Bay Area cities and counties could be on the hook for more than $200 million they expected the federal government to pay toward the cost of sheltering thousands of vulnerable homeless people in hotels during the pandemic.
Local officials say they are now scrambling to make up the funding gap at a time when their budgets are already stretched thin.
“We did our part and now the federal government must make good on their promises,” said Susan Ellenberg, president of the Board of Supervisors in Santa Clara County, which expects it could lose $16 million. “This bait and switch tactic is indefensible.”
Gov. Gavin Newsom started the hotel program, dubbed Project Roomkey, at the beginning of the pandemic in April 2020. Officials moved some 68,000 of the state’s most at-risk homeless people out of crowded encampments and group shelters where the coronavirus could quickly spread.
Local leaders expected the feds to pick up the tab. But in an October letter to state officials, the Federal Emergency Management Agency (FEMA) said it would only reimburse hotel stays of up to 20 days between June 11, 2021, and May 11, 2023. Leased rooms that remained empty also won’t be covered.
San Francisco, which has doubled down on using hotel rooms for shelter in recent years, could miss out on $190 million, officials said. Meanwhile, Sonoma County may have to cough up $32 million, Contra Costa County $9 million, and Oakland and Marin County more than $1 million each. Alameda County could not immediately say how much money it could lose. San Mateo County did not respond to a request for information.
In total, local governments statewide could end up out at least $300 million, according to the Governor’s Office of Emergency Services.
In FEMA’s letter, first reported by CalMatters, the agency said it decided to limit reimbursements to 20 days between June 11, 2021, when the state lifted its stay-at-home order, and May 11, 2023, when the federal pandemic emergency declaration ended, to align with the recommended quarantine period as COVID-19 transmission was declining.
Local governments saw Roomkey, which has since expired, as an opportunity to connect homeless people with needed services in addition to protecting them from COVID-19. As a result, many stayed longer than 20 days.
State officials said they were caught off guard by the decision and plan to push FEMA to cover the reimbursements in full.
“California is committed to maximizing federal aid to local communities and intends to aggressively advocate for FEMA to rescind the decision to deny Public Assistance to local governments,” Office of Emergency Services spokesperson Brian Ferguson said in a statement.
Local officials can also try to appeal FEMA’s decision. Contra Costa County has already “proactively authorized a contract” with a law firm that specializes in such appeals, Tim Ewell, chief assistant county administrator, said in an email.
It’s not clear how long an appeal could take. Local officials and homeowners have long complained about the lengthy and bureaucratic process of dealing with FEMA to secure payments after wildfires or other natural disasters — if they can get aid at all.
In a statement, FEMA said it will work with local governments “on all requests for federal funding to maximize reimbursement for the appropriate life saving measures they implemented to protect their citizens from COVID-19, while also ensuring the appropriate oversight of federal funds.”
Even if a potential appeal is unsuccessful, Ewell said Contra Costa County has a reserve of federal pandemic stimulus money to avoid cuts to county programs to make up for the funding it could lose.
Santa Clara County, which is staring down a $250 million budget shortfall as staffing costs swell, may have a tougher road ahead.
“It is critical that all levels of government work together to maintain resources for safety net services,” Margaret Olaiya, director of the county’s finance agency, said in a statement.