Baltimore spending board approves $18.4M deal to buy hotels for homeless residents
Baltimore’s spending board approved an $18.4 million deal Wednesday to purchase two hotels to shelter city homeless residents and a management deal that will carry the city through the rest of the year.
The purchase, which will be covered by the city’s federal American Rescue Plan Act funds, will give Baltimore control of a Holiday Inn Express and a Sleep Inn, both of which are in the area of Gay and Front streets near the mouth of Interstate 83. The city is also purchasing a parking lot between the two hotels, which are catty-cornered from the city’s juvenile justice center.
The city will spend $15.2 million to buy the hotels and pay $3.2 million to Old Town Hotel Group LLC, one of the sellers, to manage the hotel for nine months.
The Board of Estimates, which is controlled by Mayor Brandon Scott and two of his appointees, approved the purchase by a 4-1 vote. Council President Nick Mosby, who has routinely voted against all ARPA related items that come before the board, voted against the purchase. Mosby and Scott are Democrats.
Ernestina Simmons, director of the Mayor’s Office of Homeless Services, told the board Wednesday that the long-term goal for the properties is to find a community-based organization that can convert the hotels into permanent supportive housing.
Matthew Garbark, director of the city’s Office of Infrastructure Development, said the city will pay for the purchase over the course of four payments, beginning with a $1.7 payment on April 1. The deal is expected to close on March 29.
Garbark said the management agreement calls for Old Town Hotel Group to continue all current services it offers including linens and towels, the cleaning of rooms and public spaces, staffing the front desk and maintaining systems such as HVAC.
The purchase has been almost three years in the making. Like cities across the country, Baltimore began experimenting with a hotel housing model for the city’s homeless residents in the early days of the pandemic when it became clear that traditional congregate shelters risked spreading the virus. Hundreds of homeless residents were housed for several years during the pandemic, and lease agreements with several hotels were repeatedly extended. Federal Emergency Management Agency reimbursements covered most of the costs.
In April 2021, Scott’s administration released a Request for Information soliciting details on hotels for potential purchase with 100 to 200 rooms. Nearly a year later, Scott committed ARPA funds to the plan, allocating $90.4 million toward emergency housing and other housing assistance. About $45 million of that allocation was set aside for the purchase of two hotels to replace 275 beds at several congregate shelters that were to be closed.
It would take another two years, however, for the deal to be finalized. California-based LeSar Development Consultants was tapped in December 2022 to assist with the search for appropriate spaces. The agreement with the group has been repeatedly extended, including most recently in September, costing the city $221,000.
Since Scott made the pledge to buy the hotels in 2021, the Mayor’s Office of Homeless Services has undergone changes in top leadership and faced scrutiny for $10 million in federal funds that were forfeited.
In September, the Baltimore City Council took employees of the office to task for forfeiting the money which was meant to reimburse the city’s Continuum of Care program, which pays for the housing of homeless residents. The city now says it has been cleared by the Department of Housing and Urban Development to reapply for a reimbursement of $6 million. In fiscal year 2020, Baltimore lost access to the federal system used to withdraw the money for at least three months because employees of MOHS either left the office or were barred from access.
Less than a month after the council hearing, Irene Agustin, the head of the office since June 2021, abruptly resigned. She was replaced by Simmons, a local nonprofit leader.
