Proposal to spend Oregon tax dollars on hotels spurs controversy

By Dirk VanderHart (OPB)
Portland, Ore. Oct. 23, 2020 8:32 p.m. Updated: Oct. 24, 2020 12:58 a.m.

The idea, dubbed Project Turnkey, would offer up $65 million to turn distressed hotels and motels into shelters.

Oregon lawmakers on Friday approved $30 million to turn hotels into shelter space in wildfire-affected areas — less than half of the money initially sought in a strikingly contentious and emotional committee hearing.

With many Democrats urging swift action as wildfires and a pandemic have exacerbated an existing shortage of shelter beds, two prominent Democratic Senators wound up siding with Republicans to block another $35 million that could have been used to site shelters more broadly.


The hearing of the Legislature’s Emergency Board was an inflection point after months of heavy emergency spending. Since April, lawmakers have repeatedly taken swift action to deal with crises, over concerns by some they were acting with too little deliberation. Those concerns were front and center Friday.

A burned house near the Riverside fire on September 14, 2020 in Estacada, Oregon. Lawmakers are considering a proposal that would use state money to transform hotels into shelter spaces for wildfire refugees and others in need.

A burned house near the Riverside fire on September 14, 2020 in Estacada, Oregon. Lawmakers are considering a proposal that would use state money to transform hotels into shelter spaces for wildfire refugees and others in need.

Jonathan Levinson / OPB

“I really feel like this is something that we should be considering in the Legislative session when there can be public testimony where we can hear more from the involved parties,” said state Sen. Elizabeth Steiner Hayward, D-Portland, who wound up being the crucial “no” vote sinking a proposal to spend the additional $35 million.

The full proposal, dubbed Project Turnkey, would have used $65 million from the state’s emergency fund to help local community development groups, municipalities or housing authorities purchase distressed hotel properties. Those properties would be retrofitted for use as temporary shelter space for victims of wildfire, or as sites where people who’ve been exposed to COVID-19 can quarantine safely. Later on, they could be used as affordable housing, permanent shelter or for other purposes, proponents said.

The idea had been in the works for months and has backing from the League of Oregon Cities, the Association of Oregon Counties and the Oregon Restaurant and Lodging Association, among others. Grants for purchase of hotel properties would be vetted and distributed via the Oregon Community Foundation, a respected statewide nonprofit that already awards grant money to fight homelessness.

According to an explanation of the program, backers said a full allocation of $65 million could be used to create up to 1,000 units of shelter, across 18-20 properties.

But the proposal did not come before lawmakers in one piece. Instead it was broken into two chunks: a $35 million proposal meant to address shelter needs brought on by the COVID-19 pandemic, and a $30 million proposal that would be spent creating shelter specifically in largely-rural areas affected by wildfires.

That distinction wound up making a major difference. While Steiner Hayward was joined by a fellow Democratic Sen. Betsy Johnson in opposing both measures, Republicans on the committee were willing to support the funding for wildfire-impacted areas - in districts some of them represent. Those votes ensured the second piece was able to pass, in an unexpected twist that followed hours of pointed questions and debate.

“If there’s ever a reason for an emergency board, today is it,” said Rep. Paul Holvey, D-Eugene, who attempted to coax skeptical lawmakers to support the proposal. “I just cannot stand by and watch the pain and suffering and the need that our state is having right now.”

A study released last year by the state’s Department of Housing and Community Services found that Oregon would need roughly 5,800 additional shelter beds to house all of its residents who are homeless. That number has only increased during a pandemic that rendered mass shelters potentially dangerous and following the worst wildfire season Oregon has ever seen.

“The Oregon Housing and Community Services Department (HCSD) is now estimating the gap between needed and available shelter beds to be at least 10,000,” reads a description of the Project Turnkey proposals. “As winter approaches, the demand for safe, warm shelter space will become acute.”

Despite those figures, many lawmakers on the committee worried the shelter plan was half-baked, and needed a more thorough vetting. Johnson, who sides with Republicans more than any other Senate Democrat, had signaled earlier in the day that she would mount an offensive against the proposal, telling OPB: “It’s not a full-blown proposal. … This is aspirational. This is not operational.”


She was more pointed at the hearing, laying into proponents of the project with a series of questions and suggesting at one point that Democrats were bringing the proposal forward in order to score points with voters ahead of the Nov. 3 election, something backers roundly denied.

Supporters like Keny-Guyer acknowledged that Project Turnkey has not gotten the full legislative treatment, but argued that it is ready to proceed.

“We cannot be the culture of ‘no,’” she said. “We have to have bold solutions. We have to have these strong private-public partnerships or we’re going to be facing a disaster.””

Precise criteria for awarding grants under the program have not been set, but would likely involve a demonstration of need and entities being able to prove they are capable of running a shelter. Ongoing costs for running a shelter would need to come from elsewhere.

And officials are setting an extremely ambitious goal for getting the money turned around: They hope that the $35 million approved Friday will be out the door in less than two months.

“The goal is to open applications, review, and make selections by Dec. 15, with the hope that occupancy can be negotiated before the close of the transaction, in preparation for winter shelter needs,” a legislative document describing the proposal says.

Portland developer Homer Williams, who helped create a Portland homeless shelter via his Harbor of Hope nonprofit, has already identified dozens of hotels that could fit the bill, according to Keny-Guyer.

Project Turnkey is modeled off of a similar effort in California, dubbed Project Homekey. That far larger effort includes $600 million in funding, but has led to disputes and at least one lawsuit, as hotels have been converted to shelters.

Backers behind the Oregon effort first proposed funding it with money from the federal CARES Act, but wound up making their case too late. The proposal is now relying on the state’s general fund, instead.

That’s one factor that worried Johnson and Steiner Hayward, who both play a major role in writing the state budget and are bracing to grapple with a sizeable deficit brought on by the coronavirus. In a tearful explanation of her vote, Steiner Hayward said she’d attempted behind the scenes to argue for a smaller amount of money that she could support, but was unsuccessful.

“I offered those suggestions and I mean them seriously because I want to be able to vote for this,” she said. “To have colleagues imply that if I don’t vote for this, I don’t care about homelessness or I don’t recognize that this is an emergency... none of that is true.”

The $35 million rejected on Friday appears certain to come back up for consideration in coming weeks. Gov. Kate Brown has indicated she’s likely to call a special legislative session shortly after the Nov. 3 election. If she follows through, it would be the Legislature’s third-such emergency session this year.

If the money is not passed then, officials will have a fairly limited area in which to scout for motels that might be turned into shelter. Legislative documents say the $30 million approved Friday is to be limited to wildfire-impacted areas, and specifically mentions Clackamas, Jackson, Lane, Lincoln, and Marion counties. It is expected to fund around 500 units of shelter.

Rep. Rob Nosse, D-Portland, took Republicans to task for voting in their own interests in approving that pot of money, while shooting down funds that could be beneficial in his district and elsewhere.

“We are pitting one group of desperate people against another group of desperate people,” he said.