Housing Authority acquires Anderson Hotel thanks to state grant, local partnerships 

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It took a community-wide push and nearly $20 million in state and federal funds, but the Anderson Hotel in downtown San Luis Obispo is set to continue providing affordable housing for the long haul.

The Housing Authority of SLO (HASLO) is closing a sale this month to take ownership of the five-story apartment complex on Monterey Street, after it previously leased the property and rented all 68 of its units to vulnerable, low-income tenants.

Once the sale clears, HASLO will start construction on an extensive remodel of the 1920s-era building, which is expected to take between 18 months and two years, according to the agency.

"It's a great project for our community, and it was a huge lift by a lot of different parts of our community," said Scott Collins, HASLO's executive director. "It's very exciting. We're pretty close to the finish line."

That finish line—getting the Anderson Hotel into public ownership—seemed out of reach just a few years ago. But key sources of public funding, including the same state grant that enabled HASLO and other nonprofits to convert a Motel 6 in Paso Robles into homeless and affordable housing, ultimately made it possible.

"This would not have worked without all those sources coming together," Collins said.

Getting out of limbo

In 2020, the Anderson Hotel's former private owner, 995 Partnership, put the building up for sale amid mounting pressure from HASLO to invest in repairs to the century-old complex, according to past New Times reporting.

That threw the apartments' future—namely their long-term availability as affordable housing in downtown SLO—into question.

"It's a complicated building," former HASLO Executive Director Scott Smith said last year. "We've been operating it under a master lease on the property. But it's gotten more and more difficult because as the building ages, it needs work. I think the owners realize that, and we just couldn't continue master leasing it without major updates. ... Our concern is losing this housing."

In order to guarantee that the Anderson continued to serve its at-risk residents, HASLO needed to find not just $12.1 million to buy it, but $23.5 million to fund the renovations. Collins said that the aging building needs structural upgrades, new windows, ADA retrofits, electrical and plumbing work, and more.

Local agencies and community groups joined forces to piece together the funding. The city of SLO and SLO County contributed $3.7 million of their American Rescue Plan Act funds to it. U.S. Rep. Salud Carbajal (D-Santa Barbara) secured an additional $2 million in federal funds.

Then in late 2022, HASLO received a $11.6 million boost from Project Homekey—a state grant program that supports the use of existing buildings, like motels or apartment complexes, to preserve or create low-income housing.

State tax credits are helping fill the remaining funding gaps, according to Collins.

"It's a big lift," Collins said. "It's worthwhile, given [the Anderson Hotel's] proximity to services. This project will preserve affordable housing for 55 years. There will be folks who have little to no income at all who will benefit from this project."

Tenants at the Anderson Hotel are historically among the most vulnerable in the county, according to HASLO. Its residents are mostly seniors with disabilities or special needs.

As HASLO gears up for the renovations, Collins said that the agency has been working to relocate the building's 60 current tenants to other supportive housing units in the county.

"All but a few" have moved, he said, though some are still working through "timing issues" related to their next homes, and a few are temporarily staying in hotels or motels.

"It was important to HASLO to approach this with sensitivity and long lead times," Collins said. "The tenants have the option of returning to the Anderson after the rehab, if they would like to."

Capitalizing on Homekey

The Anderson Hotel is SLO County's second major success story leveraging the state's 3-year-old Project Homekey initiative.

In 2021, a $15 million grant helped HASLO, the El Camino Homeless Organization (ECHO), and People's Self-Help Housing buy and convert a Motel 6 in Paso Robles into 50 homeless shelter beds and 63 permanent affordable housing units.

Wendy Lewis, CEO of ECHO, said that the community of Paso Robles would not have a homeless shelter today if it wasn't for the Homekey program.

"It is one of the fastest ways to get people off the streets and get them into shelter or housing," Lewis said. "You're taking an existing building—you're not having to look for land, go through the planning process, do all those major steps."

But to what extent Homekey will continue to play a role in the county's aim to alleviate homelessness remains unclear. With the state poised to open a third round of Homekey grants this month, local housing organizations said they're unsure if they plan to apply.

Several hurdles make finding Homekey projects challenging, stakeholders said. One issue is finding a willing seller of a property that can be turned over relatively quickly to house at-risk populations.

"Since the genesis of the Homekey program was to rapidly house those experiencing homelessness, there is a very short timeline to spend the funding and occupy units for the intended population," said Ken Trigueiro, CEO of People's Self-Help Housing. "That has meant needing to look for existing improved properties that do not need much work to be occupied to meet the strict timeline to complete. Relatively few of those opportunities exist."

Another roadblock is that Homekey grants include just two years of operational funding for the groups providing ongoing programs and services to those getting housed. If that funding runs dry, according to ECHO's Lewis, then the project likely won't succeed, especially if it's a homeless shelter that's not generating any income on its own.

"That really limits organizations' ability, because you have to kind of take a leap of faith and do a lot of work in order to sustain that after two years," Lewis said. "I'm having some conversations at the state level to advocate for longer operational funding for the shelter portion. Had it come with four or five years [of funding], I think the community would see a lot more potential projects."

On top of that, Homekey applicants are required to find a government agency to partner with. That entity could be HASLO or the county or a local city.

Collins, with HASLO, told New Times that his organization is "open" to partnering on future Homekey projects, but it has a lot on its plate right now.

"We also have several projects in the development pipeline at this time," Collins said, "so we would need to look very carefully at other Homekey opportunities before moving forward." Δ

Assistant Editor Peter Johnson can be reached at [email protected].