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 Motel 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 • After two years without progress, the City received two proposals in 2025 from Urban Housing Communities LLC that were not financially feasible, leading the City to seek a new development partner
• In December 2025, the Housing Department issued Request for Proposals 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 motel to permanent housing units, each with individual bathroom and kitchen space
• A future development of approximately 200 units serving incomes up to 120% of area median income
• Compliance with the HomeKey program Slide 2
Redevelopment Process for Arena Motel
California HOMEKEY Program Site
1 Post RFP for a new developer
April 2026
2 Select a primary and secondary awardee under the RFP
July 2026
3 Notify HCD of intent to amend the HOMEKEY
Standard Agreement
July 2026
4 Submit awardees to City Council for approval
October 2026
5 Formally request HCD to amend and submit
requested changes, including transferring PSH
requirement to an alternate identified site
Within 30 Days of Council Approval
6 HCD confirms receipt and requested changes
Within 14 days of submission
7 HCD and Housing negotiate new terms
Up to 6 Months
8 Final Standard Agreement issued for signature
Up to 3 Months
9 Negotiate contract with primary developer
Up to 3 Months
10 Initiate Phase 1 Schedule (36 months) and
draft Phase 2 schedule
Up to 3 Months
Slide 3
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 extremelylow 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 HomeKeyfunded 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 4
Recommended Project Phasing
Arena Hotel Program
• Phase I (currently planned):
conversion of the hotel into 89 selfcontained 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 5
PARKING LOT
PHASE II
ARENA MOTEL
PHASE I
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 Post HCD Approval and Execution of Standard Agreement Deadline 1 Developer’s design and construction team 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 * City to receive HCD decision on the transfer of units 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 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 transitadjacent Diridon site Slide 7