On Monday, the Antioch City Council will host a study session on its HomeKey+ project to answer a series of questions the council has been asking for more than a year.
The study session comes after a very contentious council meeting where all councilmembers expressed strong opinions of the location, the impact, and had more questions than answers – most of the Q&A had been long overdue.
The council hope Monday’s session can help them make a “yay” or “nay” decision on whether or not to accept $34.9 million HomeKey+ grant — CSH Mahogany Housing Project would convert the existing hotel property located at 2436 Mahogany Way into approximately 84 to 85 units of permanent supportive.
In return, the city would be on the hook for $750k immediately in the upcoming budget year. Plus, up to $1.2 million annually for 5-years, with two additional five-year extensions totally up to $18.75 million in city contributions for the program.
The staff report did not include its overall spend on the unhoused over the past several years – including city funded programs, county assistance or grants from the state/federal government.
Antioch Point in Time Count
- 2026 – 251
- 2025 – 246
- 2024 – 413
- 2023 – 344
- 2020 – 238
The policy question before Council is whether the benefits of accepting the award and creating permanent supportive housing outweigh the City’s long-term operating commitment, fiscal constraints, project risks, and implementation concerns.
Some Q&A Trickling In
Within the staff report, several questions have now been answered, but many questions remain.
For example, according to the staff report, there does not appear to be an immediate concrete deadline—only the longer it is delayed, the more difficult it becomes to meet milestones.
PROJECT CONFIGURATION AND UNIT COUNT
The existing Comfort Inn currently contains 123 hotel rooms. Under the proposed Homekey+ project, the property would be rehabilitated and reconfigured into a total of 85 residential units, consisting of 84 permanent supportive housing units and one on-site manager’s unit.
Basically, it’s a reconfiguration of the hotel going from 123 hotel rooms to 85 units — to create larger, code-compliant esidential units while also incorporating the infrastructure necessary for permanent supportive housing, including kitchenettes, accessibility improvements, property management offices, supportive service and case management offices, community gathering space, laundry facilities, recreation areas, and other resident amenities.
PROPERTY STATUS AND REPORTED LOAN DEFAULT
According to the lender, while a Notice of Default has been filed against the property, there is currently no foreclosure or trustee sale scheduled. The lender advised that it is actively working with the property owner to facilitate the sale of the hotel for the Homekey+ project and is aware that the California Department of Housing and Community Development (HCD) has awarded funding for the project. The lender further indicated that it will work cooperatively with the borrower, project partners, and the City to facilitate the transaction and is aligned with HCD’s project timeline.
WHEN WOULD THE $1.2 MILLION OPERATING SUBSIDY BEGIN?
The City would not begin paying the operating subsidy immediately upon acceptance of the award.
Based on the project information discussed with HCD, the operating subsidy is tied to project operations. The project must first move through Standard Agreement execution, acquisition, rehabilitation, occupancy preparation, and lease-up. The project’s operational year is currently reflected as 2027.
Staff’s understanding is that the City’s first operating subsidy obligation would not begin until the project is operational. Based on current information, this is anticipated to occur in late 2027, subject to final confirmation through the Standard Agreement, project milestones, rehabilitation schedule, and operating documents. This means acceptance of the award would not immediately require a $1.2 million General Fund payment in FY 2026/27. However, it would establish the path toward a future operating obligation that must be addressed in future budget planning.
FUTURE COUNCIL AUTHORITY AND LONG-TERM COMMITMENTS
City Council also requested clarification regarding the implications if the current City Council accepts the Homekey+ award, but a future City Council elects not to continue funding the operating subsidy. The City Attorney’s Office has already provided legal guidance to the City Council on this matter.
CONSEQUENCES OF DECLINING OR WITHDRAWING FROM THE AWARD
Council also asked what happens if the City declines the Homekey+ award. Based on staff’s conversation with HCD, withdrawal after award may carry consequences. According to HCD that the project has already been awarded, the prior City resolutions and signed acceptance are being relied upon, and the City is part of the awarded applicant team.
Potential consequences may include:
- Loss of the $34.9 million Homekey+ award;
- Inability for the project to proceed in its current form;
- Potential negative scoring or “negative points” in future HCD funding opportunities;
- Possible reputational impact regarding future State housing and homelessness funding;
- Continued uncertainty regarding the future of the property;
- Continued need for alternative solutions to address unsheltered homelessness.
HCD specifically referenced its negative points policy as a potential consideration when an awarded applicant does not proceed after receiving a funding award.
POTENTIAL FUNDING SOURCES FOR ONGOING HOMELESS SERVICES:
Housing Successor Funds
The City currently allocates approximately $500,000 annually in Housing Successor funds toward homeless services, subject to available fund balance. Based on current projections, these funds are expected to remain available for approximately two to three additional years.
Redirecting the entire annual homeless services allocation to support Homekey+ operations would require discontinuing or significantly reducing programs currently serving approximately 2,688 homeless and at-risk Antioch residents through eight community-based organizations. It would also eliminate or significantly reduce funding for tenant-landlord mediation, eviction prevention, emergency rental assistance, legal services for tenants facing eviction, and a City staff position currently dedicated to housing services.
