SACRAMENTO, Calif. (KTXL) — A project to renovate the historic Capitol Park Hotel in downtown Sacramento into a shelter for the homeless has received sharp criticism as the cost per unit is adding up to more than a house.

City leaders are defending the plan, saying the need to get people off the streets and a lack of available property to do so meant they had to act fast.

“The conditions in that hotel have been horrific. We’re talking one elevator, at times there’s been two toilets for 118 people,” Sacramento Homeless Union President Crystal Sanchez said. “The cost of what they’re trying to charge is completely outrageous.”

She said it’s a shame how much money is going into the Capitol Park Hotel renovation project, more than $58 million, to only house 134 homeless people.

“We could do so much better with the amount of money that they’re facilitating for this to turn into housing,” Sanchez said. “It’s going to cost a lot more to just renovate versus just starting over.”

In 2019, the Sacramento City Council approved lending Mercy Housing California $13.37 million to buy the historic hotel located at 9th and l streets and to help relocate its current residents.

“Affordable housing in California is expensive,” Sacramento Mayor Darrell Steinberg said.

Steinberg stood by the decision, saying it was important to buy the property while it was available.

“You would think that there would be many opportunities for where to house people. It really isn’t the case,” he said. “First of all, you either have to own the land or you have to have a willing seller, and then it has to be large enough to be able to accommodate 100 or more people.”

Since it was sold, the building has served as a temporary homeless shelter while the renovation efforts were being made. In that time, there was a lot of deterioration, which was too costly to repair.

“We didn’t have air conditioning in there for the unhoused, or these toilet leaks, or the boiler room not working,” Sanchez said.

The age of the building means the renovation is costing more, about $445,000 per unit.

“Some of that money we’re going to get back, by the way, from the state and federal governments,” Steinberg said.

Steinberg added renovating old buildings is not the only tactic the city is taking to get more people off the streets. They’re also pushing for more tiny homes and building shelters from the ground up.

“We would consider similar opportunities, but I would first and am, in fact, pushing less expensive, quicker to build, more innovative options that can get people in less expensively and faster,” he said.

Sacramento City and County Housing Authority La Shelle Dozier issued a statement to FOX40 later Tuesday:

Sacramento’s Single Room Occupancy ordinance requires the use of residential hotels such as the Capitol Park Hotel to be preserved as low income housing.

Comparing the cost of renovating the historic Capital Park Hotel, a permanent supportive housing development, to a single family home is an inaccurate comparison.

Unlike purchasing a single family unit, permanent supportive housing includes ongoing costs, such as property management, operations and maintenance, resident services, and required ADA compliance. Other costs include relocating current occupants because they cannot be made homeless as a result of the renovation, and providing support services to assist the new residents who were previously homeless.  Many of these residents have a need for intensive services given the fact that they may have multiple disabilities. Rental affordability agreements for renovated residential hotels can be as long as 55 years.

Projects like the renovation of Capitol Park Hotel reflect what it takes to serve a vulnerable population that needs more than a roof over their heads to live a decent quality of life.

La Shelle Dozier, Executive Director, Sacramento City and County Housing Authority