Why Turning Motels Into Housing Could Outlast the Pandemic

In the spring of 2020, just as the coronavirus pandemic was exploding, Missoula, Montana, made a decision to buy the Sleepy Inn, an 80-year-old downtown motel. 

Its purpose was twofold. In the short term, the city would use the property to offer private living space to people experiencing homelessness, alleviating crowding at existing shelters. The motel would also provide a place where people infected with Covid-19 could go to isolate. In the long term, the city planned to redevelop the property as permanent apartments to help ease its shortage of affordable housing. 

Officials figured the emergency phase might last a few months at most, says Eran Pehan, the city’s director of community planning, development and innovation. But over the last two years, more than 600 people have stayed at the site, for as little as one night and as long as four months, Pehan said. The motel has been used to house people such as the chronically homeless and refugees and students who have had nowhere else to quarantine. 

“The pandemic has outwitted us all and it’s still very much full as a non-congregate shelter,” Pehan said. 

When the public health crisis does finally end, Missoula will have options for how to put the property to use for its housing needs. “It was a great example for us of making a deeper investment and making a riskier move, both from a political perspective and a financial perspective, and reaping the benefits of that down the line,” Pehan said.

Other cities are in a similar position. Using hotels and motels for emergency housing was an early adaptation state and local governments made as the Covid-19 pandemic set in. It provided safe places to stay for people experiencing homelessness and housing instability, and it gave hotel and motel owners a stream of income as tourism and other travel tanked. Studies suggested that these programs helped slow the spread of the virus in some places.

Now, heading into the third year of the coronavirus outbreak, strategies are evolving. Some states appear more poised than others to make the programs permanent. But, to some degree, it appears hotel and motel housing initiatives will outlast the pandemic and become part of the arsenal cities and states have as they battle housing shortages and try to assist people experiencing homelessness.

For instance, Oregon’s Project Turnkey directed $65 million to hotel and motel acquisitions, with a special focus on counties that were most affected by wildfires in 2020. King County, Washington, home to Seattle, acquired eight properties, including motels, with hundreds of units through its Health Through Housing initiative. 

The state of Vermont worked with housing providers to produce 247 permanent housing units, some in hotel and motel space, by the end of 2020, according to the National Alliance to End Homelessness. 

And some cities, like Austin, Texas, were already in the process of purchasing motels before the pandemic even started.

New York City, on the other hand, used a range of hotel properties to temporarily house people during the pandemic, but in recent months more or less abandoned that approach, and has not converted any hotels into permanent housing, according to a New York Times report.

Major Initiatives in California

With a severe and long running housing crisis in the state, California made perhaps the biggest investments, with two initiatives—Project Roomkey and Project Homekey. These programs directed billions in state and federal money to both temporary and long-term housing initiatives, including funds to help cities and counties lease or acquire motels and hotels. 

Project Roomkey is focused on transitional housing for people experiencing homelessness, while Project Homekey was designed to create permanent affordable housing. Both programs have been administered by cities and counties. At its peak in Los Angeles County, there were 33 Project Roomkey sites, according to Heidi Marston, executive director of the Los Angeles Homeless Services Authority. Currently the county has eight. 

Though the program hasn’t gotten as many people into permanent housing as officials initially hoped, Marston said it’s still been an effective solution for a lot of people who were previously living on the street. 

Around 35% of people who’ve stayed in Project Roomkey sites in L.A. — some 4,000 — have found permanent housing afterward, either with a housing voucher or in some other type of supportive housing, Marston said. That’s a much better rate of permanent housing placement than for people in shelters, she added. 

The program was especially effective because it was “mutually beneficial” to the county service providers, hotel and motel operators, and unhoused people, Marston noted. “It reinforced what we’ve already known, which is that when you have resources to offer people housing with dignity, they’re eager to go in,” she said.

Project Homekey sites are still being established around the county, including a proposal to buy an under-construction apartment complex. Marston said most Homekey sites are currently being used as temporary housing sites, as service providers finalize plans for redeveloping them as permanent housing.

A County-Funded Plan in Minnesota

Since the pandemic began, Hennepin County, Minnesota, home to Minneapolis, has bought four new properties to operate as emergency non-congregate shelters, including three hotels and motels and one former residential substance abuse treatment center. 

Over time, the county is converting the properties, all of which are in Minneapolis, to single-room occupancy facilities. The properties have shared bathrooms on each floor and shared kitchen facilities, explained Julia Welle Ayres, the county’s housing development and finance director. The county used its own funds, as opposed to federal dollars, to purchase the properties, and is planning to rent rooms for around $400 per month to people who’ve used its shelters. 

The county’s approach avoids some of the strict income-qualification rules that come with federal funding, like low-income housing tax credits, and helps provide a level of affordable housing that doesn’t exist on the open market. Many people in local emergency shelters can’t afford market rate rents but can afford $400 a month, Ayres said. 

Neighborhood Backlash

As is common with many types of affordable housing proposals, jurisdictions have faced some backlash from nearby neighbors over proposals to convert hotels to low-income housing. Officials have faced some “NIMBY” pushback in King County and Austin, for example. 

Ayres said Hennepin County moved so quickly to acquire the properties that there wasn’t the typical level of community engagement. Since the acquisitions, neighbors surrounding one of the properties have complained about an uptick in crime. After the county investigated, though, it determined that the increase wasn’t related to the shelter. 

“I think there’s a natural inclination to think our increase in crime is coming from our low-income neighbors—that’s what NIMBYism is all about—but we were happy to be able to report it wasn’t us,” Ayres said. 

In another instance, neighbors have welcomed the county’s takeover of a motel that was formerly rundown and used regularly for prostitution. Overall, Ayres said, Hennepin County could exit the pandemic in a “much stronger place” relative to housing and homelessness than before.

Unclear Outlook for Missoula Motel

In Missoula, Montana, plans for the Sleepy Inn are still in flux, said Pehan. Since the pandemic began, a 200-unit low-income housing tax credit property has been completed across the street from the motel, and another 200-unit affordable-housing property is being built nearby as well. 

The city has recouped its original investment in the motel with Federal Emergency Management Agency dollars, Pehan said, and it’s now considering whether to redevelop the property for affordable housing when the pandemic fades or sell it to a private developer. 

Missoula officials have been holding meetings about the future of the property with community members. Some want to see the motel developed for low-income housing. Others disagree and say there’s already a disproportionate amount of low-income housing in the neighborhood. 

If the city doesn’t redevelop the site, it will still be required by law to put the proceeds of any sale into affordable housing, Pehan said. So the purchase will pay dividends towards housing programs no matter what.