reward.
"What was our objective initially? She asked. "Our objective was to assist our unhoused, our homeless people."
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https://www.thereporter.com/2025/O4/O9/vacaville-council-closes-door-on-project-homekey/ Page 5 of 15

Google problems with homekey program california
All
♦ Al Overview
The Homekey program in California, intended to rapidly expand housing for the homeless, faces several challenges. These include low rates of successful long-term housing placement, habitability issues at some sites, and concerns about drug and alcohol use. Additionally, some projects struggle with funding for long-term operations and renovation costs. There are also questions about the program's state oversight and lack of measurable objectives. o
Here's a more detailed breakdown:

1. Low Housing Placement Rates: While Homekey provides shelter, a significant portion of individuals do not transition to permanent housing. For example, in the Bay Area, only about 37%Q of those moving through Homekey shelters secured long-term housing. o

4. Incomplete Approach: Some argue that the "Housing First" approach, which prioritizes Immediate housing, is not sufficient on its own. It's argued that addressing underlying issues like addiction, mental illness, and the root causes of homelessness is crucial for long-term success. o

5. Legal and Regulatory Challenges: Lawsuits, like the one against _$hangri-La Industries, have highlighted potential issues with financial management and compliance with state regulations. There are also legal challenges to the program's constitutionality, particularly regarding the use of public funds for projects that might not require public votes. cp
In conclusion: While Homekey has provided much -needed shelter, it's not without its problems. Addressing these challenges through improved oversight, enhanced funding mechanisms, and a more :comprehensive approach to tackling homelessness is essential to ensure the program's long- term success. &
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Vallejo City Council won't apply for homeless housing project funding — Times Herald Online 8/2/25, 9:10 PM
NEWS 4"- HOUSING
Vallejo City Council won t
apply for homeless housing
project funding
By JANIS MARA I [email protected]
UPDATED: May 22, 2025 at 12:14 PM PDT
We'd like to send you some noti
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https://www.timesheraldonline.com/2025/O5/2O/vallejo-city-council-wont-apply-for-homeless-housing-project-funding/ Page 1 of 21

Vallejo City Council won't apply for homeless housing project funding — Times Herald Online 8/2/25, 9:10 PM
1 The Vallejo City Council Monday dE
for state funding for three propos(
housing projects in Vallejo.

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risk of or experiencing homelessnf
behavioral health services such as
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mere nine business days from Tue
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The council members said they on
proposed Homekey+ projects whe Continue
deadline to vet the projects in timE
the city's ability to successfully manage the projects. "I don't think that we have the capacity to have our own staff oversee the success of some of these projects moving
forward," said Council member J.R. Matulac.

Years ago, the city received Homekey funding for the now - long -delayed, markedly over -budget Broadway Project,
which has still not opened. Without sufficient vetting, the ................-..-......--.....__...... .
council members feared a repeat of that experience.
"I'm disconcerted that a lot of these projects came to us years ago to where there was a period when we could have vetted these," had staff advised the council about the
proposals, the council member said. One of the projects was brought to city staff about four years ago, a presenter said, but the council was not advised at that time.

X
https://www.timesheraidonline.com/2O25/05/20/vallejo-city-council-wont-apply-for-homeless-housing-project-funding/ Page 2 of 21

Vallejo City Council won't apply for homeless housing project Funding — Times Herald Online 8/2/25, 9:10 PM
0 The council members praised the three projects, saying that if they had had time to properly examine them and work
with the originators, it might have been possible to act as co -applicants for the projects.

The council declined to vote on the proposals, which had the same effect as voting them down, City Manager Andrew
Murray advised. Instead, council members unanimously
passed a motion by Mayor Andrea Sorce aimed at correcting the deficiencies they felt had caused the problem.

The motion directed staff to create a timeline for
implementation of the MRG recommendations and create a
process for vetting affordable housing projects and bring that back to the council in July. The motion also involved engaging and partnering with the applicants for future
opportunities, meeting with advocates regarding
community land trusts and having them present to the
council, and holding a study session with the city's housing commissioners.

The motion referred to a 2024 managerial audit by
consultant MRG finding that the complexities of the project's state grant funding and the limited experience of city staff and the developer team caused delays and budget overruns in the Broadway Project, eventually necessitating a $6
million city bailout.

W
https://www.timesheraidonline.com/2025/05/20/vallejo-city-council-wont-apply-for-homeless-housing-project-funding/ Page 3 of 21

FUNDING
AND

CONSTRUCTION
ISSUES

The Homekey program in California has experienced many problems. Habitability complaints, code violations, and even deaths related to drug overdose and alcohol use.

There were over 27 deaths recorded in the Bay Area at these homekey sites. Seventy percent of deaths occurred in Homekey facilities in San Francisco.

Vacaville and Vallejo City Council Homekey Programs
Vacaville Council closes the door on Project Homekey (main concern was safety) All council members voted "NO"
Vallejo City Council will not apply for homeless housing project funding (limited staff to monitor)
Hopefully our concerns will be heard and this zoning and proposed project will not be approved.

PROJECT ISSUES
At the City Council meeting scheduled on January 21, 2025 the agenda was "Approving the Allocation of Local Housing Trust Funds to Danco Homes" in the amount of $1.4 million dollars
Reports on Danco Group's Homekey projects and related issues mention the following.

1. Financial Issues and Loan Defaults

2. Unrecorded Affordability Restrictions

3. Allegations of misrepresentation and breach of contract

4. Unpaid contractors and liens

5. Project delays and unfinished projects

FUNDING ISSUES

IF THE STATE OF CALIFORNIA AND FEDERAL COVER CANNOT FUND THESE

PROJECTS, WILL THE CITY OF FAIRFIELD BE ABLE TO COVER THESE EXPENSES IN THEIR BUDGET?
JULY 23, 2025 DAILY REPUBLIC ARTICLE
"NEW STATE BUDGET PAPERS OVER $20 BILLION DEFICIT, IGNORES DAY OF RECKONING"
WILL NEEDED FUNDING BE AVAILABLE WITH THE STATE BUDGET IN CRISIS? Reid et study cautions "less than half of Homekey sites have funding in place to support the long-term operations of their sites, raising significant concerns among project stakeholders about what they would do once the state funds run out".

