Council kills homeless housing project slated for former Horizon Shine site

City withdraws from homeless housing project with St. Vincent de Paul due to financial concerns

Jack Tibbetts, director of St. Vincent de Paul - Sonoma County, defended the viability of the project, called Gravenstein Commons (see rendering in inset), but was unable to convince a majority of the council to take the risk. (Photo and rendering from city video of the meeting)

In May 2023 the Sebastopol City Council agreed to apply for state Project Homekey funding in partnership with St. Vincent de Paul (SVdP) to create a 22-unit apartment complex at 845 Gravenstein Highway North, the former Horizon Shine site. The development, called Gravenstein Commons, was created to provide permanent supportive housing for the homeless, including some former Horizon Shine residents.

Last night, in a 3 to 2 vote, the council voted to withdraw from this partnership, effectively killing the project.

The central reason was laid out clearly in the staff report: “The Council was not made aware that the Homekey program requires that the sponsoring jurisdiction bears the financial responsibility for the project, thus creating risk to the City.”

In his introduction to this item, City Manager Don Schwartz described those risks. His analysis was based partially on the work of Mark Krug, who SVdP hired to analyze the risks to the city.

“The first is the capital funding,” Schwartz said. “The state approved $5.8 million for capital funding; that was what was in the application that we submitted along with St. Vincent de Paul. Yesterday I received an email from Mr. Tibbets saying that $10.7 million was a reasonable target for capital expenses. You can see there's a pretty significant gap there. The risk assessment completed by Mark Krug indicated there's a $5 million gap and that there should be a thorough review of the capital budget before proceeding with the project.”

The second risk Schwartz identified involved the funding to bridge that $5 million gap.

“There are numerous funding sources that might be able to fill that gap,” Schwartz said. “We received a notice from the county health director that she has set aside $3 million in county funds to be used as needed. Those funds require Board of Supervisors’ approval before they would be committed. Mr. Krug feels and I feel the same way, which is don't count on them until you actually have the approval and firm commitment…you don't count on any governing bodies' actions in advance of those actions because you don't really know what's going to happen.”

Schwartz was equally leery of the other sources of funding that St. Vincent de Paul had amassed, including a $2.5 million letter of credit, $1.5 million in direct funding from SVdP, and $671,000 that could be moved from operating costs to capital costs.

Finally, Schwartz said the city just didn’t have the bandwidth to take on a project of this complexity.

“There's another category of risk or concern that's come up and that is organizational capacity, meaning city capacity and time. Every city that I know of that has a Homekey project has full time staff who have housing expertise,” he said. “We do not have that in Sebastopol…What I've learned from talking to colleagues and other cities is sort of ‘Don't try this at home if you don't know what you're doing.’ And I have to say, we just don't have that capacity in house.”

The downside of stepping back from this project involves the loss of potentially $10 million in funding to deal with the city’s homeless problem and the possible proliferation of homeless encampments on the city’s streets.

Tibbetts defended the viability of the project—and its importance to the 22 to 30 homeless individuals it would serve. Supervisor Lynda Hopkins put in her two cents (er, $3 million in county money) as well in favor of the project. But a majority of the council—Jill McLewis, Sandra Maurer and Stephen Zollman (the latter two are on the city’s budget committee)—remained unconvinced.

After referencing her difficulties with another Homekey Project, Elderberry Commons, which is located near her business, McLewis said “I believe that I need to listen to the city manager. We hired him. I voted for him because I believe that he has what it takes to bring us out of this catastrophic financial situation that we have.”

She gave a short list of the challenges the city faces—its looming deficit, water and sewer crisis, crumbling roads—and said, “I don't want his time [meaning the city manager’s time] being taken away from all of these massive projects that we have. We need to take care of our current residents—not future residents, but current residents that we have right now. So therefore, I will not support this project tonight.”

Maurer agreed.

“When we hired our new city manager, we all agreed that we would have his back. That's how I felt, that we would support him and have his back,” she said. “The situation that our city is in right now”—she named the city’s financial crises and the looming loss of several key employees—“it's just a bad time for Sebastopol to take on a project like this when we have so many other complexities and problems. And I'm really sorry, because this is a huge amount of money to walk away from. It's a really hard decision.”

Zollman was on the same track. “I do wish things were financially different, but having served on the budget committee for last year and this year, I'm in no mood to take on any more risks for this city—quite honestly for a lot of reasons that councilmember Maurer just identified. Why would a city that's in financial trouble get into a situation that occurs more risk?” Zollman said. “That doesn't make any sense to me.”

Councilmember Neysa Hinton knew she was on the losing end of this vote. “It's always rough when you go fourth, and three people are against it,” Hinton said, noting that when she was first on the council the city was willing to take a risk on Park Village, the city’s first low-low income property. “We didn't know how we were going to fund that here. And yet the grants came through. I feel like the juggling is happening because people are trying to help us, and it is permanent supportive shelter which I support…So I will be—even if I'm on the short side of the stick tonight—supporting this project because we have done a lot for people in need in this community, and I believe the people that voted for me support that.”

Mayor Diana Rich also supported the project.

“When I looked at this particular project, there are two things that stand out to me. First of all, this is an affordable housing project. Second of all, this is a financially responsible, reliable partner, supported by the county, well connected. With all of the money that St. Vincent de Paul has control of, with $3 million committed from the county, I am confident that the capital expenses will be covered, the operations would be covered.”

She also expressed a concern that backing out of this project could backfire, leaving more people living on the streets of Sebastopol.

Rich called for the vote, knowing how it would play out. Councilmembers Maurer, McLewis and Zollman stuck by their guns, voting against Gravenstein Commons. And that was the end of that.

“SVdP is very disappointed in the Council’s decision to withdraw their position as co-applicant to the project,” Tibbetts said. “It took many years of staff time, communication, and out-of-pocket investment to get us here. But the truly sad part about the end to this long saga isn’t the fact that we will have to forego the $6.5 million award by the state. The biggest loss will be experienced by the 22-30 people who would have otherwise found safety, peace and opportunity in a permanent home. Now, they will be sent packing to wander Sebastopol and the surrounding area.”

What will happen next to the former Horizon Shine lot? The property could become a used car lot, Tibbetts suggested.

Not glamorous perhaps, but some in the city were happy about that.

“I just want to point out to you the two great moneymakers for cities: hotels and car dealerships,” said City Manager Don Schwartz.

Wondering what else happened at the city council meeting this week? See our city council recap, which we’ll post tomorrow, on Thursday, April 4.