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Politics & Policy

San Francisco downtown hotel gets $20M damage settlement from Covid shelter program

Hotel Whitcomb at 1231 Market St. in San Francisco. | Joe Mabel/Wikipedia/Creative Commons

The San Francisco Board of Supervisors approved the last of tens of millions of dollars in damage claims from operators of hotels leased during the Covid pandemic for people experiencing homelessness. 

At their Tuesday meeting, the supervisors approved $23.6 million in settlements, including one for $19.5 million by owners of the Hotel Whitcomb, unanimously and without discussion. They also approved smaller settlements for the Good Hotel and Nob Hill Hotel.

The claim filed by the Hotel Whitcomb—a historic property at 1231 Market St.—is by far the largest of the damage claims, and is expected to be the last. San Francisco contracted with 29 hotels for the Shelter-in-Place Hotel Program, paying flat rates for their use during a phase of the pandemic when most public spaces were in lockdown and hotel rooms had little demand.

Nine of those hotels have made claims for damages, with settlements totaling roughly $44.5 million. 

The Shelter-in-Place Hotel Program temporarily housed more than 3,300 medically vulnerable people who would have otherwise been sleeping on the streets or in congregate shelters during Covid. The program ran from April 2020 to December 2022.  

The Whitcomb owner’s original damage claim estimated $28 million in renovation costs for water damage, unspecified damage to rooms, fumigations and various other construction fees. The assessor-recorder most recently assessed the structure at the property at $55 million—meaning the final damage settlement amounts to around one-third of the building’s assessed value. 

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First opened to the public in 1917, the historic 459-room hotel is listed as closed until further notice on its website. The Hotel Whitcomb didn’t immediately respond to a request for comment. 

The Federal Emergency Management Agency is expected to reimburse a bulk of the costs associated with the Shelter-in-Place Hotel Program, but City Hall sources are not expecting the agency to pick up the tab for damage settlements.

As of February, the city had filed for $385 million in federal reimbursements and had been reimbursed $148 million. But the most complicated and least likely to be approved claims will be saved for last. 

A spokesperson for City Attorney David Chiu described the settlement as “an appropriate resolution,” saying it was “the last SIP Hotel claim for damages that the City is aware of.”

Supervisors Matt Dorsey and Rafael Mandelman requested a hearing to review the Shelter-in-Place Hotel Program May 23. Dorsey pointed out the cost of the damage claims when introducing the request, saying, “I think there are important lessons to learn.”