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At the Granada Hotel, a rush to house the homeless comes at the expense of elderly tenants

The Granada Hotel, a single-room occupancy building on the cusp of Nob Hill and the Tenderloin, has had its issues. But for years, the Granada provided the basics to a community predominantly of seniors and people with disabilities: Secure, affordable rooms, three meals a day, and activities like music and field trips to ease the burdens of isolation for vulnerable residents.  

Now, a group of 21 long-term tenants at the Granada are suing the site’s owner and property managers, Episcopal Community Services and Caritas Property Management, both major players in the city’s network of supportive housing and homeless services. The suit alleges elder abuse, forced eviction and other abuses after the city moved quickly to buy the property last year with money from Project Homekey, a $1.45 billion state program funding the acquisition of hotels for homeless re-housing. 

Project Homekey was hailed by local officials as a far more cost-effective means of providing stable homes compared to building new housing, which can cost upwards of $1 million per unit in San Francisco. But in the case of the Granada, a rushed deal combined with a seeming lack of oversight created an unbearable and dangerous environment for existing tenants, the lawsuit alleges.

The situation at the Granada shows how the many layers of entities involved in supportive housing efforts in San Francisco can lead to a lack of accountability and transparency, leaving tenants with little recourse even for major problems. Although the state and the city funded the acquisition of the Granada, it’s owned by Episcopal Community Services (ECS), a nonprofit that’s paid by the city to provide various homelessness services. ECS in turn contracts out management of the property to Caritas, a for-profit company that runs a number of supportive housing sites.

The Granada can also be seen as a case study in unintended consequences. Residents had lobbied the city to take action after they sued a previous owner for neglecting the property, only to see it go further downhill. A Project Homekey requirement that hotels purchased by the program quickly fill at least half their rooms with formerly homeless individuals meant a rush to bring people in, with minimal screening. 

In interviews with the SF Standard, long-term Granada residents described an ongoing decline in safety, cleanliness and basic amenities at the building that began under a previous owner and grew dramatically worse after it changed hands in November 2020.

“This is a real screwup; I’m not gonna lie,” said David Murray, an eight-year resident of the Granada who uses a wheelchair. “What’s going on here is a total waste of state and federal money.”

Supervisor Aaron Peskin, who championed the deal after residents reached out to him for help, declined to comment for this story. His office referred the SF Standard to Tom Paulino at the Mayor’s Office and Department of Homelessness director Shireen McSpadden, neither of whom responded to questions about the process of transitioning the Granada into permanent supportive housing or oversight of its operations. A separate request for comment to the Department of Homelessness also went unanswered. Caritas did not respond to requests for comment. 

ECS president Beth Stokes also declined to be interviewed. She said in a statement: "All of the physical issues with the Granada were in existence prior to ECS assuming ownership in late November 2020. Under the parameters of the Homekey program ECS was required to have 50% of the units occupied by formerly homeless individuals within the first 120 days, which was the first priority for the organization. Concurrent to the rehabilitation of the aforementioned and move-in process for new tenants, ECS has been in collaboration with the City on a thoughtful redesign for the building.”

A permit filing with the city’s Department of Building Inspection shows a $23 million structural renovation planned for the coming months.

The 232-unit Granada was one of about 80 sites the city evaluated for acquisition last year as part of an effort to broaden its portfolio of permanent supportive housing, which provides extra services to help formerly homeless residents. At the time of the acquisition, around 80 units were occupied by legacy tenants, and the city promised that none would be displaced. The per-unit acquisition cost of the Granada was $182,000, according to budget paperwork filed with the state, or the equivalent of about $320,000 when operating and maintenance costs are included.

The exterior of the Granada Hotel in Lower Nob Hill on Dec. 1, 2021. | Sophie Bearman

Underpinning the sale was an infusion of state funds through Project Homekey, a program introduced by Gov. Gavin Newsom last year to acquire underused hotel or apartment sites to house the state’s rising homeless population. To date, the Granada, which cost $46 million for the building alone, is the largest and most expensive acquisition funded through Project Homekey. The state paid for the building acquisition with grants and provided some operating capital on the condition that the city kick in matching funds. 