Community Development Block Grant (CDBG)
Federal regulations limit CDBG public service expenditures to 15 percent of the City’s annual allocation. Based on recent grant awards, this equates to approximately $127,500 annually, although the amount varies each year.
Using the City’s entire public service allocation for Homekey+ operations would eliminate funding for the City’s competitive public service grant program during that funding cycle, affecting approximately 13 nonprofit organizations currently serving at least 1,655 Antioch residents, including programs supporting seniors, individuals with disabilities, youth, victims of abuse, and other vulnerable populations. Additionally, such a change would require a Substantial Amendment to the City’s HUD Consolidated Plan, completion of a federal public participation process, and would not be available until the next funding cycle.
Permanent Local Housing Allocation (PLHA)
The City receives approximately $350,000 annually through the State’s Permanent Local Housing Allocation (PLHA) Program. State requirements dedicate a significant portion of these funds to housing rehabilitation, first-time homebuyer assistance, accessory dwelling units, and administration. Approximately 55 percent of the annual allocation (roughly $190,000 annually) could potentially be directed toward homelessness-related activities through the City’s next five-year PLHA planning process.
However, redirecting these funds would require reducing or eliminating other housing priorities currently supported through PLHA, including affordable homeownership assistance and housing rehabilitation programs. Any change would require HCD approval and completion of the City’s next required five-year planning process.
HUD Section 108 Loan Program
Staff also evaluated whether the HUD Section 108 Loan Guarantee Program could be used to finance ongoing Homekey+ operations. Section 108 is intended to finance capital improvements, including housing acquisition and rehabilitation, public facilities, infrastructure improvements, and economic development projects. It is not an eligible funding source for ongoing supportive services, staffing, case management, or annual operating expenses. As a result, Section 108 could potentially support future capital improvements but cannot be used to fund the City’s proposed operating commitment associated with the Homekey+ project.
CITY ROLE AS CO-APPLICANT AND PAYEE
HCD clarified that the City is the eligible public agency applicant for the award. California Supportive Housing and CSH Mahogany Housing LP are co-applicants/project partners, but the City’s role was necessary for the project to apply under the Homekey+ structure. HCD also indicated that the City is required to be the payee for the award. The exact disbursement structure may be established through escrow instructions, joint approval processes, or other mechanisms agreed upon by the parties and HCD. Grant funds may be structured in a way that requires approval from both the City and project partners before funds are drawn or released. This is an important administrative issue for Council because it means the City may have fiscal administration responsibilities even if the project is owned and operated by a separate project entity.
RELOCATION CERTIFICATION
The Acting City Manager has also been asked to execute documentation related to no relocation. HCD explained that relocation review is required for HCD-funded projects to ensure that acquisition or rehabilitation does not improperly displace occupants who may be entitled to relocation benefits. HCD indicated that its legal review found that no relocation benefits are required for this project because the project does not involve displacement of qualifying occupants. The no-relocation certification is intended to document that finding and confirm that the project does not involve relocation obligations.
RESIDENT ELIGIBILITY AND PLACEMENT PROCESS
Council and community members have asked whether Antioch residents would be prioritized and how individuals would be placed into the project.
Homekey+ permanent supportive housing is not a walk-in shelter and is not first-come, first-served housing. Residents are typically referred through coordinated entry, outreach systems, homelessness service providers, behavioral health partners, veteran service systems, and other eligibility-based referral pathways.
The final referral process must comply with fair housing law, Homekey+ requirements, coordinated entry requirements, and any approved tenant selection plan. However, staff has discussed with County partners that other jurisdictions have explored lawful ways to align lease-up with local homelessness response priorities, including focusing on individuals already experiencing homelessness within the jurisdiction or project service area where allowed by funding and fair housing requirements. This issue should be addressed directly by project partners and County representatives during the study session.
Key questions include:
- Can Antioch residents experiencing homelessness be prioritized?
- Can the project prioritize individuals already living unsheltered in Antioch?
- How would referrals be screened?
- What eligibility documentation is required?
- Who makes final placement decisions?
- What happens when a resident violates lease or program requirements?
PUBLIC SAFETY AND NEIGHBORHOOD IMPACTS
Council and members of the public expressed concerns regarding neighborhood compatibility, calls for service, property management, behavioral health needs, and public safety. Staff recognizes that outcomes vary among supportive housing developments and are largely dependent upon project design, property management, service delivery, resident screening, security practices, and ongoing operational oversight. For this reason, representatives from jurisdictions with direct Homekey implementation experience have been invited to discuss both successful practices and lessons learned, including operational challenges encountered after project opening.
The City has invited subject matter experts and jurisdictions with Homekey experience to discuss:
- What worked in their communities;
- What did not work;
- How public safety concerns were addressed;
- Calls for service before and after project opening;
- Security and property management structures;
- Lessons learned from implementation;
- How neighborhoods and businesses were engaged.
