Despite having the rug pulled out from under them two years ago when their city made a major stride toward establishing a landmark homeless assistance program, Redlands officials have recommitted themselves and the Redlands community to redirecting the destitute toward a more normalized existence.
Two years ago, the city applied with Sacramento for money to be used for the specific purpose of addressing the housing crisis that had left 213 people living on the streets of Redlands in 2024 and 146 so situated this year. At its June 3 meeting, the city council signed off on passing along to ten different entities engaged in homeless assistance efforts the $4.1 million the city successfully pulled down from the state government as the result of that application.
According to Assistant City Manager Chris Boatman, “On November 27, 2023, the California Interagency Council [gave] notice of funding availability for the Encampment Resolution Funding Round Three Program, which seeks to fund actionable, person-centered local proposals that resolve the experience of unsheltered homelessness for individuals residing in encampments. On April 30, 2024, the Homeless Solutions Division Program Manager of the Facilities and Community Services Department submitted an Encampment Resolution Funding Round Three (ERF-3-R) Program grant application in response to the notice of funding availability for a comprehensive plan to implement a multi-faceted approach addressing ongoing homelessness challenges in the city.”
On September 27, 2024, the City of Redlands received confirmation from the State of California Department of Housing and Community Development of its intent to award a grant to the city for the Community Services Department submitted an Encampment Resolution Funding Round Three Program. On December 17, 2024, the city council accepted the Encampment Resolution Funding Round Three Program, grant for the amount of $5,341,800.
According to Boatman, “On February 25, 2025, the city received the funds from the HCD for the ERF-3-R Program and of that amount, $4,155,600 will be allocated to local non-profit service providers (subrecipients) in order to meet the project’s proposed outcomes. Funding for the homeless resource services program agreements will be for a 24-month period beginning June 4, 2025. The subrecipients will provide a range of supportive services through a multi-faceted approach geared towards the specific needs of the homeless populations in Redlands, including temporary and transitional housing as well as securing housing for up to 100 individuals. Additional services include mental and substance-use treatment, employment assistance, and specialized care for those with chronic health and physical disabilities.”
Boatman on June 3 told the city council, “The City of Redlands has existing partnerships with key community organizations to facilitate these services and were selected as subrecipients as part of the grant application process. Key partnerships include several nonprofit organizations leveraging their unique areas of expertise and resources. Step Up on Second Street, Inc., with over 35 years of experience, will provide outreach services and connect individuals to available resources, including permanent housing at the Step Up in Redlands site. Youth Hope focuses on unhoused youth, offering outreach, case management, and supportive services.”
Those who are to be in the loop for the fund pass-throughs are the Salvation Army, which is to receive $1.4 million to provide rapid re-housing services, temporary shelter beds, outreach and mobile shelters; Building a Generation, which is to get $606, 200 to provide rapid rehousing and employment services; the Family Service Association of Redlands, which is being allotted $456,200 to offer rapid rehousing services; Step up, the nonprofit entity now administering the home assistance project run out of the converted Good Nite Inn, which is getting $354,250 to provide an outreach and provide continued support at the converted hotel, a transitional housing project; the Center for Spiritual Living: which is to receive $337,500 for temporary shelter beds; Rehabilitation Services: which is to get $337,500 for temporary shelter beds; SB Express: which is to be provided $264,000 to provide temporary hotel rooms; the Goodwill, which is to receive $150,000 to provide employment services for the homeless; the Redlands Chamber of Commerce, which is to get $150,000 for employing the homeless; and Youth Hope, which is to receive $100,000 for providing outreach to the homeless.