EXECUTIVE ORDER - TRUMP 7/24/25

ENDING CRIME AND DISORDER ON AMERICA'S STREETS

SOME EXPERTS SAY TRUMP COULD USE THIS EXECUTIVE ORDER TO CUT OFF MONEY TO CALIFORNIA. ALREADY HAS CUTOFF FUNDING FOR HOMELESS SERVICES, LOWER COST HOUSING AND MEDICAID.

FEDERAL FUNDING CHANGES ARE SIGNIFICANTLY IMPACTING HOMELESSNESS

INITIATIVES WITH PROPOSED CUTS TO AND SHIFTS IN FUNDING PRIORITIES BY THE ADMINISTRATION.

INCLUDES: 44% REDUCTION IN HUD FUNDING.
2026 BUDGET GOAL = SECTION 5 ACTION: SHIFT HOW FUNDS ARE ALLOCATED TO MOVE AWAY FROM "HOUSING 1 ST" POLICIES.

BUDGET CUTS TO HOMELESS GRANTS WHICH SUPPORT VARIOUS HOUSING AND SERVICE PROGRAMS. (SECTION 4 (A) REDIRECTING FEDERAL

RESOURCES
INSTRUCTS THE U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT HUD TO WITHDRAW SUPPORT FOR HOUSING FIRST POLICIES.

NEW POLICIES FOR SUBSTANCE ABUSE OR MENTAL TREATMENT IN

INSTITUTIONS

CALIFORNIA PROPOSED STATE BUDGET CUTS AND FEDERAL CUTS COULD FURTHER STRAIN RESOURCES FOR HOMELESS INITIATIVES.

WANTS TO ABOLISH FEDERAL SUPPORT FOR "HOUSING 1 ST" WHICH IS THE

IDEA THAT HOMELESS INDIVIDUALS SHOULD GET HOUSING EVEN IT THEY ARE STILL USING DRUGS, AND "HARM REDUCTION" WHICH FOCUSES ON PREVENTING OVERDOSES AND OTHERWISE MAKING USE USE SAFER. (CAL MATTERS JULY 25, 2025)

PLACING THE HOMELESS IN VISTA RIDGE DOES NOT CONTROL THE DRUG PROBLEM. PEOPLE ARE NOT CONTROLLED IN THIS FACILITYAND CAN CONTINUE USING DRUGS. THIS IS A LIABILITY
ISSUE TO THE CITY OF FAIRFIELD.

TRUMP DIRECTS THE ATTORNEY GENERAL TO REVIEW WHETHER

ORGANIZATIONS THAT GET
FEDERAL FUNDS AND ALSO "KNOWINGLY DISTRIBUTE DRUG PARAPHERNALIA OR "PERMIT THE USES OF DISTRIBUTION OF ILLICIT DRUGS" ON THEIR

PROPERTY ARE ALSO VIOLATING FEDERAL LAW - AND BRING CIVIL OR

CRIMINALACTIONS AGAINST THEM
THE CURRENT ESTIMATED COST TO CONVERT THE MOTEL ROOMS FOR 48 UNITS IS 27 MILLION DOLLARS ($26,892.954 actual last estimate) THAT EQUATES TO $562,500 PER UNIT ...... THE COST FOR A SINGLE DWELLING HOME.

THIS INCLUDES THE ACQUISITION AND RENOVATION COSTS TO STRIP DOWN TO THE BARE WALLS, REDOING ALL ELECTRICALAND PLUMBING CHANGES.

AVERAGE UNIT SIZE TO CONSTRUCT NEW APARTMENTS YEAR 2025 IS 20 UNITS = 2 M TO 7 M
50 UNITS = 5 M TO 18 M
100 UNITS = 10 M TO 35 M
RENOVATING AND CONVERTING THE 3 STORY, 100 ROOM HOTEL INTO SINGLE

OCCUPANCY UNITS WITH KITCHENETTE, POOL (LIABILITY ISSUE) THE CITY CONTRIBUTION IS $1,000,000 LOCAL HOUSING FUND
$535,541 INCENTIVE FUNDS BY THE STATE
BALANCE OF PROJECT EXPENSES PAID BY ????????????
WHAT IS THE FUNDING SOURCE FOR FUTURE COSTS FOR THIS HOUSING?

CONSTRUCTION ISSUES

A BIG FAIL FOR NEWSOM'S PROGRAM DEVELOPER SHANGRI-LA INDUSTRIES

WHO WAS A MAJOR RECIPIENT OF THE GOVERNOR'S HOMEKEY PROGRAM RECEIVED 114 MILLION DOLLARS OF STATE FUNDING FOR SAN BERNARDINO.

VENTURA AND MONTEREY COUNTIES APARTMENTS WERE NOT CREATED AND

THE COMPANY LEFTATRAIL OF UNPAID DEBTS, BUDGET OVERRUNS, PROPERTIES THAT FACE FORECLOSURE. BUILDING WERE IN RECEIVERSHIP AND LAWSUITS OCCURRED.
103 ROOM PROPERTY IN SALINAS, CA. ONLY 13 RESIDENTS RESIDE IN UNRENOVATED UNITS.

RISING INTEREST RATES, SLUGGISHNESS BY STATE HOUSING THE COMMUNITY DEPARTMENT WERE EXPERIENCED.