The Board of Supervisors unanimously passed a resolution in October 2020 approving a buyout of the Granada and committing millions in matching local funds to support its ongoing operations, described as permanent supportive housing complete with “extensive, on-site supportive services” such as clinical treatment, individual case management, job readiness evaluations and other services, according to application documents filed by Episcopal Community Services. 

Alongside ECS, the city of San Francisco filed as lead applicant for $47.8 million in state funds to support the acquisition, a figure that included the cost of the Granada building itself—a 112-year-old, 10-story hotel at 1000 Sutter Street—and $5.5 million for two years of operating expenses. The city pledged another $23 million for rehabilitation costs and $2.9 million per year in ongoing subsidies.

Granada tenants who spoke to the Standard were incredulous at the price tag, alleging that the infusion of government funding and entry of a new nonprofit operator was accompanied by a continued degradation of on-site services and the creation of a dangerous environment for both legacy tenants and new residents who moved in under the Project Homekey program. 

Following the acquisition, the lawsuit alleges, ECS and Caritas reduced or eliminated services in a way that proved severely burdensome for existing tenants, many of whom have mobility challenges. That included cutting off food service and common areas, failing to provide basic necessities like toilet paper and linens, and failing to provide reliable on-site staff or security. Those moves were interpreted as an intentional and cruel effort to force out existing tenants who declined to sign new leases drawn up by ECS. 

The dining room of the Granada on Dec. 1, 2021. The space previously served three meals a day to tenants. | Sophie Bearman

“I’m scared; right now I do not [leave] my room,” said Vicky Jin, a disabled tenant with cancer who has lived at the Granada for eight years.  

Jin said that she had been harassed in building elevators and grew fearful of harmful smoke, noise and outbursts by strangers who came into the building in the absence of on-site security. In her small living quarters, meanwhile, a hole in her bathroom wall went unrepaired for more than two months this fall, inviting a rodent infestation and what Jin suspected was contaminated, cloudy water. She reported being bit by mice that drew blood, forcing her to begin taking sleeping pills to quell nighttime anxiety. 

Complaints about conditions at the Granada predated the sale, with tenants banding together to sue a former owner and another interim owner, Michael Lieberman and Pantoll Holdings, for failing to control pests, provide a clean living environment in some units and for reducing meal service without providing a reduction in rent. At one point, they alleged, Lieberman fired most staff and shortly thereafter offered the building up for sale. The lawsuit against Lieberman eventually settled, but not before dozens of tenants—those with the means to move—opted to leave or were pulled out by concerned relatives.

Property assessments obtained by the SF Standard show that unsafe and unsanitary conditions at the site were observed prior to November 2020, but have largely gone unresolved. Some may have been overlooked in a rush to close the deal and fill rooms at the Granada over the tight 90-day execution period set forth by the state, which required the site operators to fill rooms by February 2021.

In a site assessment performed by Basis Consulting in November 2020, consultants noted a number of deficiencies including exposed pipes and wall cavities, damaged floors and unsanitary bathroom fixtures. The assessment recommended a “comprehensive” pest evaluation and immediate pest treatment at an estimated cost of $53,000, one of several immediate repairs recommended at a total cost of $3 million. Tenants said in a legal filing that building managers gave them “one or two glue traps” in response to mice and roach infestations in their rooms.  

Granada tenant Marsha Macchi, who is blind, rests in her room which is plagued by mice on Dec. 1, 2021. | Jesse Rogala

Episcopal Community Services is one of the largest providers of homelessness services in the city, with 478 employees. It had revenues of $41 million last year, according to federal tax filings, most of which came from the city, and has received $25 million in payments from city departments so far this fiscal year for running shelter-in-place hotels, supportive housing, navigation centers and other services. 

According to tenants, the ongoing degradation of on-site services was accompanied by false promises regarding the transition to supportive housing. Peskin, who championed the deal following requests from tenants for help, assured residents that a conversion to supportive housing would be favorable for tenants and that the development would retain its character as a senior and disabled living community, according to Jonathan Shockley, a disabled 22-year resident of the Granada.  

