HOUSING DEPARTMENT
ACTIONS RELATED TO THE ARENA
HOTEL REDEVELOPMENT AND
HOMEKEY PROGRAM TRANSITION
September 1, 2026 Item 8.2
City Council
Erik L. Soliván
Housing Director
Banu San
Deputy Director
Background and Request for Proposals
• In March 2023, the City purchased the Arena Hotel at 817 The Alameda for $22.9 million, using a HomeKey grant and Measure E funds; the 1.39-acre site has served as interim housing since 2023 • Between 2023 and 2025, Urban Housing Communities LLC submitted two proposals that were not financially feasible, leading the City to seek a new development partner • In December 2025, the Housing Department issued Request for Proposals on 12-15-2025 for two City- owned sites: the Arena Hotel and 71 Vista Montana. For the Arena Hotel, the Request for Proposals sought:
• Conversion of the existing hotel to permanent housing units, each with individual bathroom and kitchen space
• A future development of up to 200 to 234 units serving incomes up to 120% of area median income • Compliance with the minimum requirements of the HomeKey program Slide 2
Recommended Respondent: Episcopal Community
Services of San Francisco (ECS)
Episcopal Community Services of San Francisco (ECS) was the highest-ranked respondent for the Arena Hotel based on its combined proposal and oral interview scores.
Developer Profile
Episcopal Community Services: nonprofit affordable
developer with a portfolio of more than 2,000 extremely- low income units across the Bay Area
Development record: eight extremely-low income
developments built or renovated; expertise across
acquisition, adaptive reuse, rehabilitation, lease-up, and operations
HomeKey experience: multiple successful HomeKey
funding rounds, from feasibility and application through construction, lease-up, and ongoing compliance
Basis for Recommendation
• More than 40 years developing,
operating, and sustaining supportive
housing
• Proven delivery of complex HomeKey-
funded projects on accelerated timelines
• Proposal meets all HomeKey criteria,
including fully self-contained units
• Proposed two-phase schedule consistent
with the City’s required delivery
timeframe
Slide 3
Recommended Respondent: Episcopal Community Services
Arena Hotel Program
• Phase I: conversion of the hotel into
89 self-contained extremely low
income (30% AMI) units, plus a
manager’s unit
• Phase II: future mixed-income
construction on the parking lot
portion of the site, up to 120% AMI
• Building in generally good structural
condition; no immediate seismic
upgrades anticipated
Slide 4
Schedule of Performance — Phase I
Three-year Exclusive Negotiation Agreement, with the possibility of two six-month extensions at the City’s discretion. Milestones run from the execution of the Exclusive Negotiation Agreement. Substantial failure to meet these milestones, without the City’s express approval, will result in termination of the ENA. # Milestone Deadline
1 Developer’s consultant selection Within 1 month
2 Developer due diligence Within 4 months
3 Initial financing proposal Within 6 months
4 Preliminary Planning Review application Within 6 months 5 Entitlements and land-use approvals Within 12 months
6 Financing commitments Within 18 months
7 Ground Lease execution and Start construction Within 36 months, subject to City Council Approval
Slide 5
HomeKey Program Transition
Related action: HCD approval of the pending Homekey agreement amendment is required to complete the developer transition and discuss next steps for the site with HCD.
• The current Homekey agreement still reflects the prior developer and co- grantee structure.
• The City has requested that HCD amend the agreement to identify the City as the sole grantee and Episcopal Community Services as the replacement development partner.
• The City has submitted an updated Conversion Plan confirming that the transition and redevelopment will not disrupt interim housing operations.
Acquisition Funding
$22.9M
Arena Hotel purchase price, March 2023
$17.9M
HomeKey grant from HCD
$5.0M
Measure E funds
Slide 6
Right to Award: Second-Ranked Respondent
If Episcopal Community Services is unable to successfully execute an agreement with the City, or does not comply in a timely and diligent manner with any material obligation under the Exclusive Negotiation Agreement, the City may terminate negotiations and commence negotiations with the second-ranked respondent (Propertyworx LLC), as stated in the Request for Proposals.
Propertyworx LLC
• 210+/- rental units delivered in two
phases, structured to comply with
HomeKey requirements
• Tax-exempt bonds, tax credits, a City loan,
and a ground lease returning residual
receipts to the City
• 100% affordable at 80% AMI or
below, averaging roughly 60% AMI
• Modular delivery on the transit-
adjacent Diridon site
Slide 7