Denver Using $9 Million in Federal Funds to Buy Motel for Homeless Housing

After years of waiting for additional federal funding, the City of Denver plans to purchase the Stay Inn at 12033 East 38th Avenue for $9 million and convert the motel into supportive housing.

"This purchase prioritizes our citywide commitment to housing needs of our community and resolving episodes of homelessness through proven supportive housing models," says Sabrina Allie, a spokesperson for the Department of Housing Stability. "It provides a resource center to serve multiple needs for those housed on site."

The Stay Inn, a four-floor walk-up, has 96 units, 89 of which already have kitchenettes "that include a mini-microwave, coffee maker, mini-fridge, hotplate, food storage area, and sink," according to an executive summary of the purchase and sale agreement. The units that don't have kitchenettes are located near a common area with kitchenette appliances; the property also has on-site laundry, parking and a pet relief area. The entire facility will be used as housing for people who are homeless, whether currently living on the streets or in local shelters.

The City of Denver plans to contract with an organization that will operate the housing and provide services.

"They will also be required to convert the pool area into a community resource area for supportive housing needs," according to the executive summary.

The City of Denver has earmarked another $43.25 million to buy four more buildings, likely motels, and turn two of those into permanent supportive housing and two of them into navigation centers where people leaving encampments can be placed temporarily and connected with housing.

"Using motels/hotels for people experiencing homelessness is an effective and efficient way of making more housing resources available more quickly," says Cathy Alderman, the chief communications and public policy officer with the Colorado Coalition for the Homeless. "These buildings can either be converted into studio apartments in much less time than it would take to build from the ground up, or they can serve as transitional housing options for people while they wait for a longer-term housing resource to become available."

The city is buying the Stay Inn from IH Holdings Sixteen LLC, a subsidiary of Situs Capital Management. Denver plans on using only federal dollars for the purchase, including federal COVID relief dollars, Community Development Block Grant money and a $2 million grant from the U.S. Department of Housing and Urban Development.

Mayor Michael Hancock and Congresswoman Diana DeGette had announced the proposed purchase back in May 2021, but the deal was delayed while the city waited for the HUD grant, which was stalled in Congress. Earlier this year, however, DeGette was able to secure the funding.

HOST had originally planned to transform the Stay Inn motel into a shelter, but those plans shifted, and it's now focused on turning the property into housing right away.

During the pandemic, the City of Denver has been funding the lease of certain motels by service-provider organizations to shelter people who test positive for COVID or have health conditions that put them at risk for getting seriously ill or dying from COVID. Many of those contracts are lapsing, leading some of those who'd been staying in the motels the choice of going into congregate shelter settings or back on the streets.

Now the city is starting to buy these motels itself.

"Supportive housing units provide on-site services to help put residents on a path to permanently exiting homelessness," Allie notes. "In supportive housing, people with long histories of homelessness can get help with persistent obstacles: mental illness, substance use disorders and chronic medical conditions."

The Denver City Council Finance and Governance Committee will vote on the deal on December 13; if the full council approves the purchase in January, the city will close on the motel in early 2023. The renovation timeline has not yet been set.