COUNTY AND REGIONAL PARTNERSHIP
Council has also raised questions regarding the County’s role. Staff contacted Contra Costa County Health, Housing and Homeless Services leadership to request participation and input. County representatives have indicated that the County has operated or supported housing and shelter programs, including Delta Landing, which continues to operate and is not closed. County representatives also noted that local homelessness response requires coordination among cities, the County, behavioral health, outreach teams, service providers, law enforcement, and property management.
County subject matter expertise is important for this discussion because referral pathways, service coordination, behavioral health support, and long-term housing stability are not City-only functions.
FUNDING STRATEGIES TO REDUCE GENERAL FUND IMPACT
Council has asked whether the City’s operating subsidy could be reduced through other sources. Potential sources that may warrant further exploration include:
- Community Development Block Grant funds, if eligible;
- Housing Successor funds, if eligible;
- County behavioral health or homelessness resources;
- Continuum of Care resources;
- State housing and homelessness grants;
- Federal funding;
- Regional cost-sharing;
- Project-based vouchers or rental subsidy resources;
- Philanthropic or provider-based funding.
At this time, staff cannot guarantee that these sources will cover the full operating subsidy.
QUESTIONS RAISED BY COUNCIL AND STAFF RESPONSE SUMMARY
- Is the award final or conditional? Not yet. HCD has issued a conditional award of $34.9 million and the project has advanced beyond the application stage. However, the project is not yet fully finalized because the Standard Agreement has not been fully executed and other program requirements must still be satisfied before grant funds may be disbursed.
- Has the City already accepted the award? The City previously executed and returned the Conditional Award Acceptance acknowledging the terms and conditions of the award. HCD has confirmed that this document does not, by itself, obligate the City to execute the Standard Agreement or proceed with the project. Execution of the Standard Agreement remains the action that commits the parties to the grant.
- Does the City have to pay $1.2 million immediately? No. The operating subsidy is tied to project operations and is not expected to begin until the project is operational, currently anticipated in 2027.
- What happens if the City declines? If the City elects not to execute the Standard Agreement, HCD would likely rescind the Homekey+ award and the current project would not proceed under this funding allocation. HCD has advised that declining an award could be considered during evaluation of future competitive funding applications; however, any effect on future scoring would depend on the specific funding program and evaluation criteria in place at that time.
- How does the current loan default affect the project? Based upon discussions between the City’s legal counsel, project representatives, and parties associated with the existing financing, the reported loan default appears to involve the current property owner rather than the Homekey+ project itself. While it may affect the timing or structure of the acquisition, HCD has advised that acquisition through foreclosure, receivership, negotiated purchase, or other lawful means may still be possible. The developer continues to evaluate acquisition options with the lender and trustee.
- Is this a loan? No. HCD described Homekey+ as a grant program. The City’s obligation is related to its role as co-applicant, payee, and proposed local contributor.
- Who receives and administers funds? HCD indicated the City is required to be the payee. Specific disbursement controls may be established through escrow or other approved structures.
- Who gets housed? Residents would be referred to through approved eligibility and referral systems, not through open walk-in access. The final tenant selection and referral process must comply with Homekey+, fair housing, and coordinated entry requirements.
- Can Antioch residents be prioritized? This requires additional legal and programmatic clarification. County partners have indicated that some projects have used lawful local targeting approaches, but final structure must comply with fair housing and funding requirements.
- What public safety measures will be in place? The final operations plan should include property management, staffing, service coordination, resident expectations, security protocols, and coordination with APD and County partners.
STAFF CONCLUSION
The Homekey+ award represents a significant opportunity to bring approximately $34.9 million in State funding to Antioch for permanent supportive housing. The project also carries meaningful long-term fiscal, operational, legal, and community considerations. The June 23 Council discussion and subsequent community conversation made clear that additional information is needed before final action. Staff has worked to gather information from HCD, Contra Costa County, the City Attorney’s Office, project partners, service providers, and jurisdictions with Homekey experience.
The central policy question before Council is whether the benefits of accepting the award and creating permanent supportive housing outweigh the City’s long-term operating commitment, fiscal constraints, project risks, and implementation concerns.
If You Go
Antioch City Council Meeting
DATE: Monday, June 29, 2026
TIME: 6:00 P.M. Special Meeting/Study Session
PLACE: Council Chambers
200 ‘H’ Street Antioch, CA 94509
Staff Report – click here
Previous
- June 24, 2026 – Antioch City Council Punts HomeKey+ Decision, Schedule Study Session
- June 11, 2026 – Antioch Could Reconsider HomeKey+ Project
- May 12, 2026 – Governor Newsom Delivers $111 Million in Voter-Approved Prop 1 Funding
- March 2026 – Still Pending: Antioch Set to Get Update on HomeKey+ Application
- Dec 2025 – Antioch to Talk Warming Centers, HomeKey+, Purchasing and Consultants
- May 2025 – Antioch Agrees to Move Forward with HomeKey Application