+ Al overview
Reports on Danco Group's Homekey projects and related issues mention several problems:
• Financial Issues and Loan Defaults: There have been reports of Danco Group defaulting on pi ivate loans associated with some Homekey projects. The California Department of Housing and Community Development (HCD) has alleged that these loans violated Homekey program agreements which require affordability restrictions to be recorded before any loans and state approval for loans. • Unrecorded Affordability Restrictions: HCD has stated that Danco Group failed to record affordability restrictions in some of their Homekey projects, violating program agreements.
• Allegations of Misrepresentation and Breach of Contract HCD has released statements accusing Danco Group (referrer: to as Shangri-La Industries in some reports) of misrepresenting financial considerations and breaching contractual obligations.
• Unpaid Contractors and Liens::'ontractors working on some Danco Group Homekey projects have filed lien:;. alleging they have not been paid.

Project Delays and Unfinished Projects: At least one project developed by Danco Group has been delayed and remains unfinished, exceeding its target opening date. 69
It's important to note that some reports refer to Danco Group as "Shangri-La Industries". These reports suggest the problems include accusations of running a financial "Ponzi scheme" and mismanagement of funds across different projects. The California Attorney General's office is coordinating with HCD in investigating these matters. (11
Separately, a Facebook group called "Boycott The Danco Group" exists, where residents and advocates share personal experiences with the company's property management, including issues with maintenance, rent, and treatment by management. This group criticizes Danco Group's business practices and advocates for tenant rights. &
rbM
Facebook
8o c'ott The Dailcir Group
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Big fail for Newsom's Homekey housing M,1
program I KCRW
2O2,C - Sh-3:tigii-L_. - triublc>._�a
California homeless housing projects on
hold - CalMatters
Dec 15. 2C2 - Shang-. ,�;:; caf:u;lt::d
on private in
Boycott The Danco Group I Facebook
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Show all

Flawed Project Homekey now immersed in scandal - Pacific Research Institute 8/2/25, 4:22 PM

EXPLORE ISSUES COME TO EVENTS READ S LISTEN
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P I NRARD1
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Flawed Project Homekey now �=
immersed in scandal ;
Wayne Winegarden

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Project Homekey is inherently flawed because it is
expensive and ineffective for people who remain
homeless due to problems of addiction and mental health challenges - the majority of the homeless population.

The program also suffers from the same ineffective
financial management plaguing California's homeless
programs.

My Pacific Research Institute colleague KerryJackson and I have written extensively about the inherent flaws of Project Homekey. As a refresher, Project Homekey is Gov. Gavin Newsom's main program for addressing the state's homelessness problem. It attempts to leverage the current hotel and motel infrastructure to move people from the streets to housing.

The program is predicated on the "Housing First" approach, which asserts that a permanent and stable home is the best platform to help people overcome the challenges that caused their homelessness, including the problems of mental illness and addiction. A significant share of the estimated $24 billion that the state has spent addressing homelessness over the past several years has gone to this program.

Project Homekey is inherently flawed because it is expensive and ineffective for people who remain homeless due to problems of addiction and mental health challenges — the majority of the homeless population. The program also suffers https://www.pacificresearch.org/flawed-project-homekey-now-immersed-in-scandal/ Page 1 of 3

Flawed Project Homekey now immersed in scandal - Pacific Research Institute 8/2/25, 4:22 PM trom the same ineffective nnanciai management plaguing uaittornia s nomeiess programs.

As documented in an April 2024 report from the state auditor, the "lack of coordination among the State's homelessness programs" has "hampered the effectiveness of the state's efforts to end homelessness." Further, the state is not ensuring "that it collects accurate, complete, and comparable financial and outcome information from homelessness programs. Until Cal ICH [California Interagency Council on Homelessness] takes these critical steps, the state will lack up-to-date information that it can use to make data -driven policy decisions on how to effectively reduce homelessness."
In a June 7 article, the Los Angeles Times: reports on non-profit organizations who "were awarded more than $114 million in Homekey funds to convert seven motels in San Bernardino, Ventura and Monterey counties into studio apartments for formerly homeless tenants" Instead of housing hundreds of people, "most sit empty and unfinished." The projects also face foreclosure and accusations of financial impropriety. In response, Attorney General Rob Bonta has filed a civil lawsuit.

Given the state of the financial oversight of the state's homeless programs, such failures should not be surprising. The state and local governments have rushed to spend billions of dollars to demonstrate to voters that they are addressing the crisis. Doing so without proper financial controls is a management failure of epic proportions. In fact, after recklessly spending so much money, in such a short time, without proper controls, the state should be thankful that at least some of the projects have worked out.

This financial scandal, as well as any other potential financial improprieties we may discover in the future, should serve as a wakeup call to the state. First, California must finally heed the calls of the state auditor and impose proper financial controls on the state's homeless spending. As part of this process, the state should seriously consider how to consolidate the more than 30 homeless programs that the auditor identified. Trying to manage so many programs inevitably creates the risk that the efforts of different programs will be duplicative or could even work at cross purposes.

Second, the state should recognize that the "Housing First" approach is particularly vulnerable to the problems of financial abuses in addition to being a costly and ineffective strategy for addressing the homeless crisis. Rather than effectively entering the housing development industry through Project Homekey, policy leaders should employ a two-part strategy that leverages nonprofits that use more affordable temporary housing and institutional i
services to immediately help those who are currently homeless, and repeals the regulations and government -imposed costs that are limiting housing supplies https://www.pacificresearch.org/flawed-project-homekey-now-immersed-in-scandal/ Page 2 of 3

Flawed Project Homekey now immersed in scandal - Pacific Research Institute wnue ariving up the costs or ounaing new nousing.
812/25, 4:22 PM
Failures and scandal in Project Homekey stand as a stark reminder that the state's current approach to helping the homeless, while well intentioned, is incapable of resolving California's ever -worsening problem. As the old saying goes, admitting that the problem exists is the first step toward recovery — or in this case, in resolving the crisis that has been allowed to fester for far too long.

Wayne Winegarden is a senior fellow for business and economics for the Pacific Research Institute.

