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San Francisco to Pay Hotel Whitcomb $19.5 Million in Property Damage

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A tall hotel building is seen in the distance with many rectangular windows. A woman has her back to the camera as she stands staring to her right. The sun is shining on parts of the building, but it is mostly in shade.
The owners of Hotel Whitcomb on Market Street filed a complaint against San Francisco on April 13, 2023. The historic hotel alleges that it endured millions in property damages resulting in loss of use from the city's shelter-in-place hotel program, Project Roomkey. (Beth LaBerge/KQED)

San Francisco could pay up to $19.5 million to settle a lawsuit over property damages at one of the hotels that provided emergency housing during the pandemic.

The owners of Hotel Whitcomb on Market Street filed the complaint against San Francisco on April 13 of this year. They allege the historic hotel endured millions in property damage resulting in loss of use by the city’s shelter-in-place hotel program, part of a statewide effort called Project Roomkey that opened up empty hotels during the pandemic to create emergency shelters.

The settlement is the latest agreement between the city and owners of the hotels that stepped up during the COVID-19 pandemic to provide emergency housing for people experiencing homelessness during the first two years of the pandemic. That has included $2.9 million to the Tilden Hotel and $5.3 million to Hotel Union Square.

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The city expects to pay out around $26 million in total for property damage payouts from the shelter-in-place hotel program, according to a city budget report released in February.

Jen Kwart, spokesperson for the city attorney’s office, told KQED in an email the department believes the proposed settlement is an “appropriate resolution” and “is the last SIP Hotel claim for damages that the City is aware of.”

The city is expecting reimbursements for costs of implementing the emergency housing program, and has already filed for $386 million from the Federal Emergency Management Agency. It’s not yet clear how much FEMA will cover in the property damages, according to a report from The San Francisco Standard.

The city contracted with the hotels during the early days of the COVID-19 pandemic when tourism was decimated and hotels had lost their customer base. Using emergency relief funding, the city paid the hotels to open up the otherwise empty rooms for temporary emergency shelter.

The program came together remarkably quickly, but challenges presented themselves as the pandemic raged on.

At its peak, the hotel shelter program opened 2,288 rooms across 25 hotel sites, according to data from the city’s Department of Homelessness and Supportive Housing. More than 3,300 adults were housed in hotel rooms and the city claims that about two-thirds of eligible guests were transferred to longer-term housing by the time the program ended in December 2022.

Residents in the hotels and housing advocates applauded the non-congregate housing approach to the global health crisis that was rapidly unfolding. Studies on the program have shown that residents who lived in the hotels and were connected to health and substance-use services directly at the hotel were also less likely to require emergency services.

But life was not always easy inside the hotels. Staff and residents at Hotel Whitcomb were often on the front lines of the overdose crisis that the city continues to endure. About 400 people were housed there during the pandemic, many of whom struggled with substance use disorders.

On-site services helped prevent overdoses and encourage safer drug use, such as clean needle exchanges and training on how to administer the overdose-reversal drug naloxone. At least 18 people overdosed at Hotel Whitcomb from the time it first opened its rooms for the program in April 2020 to April 2022, KQED reported while the program was still in place.

The settlement passed the Government Audit and Oversight Committee on Thursday. It will next go before the full Board of Supervisors and the mayor for final approval.

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