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Work is underway to convert a Santa Rosa Avenue hotel into housing for low-income residents, a transformation spurred by a host of economic troubles at the site that local officials say could provide much-needed rental units amid Sonoma County’s tight housing market.

Akash Kalia,who bought The Palms Inn in south Santa Rosa from his parents, plans to convert the hotel’s 104 units into permanent housing for homeless veterans and the elderly, a transformation the 24-year-old business school dropout characterized as “part of (serving) the greater good.”

Kalia left the University of Oregon in 2012 and moved back to Sonoma County to help his parents, who were behind on their taxes and facing bankruptcy. He purchased their ailing hotel, and for the past three years, he said he’s worked to address its problems, including settling a federal lawsuit that required him to connect to Santa Rosa’s water system, making payments on $183,000 in outstanding hotel bed taxes and fixing code enforcement issues.

Now, he’s asking county supervisors to authorize deferring more than $17,000 in county permitting fees to convert the hotel into permanent single-room occupancy lodging, a type of housing more common in places like San Francisco and New York that historically has housed low-income and working class people.

Kalia acknowledged the business’s financial and legal struggles, but he said the problems have provided him an opportunity to also help people in the face of a local housing crisis. The units will be for rent, and he will accept federal housing vouchers.

“I see hardship all the time on the stretch of Santa Rosa Avenue that’s a little more seedy,” Kalia said. “I’ve been thinking about ways to help for a long time ... so I thought this was one way of doing something good.”

Kalia said he is complying with the state’s mandate to connect to city water. He said he has paid more than $200,000 in city permit fees and contracting costs and is on track to be fully connected by the end of the month. He has also worked out a payment plan with the county to pay off outstanding hotel bed taxes accrued before he purchased the property.

The Board of Supervisors is expected to vote Tuesday on whether to defer county use permit fees, a step Kalia said is needed to complete the SRO conversion. The project appears to have the backing of county officials and advocates for homeless people.

“We are very excited about this,” said Supervisor Shirlee Zane, whose district includes the property. “It’s going to create critical housing for low-income elderly people and homeless veterans, and we don’t want something like application fees to slow down or kill his project.”

If approved, Kalia will be required to pay the use permit fees within six months. He’s hoping to have the units ready to lease by December.

Kalia said he didn’t realize the extent of the problems on the property when he bought it in 2012. He said he was in the position to help his parents because around that time, he’d received money from a personal injury lawsuit — he was hit in the eye with a paintball when he was 12.

By the time he purchased the hotel, however, state regulators had already sent Kalia’s parents multiple notices requiring them to stop using their well for drinking water, and to hook up to the city’s system. The couple also hadn’t paid their hotel bed taxes in six years.

Since then, Kalia said he hasn’t missed a payment on his annual transient occupancy tax bill, while seeking to get the property into compliance with state laws.

“I realized that this can be a sustainable business, and a rehabilitation campus for people,” Kalia said.

Kalia is partnering with Catholic Charities to provide a host of services for low-income elderly people and homeless veterans. In addition to housing, the site will include case-management services, such as financial counseling and job training. Residents will also be connected with mental health care and substance-abuse treatment.

Kalia will have a permanent income stream because people be will be housed with their federal rental subsidies.

“We’re so excited. This is going to be a total game changer for our homeless outreach services team,” said Jennielynn Holmes, director of shelter and housing for Catholic Charities. “We’ve been out there screening people for placement into housing, and I have hundreds of thousands of dollars in federal funding to place them, but we just haven’t had the housing to do it.”

Zane said she hopes such a project will be replicated in other areas to alleviate homelessness among veterans in Sonoma County. The number of veterans sleeping outside has dropped in recent years, with an estimated 217 on the streets today — a 46 percent decrease from 2013.

“Veterans have vouchers available to them,” Zane said. “So with projects like this, we could house so many of our veterans in need.”

You can reach Staff Writer Angela Hart at 526-8503 or angela.hart@pressdemocrat.com. On Twitter @ahartreports.

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