V ® ►a/ B
Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.
https://www.pacificresearch.org/flawed-project-homekey-now-immersed-in-scandal/ Page 3 of 3

Big fail for Newsom's Homekey housing program I KCRW
7/31/25, 4:06 PM
i
fl
Greater LA
Developer bungles Newsom's affordable housing program
By Anna Scott Dec. 18, 2023 Housingnnent
MORE `
BEFORE
AFTER
In King City, in Monterey County, Shangri-La Industries received $12.2 million in Homekey funds in mid-2022 to turn an approximately 45-unit motel (top image) into housing.

The bottom image is a rendering of the proposed final conversion. However, the project remains unfinished and is more than a year past its target opening date. Photo courtesy of King City Mayor Mike LeBarre.

This story was produced with The California Newsroom, a collaboration of public inedia outlets throughout the state.

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 -ping a financial shell game.
—.rt'effect, Shangri-La is operating a real estate Ponzi scheme, where loans that were supposed to be reserved to complete specific projects were Commingled with other funds and entities to prop -up other failing Shangri-La projects;' reads a court filing from December 8, by lawyers for a lender involved in several Shangri-La Homekey projects. https://www.kcrw.com/news/shows/greater-la/homekey-shangri-la-in...20troubles%20also%20reach,past%20its%20target%20opening%20date . Page 2 of 12

Big fail for Newsom's Homekey housing program I KCRW
7/31/26, 4:06 PM
"I'm not going to respond to that allegation at all;" Shangri-La owner and CEO Andy Meyers said in an interview Friday. "We are an entity, Shangri-La Industries, and have a number of properties. But there's no Ponzi scheme. Obviously, whomever made such an accusation doesn't know what a Ponzi scheme is:' ,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 �Uments show that a 103-room property in Salinas housed just 13 residents as of October — all in unrenovated units.

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.

In an email, a spokesperson for the housing department said, "Shangri-La is in breach of contract" The department said it is investigating, and declined further comment.

Shangri-La's financial troubles are quickly unfolding in court proceedings. On Friday, a Monterey County Superior Courtjudge 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 dctlults 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 5 0 h' 1 i,, why isn't the crisis getting better?
"It's notjust 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.

Facing foreclosure in Redlands
When Gov. !Newsom launched Homekey in 2020. local governments up and down the state were typically tackling homelessness by putting people in shelter beds or investing in new construction. Convinced that converting under-utilized motels and hotels into studio apartments was quicker and more cost-effective — especially during the financially precarious days of the pandemic — Newsom's office created Homekey grants to do just that. The tally so far is more than $3 billion. "Homekey is changing thousands of lives statewide," Newsom said at the ribbon -cutting for a Shangri-La Homekey project in Redlands, which he attended virtually last December. He praised the project for providing "dozens of people with shelter, critical resources, and community," according to the city's website.

But a lender began foreclosure proceedings on the Redlands building less than a year later. A San Bernardino Superior Court judge approved the lender's request to have a court - appointed receiver take over the property, effective Jan. 1, court records show. gently, there are no indications that the building's approximately 100 tenants will have to move; they're receiving services such as case management and mental health care, by the Santa Monica -based nonprofit homeless services provider Step Up on Second Street, which is partnered with Shangri-La on all its Homekey projects.

The Redlands project's path to being taken over by an outside party reflects a pattern with Shangri-La's Homekey undertakings: Get a state award, secure additional funding or credit from private lenders — then stiff those lenders.

After being awarded a $30 million Homekey grant for the Redlands conversion in March 2022, Shangri-La borrowed $ l2 million from Arixa Institutional Lending Partners and took out a $20 million credit line from BMO Harris Bank, according to lawsuits and state records. The records show Shangri-La defaulted on both.

The situation has also created trouble for government officials in Redlands. Under the terms of Homekey. the city is also an applicant for the project. Redlands Public Information Officer Carl Baker said the money went directly to Shangri-La — not through city coffers. But in a letter to Shangri-La principals and Redlands Mayor Pro Tem Paul Barich dated December 4, the states housing department wrote that both the developer and the city breached their Homckey agreement by using the building to secure the Arixa and BMO deals.
"We've been in contact with Shangri-La, we've been in contact with the state," said Baker. "I know that the state is invested in seeing that this project succeeds, and so are we "Overages and delays" in Thousand Oaks
The same pattern is apparent in Ventura County, where Shangri-La was awarded $26.7 million in Homekey funds last year to transform a 78-room motel in Thousand Oaks, state records show. Thousand Oaks Assistant City Manager Ingrid Hardy said the cash, which went straight to Shangri-La, was supposed to cover the purchase, renovation, and some operating costs. Property records show that Shangri-La then borrowed more than $10 million from private lenders. The company has since defaulted on payments. The property is now going through the foreclosure process.

Shangri-La also racked up $1.9 million in liens from subcontractors on the Thousand Oaks building, according to property records. The motel sits empty and unfinished.

When asked about Shangri-La's need for money from private lenders on top of the Thousand Oaks Homekey funds, Meyers pointed at forces beyond his control. "Well, there were overages, and there were delays in the closing" caused by the state, he said. "And the price of the property went up $5 million at the end, as the seller wanted to back out with all the delays."
It's unclear if a $5 million price bump for the Thousand Oaks property occurred. In May 2022, the building was valued at $18.2 million, according to an appraisal submitted to state housing officials by Shangri-La and obtained by KCRW through a public records request. In October, Shangri-La bought the former motel for $18.9 million — an increase of just S600,000 over the appraised value. Meyers didn't respond to a follow-up email seeking clarification. sae interview, he said Shangri-La continues to work on refinancing its Homekey projects.

