The Community Redevelopment Agency board recently withdrew its support for a low-rent hotel on Skid Row and decided to provide only the minimum funding for two other projects in an effort to stem a glut of single-room occupancy housing.
The action came after an agency-commissioned study found a 14% vacancy rate in existing publicly funded SRO hotels. The study, conducted by the consulting firm Housing Management Systems, concluded that vacancies would continue to rise because of the large number of units made available in recent years and the latest cutbacks in welfare payments, which prevent the poor from being able to afford even low-rent housing.
The study, presented in October, reviewed low-rent housing projects owned or run by nonprofit groups in an area bordered by 3rd, Alameda, 7th and Spring streets. Over the last decade, about 1,500 single-room occupancy units were built or renovated. About 600 of the units were made available between March, 1992 and April, 1993, according to the study. An additional 1,252 new and rehabilitated units in pending projects are expected to come on the market in the next two years.
Faced with these figures and its own budget concerns, the CRA board agreed last month to delay any new low-rent housing projects, including the proposed acquisition of the Southern Hotel at 412 5th St., and only fund rehabilitation of the Palmer Hotel, at 538 S. Wall St., and the Eugene Hotel, at 560 S. Stanford Ave., if they can obtain federal subsidies.
The agency will provide the minimum funding of $3,000 per unit for the Palmer and Eugene hotels, which nonprofit developer SRO Housing Corp. hoped to have rehabilitated and ready for occupancy by mid-1995.
The minimum funding will not be enough to rehabilitate the hotels to federal housing standards, said Andy Raubeson, executive director of the SRO Housing Corp. The developer is seeking grants and loans from other sources, Raubeson said.
"We are struggling to try to make it work under those constraints," he said.
In addition, the CRA's decision to pull out of the Southern Hotel project forced the SRO Housing Corp. to withdraw from escrow for the building, Raubeson said.
The CRA board also set a late January deadline for determining whether the Boyd Hotel project, proposed by the Skid Row Housing Trust, can find operating funds elsewhere in order to proceed.
The board also agreed to aggressively urge county officials to counter welfare cuts with measures such as allowing welfare recipients to double up in SRO units. The board promised to review the situation again in six months.
Average monthly rent for single-room occupancy units, with shared bathroom, kitchen and lounge areas, is $222, according to the Housing Management Systems study. Meanwhile, the county in recent months cut monthly general relief payments to $212, leaving recipients who live in SROs little for food and other needs. The seven nonprofit single-room occupancy providers in the Downtown area cannot afford to lower rents any more, the report concluded.
CRA board members agreed the problem is more the inability of low-income tenants to afford the rents than a surplus of housing. But they supported the idea of putting future units on hold until existing vacancies are filled.
Raubeson argued earlier that his group was being unfairly punished for the study's high average vacancy rate, noting that vacancies at his 15 hotels are less than 5%. But he softened his stance slightly last week and said he understood the CRA board was faced with limited resources.
"This isn't just a reaction to a vacancy study, but an attempt to reallocate resources. . . . This is the new reality. I've got to work with that."