Once hailed as a model solution for homelessness, poor conditions threaten the mission at Santa Rosa’s Palms Inn

‘Not meant for everyday living’

Woodard, the resident with asthma, said even with the mold and pest issues, he’s thankful to have moved into the Palms after seven years sleeping on the streets and in parks around downtown Santa Rosa. Now, with a roof over his head and an internet connection, Woodard, 36, has had more stability to pursue his restaurant management degree at Santa Rosa Junior College.

But as his health worsened, the conditions became too much to bear. Recently, Woodard was temporarily moved to another room at the site by Palms management while the mold in his unit is treated. Still, given the age and state of the 55-year-old building, he’s worried the mold will return.

“These rooms are tiny; they're not meant for everyday living,” Woodard said.

The Palms, which accounts for about 10% of the county’s permanent supportive housing stock, operates through a complex arrangement between public, private and nonprofit interests.

In addition to Burbank Housing, which provided property management services, those interests include Catholic Charities of Santa Rosa — the county’s primary homeless services provider — as well as the Department of Veterans Affairs, which both offer case management services for residents.

Since opening in 2016, politicians and advocates have held up the Palms as a cost-effective template for quickly getting local homeless people off the street.

“The Palms Inn supportive housing program is a model of how private property owners can work cooperatively with nonprofits and government to pursue their personal business interests in a way that is beneficial to the larger community,” wrote Jen Klose, director of Sonoma County-based pro-housing group Generation Housing, and Kalia’s attorney at the time, in a Press Democrat guest column when the Palms’ launched.

In 2020, KQED Public Media in San Francisco spotlighted the facility in a podcast about California’s Project Homekey program, an unprecedented $3.6 billion effort rolled out during the pandemic involving buying often rundown motels to turn into housing for homeless people — including at least five such sites in Sonoma County.

“That sounds really nice, like a home,” the podcast host said following an interview with Kalia. “And it sounds like what the state is trying to do on a much bigger scale.”

But officials with Burbank Housing — which owns and manages over 3,200 affordable units in Sonoma County and is set to launch two new homeless housing facilities in the North Bay — described the Palms as a “failed experiment.”

“I’m outraged by the situation out there, and something needs to be done. It cannot continue,” said Larry Florin, Burbank’s chief executive.

Over the nine months Burbank ran the Palms from July 2021 through March 2022, Florin said Kalia declined to pay to fix problems at the facility. Burbank took over property management from Catholic Charities, which continues to provide supportive services at the site.

At that time, nearing the middle of the second year of the pandemic, county and city housing agencies that oversee the Palms paused or delayed in-person room inspections. Authorities normally inspect the property every two years, and also when they move in a new tenant.

In light of the issues at the Palms, the Sonoma County Housing Authority plans to inspect the property ever year going forward, officials said.

Burbank employees arrived to find serious mold and pest issues and crime and prostitution, Florin said. Insect problems were so bad that Burbank had to send an exterminator to a property manager’s house because he brought bedbugs home, Florin said.

Kalia contends it was Burbank that failed to address problems at the Palms. The site “deteriorated quickly under Burbank’s control,” he said, adding the nonprofit was ill-equipped to handle the level of care required for the vulnerable population at the Palms.

In interviews, Kalia said pest, mold and other habitability issues surfaced during the pandemic as case managers scaled back on-site visits and some residents allowed their rooms to fall into disrepair. Kalia got rid of the nonprofit because issues “weren't being addressed in the manner and the timeliness that I felt was necessary,” he said.

Burbank officials rejected that claim. In a statement, the nonprofit said it chose to stop managing the Palms earlier than required by its contract “due to the lack of financial support necessary … along with the excessive amount of time required by Burbank staff due to the level of dysfunction we encountered.”

As the owner of the Palms, Kalia collects about $1.4 million each year in rent. Residents’ monthly payments, ranging from about $1,100 to $1,250 per unit, are largely covered by federal housing vouchers, which are distributed by local housing authorities. But tenants kick in as well, paying 30% of their incomes.

Meanwhile, Catholic Charities and the Department of Veterans Affairs rely on public funding to connect residents with mental health support, drug counseling and other care. The VA provides services at 50 units occupied by veterans at the property, while Catholic Charities serves 44 units occupied by formerly homeless civilians.

Jennielynn Holmes, head of homelessness programs for Catholic Charities, said the agency’s budget for services at the Palms is around $620,000 a year. In addition to caseworkers, the budget covers 24-7 on-site supportive services, Holmes said.

The VA spends about $82,000 a year as part of a “cost-share to Catholic Charities to support their program staff,” a VA spokesman said in a statement.

With Burbank gone, Kalia, a 30-year-old self-described “social entrepreneur,” has created his own company for property management at the site.

