Antioch Council to hold special study session on homeless hotel Monday June 29th
Saturday, June 27th, 2026
Before deciding to accept or reject State Homekey+ funding
City staff answer councilmembers’ questions; can only use 15% of CDBG funds to cover the up to $1.2 million annual commitment
By Allen D. Payton
As agreed to during their meeting this past Tuesday, June 23, 2026, the Antioch City Council will hold a study session Monday, June 29th, to discuss and get questions answered regarding the State Homekey+ funding for the Mahogany Housing Project at the Antioch Inn & Suites, formerly Comfort Inn. It will help the council members determine whether they will vote to accept or reject the $34.9 million grant at their next regular meeting on July 28th.
The City would have to commit an initial $750,000 already included in next year’s budget, plus, up to an additional $1.2 million per year for the next five for $6.75 million total and as many as 15 years for a total City commitment of $18.75 million. The State and City funds will provide for the acquisition and rehabilitation of the hotel on Mahogany Way, for approximately 84 units of permanent supportive housing.
On average, the state and city funds combined would total $41.75 million or about $500,000 per unit over the first five years and approximately $54.4 million or $640,000 per unit over the full 15-year period.
However, Mayor Pro Tem and District 3 Councilman Don Freitas asked if the other 40 rooms would still be rented for public hotel accommodations. Another question asked by District 2 Councilman Louie Rocha, that City staff did not have an answer for, was what would happen if a future council chooses to not continue the program. Those are just two of the questions the council members want answered before they vote.
As previously reported, following Council direction at their meeting on May 22, 2025, the City applied for the Homekey+ funding. “The project application assumes ongoing operating assistance averaging approximately $1.2 million annually during the initial five-year period,” for a total of an additional $6 million. “If such funding levels were maintained over the full fifteen-year period, the total potential City contribution could be approximately $18.75 million, from the General Fund.”
“The City would receive the benefit of approximately $34.9 million in State Homekey+ funding,” awarded in May, 2026, “for acquisition and rehabilitation of the project. The City would assume ongoing administrative, monitoring, and compliance responsibilities associated with participation in the program.”
“While the City was a co-applicant and recipient of the award, the City has not executed the Homekey+ Standard Agreement with HCD and has not formally accepted the grant funds. Because the…Agreement has not been executed, the City currently has no contractual obligation to participate in the project. The City would not assume the reporting, compliance, monitoring, or administrative responsibilities associated with the Homekey+ Program.” However, if the Council declines the grant funds, “the City could experience reduced competitiveness for certain future discretionary housing funding opportunities.”
Staff Answers questions
In the City staff report for the item, SM-1 on the agenda, they answered a variety of the council members’ questions.
HOMEKEY+ AWARD STATUS
The project received a conditional award in March 2026. The Acceptance of Terms was signed by both the City and CSH on March 17, 2026.
The award letter indicates that the representations made in the application are the basis for the award. HCD has been preparing the Standard Agreement, which is the final contract document for the award. The Standard Agreement has not been presented to the City as of the writing of this staff report.
HCD TIMELINES & PROJECT MILESTONES
“One of the primary questions raised by Council was related to timelines required by HCD. To staff’s knowledge, there does not appear to be an immediate concrete deadline.
“However, HCD described a series of project milestones tied to the award letter, Standard Agreement, construction, rehabilitation, and lease-up schedule. The longer the City delays execution and project advancement, the more difficult it becomes for the project to meet the milestones contemplated in the award and the Homekey+ Notice of Funding Availability (NOFA). Homekey+ is designed to support the relatively rapid development of permanent supportive housing, and HCD expressed concern regarding the amount of time that has passed since issuance of the March 2026 conditional award.
In simple terms, staff understands the timeline issue as follows:
- The City has received a conditional award.
- The acceptance of award terms was signed.
- HCD is preparing or has prepared the Standard Agreement.
- Project milestones are tied to execution and project delivery.