Existing low-income tenants, who were paying anywhere from $700 to $2,300 for units of varying sizes and amenities, were presented with new leases that could have reduced their rents to as little as $504 per month, depending on their incomes. The new, 51-page leases were intended for a new cohort of very low-income, formerly homeless residents who would have their rents capped at 30% of their monthly income. The city and state make up the difference through operating subsidies equivalent to about $3 million per year, intended to fund a robust staff that includes on-site managers and assistant managers, supportive services supervisors, case managers and janitors, according to its application for grant funding. 

That robust staff never materialized, with ECS telling the Standard that they hired staff “in correlation” with the Granada’s current occupancy. Security staff was not budgeted for, though, and residents say there has not been a consistent security presence.

Drug use grew common, while strangers off the street—sometimes unstable or inebriated—were permitted to freely enter the building, residents say. Police records show a surge in reports and calls for service at the Granada, with 41 recorded incidents this year ranging from assaults and domestic abuse to an attempted rape of a long-term resident in her 90’s by a new tenant in March 2021. At least four people have died at the Granada this year, according to city records. 

Jonathan Shockley, a disabled resident of the Granada, said the building’s current tenants have become “collateral damage" following the Nov. 2020 acquisition. | Jesse Rogala

Residents provided photos to the Standard of what they identified as a meth lab in a room on one of the upper floors, alongside a letter to Caritas warning of a strong chemical smell and the possibility of a dangerous fire hazard. Those concerns were dismissed as “rumors” by Caritas, they said, while police and fire officials said they couldn’t do anything because they didn’t know what room it was in. 

Residents say they were also told at meetings with the building’s new management that new tenants would be reasonably vetted in light of the elderly and disabled existing residents.  

Yet application paperwork filed jointly by the city of San Francisco and ECS didn’t indicate any age restriction for the project. In documentation presented to the Board of Supervisors, the city’s Department of Homelessness and Supportive Housing said only that new tenants would be selected through the city’s Coordinated Entry System and would include clients transitioning out of shelter-in-place-hotels. 

In a policy document published in February 2021, the Department of Homelessness and Supportive Housing determined that Coordinated Entry clients with the “highest barriers to housing” would be prioritized, and that they may not be screened out on the basis of factors such as substance abuse, domestic violence, criminal history or unwillingness to receive services. 

“There’s a lack of scrutiny, and the legacy tenants are the ones suffering the results,” said Jason Wolford, the attorney representing the Granada clients in the lawsuit. “What’s sad is that it’s going to be framed as a NIMBY argument. But it’s not in my backyard; it’s in my living room.” 

An audit of the Department of Homelessness last year revealed that the department does not maintain a consistent system for monitoring the contracts it maintains with a constellation of nonprofit service providers in the city. A public records request to the department turned up no desk audits, site visits or any other monitoring of ECS or most of the other 59 organizations it maintains contracts with.  

A wheelchair sits in a hallway of the Granada Hotel in Lower Nob Hill. | Jesse Rogala

A spokesperson for the California Department of Housing and Community Development, which administers Project Homekey, said that it has been unable to conduct any site visits of the Granada due to COVID, but requires regular monitoring of project sites. It was unable to provide any monitoring documentation by press time. 

Shockley emphasized that legacy tenants are not opposed to either the Project Homekey program or the prospect of having formerly homeless individuals as neighbors. But, they said, the change was misrepresented both by new management and city staff and was executed without sufficient security and support for new occupants. 

Several tenants said they were looking around for new homes—no simple feat on a fixed income in San Francisco. Murray said that after languishing on a city affordable housing wait-list for eight years, he was moved ahead on the list soon after the lawsuit was filed in San Francisco Superior Court in October.

“The city is entitled to pursue some of these projects, but they have to compensate the people who are being trampled over, or at whose expense this whole operation is taking place,” added Shockley. “So we are ready to fight for our rights and to demand or at least attempt to demand that we're compensated for what's happened, and that the city take some responsibility for the collateral damage of their operations.”