That's been difficult, court records show. In a December email exchange that was submitted in court, a Shangri-La lender at the firm Sunday Capital reached out to a second lender that had agreed to refinance a project in Salinas, asking when the deal would close. https://www.kcrw,com/news/shows/greater-la/homekey-shangri-la-in...20troubles%20also%20reach,past%20its%20target%20opening%20date . Page 3 of 12

Big fail for Newsom's Homekey housing program I KCRW 7/31/25, 4:06 PM "Hello," the second lender replied, "we are not doing this loan anymore due to a lot of fraudulent activity, so we have passed on the deal. Thanks." In King City: "I'd just like to know where the money is" angri-La's troubles also reach King City, in Monterey County, where the company received $12.2 million in Homekey funds in mid-2022 to convert an approximately 45-unit motel. Once again, the developer got the funding directly, said King City Mayor Mike LeBarre. The grant was supposed to cover the purchase price, renovation, and on -site services for four years, he said. Shangri-La took out a S43 million private loan on the property, which violates Homekey rules, according to a notice sent to the developer by the state housing department. The project remains unfinished and is more than a year past its target opening date. "It's so frustrating," said LeBarre. "If it was fulfilled, we would have people right now in permanent supportive housing, getting the things that they need to better their lives" LeBarre said the city is paying hotel bills to put up about 40 unhoused people who'd expected to move into the Homekey project. He said Step Up is working with the city to provide services at that location.
"I never expected this," said LeBarre. "I'd just like to know where the money is." State officials miss clues about so-called `financial powerhouse' One of Shangri-La's selling points as a Homekey developer was its financial strength. In a 340-pagc packet of documents sent to the state housing department in April 2022 by Shangri-La/Step Up, and obtained by KCRW and The California Newsroom through a public records request, its executives claimed it was a "financial powerhouse" Shangri-La Industries and its development subsidiaries, Shangri-La Construction and Shangri-La Development, have ties to Shangri-La Entertainment, which was founded by the late film producer and philanthropist Steve Bing. In the materials, Meyers even pledged to commit up to $275 million to the company's Homekey projects.

When asked about that personal pledge on Friday, which bears his signature, Meyers said, "I'm not really sure what you're talking about."

ANDREW MEYERS
Apo€ 29, 2u72 ABDUL-WAHAB
Fund[np Commament - Homelvey PWogram
7o Snar7rt i Ca", 1JT:

PumMnt to Shang-rt-ta Capital, MC CShangr;-ta CapftjP, and Shangti•la rrttlustdes, (Xi ("Si,n request for financing, in partner.Oip with Stangrt-W Developmmet, lLC C°5€ p in togrtherwittt SU and 5bMVn.la capita€ shall bejcdntly referred to as "Deveioper"), Andrew bteyem Abdu€-Wahab CFunderl Provides this fuoding comet m-k nt for purposes of Oevefees proposed Sete of California Department of Housing and Community Dcwelofmment Homekey Progran> Notice of Fruuling Avagagity, Round 7 C Projecs') Far the period =vroencing an the date of dosing and ending tt". hundred sj.ty (366) mondts folton;ng, or Tuft rr,peymmi of FurWs, Fundar agrees to provide to Developer funding of UP to an a99,egaee of two hundred seventy fdty mrn:em dof https://www.kcrw.com/news/shows/greater-la/homekey-shangri-la-in...20troubles%20also%20reach,past%20its%20target%20opening%20date . Page 4 of 12

Big fail for Newsom's Homekey housing program I KCRW
warning signs
7/31/26, 4:06 PM
For example. a few months before sending the materials, in January. Wells Fargo Bank sued Shangri-La's construction arm, as well as Meyers and Holmes, accusing the rnimpany principals of "conspiracy to defraud" The suit alleges that "Meyers and Holmes personally withdrew substantial sums of money from Shangri-La for their personal efit." It claims that in late 2021, they deposited S3 million in bad checks into a Wells Fargo account, and then moved more than S100,000 to their personal accounts at other As. The checks bounced and the entire S3 million was returned for insufficient funds, according to the lawsuit.

Meyers said he is "looking into" the allegations in the Wells Fargo suit and claims made by plaintiffs in other lawsuits.

The packet of financial documents to the state included a letter from Shangri-La Chief Financial Officer Cody Holmes promising that a Shangri-La affiliate called HM Land Development could commit up to $100 million to the company's Homekey projects. The letter was accompanied by a tax form listing a handful of income properties owned by HM, including a condo at Downtown LA's ritzy LA Live complex; but HM had received a default notice about that property more than six months earlier, according to county records. The records show that the condo eventually went into foreclosure.

Meyers said he didn't "have the exact information" to answer questions about HM's portfolio.

Holmes, the CFO, has not responded to multiple requests for comment.

A longtime partnership
Step Up, Shangri-La's partner in all of its Homekey projects, has a considerable track record in homeless services, including running more than a dozen supportive housing projects throughout Southern California. In the materials sent to the state, the nonprofit claimed that its previous motel -conversion work "was an early genesis of what eventually became the landmark Homekey program."
Shangri-La and Step Up have been partners on projects that pre -date Homekey. The organizations previously received funds through the City of LA's Proposition 111IH bond measure for five homeless housing projects, including two that v4Kugd 11st >= on the Veterans Affairs campus in West Los Angeles, and one troubled building in Westlake I� KCRW reported on in 2020. Shangri-La and Step Up are also partnered on projects in Tennessee and [North Carolina, some of which have run into delXS.

The two companies even employed the same CFO, Judson Leibee, who worked for Shangri-La from 2009 to 2016, and then at Step Up from 2017 to 2023, according to his LinkedIn profile. Leibee declined to comment for this story.

In an interview, Step Up President and CEO Tod Lipka said he's "shocked and very dismayed" by Shangri-La's defaults and financial issues with Homekey projects. "Our partnership is one in which we both have our lanes," Lipka said. "So, essentially, Shangri-La handles all the financing of the projects ... and then they deliver it to us. We were given reassurances on an ongoing basis that work would resume, the problems would get resolved by Shangri-La, and on and on. " Lipka said Step Up wasn't notified of Shangri-La's defaults on Homekey projects until this fall. said Step Up never received any Homekey money directly and is currently providing services on the three occupied projects, even though "much of the cost of those services not been reimbursed to Step Up" by Shangri-La.
"Maybe in retrospect, we could've done more due diligence," he said.

