Transforming Three California Hotels to Affordable Housing

Capital One is financing the conversion of three California hotels to affordable housing serving formerly unhoused individuals

Pictured above: A rendering of the Long Beach West conversion from a vacant hotel to affordable housing

The 2023 Point-inTime Estimates – an annual effort conducted by the Department of Housing and Urban Development – indicated the number of unhoused individuals on a single night in January 2023 surpassed 650,000, a 12% increase from 2022.

“Safe, affordable housing is a cornerstone of building thriving communities, and ensuring there is an adequate supply of housing is a key step in addressing the increase in homelessness,” said Desiree Francis, head of Community Finance at Capital One. “Mitigating the housing deficit requires capital, community support and collaboration.”

In some cases, that means getting creative with existing resources and structures within a community. 

A recent Brookings analysis determined that “there is no ‘one-size-fits-all’ barometer for understanding America’s challenge with homelessness.” Instead, the research shows that city, state and local communities should take into account regional trends, challenges and solutions that can help them house more people – and keep them housed. And, it suggests cities can scale programs initially created to stop the spread of COVID-19.

At the height of the pandemic, states like California, Vermont and Washington took action to reduce the spread of COVID-19 among those experiencing homelessness by turning to available hotel rooms for temporary shelter.

Now, initiatives are underway to convert vacant hotels to permanent housing as a way to meet gaps in affordable housing nationwide. In California, Project Homekey – which launched in July 2020 – provides an opportunity for developers to convert commercial properties, such as hotels, motels, hostels, multifamily apartments and other residential facilities to affordable housing. 

As part of this statewide effort, Linc Housing is converting three vacant hotels – two in Los Angeles County and one in Orange County – to create more than 260 units of permanent supportive housing. Permanent supportive housing incorporates affordable housing with supportive services designed to engage individuals at risk of becoming unhoused, those who have been unhoused and those with differing mental and physical capabilities.

To support financing of the conversions, Capital One originated federal and state low income housing tax credit (LIHTC) equity investments totaling $26 million and a $20 million construction loan for North Harbor Apartments Phase II. Capital One also originated about $12 million in permanent Freddie Mac loans across the three properties.

The North Harbor, Long Beach East and Long Beach West properties will provide fully furnished apartments to individuals and households earning up to 30% of area median income (AMI). Each community will have case management offices and amenity space. Additionally:

  • North Harbor will have onsite financial literacy and digital access services, health and wellness activities, parenting services and onsite food cultivation and preparation. It will also have a business center and computer lab.

  • Long Beach East will have a computer lab and offer computer training opportunities.

  • Long Beach West will have courtyards designed for outdoor activities, recreational gatherings and gardening.

“The combination of public and private investment is critical in addressing the community need for affordable housing,” said Francis. “Together, these investments create greater access to stable housing and supportive services that can serve as the foundation for improving residents’ quality of life and drive efforts to revitalize communities.”

Learn more about how Capital One is improving communities across the country with solutions that support affordable housing needs and goals.

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