Since The Press Democrat first visited the Palms in mid-March, maintenance work at the site has increased.

In late April, Sonoma County Housing Authority said Kalia had corrected habitability issues in all but two of 22 rooms. But the agency is waiting to resume approving new leases at the site until it is more confident cockroaches and mold won’t return. Pest control issues, in particular, have been a reoccurring problem even after rooms have been treated, housing authority officials said.

On April 28, the county building department closed code enforcement cases for many of the same issues at seven units, officials said. Cases for four of those units had remained open for over a year, during which time the agency sent Kalia two separate notices demanding violations be addressed.

Additionally, the Santa Rosa Housing Authority, which also refers residents to the Palms, found cockroaches and “evidence of moisture intrusion.” City officials said Kalia has been “actively addressing the issues” but declined to provide more details, citing privacy concerns of tenants.

Feeling abandoned

Even as efforts to improve the property are underway, residents who spoke with The Press Democrat remain skeptical the fixes will have a lasting difference, after years of feeling forgotten at the site.

Some at the Palms say they rarely see their caseworkers with Catholic Charities and the VA, and point to deaths at the property in recent years as a sign of neglect.

For resident KaLani Raposa, the Palms has begun to feel like a “ghost town.”

“It was a clean place … (now) you'll find burnt tinfoil all over the place, you'll find syringes, things that we never saw there before,” Raposa said. “People are getting high in stairwells in broad daylight.”

Drug dealing and prostitution have been a problem at the property, according to residents and Burbank Housing officials. From April 2021 to April 2022, the Sonoma County Sheriff’s Office responded to 219 calls for service at the Palms — more than one every other day — according to department spokesman Sgt. Juan Valencia.

A public records request to the Sheriff’s Office found coroner reports for four residents who died of methamphetamine and fentanyl overdoses at the Palms in 2021. One overdose occurred in a car in the hotel parking lot.

Holmes said she was aware of drug overdoses at the Palms. Caseworkers do regular check-ins with residents, she said, in part to watch for residents with potential substance use disorders. But she said in-person visits were limited for much of the pandemic and that some residents decline help.

It’s also a constant challenge connecting those with severe mental health and drug issues to local systems of care that “are very under-resourced and underfunded,” she said.

“Housing the most vulnerable population is hard, but incredibly vital work that has to happen,” Holmes said.

The Palms does not require residents to be clean and sober before moving in. Instead, it follows a nationwide “housing first” model, which focuses on getting people housed and their lives stabilized, and then providing supportive services. The approach is widely credited with helping people remain in housing, while reducing health care costs and incarceration among those with mental illness and substance use disorders.

Holmes pointed to the county’s opioid epidemic as a factor in recent overdose deaths at the site. Fentanyl, a synthetic opioid 100 times more potent than morphine, has led to a surge of overdose deaths across the region. In 2020, 80 people in Sonoma County died of overdoses involving fentanyl and other substances, up from just 12 in 2017.

“We are not exempt to the kind of major fentanyl and opioid situation that's going on in our community, and that's happening in the housed and unhoused community,” Holmes said.

During the pandemic, two people who died at the Palms were left undiscovered for days, according to law enforcement records and resident interviews — leaving one body found in “a state of decomposition,” according to a Sonoma County Coroner’s investigation report.

The Palms houses the county’s most vulnerable members, Kalia noted, and deaths have been something both he and the Palms community have had to grapple with. He added that some Palms residents live alone, and he thought it’s not necessarily uncommon for people who die in that situation not to be immediately discovered.

Kalia said he was not familiar with deaths in which bodies weren’t found for days or weeks. Those were questions for Catholic Charities and the VA, he said.

Holmes declined to discuss the specifics of resident deaths, citing privacy concerns. The VA also declined to comment about the circumstances of the deaths.

Heather Jackson, a founder of the homeless advocacy group Sonoma County Acts of Kindness, said she’s long been aware of health and safety issues at the Palms. She pointed to similar concerns at the former Gold Coin motel in Santa Rosa, which houses around 18 vulnerable and formerly homeless people and is set to be converted to 54 units of supportive housing. A January Press Democrat investigation revealed widespread code violations at the property.

“It’s sad to think of our unsheltered folks … being placed in an environment that creates even more challenges for them,” Jackson said.

A debt-plagued history

Questions about the conditions of the Palms property, built in 1967, predated Kalia’s ownership.

In 2009 amid the Great Recession, his parents, Inderjit Kalia and Joy Mukherji, declared bankruptcy. They submitted the motel, at the time a Days Inn, along with a shopping plaza and a gas station to the administration of a federal judge in San Francisco. Creditors claimed the motel was in disrepair.