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https://www.kcrw.com/news/shows/greater-la/homekey-shangri-la-in...20troubles%20also%20reach,past° / 20its%20target%20opening%20date. Page 5 of 12

California homeless housing projects on hold- CalMatters 7/31/25, 4:06 PM
Politics Immigration Housing Education Economy Environment California Voices Digit:

HOMELESSNESS
California housing projects for homeless on hold
as developer defaults
t BY JEANNE KUANG
DECEMBER 15, 2023 UPDATED JANUARY 12, 2024
Republish
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California homeless housing projects on hold- CalMatters 7131125, 4:06 PM
state's Homekey program in downtown Los Angeles on Feb. 13, 2023. Photo by Larry Valenzueta for CalMatters/Catch Light Local W

IN SUMMARY
Local officials counted on the state's Homekey program to convert hotel rooms. But now a major developer has defaulted on loans and the state housing department is investigating.

Update: On .Ian. 9, 1l ttornew General Rob Bontu sued Shangri-La Industries LLC on behalf of the Department of Housing and Community Development, alleging contractual fraud and seeking the return of $114 million in state fiends.

King City, population 14,000, wanted to show that even small towns can try to solve homelessness.

The Monterey County community last year partnered with Los Angeles -based developer Shangri-La Industries to land a grant from Homekey, California's $3.1 billion program to help cities build affordable housing for their homeless residents.

King City and Shangri-La got $12.4 million to convert a motel into 44 units of permanent housing complete with social services — enough room for the city's entire homeless population, said Mayor Mike LeBarre. The city expected the units to open by the end of 2022. But starting late last year, LeBarre said the renovations kept getting delayed.

Now the whole project may be in jeopardy. And the California Department of Housing and Community Development said this week it is investigating Shangri-La for program violations.

Shangri-La took out a loan for the conversion, which is now in default, according to filings in the Monterey County Recorder's Office, putting the project at risk of foreclosure. The developer also failed to record an affordability use restriction — the legal language attached to a deed that guarantees the property remains affordable housing, LeBarre said. https://calmatters.org/housing/homelessness/2023/12/california-ho...%2DLa%20this%20year%20defaulted,state%20is%20partly%20to%20blame . Page 2 of 9

California homeless housing projects on hold- CalMatters 7/31/25, 4:06 PM
Shangri-La this year defaulted on private loans in seven Homekey-funded motel conversion projects across the state, three of which are already housing homeless residents. On several of the projects, contractors have tiled liens, alleging they weren't paid.

And Shangri-La failed to record affordability restrictions in six of the projects, according to the California Department of Housing and Community Development, which said it is coordinating with the state Attorney General's office in its investigation. "We are aware of violations by Shangri-La Industries with respect to six of the seven Homekey properties for which it is the developer," spokesperson Pablo Espinoza wrote in an email to CalMatters on Wednesday. "The state takes seriously any violations and is actively investigating this matter."
In letters the department issued to the developer this month, officials alleged the lack of affordability restrictions, and the loans themselves (which made the projects collateral for lenders) violated program agreements with the state.
'In an interview Thursday, Shangri-La CEO Andy Meyers said the state is partly to blame. He accused the housing department of taking months to approve the affordability agreements, a required step before the documents are recorded.
"The state has just taken forever to get these agreements out," he told CalMatters.

Other problems with the projects have stemmed from that, he said. Projects are over budget, in part because Shangri-La has had to pay property taxes, when they would be eligible for abatements if the properties were recorded as affordable housing. Lenders also expected the affordability agreements to be recorded, causing some loan defaults on technicalities, he said.

Meanwhile, he said, high interest rates the past two years have made refinancing difficult. The loan defaults were first reported this inontli by the real estate news outlet The Real Deal. "There's been no sense of urgency until there were these recent articles written about the loan ,defaults," Meyers said of the housing department's approving the agreements. "Then all of a sudden, HCD got really engaged and said, `We reached out to the Attorney General.' I don't give https://calmatters.org/housing/homelessness/2023/12/california-ho...%2DLa%20this%20year%20defaulted,state%20is%20partly%20to%20blame . Page 3 of 9

California homeless housing projects on hold- CalMatters 7/31/25, 4:06 PM
a s t ... I would love to go meet and work things out with HCD." Espinoza denied Meyers' allegations, though one city appeared to back up the developer's claim.

In Thousand Oaks, a Los Angeles suburb, Assistant City Manager Ingrid Hardy told CalMatters in an email that the city and developer submitted an affordability agreement for a Homekey project to the state department in February, and only received approval to record it within the last week.

But Espinoza said the department couldn't have approved the agreements after Shangri-La had already taken out the loans, and "absent their violation the recording would have been done in a timely manner."
The department's probe appears to be its first significant investigation into a private developer for the much -praised Flomekey program.

The program — which gives cities, counties and local housing authorities money to build .permanent housing for homeless residents — began in 2020 and has mostly funded hotel and motel. conversions. Over the past three years, the housing department has granted $3.1 billion for 226 projects that, when all are completed, promise more than 14,000 units of affordable housing.

Shangri-La's loan defaults throw the future of some of those projects into question. The housing department stressed in an emailed statement that the developer's grants amount to just 3% of the total public dollars distributed through the program.

Meyers, meanwhile, said his company is committed to refinancing its loans and completing construction, which is halted on the four projects that haven't yet opened. "I'm going to find a way to get these projects done one way or another," he said. https://calmatters.org/housing/homelessness/2023/12/california-ho...%2DLa%20this%20year%20defaulted,state%20is%20partly%20to%20blame . Page 4 of 9

California homeless housing projects on hold- CalMatters 7/31/25, 4:06 PM
Americas Best Value Inn Corte Madera, a Homekey program site, is located next door to an apartment complex at the base of a residential neighborhood in Marin County. Photo by Anne Wernikofffor Ca [Matters The delays have vexed local officials like LeBarre who were depending on the Homekey program to provide a significant number of affordable housing units, especially in small cities with otherwise limited services for the unhoused.

