City discusses updated terms for controversial Middletown ‘mega-shelter’

SAN DIEGO (FOX 5/KUSI) — The San Diego City Council continued its discussion of new lease terms for the Middletown facility where the city hoped to place a 1,000-bed homeless “mega-shelter” during Monday’s closed session.

It comes after the original $1 billion plan was put on an indefinite hold by the city council’s Land Use and Housing Committee over concerns raised by the city’s Independent Budget Analyst about the proposed lease just two weeks following Mayor Todd Gloria’s unveiling of it early last month.

In the press conference announcing the shelter on April 4, Gloria described the shelter as a game-changer, dramatically increasing the number of available shelter beds in the city for homeless residents.

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The vast majority of the city’s existing facilities are nearly always full with the vast majority of unsheltered residents’ referrals going uncompleted, because there simply is not a bed available for them, as Voice of San Diego reported last year.

The mega-shelter plan as it was initially discussed, according to the city, would cost the city about $30 million per year to operate, not including $1.9 million annually in rent for the 35-year lease of the 65,000-square-foot facility. The lease would have two, five-year renewal options.

The city would also have to dole out $18 million to retrofit the facility, located at the intersection of Kettner Boulevard and Vine Street, before it can open up for service to unhoused residents.

In a statement last month about the delay, Gloria’s director of communications Rachel Laing said it was, in part, to allow opportunity for the Independent Budget Analyst to do “a deep dive on the deal.” The office had done an initial review of the project as part of a new due diligence procedure following other failed property acquisitions.

How the city plans to fund the mega-shelter also remains a bit of an open question, particularly as some critical homeless programs are facing major cuts heading into the next fiscal year.

“As fast as we want to move on the City’s most urgent challenge, it’s worth taking a little extra time to make sure we secure the best deal possible for the taxpayers,” Laing continued.

Details about the updated lease terms the city council discussed behind closed doors have not been disclosed, although it is expected to feature cheaper rent and a reduced lease term among other things.

In a statement Monday afternoon, Gloria did not provide additional information on what the city is aiming for with the new lease agreement, but said the negotiations with the owner of the building are on moving along.

“Negotiations surrounding such a large and ambitious proposal are complex. This cannot be accomplished overnight, but we are on track, and I am fully committed to getting this done,” he said.

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Gloria added that, while the city has “made great strides to address the homelessness crisis,” there is still more to do to “bring people in off the street.”

“We have an opportunity to do just that with the addition of 1,000 beds at a new long-term shelter that could operate like the Operation Shelter to Home program we housed at the convention center, with a wide array of wrap-around supportive services, during the pandemic,” he continued.

However, some residents remain displeased with the prospect of the mega-shelter moving forward. Ahead of the closed session meeting Monday, a small group of detractors to the shelter gathered for a protest outside city hall.

Holding signs that read “Why Rush?” and “Stop the Mega Homeless Shelter,” the demonstrators were also joined by mayoral candidate Larry Turner, who opposes the shelter placement.

“It’s a dangerous area. People think it’s far away from everything, but it’s not,” he said.

Turner added that he was also there to call for more transparency in the vetting process for city real estate deals, particularly in light of the ongoing fallout of the 101 Ash Street debacle.

“They’ve been working a plan for months and then they show up and do a press conference there,” he said. “Within a day, it started falling apart … This is a horribly thought out plan.”

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Gloria addressed some of these concerns raised by protesters during a press conference on Monday following the confirmation of Assistant Chief Scott Wahl as the new San Diego Police Department Chief.

“Let’s be clear: This is closed session, this is where real estate transactions are discussed in private. Obviously disclosing our position in public would likely result in less advantageous deal for taxpayers,” the mayor said, adding that it will be made public information if a deal is reached. “I’m interested in driving the best bargain possible with our limited resources.”

He also pushed back against people who were arguing against the placement of the shelter at this facility, saying “That building is far better than the sidewalk and that gets lost in that conversation a lot.”

“We’ve already exhausted many of the city-owned options, but we still have demand for more. This is how we get more,” he continued. “Without these additional beds, we will continue to have thousands of people languishing on our sidewalks and that is just wrong.”

Watch Ed Lenderman’s report on the protest for KUSI in the player above.

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