Renting rooms for homeless got too expensive, so Hennepin County bought hotels

During the pandemic, Hennepin County created a strategy to keep those experiencing homelessness and those most susceptible to getting COVID-19 safe — rent them hotel rooms.

But the concept was getting expensive and the county decided in late 2020 it would just be cheaper to buy hotels.

More than $25 million was spent to buy five properties, mostly paid for by federal pandemic recovery funding. They are being renovated into hundreds of affordable single-room places to live and will be run by agencies contracted by the county.

In the long term, expenses to deal with homeless people and others seeking a place to call home will save money on shelter use and other options and services the county has furnished in the past.

"Hennepin County is certainly at the forefront of this kind of strategy," said David Hewitt, the county's director of housing stability, who notes California is trying a similar approach. "It creates affordable housing that doesn't exist."

So far the county has bought:

The county also now owns Stevens Square Residence in south Minneapolis and transferred the purchase of the Robin Hotel in Robbinsdale to the Minnesota Assistance Council for Veterans.

The properties are at different stages of rehabilitation and different levels of occupancy. Each will have a different and specific design with the ultimate goal to create single-room units. In all, the properties have 221 rooms.

County officials are still working on plans for The LuMinn, which has 55 rooms and cost $12 million. The University Inn, with 45 rooms, is being used as a temporary shelter while refurbishing is completed. Officials hope it will start renting rooms this summer. Like the Robin Hotel, it was turned over to a local housing provider, but the county will still remain active. The provider agreed to keep daily expenses below what it cost to house somebody in a shelter.

The goal is for the properties to provide affordable housing for households with incomes at or below 30% of area mean income, which equates to about $20,000 for someone living alone.

Stevens Square a model?

Julia Welle Ayres, Hennepin County's director of housing development and finance, calls Stevens Square Residence "our little gem in the housing inventory."

Most of the tenants exited directly out of homelessness, she said.

The property, opened two years ago, was previously a treatment center and that made it easy to convert it to single-room units. It is the only one of the bunch already full. It cost $1.1 million to buy and renovate the three-story brick building. There are 31 rooms. Residents share laundry, kitchen and restroom facilities.

Hennepin County leased the property to Alliance Housing, which will manage the building and receive an operating subsidy of up to $400,000 total for the next four years.

Oftentimes, the homeless have some money for rent, but no affordable options, Welle Ayres said.

Tiffany Simmons used to wonder how anyone could want to live in just a room. Now Stevens Square's property manager, she's the concept's biggest supporter.

"I've met people from all walks of life. They weren't materialistic before becoming homeless and a room is plenty of space," she said. "As a first step, places like Stevens Square are a great option to building a foundation and rent history."

This past week she visited with Brionna Mosley in her room. Mosley moved into the building about six months ago. A warm flannel blanket covers her bed, while a television partially blocks a window. Her belongings are neatly stored on shelves and hang in a wardrobe. One corner is dedicated to Mosley's food, stored in shelves or the small refrigerator that sits on an even smaller table. A gold-framed mirror leaning against the wall is marked with words of encouragement: "You are a winner."

Many residents only receive Social Security benefits and it's hard to find housing on $700 to $800 a month, Simmons said. A room at Stevens Square Residences rents for $300 to $400 a month.

"They learn the basics of being a good roommate and paying rent," she said. "On Thanksgiving, they all pitched in for a celebration."

Importance of new options

With the end of federal rental assistance and expiration of the eviction moratorium, it's more important than ever to have new affordable housing options, Hewitt said.

During the pandemic, the shelters were two-thirds empty, he said. Now, there are 1,600 people in shelters, including 300 more children than in the past few years. Several hundred live in encampments.

"The encampments impact surrounding communities and puts people at the greatest risk," he said. "There can a be a variety of reasons why somebody would want that option, including chemical dependency or lack of a better housing option."

Progress is being made. Even before the hotel purchases, the county had helped move 464 vulnerable residents into housing.

Welle Ayres said the county intended to be a good neighbor when it bought the Metro Inn and Aqua City Motel, both located close to residential areas on the southern edge of Minneapolis. They held meetings with residents and helped identify priorities. Crime went down on those properties once the county took ownership, she said.

The Metro Inn should open to new residents this summer, but plans for the Aqua City Motel are still in the works because it was bought just a few months ago.

She is hoping Stevens Square can show other jurisdictions that the new strategy can work. That also goes for finding new buyers for the University Inn and Robin Inn after the county became the initial landlords.