Like other local governments Shangri-La worked with, King City didn't purchase the motel itself and has no ownership stake in it. Instead, the city acted only as a required co -applicant when the developer sought the state funds to acquire and renovate the property.

Now, the city is asking for state help to save the property fiom a possible foreclosure. And it has scrambled to keep dozens of unhoused residents in motel rooms temporarily, for months longer (than planned. King City moved the residents from a creekbed encampment earlier this year, intending to soon move them into permanent units at the Shangri-La project, LeBarre said. https://calmatters.org/housing/homelessness/2023/12/california-ho...%2DLa%20this%20year%20defaulted,state%20is%20partly%20to%20blame . Page 5 of 9

California homeless housing projects on hold- CalMatters 7/31/25, 4:06 PM "We're trying to find solutions of how to keep the project alive," he said.

More than 200 miles south, the city of Thousand Oaks and Shangri-La won a $26.7 million Homekey grant in 2022 to convert a Quality Inn to 77 units of permanent housing. Shangri-La beat out three competing bids, according to a memo city officials prepared in the fall of 2021.

Thousand Oaks selected the developer for its "significant motel conversion experience," and because the company had already picked out the property on its own. City officials also noted that Shangri-La's prior Homekey-funded projects — in Salinas and San Bernardino — were "among the top 10 percent most cost-effective Homekey projects in California" and that the company would not need "any financial capital assistance from the city" to buy or renovate the hotel.

Still, Hardy, the assistant city manager, said the city also gave Shangri-La $1.8 million to help with construction. The project was supposed to open before the end of this year. But the developer has defaulted on a $10 million loan and contractors have also filed liens, according to Ventura County property records.

Construction is only 20% complete, Hardy said.
"The city is obviously extremely concerned and anxious to get this project back on track and resume construction so that we can house our most vulnerable residents," she wrote. "Our community is relying on this project to serve people experiencing homelessness, especially considering this project was going to be the first of its size in East Ventura County." Shangri-La's other projects were motel conversions in San Bernardino and Redlands that have both opened, and three in Salinas, where only one project has opened. In all its projects, the developer partnered with nonprofit Step Up on Second to provide services to residents.

Salinas and San Bernardino County officials did not respond to inquiries from CalMatters on Thursday. Step Up officials could not be reached for comment. i
In Redlands, city spokesperson Carl Baker said an affordability agreement has been recorded. https://calmatters.org/housing/homelessness/2023/12/california-ho...%2DLa%20this%20year%20defaulted,s[ ate%20is%20partly%20to%20blame. Page 6 of 9

California homeless housing projects on hold- CalMatters 7/31/25, 4:06PM The property opened in January and is "basically fully occupied with approximately 120 residents," he said.

But the project's troubles aren't over. This week Luxlion Industries, a company that provides fire safety services, filed a lien on the property.

CalMatters'investigative reporter Lauren NcilLler contributed to this story.

J
https://calmatters.org/housing/homelessness/2023/12/california-ho...%2DLa%20this%20year%20defaulted,state%20is%20partly%20to%20blame . Page 7 of 9

Protecting Progress: State Housing and Homelessness Funding Must Continue - California Budget & Policy Center 7/30/25, 3:30 PM
1-1
California Budget
& Policy Center
Protecting Progress: State
Housing and Homelessness
Fund'i'ng Must Continue
December 2024 1 By Monica Davafos
Every Californian deserves the dignity of a safe, affordable home — an attainable reality in a state as prosperous and resourceful as California. Yet state homelessness and affordable housing investments are approaching critical funding cliffs, with deepe-r cc -,its expected in 2025 if one-time allocations are discontinued and federal dollars . e cuts under the Trump administration. Ensuring vital housing efforts continue will require sustained funding and new revenue to protect and uplift Californians and communities statewide.

Noteable state investments in California's homelessness response and affordable housing production began in 2019. Over the past six years, the combination of flexible federal dollars during the COVID-19 pandemic, strong state revenues, and a growing urgency to address housing costs led to unprecedented state investments in affordable housing and other homelessness solutions — however, continuing this progress hinges on ongoing funding.

Core State Investments to Solve Homelessness Are
Temporary
California homelessness -related spending reached a high of $6.8 billion in 2022-23, fueled by the surge in state revenue during the pandemic and flexible federal dollars. However, 2024-25 spending dropped to $2.5 billion, nearly half of which is not guaranteed in the next budget cycle. Although these investments have not fully met the scale needed to end homelessness, they have helped more Californians experiencing homelessness to access stable housing than ever before. These dollars, while https://calbudgetcenter.org/resources/protecting-progress-state-housing-and-homelessness-funding-must-continue/ Page 1 of 5

Protecting Progress: State Housing and Homelessness Funding Must Continue - California Budget & Policy Center 7/30/25, 3:30 PM
designed as temporary, are also now core to California's homelessness response systems statewide, making the potential loss of funding a significant threat to ongoing progress.

California Homelessness Investments Continue to
Face Sharp Declines in 2025
Total Homelessness -Related Spending From 2019-20 to 2024-25 = $20.7B $6.8B /
2019-20 2020-21 2021-22 2022-23 2023-24 2024-25
Note: HHAP = Homelessness Housing, Assistance, and Prevention Grant Program. HHAP "bonus" funds not reflected. Totals include funding from over 40 homelessness -related programs, many of which received one-time funding.

Spending excludes bond funds from Proposition 1 (2024).

Source: Governor's Office and Department of Finance
One -Time HHAP Funds
Other Homelessness
Programs
California Budget
& Policy Center
=.

