Can the Palms Inn still be a model for homeless housing in Sonoma County?

Since its launch in 2016, the Palms Inn has been held up as a model for solving homelessness in Sonoma County.

The 104-room former motel just south of Santa Rosa is used as permanent housing for homeless people, while caseworkers aim to connect residents there with drug treatment, mental health counseling and other social services.

But a Press Democrat investigation found widespread health and safety issues at the Palms, including mold, cockroaches, crime and a string of recent drug overdose deaths.

Despite those problems, homelessness experts and advocates say turning motels into supportive housing may be the county’s best bet to provide stable homes for many of its estimated 2,700 homeless residents.

Motel conversions are now underway across the county as part of California’s Project Homekey program, an unprecedented $3.6 billion effort rolled out during the pandemic to increase homeless housing across the state.

Adrian Covert, a senior vice president of public policy for the Bay Area Council, said converting motels is cheaper than building new housing, adding that getting people off the street should result in public savings in police calls, hospital care and other services.

“Providing them with a permanent exit (from homelessness) costs money, and Homekey has been providing that exit for less money than anything we’ve tried before,” Covert said.

But he stressed projects must stay properly funded and that operators must be adequately staffed and equipped to provide residents with needed services.

“We’re talking about the chronically homeless, the hardest cases,” he said.

In Sonoma County, five Homekey motel sites could be up and running by year’s end, including two already open facilities in Santa Rosa and Sebastopol. So far, the state has awarded local Homekey projects roughly $54 million to create a total of around 280 housing units.

Blue markers are proposed sites in the process of applying for state funding. Green markers are sites that have already received funding and yet to open. Yellow markers are sites currently housing formerly homeless residents.

Local homelessness advocates and service providers note a few key differences between Homekey sites and the Palms.

For one, Homekey projects generally get millions of dollars to renovate buildings before people move in — resources that weren’t available to the Palms.

“If it was the present day, we would have received the $10 million in taxpayer funding for the needed upgrades,” said Shirlee Zane, a former Sonoma County supervisor and an early backer of the Palms, who called for more public funds to be directed to the site.

For Homekey projects, state and local dollars are currently being set aside to cover ongoing expenses for the initial years of operation.

Even so, questions remain about Homekey funding. Some projects haven’t received enough money to complete renovations and had to look elsewhere for financing. And it’s unclear how ongoing expenses at the sites will be paid for well into the future.

Most of the Palms’ public funding, meanwhile, comes from federal housing vouchers, which help cover rental costs for low-income people. Palms residents with vouchers contribute around 30% of their income to rent. In total, the site receives about $1.4 million in rental revenue each year, although a number of residents are in arrears.

Another difference is that the Palms has a private owner, Santa Rosa-based Akash Kalia.

While Homekey allows private owners, Homekey sites in Sonoma County are owned by local governments or in partnership with nonprofits, in theory allowing for easier oversight. Homekey operators and local jurisdictions are also required to submit annual reports to the state housing department.

Burbank Housing, the county’s largest nonprofit housing provider, pulled out of its contract to manage the Palms in March because it says Kalia failed to make the necessary investments in the property. Kalia, however, disputes that characterization and said he fired Burbank for allowing the Palms to fall into disrepair.

Burbank Chief Executive Larry Florin said Homekey — which is set to fund two Burbank-owned sites in Petaluma and Napa — shouldn’t be judged by the issues at the Palms.

“Because one experiment wasn't adequately funded … the whole program should not fall victim,” Florin said.

You can reach Staff Writer Ethan Varian at ethan.varian@pressdemocrat.com or 707-521-5412. On Twitter @ethanvarian.