Developer of luxury apartment building in Sacramento suing to block nearby homeless housing
A plan to get more than 100 homeless people into permanent housing in a Sacramento hotel could be derailed by developers of a high-end apartment building across the street.
The Sacramento City Council’s vote Tuesday to seek state funding for the homeless housing project immediately prompted a lawsuit from developers who claim the city is undermining its own desire to redevelop the long neglected River District area near the American River into a modern downtown addition.
Developers say they filed a lawsuit against the city this week in Sacramento County Superior Court. The lawsuit, obtained by The Sacramento Bee, claims the city is going back on its vow not to increase homeless services in the River District. The lawsuit had not yet been formally filed in court as of Thursday morning, and city officials had not yet issued a formal response.
The planned 250-unit high-end apartment complex would be built next to the American River levee on Bercut Drive, just east of Interstate 5 on the former Rusty Duck and Hungry Hunter restaurant sites, featuring river views and a short walk to light rail, as well as the planned new Major League Soccer stadium and Kaiser Permanente healthcare campus in the downtown Railyards. It would include only market rate units on the higher end of the price scale, not affordable units.
The city’s planned homeless housing project, at the Hawthorn Suites Hotel, sits across the street.
The lawsuit, filed by 500 Bercut LLC, claims the city is violating a 1989 resolution that said the city would not add new services and housing for homeless people in the River District. Developer Steven Ayers is the manager of 500 Bercut LLC, according to Secretary of State records.
Bob Erlenbusch, of the Sacramento Regional Coalition to End Homelessness, said allowing a high-end apartment complex to kill a project for homeless housing would be disastrous, further exacerbating Sacramento’s housing crisis.
“That’s sinful,” Erlenbusch said. “The River District quite frankly should be ashamed they’re opposing it. Where do they want people to go when there is no place to go?”
The River District area, bordered by the Sacramento and American rivers just north of downtown, includes the large Loaves and Fishes campus. Property owners in the area say services that attract a high number of homeless individuals have long made the area hard to redevelop.
But the city and thousands of its poorest residents are struggling with a level of homelessness never before seen. Last year’s point-in-time count found 5,570 homeless people living in the county, mostly in the city and mostly sleeping outdoors. In response, city officials have been pushing to open large shelters across the city, but have struggled to find sites.
When the coronavirus struck, and Gov. Gavin Newsom launched a program to provide state funding for cities to get homeless indoors in motels, city officials jumped on the opportunity.
Mayor Darrell Steinberg voted with the City Council majority on Tuesday to apply for state funds to purchase the Hawthorn Suites at 321 Bercut Dr. and turn it into about 100 units of permanent housing units for homeless, preceded by three years of interim housing.
“If I have to err on one side, I will err on aggressively doing everything we can do,” Steinberg said during the meeting after hearing complaints from the River District business community. “It’s no longer acceptable for people to live out on the goddamn sidewalk.”
Hundreds of homeless people sleep in tents lining several blocks of streets near Loaves and Fishes and along the American River Parkway. Many walk to the nonprofit for food, showers, hygiene supplies and a sense of community, but the campus has no shelter beds or housing. All the shelters in the city, including the ones on the River District on North A and North Fifth Streets, are typically full on any given night.
The 1989 homeless resolution
In the lawsuit, the developers argue that a 1989 city resolution promises not to build a homeless shelter in the area, citing this passage: “The city shall not construct any new or additional facility in the Richards Boulevard Area for the purpose of shelter, housing, feeding or providing social welfare services to indigent, homeless or transient persons.”
Anthony Scotch, a representative for the 500 Bercut LLC group, said the homeless housing proposal likely will delay his group’s efforts to build its mixed-use apartment project. His group talked over preliminary plans with the city earlier this year, he said, and is now in search of investment capital.
“It puts a major cloud on our ability to get that part done, raising private equity capital,” Scotch said. “Until this is resolved, we are basically stalled.”
Hearing that the homeless project could put the development in jeopardy, in addition to the nearby Township 9 project where new units are planned, caused Councilman Jeff Harris to take an unexpected vote against the project Tuesday, he said.
“It could quite conceivably cause investment partners to look upon the River District less favorably,” said Harris, who represents the area and rarely votes against homeless projects.
The item went on to pass, with Councilmen Harris and Allen Warren voting against it, and Councilman Larry Carr abstaining. Harris added an amendment that the city would “do whatever it takes to run this shelter appropriately and do no harm to the River District.”
That assurance did not ease the fears of the developers, or from the existing businesses, said Steve Goodwin, longtime member of the River District board, which represents businesses in the area.
“It’s really tough when every morning you have to come in and you’re cleaning up human excrement from your doorways,” Goodwin said. “How do you deal with that as a business?”
Even if the project would get 100 people in the River District off the sidewalks and the levee, it would not be worth it to have another project in the district that further brands it as “the homeless area,” resulting in more homeless people going there looking for help, Goodwin said.
River District board executive director Jenna Abbott agreed. The board took a unanimous vote opposing the project and has retained its own attorney, Abbott said.
“We are the River District. We’re not the homeless district. But sadly it’s becoming more and more our moniker,” Abbott said.
Abbott questions whether the people who would be housed in the new apartments would be homeless people sleeping in the River District now, as intended, or if they would come from other parts of the county.
Officials plan to use the Hawthorn partly for the more than 500 homeless people who are currently staying in temporary motel shelters and trailers, which are set to close at the end of the year, including one in the River District on Jibboom Street. Without more housing, many of those people, including those who are elderly or have medical issues, could be released back onto the streets when the motels close. One of the temporary hotels, in Woodlake, is closing early, at the end of this month.
The temporary motel shelters – through a project called Project Roomkey – and the permanent hotel housing – in Project Homekey – are part of state programs to get homeless people indoors to protect them from the coronavirus. Newsom has announced the city will receive state funding for another Homekey hotel in the Parkway neighborhood of south Sacramento, with another 100 rooms. Steinberg has said he expects the city will receive state funding for the Hawthorn, as well.
It’s unclear if the lawsuit will upend those plans.
This story was originally published September 24, 2020 at 1:20 PM.