State Affordable Housing Investments Remain Low
Meaningful investments in affordable housing, particularly for individuals and families with the lowest incomes, can help solve the ongoing struggle of more Californians falling into homelessness and facing housing insecurity faster than they can be stably housed. Yet, despite the critical need, the 2024 Budget Act cut over $1 billion for various housing programs, while continuing some modest one-time https://calbudgetcenter.org/resources/protecting-progress-state-housing-and-homelessness-funding-must-continue/ Page 2 of 5

Protecting Progress: State Housing and Homelessness Funding Must Continue - California Budget & Policy Center 7130/25, 3 30 PM augmentations. Z
Despite the state's unprecedented recent investments in affordable housing, state General Fund dollars comprised less than 20% of funding that supported affordable housing and homeownership attainment between 2019 and 2023. The majority of non -General Fund dollars for affordable housing primarily reflects federal funds and private bonds that are likely threatened with the incoming Trump administration. Potential cuts to federal funding for affordable housing underscore the need for state leaders to amplify and continue efforts, particularly given that all of these investments are still a small share of the sustained funding needed to solve California's housing shortage. https://calbudgetcenter.0rg/resources/protecting-progress-state-housing-and-homelessness-funding-must-continue/ Page 3 of 5

Protecting Progress: State Housing and Homelessness Funding Must Continue - California Budget & Policy Center 7/30/25, 3:30 PM State Investments Comprised Less Than 20% of
Affordable Housing Funding From 2019 to 2023
Total Affordable Housing General Fund Expenditures From 2019-20 to 2023-24 = Approx. $7.8 B
$9.813
$7.4113
$4.68
$6.1 B
='l ,r=f` General Fund
$7.16—mm-- Other Funds
2019-20 2020-21 2021-22 2022-23 2023-24
Note: Current figures may be slightly lower as some data provided predates the enactment of the 2024-25 budget. Other funds comprises bonds, special funds, and federal funds, including $17.8B in private activity bonds across the fiscal years displayed. Totals aggregate over 30 programs and funding streams that supported a variety of affordable housing and homeownership programs. - Source: Governor's Office
California Budget
$ Policy Center
As California faces projected budget shortfalls and potential federal funding cuts to vital housing and safety net programs under the Trump administration, it's more urgent than ever to sustain the programs that are building affordable housing and keeping Californians housed. Without robust new revenue streams and continuous funding, these successful efforts face dire cuts that will have devastating consequences for Californians who rely on them and communities across the state.

LZ
https:l/calbudgetcenter.org/resources/protecting-progress-state-housing-and-homelessness-funding-must-continue/ Page 4 of 5

imekey: A Model for Addressing Homelessness? - California YIMBY 7/31/25, 1:
c= - .:^ogle _-
projects far less susceptible to NIMBYism. As Reid et al. observe, their interviews showed that "the state's by -right development language gave city councils as well as other public agencies the confidence to proceed with projects even in the face of neighborhood opposition"
In the future, the Homekey program will need to deliver more operating funds to maintain the supply of permanent supportive housing. In the current program, local authorities can apply for two years of operating funds, for a maximum of a monthly $1,000 subsidy per unit.

But Reid et al caution that "less than half of Homekey sites have funding in place to support the long-term operations of their sites, raising significant concerns among project stakeholders about what they would do once the state funds run out." While this is an ongoing problem endemic to affordable housing programs throughout the United States, and other models of public housing development could be explored to clear the financing logjam, existing Homekey projects will need guarantees of additional operating subsidies in the very near future.

Compounding the problem, escalating construction costs increase the need for funding when projects require renovation of buildings, and conversion to traditional supportive housing status reintroduces the funding complexities that Homekey had initially helped to avoid. Reid et al. argue that while increased federal funding for housing vouchers is needed to support the operations of Homekey projects (which President Biden's Build Back Better proposal would have offered), the state can provide technical support to local jurisdictions so that municipal housing authorities can unlock more federal subsidies through voucher programs.

Photo by Nina, NilI
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https://cayimby.org/blog/project-homekey-a-model-for-addressing-h...0al%20caution,federal%20subsidies%20through%20vcucher%20programs . iom(
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Local Businesses

PETITION

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MAYOR CATHERINE MOYAND VICE MAYOR PAM BERTANI

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THE UNDERSIGNED ARE OPPOSED TO THE PROPOSED HOMEKEY PROJECT THAT IS BEING PROPOSED AT THE SURESTAY HOTEL. THIS CHANGE COULD NEGATIVELY IMPACT OUR LOCAL BUSINESS.

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PETITION

THE UNDERSIGNED ARE OPPOSED TO THE PROPOSED HOMEKEY PROJECT THAT IS BEING PROPOSED AT THE SURESTAY HOTEL. THIS CHANGE COULD NEGATIVELY IMPACT OUR LOCAL BUSINESS.

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PETITION
TO THE CITY OF FAIRFIELD COUNCIL MEMBERS, MAYOR AND VICE MAYOR:

We the undersigned are opposed to the approval of the city rezoning and conversion of the Surestay / Vista Ridge proposed Homekey Project for the homeless with severe mental illness, behavioral issues, drug addiction or alcohol abuse. 'I'S-C Ili
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TO THE CITY OF FAIRFIELD COUNCIL MEMBERS, MAYOR AND VICE MAYOR We the undersigned are opposed to the approval of the city rezoning and conversion of the Surestay / Vista Ridge proposed Homekey Project for the homeless with severe mental illness, behavioral issues, drug addiction or alcohol abuse. "V'r \� -,-s _ :::22
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TO THE CITY OF FAIRFIELD COUNCIL MEMBERS, MAYOR AND VICE MAYOR

SIGNED NOTICE TO OPPOSE THE PROPOSED PROJECT
The undersigned are opposed to the approval of the city rezoning and conversion of the Surestay / Vista Ridge proposed Homekey project:

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Fairfield City CouncilAugust 5, 2025

Fairfield City Council
August 5, 2025