“Family Service Association, Building a Generation, and the Salvation Army have over 10 years of experience and will leverage their community relationships to support permanent housing placements,” Boatman said. “Rehabilitation Services, Salvation Army, and Central for Spiritual Living each have over 5 years of experience serving diverse populations and will provide interim shelter beds. The Super 8 motel currently works with the city and will provide emergency shelter. Leveraging over 5 years of experience in career development and job search assistance, Building a Generation, Goodwill Career Services, and Redlands Chamber of Commerce will provide job placement assistance. Each partner’s prior experience in managing complex homelessness projects informs this proposal, ensuring that the roles assigned are backed by a proven track record of success. While no formal procurement process was required by the ERF-3-R grant application, the Single/Sole Source providers listed below have met City Procurement requirements as well as the qualifications and experience required as part of the grant application process. Additionally, the Program subrecipients have assisted the City with housing 350 homeless individuals exceeding the expected target of 200.”
“We’re not just putting people in housing temporarily,” Boatman said during the Tuesday, June 3, meeting. “We’re seeing them actually permanently taken off the streets.”
Redlands was among one of dozens of California cities that moved to take advantage of money being offered by the State of California through its Department of Housing and Community Development via the so-called Homekey Program, which was being pushed by Governor Gavin Newsom at around the time of the COVID-19 pandemic in 2020.
The city partnered with Step Up on Second, the Santa Monica-based nonprofit to take possession of the Good Nite Inn, located on Industrial Avenue, and convert its 98 hotel rooms into mini-living quarters, complete with kitchenettes and bathrooms to house and support, variously, individual homeless or homeless couples. Step Up on Second affiliated with a Los Angeles-based developer, Shangri-La Industries, to engage in those conversions. That project progressed well, and in March 2023, the facility opened, becoming what was, in the most straightforward of terms, a model of how the state/local public agency/private industry solution to the homeless problem could be applied and one of the first real successes of the Homekey program.
Unbeknownst to virtually everyone involved, however, a Shangri-La Industries employee, its then-28-year-old chief financial officer, Cody Holmes, had embezzled an estimated $40 million from the company, which resulted in Shangri-Las defaulting on the loans taken out to multiple construction projects for homeless shelters, including the Good Nite Inn in Redlands, one in San Bernardino, one in the City of King, one in Thousand Oaks and three in Salinas. As pertained to the Good Nite Inn conversion project, Shangri La received $30 million originating with the State of California passed along to it through the Department of Housing and Community Development and the City of Redlands but then defaulted on a $12 million private loan it obtained in June 2022 to purchase the motel.
In a 321-page lawsuit filed in January in Los Angeles Superior Court, the California Department of Housing and community Developed sued Shangri-La, alleging the developer breached its obligations under terms of its agreements with the Homekey program. The state also sued everyone else involved, including the cities of Redlands, Thousand Oaks, King, Salinas as well as the County of San Bernrdino, which was sponsoring the conversion project in San Bernardino.
In that suit, the state maintained that for six of the seven motel properties that were supposed to be converted to homeless shelters, Shangri-La and its partner agencies failed, in timely fashion, to record use restrictions on the motel properties to ensure they would be used solely for interim or permanent housing for the homeless for up to 55 years, which was a key requirement of the Homekey Program.
In large measure, the state recognized that it was Shangri-La that was the bad actor in what had occurred, as it made clear in the legal filing that upon receiving more than $114 million in Homekey funds from the state, the company had recorded deeds of trust on the seven motel properties to secure loans from third-party lenders without first obtaining the state’s written authorization, another requirement layered into the Homekey agreements.
Exacerbating the situation, subcontractors and lenders had filed more than a score of liens totaling millions of dollars at recorders’ offices in Ventura and Monterey counties by contractors and lenders that were not paid for Homekey-funded projects in those areas.
Despite the lawsuit from the state and having been simultaneously ripped off themselves by Shangri-La, the City of Redlands and Step Up on Second, remarkably, had persisted with completing the Redlands project, which opened in March 2023.
Redlands terminated its relationship with Shangri-La, and together with Step Up on Second has taken full control of the operation of the facility. The city continues to provide at least $510,000 annually used toward the operating budget to house the homeless at the converted motel — which now goes by the name of Step Up in Redlands.