City Council Faces Lawsuits as Deadline Passes for $20.1 Million Housing Project

Riverside officials and residents at Tuesday's special city council meeting continue to debate what the council's January rejection of a $20.1 million housing grant means for the community.

After the City Council voted 4-3 on Jan. 13 to reject the Homekey+ grant funds that would have converted the Quality Inn at 1590 University Avenue into 114 studio apartments for homeless and low-income residents, councilmembers now face two potential lawsuits and numerous disappointed residents – many asking councilmembers to reconsider.

"The council discussed the lawsuits in closed session but took no reportable action. The Feb. 10 deadline for reconsidering the project passed Tuesday without any of the four councilmembers who voted against it filing a motion to bring it back.”

The project, proposed by Riverside Housing Development Corporation, would have been the city's largest permanent supportive housing development.

The property seller's representative is alleging wrongful interference with the sale after nearby property owners tried to purchase the hotel themselves. That offer came after the seller's representative warned council members and the Gazette in late January emails that rejecting the project would result in the property being leased to weekly tenants, predicting maintenance would stop, police calls would multiply and spending on "drugs and prostitution" would increase.

Another potential lawsuit comes from the ACLU of Southern California, arguing the vote may violate the city's legally binding Housing Element Law and fair housing laws based on what the organization describes as stereotypes against unhoused residents.

The council also received a letter from Inland Counties Legal Services on Tuesday, warning that the California Department of Housing and Community Development will investigate the rejection for potential violations of the Housing Element Law and fair housing laws that prohibit discrimination in land use and zoning.

Additionally, the letter warned that, "The city leaves itself vulnerable to litigation on behalf of low-income and disabled community members reliant on this permanent supportive housing, especially given many councilmembers' public comments evidencing discriminatory animus and bias in rejecting these grant funds."

On Wednesday, Councilmember Clarissa Cervantes, who introduced the project, said she intends to bring the matter back to closed session.

"I believe it's our legal obligation to seriously review if we want to go down this path and what impacts it can have for the city," Cervantes said in a statement to the Gazette.

"These groups and HCD are giving us an opportunity to correct our course and we should take it," she said. "I will be asking our City Attorney, City Clerk, Mayor, and Mayor Pro Tem to bring this item back to closed session as soon as possible."

Residents at the meeting echoed these concerns, asking the council to reconsider the project.

"It seems much dust has been kicked up about who gets to be included and what designation of misfortune they must carry to be worthy of housing," said resident Denise Dotebacher. "But this is a win for anyone experiencing the trauma of homelessness, anyone, seniors, veterans, those suffering mental or physical disabilities or substance use disorders."

Several students at the University of California, Riverside also expressed their disappointment, since the project could have housed low-income students or recent graduates.

"Housing is one of the biggest barriers for students on their way to join the workforce," said UCR student Urban Cross during public comment. "I know friends who have been forced into dropping out because of how unaffordable housing can be. So seeing when a project like this gets shut down, it crushes me, especially when 20 of these units could have been available for students to apply for."

UCR student Alex Orozco brought up a forum he attended at school in which he spoke with Falcone about affordable housing.

"This was a $20.1 million grant that could have housed 15 percent of Riverside's unhoused population the day after it was built," Orozco said. "I think that this is a massive shame."

No public commenters spoke in support of the rejection, but Councilmember Philip Falcone explained in a statement to the Gazette last week that part of his decision to vote "no" on the project was due to opposition from local businesses and residents in his ward.

"Businesses were not notified until the eleventh hour...most importantly, resident groups on the Eastside were lukewarm to it at best," Falcone said. "All of this could have been avoided if these partners were not blindsided."

He also expressed frustration that the anticipated tenant population shifted over time.

"City of Riverside data finds the fastest growing homeless population to be seniors," Falcone said. "However, at the January meeting, in real time, the City Council was told that this project would not be exclusively for seniors and veterans due to lack of individuals who meet those criteria. If this was never viable, several of my colleagues and I were strung along and then had the rug pulled out from underneath us."

Other councilmembers who voted against the project questioned whether the city's "Housing First" approach, which prioritizes placing people in housing without barriers to entry, would deliver sustainable outcomes.

In January, Councilmember Sean Mill, who voted against the project, argued that providing housing without addressing underlying mental health or substance abuse issues fails to help people.

"Housing First has failed," Mill said, calling the model "housing stabilization without human stabilization."

Other opposition came from local business owners, who spoke against the project in January.

Beverly Bailey, whose family invested $15 million in the nearby Farmhouse Collective, questioned whether the development aligned with the city's vision.

"Our family invested millions of dollars into this part of Riverside...is this something that is just a bandaid or is this a vision for our city as a whole?" she said during a Jan. 13 meeting.

Brent Sherman, a regional manager for University Village Shopping Center, also said in January that his opposition was focused on location.

"My opposition is to this specific siting and scale," Sherman said. "114 units with 94 units of permanent supportive housing for individuals with behavioral health challenges placed on a major gateway corridor directly next to student housing and small businesses."

The $20.1 million Homekey+ award is expected to return to the state.

By Micaela Ricaforte