- Delay does not automatically terminate the award today, but continued delay increases risk to the award and project schedule.
PROJECT CONFIGURATION & UNIT COUNT
“The existing Comfort Inn currently contains 123 hotel rooms. Under the proposed Homekey+ project, the property would be rehabilitated and reconfigured into a total of 85 residential units, consisting of 84 permanent supportive housing units and one on-site manager’s unit. The reduction in the total number of units does not represent unused space or hotel rooms that would continue operating for transient lodging. Rather, the rehabilitation combines multiple existing hotel rooms to create larger, code-compliant residential units while also incorporating the infrastructure necessary for permanent supportive housing, including kitchenettes, accessibility improvements, property management offices, supportive service and case management offices, community gathering space, laundry facilities, recreation areas and other resident amenities.”
PROPERTY STATUS & REPORTED LOAN DEFAULT
The staff report also shares, “Council and members of the public raised concerns regarding news reports that the
property is associated with a loan default. Since the June 23, 2026, City Council meeting, staff has received additional information directly from the lending institution regarding the status of the loan.
“According to the lender, while a Notice of Default has been filed against the property, there is currently no foreclosure or trustee sale scheduled. The lender advised that it is actively working with the property owner to facilitate the sale of the hotel for the Homekey+ project and is aware that the California Department of Housing and Community Development (HCD) has awarded funding for the project. The lender further indicated that it will work cooperatively with the borrower, project partners, and the City to facilitate the transaction and is aligned with HCD’s project timeline.”
POTENTIAL FUNDING SOURCES FOR ONGOING HOMELESS SERVICES:
The staff report also offers some other funding sources for homeless services. However, one source can’t be used, and the City can only use 15 percent of its annual Community Development Block Grant funds, which was suggested by District 1 Councilwoman Tamisha Torres-Walker.
“During Council discussion, questions were raised regarding whether existing City, State, or Federal funding sources could be used to offset the potential ongoing operating commitment associated with the Homekey+ project. Staff evaluated several potential funding sources and summarized the findings below.
“Staff evaluated several existing funding sources to determine whether they could realistically offset the City’s projected operating commitment. While each funding source could potentially contribute to project operations, each carries statutory limitations or would require significant reductions to existing programs currently serving Antioch residents. Accordingly, none of the identified funding sources currently provides a complete replacement for the projected operating subsidy without corresponding impacts to existing City priorities.”
Housing Successor Funds
“The City currently allocates approximately $500,000 annually in Housing Successor funds toward homeless services, subject to available fund balance…these funds are expected to remain available for approximately two to three additional years.
“Redirecting the entire annual homeless services allocation to support Homekey+ operations would require discontinuing or significantly reducing programs currently serving approximately 2,688 homeless and at-risk Antioch residents through eight community-based organizations. It would also eliminate or significantly reduce funding for tenant-landlord mediation, eviction prevention, emergency rental assistance, legal services for tenants facing eviction, and a City staff position currently dedicated to housing services.”
Community Development Block Grant (CDBG)
“Federal regulations limit CDBG public service expenditures to 15 percent of the City’s annual allocation. Based on recent grant awards, this equates to approximately $127,500 annually, although the amount varies each year.
“Using the City’s entire public service allocation for Homekey+ operations would eliminate funding for the City’s competitive public service grant program during that funding cycle, affecting approximately 13 nonprofit organizations currently serving at least 1,655 Antioch residents, including programs supporting seniors, individuals with disabilities, youth, victims of abuse and other vulnerable populations. Additionally, such a change would require a Substantial Amendment to the City’s HUD Consolidated Plan, completion of a federal public participation process, and would not be available until the next funding cycle.
Permanent Local Housing Allocation (PLHA)
“The City receives approximately $350,000 annually through the State’s Permanent Local Housing Allocation (PLHA) Program. State requirements dedicate a significant portion of these funds to housing rehabilitation, first-time homebuyer assistance, accessory dwelling units, and administration. Approximately 55 percent of the annual allocation (roughly $190,000 annually) could potentially be directed toward homelessness-related activities through the City’s next five-year PLHA planning process.