“Debtors will likely be required to increase operating expenses to make up for a lack of spending on deferred maintenance and improvements,” attorneys for one loan holder wrote.

After the bankruptcy proceedings, Kalia acquired the motel through an arrangement with a private lender, he said. He was just 24 years old, and had dropped out of the University of Oregon to take over the business. He also took on a high-interest loan attached to the property.

“My family was about to lose everything,” he said, “so I did whatever I could to save it,” he said.

Kalia inherited other financial woes.

Sonoma County had sued his parents over unpaid lodging taxes, and Kalia settled for $153,000 in installment payments in 2014. By early 2016, he had paid well over $200,000 to connect the property to Santa Rosa city water as part of an agreement with the state health department.

The agency alleged Kalia’s parents had for years failed to respond notices about high levels of arsenic in the motel’s well water.

Even as county officials awarded $260,000 to help cover startup costs at the Palms in late 2015, county officials didn’t have a window into how Kalia structured his private business, said former Sonoma County Supervisor Shirlee Zane, a key early backer of the project.

“We weren’t able to say if (Kalia) is making this much profit, how much are you putting back into the building,” she said. “We asked for it and didn’t receive it.”

Kalia declined to say how much he earns for owning and operating the Palms.

In December 2020, Kalia refinanced his high-interest Palms loan with a $6.6 million bank loan from Luther Burbank Savings and paid off the private lender, property records show.

Around May 2021, county property records show Kalia purchased a $1.7 million personal home in the Santa Rosa hills, using the Palms as collateral. Kalia confirmed using the Palms to get the home loan, which he refinanced a few months later.

Kalia sits on the boards of the Community Foundation Sonoma County and the Santa Rosa Metro Chamber, two of the region’s most prominent civic organizations. He is also a former member of the Santa Rosa Planning Commission, appointed by former City Councilman Jack Tibbetts in 2017.

Kalia said his newly formed property management team is committed to “work through the remaining problems as fast as we can,” he wrote in an email.

The team has been led by Alexandria Negus, a longtime real estate investment manager, according to documents Kalia submitted to the county housing authority. Negus is the chair of Generation Housing’s board of directors, according to the nonprofit’s website.

Kalia said the team, which includes an on-site property manager and facilities manager — both former Catholic Charities employees who have worked at the Palms — will communicate closely with caseworkers to ensure any problems at the Palms don’t go unnoticed in the future.

Kalia also plans to install a security gate and fencing to better manage site access; and will add moisture-controlling fans in many units to prevent mold. He said he’s spending $2,300 a month for pest treatment at the site, while noting tenants still owe a total of $138,000 in unpaid rent since the start of the pandemic.

He highlighted $500,000 spent on a new roof, paint job and parking lot upgrades over the past year as evidence of his ongoing commitment to improve the facility.

‘Something that’s become untenable’

Chris Coursey, the Sonoma County supervisor representing the district that includes the Palms, said he will “insist” all problems at the site are fixed, adding he had limited information about the facility when contacted by The Press Democrat.

He emphasized that homeless housing operators should be held to the same standard as any landlord that collects public money.

“This doesn’t sound like what we’re paying for,” he said of the Palms.

Early Palms’ proponents, meanwhile, argue any concerns should be balanced against the urgency of addressing the county’s homelessness crisis.

“It’s better for people to be in housing, even if it has issues, than sleeping on the streets,” said Zane, who held Coursey’s seat on the board until last year.

Richard Brown, a veteran, moved off the street and into the Palms Inn four years ago. He pays around $300 a month out of his disability checks for a first-floor room. The rest of his rent is covered by a VA voucher.

But Brown no longer stays at the Palms. He left after his apartment was robbed twice, he said, because of a faulty lock installation. Brown did not file a police report in either case, he said.

“The Palms has degenerated into something that’s become untenable,” he said.

Last July, Brown returned to live at a favored hiding spot from a near-decade of homelessness in Sonoma County — a marshy bank along the upper Russian River. There, Brown, a trained architect, has built a wooden cabin hidden among the reeds for him and his girlfriend.

He still pays out of his monthly income to keep up the room at the Palms, because he fears if he gives up his housing he’ll lose his voucher permanently, Brown said. He visits the Palms occasionally to check his mail, but has given up on it as a safe place to live.

As the county turns its attention to new state-funded supportive housing project across the county, Brown said the Palms has become out of sight, out of mind.

He worries local officials are reluctant to fully confront the issues at the county’s model homeless housing program.

“From the county supervisors on down, this is their best bet,” Brown said. “They want it to work so badly.”

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

You can reach Staff Writer Andrew Graham at 707-526-8667 or andrew.graham@pressdemocrat.com. On Twitter @AndrewGraham88