“However, redirecting these funds would require reducing or eliminating other housing priorities currently supported through PLHA, including affordable homeownership assistance and housing rehabilitation programs. Any change would require HCD approval and completion of the City’s next required five-year planning process.
“Staff also evaluated whether the HUD Section 108 Loan Guarantee Program could be used to finance ongoing Homekey+ operations. Section 108 is intended to finance capital improvements, including housing acquisition and rehabilitation, public facilities, infrastructure improvements, and economic development projects. It is not an eligible funding source for ongoing supportive services, staffing, case management, or annual operating expenses. As a result, Section 108 could potentially support future capital improvements but cannot be used to fund the City’s proposed operating commitment associated with the Homekey+ project.”
QUESTIONS RAISED BY COUNCIL AND STAFF RESPONSE SUMMARY
1. Is the award final or conditional? Not yet. HCD has issued a conditional award of $34.9 million and the project has advanced beyond the application stage. However, the project is not yet fully finalized because the Standard Agreement has not been fully executed and other program requirements must still be satisfied before grant funds may be disbursed.
2. Has the City already accepted the award? The City previously executed and returned the Conditional Award Acceptance acknowledging the terms and conditions of the award. HCD has confirmed that this document does not, by itself, obligate the City to execute the Standard Agreement or proceed with the project. Execution of the Standard Agreement remains the action that commits the parties to the grant.
3. Does the City have to pay $1.2 million immediately?
No. The operating subsidy is tied to project operations and is not expected to begin until the project is operational, currently anticipated in 2027.
4. What happens if the City declines? If the City elects not to execute the Standard Agreement, HCD would likely rescind the Homekey+ award and the current project would not proceed under this funding allocation. HCD has advised that declining an award could be considered during evaluation of future competitive funding applications; however, any effect on future scoring would depend on the specific funding program and evaluation criteria in place at that time.
5. How does the current loan default affect the project? Based upon discussions between the City’s legal counsel, project representatives, and parties associated with the existing financing, the reported loan default appears to involve the current property owner rather than the Homekey+ project itself. While it may affect the timing or structure of the acquisition, HCD has advised that acquisition through foreclosure, receivership, negotiated purchase, or other lawful means may still be possible. The developer continues to evaluate acquisition options with the lender and trustee.
6. Is this a loan? No. HCD described Homekey+ as a grant program. The City’s obligation is related to its role as co-applicant, payee, and proposed local contributor.
7. Who receives and administers funds? HCD indicated the City is required to be the payee. Specific disbursement controls may be established through escrow or other approved structures.
8. Who gets housed? Residents would be referred to through approved eligibility and referral systems, not through open walk-in access. The final tenant selection and referral process must comply with Homekey+, fair housing, and coordinated entry requirements.
9. Can Antioch residents be prioritized? This requires additional legal and programmatic clarification. County partners have indicated that some projects have used lawful local targeting approaches, but final structure must comply with fair housing and funding requirements.
10. What public safety measures will be in place? The final operations plan should include property management, staffing, service coordination, resident expectations, security protocols, and coordination with APD and County partners.
See additional details and issues in the agenda item SM-1.
Meeting Details
A Closed Session beginning at 6:00 p.m. will be held to again negotiate contracts with City employee groups who have been working without one since last fall including the Management Unit, Operating Engineers Local Union No. 3, Confidential Unit, Antioch Police Officers Association and Antioch Police Sworn Management Association. The study session will begin at 6:30 p.m. inside the Council Chambers at City Hall, 200 H Street in Antioch’s historic, downtown Rivertown. It can be viewed livestream on the City’s website or the City’s YouTube channel.













































