FEMA puts California on the hook for $300 million in pandemic homelessness costs

California officials say the federal government is reneging on hundreds of millions of dollars that cities and counties were counting on to cover the costs of sheltering thousands of vulnerable homeless people in hotel rooms during the pandemic.

Local governments across the state and Bay Area are now left scrambling to make up the funding gap at a time when their budgets are already stretched thin.

In an October letter to the state officials, the Federal Emergency Management Agency explained it would only reimburse hotel stays of up to 20 days between June 11, 2021, and May 11, 2023. That means cities and counties could end up on the hook for more than $300 million, according to the Governor’s Office of Emergency Services.

The news organization CalMatters first reported the letter and dollar figure.

Santa Clara County, which is staring down a $250 million budget shortfall, has submitted nearly $500 million to FEMA but has so far only been reimbursed about $50 million, officials said. It wasn’t immediately clear how much the county could end up having to pay out of pocket.

“We incurred those costs in the reliance on the federal government’s guarantee that it was going to pick up those costs,” said County Executive James R. Williams last week.

Gov. Gavin Newsom launched the hotel program, dubbed Project Roomkey, at the start of the pandemic in April 2020 to move the state’s most at-risk homeless people out of crowded encampments and group shelters where the virus could quickly spread. Officials credited the now-expired program with keeping unhoused residents safe, but the majority of the roughly 62,000 people who stayed at the leased hotel rooms failed to find permanent housing.

In FEMA’s letter, the agency said it decided to limit reimbursements to 20 days between June 11, 2021, and May 11, 2023, to align with the recommended quarantine period as COVID-19 transmission was declining. Many homeless people stayed far longer than 20 days.

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State officials said they plan to push FEMA to cover the reimbursements in full.

“California is committed to maximizing federal aid to local communities and intends to aggressively advocate for FEMA to rescind the decision to deny Public Assistance to local governments,” Office of Emergency Services spokesperson Brian Ferguson said in a statement.

Local officials can also try to appeal FEMA’s decision. Contra Costa County, which stands to be out $9.2 million, has already “proactively authorized a contract” with an attorney that specializes in such appeals, Tim Ewell, chief assistant county administrator, said in an email.

Even if a potential appeal is unsuccessful, Ewell said the county has a reserve of federal pandemic stimulus money it can use to avoid cuts to any county programs.

Check back for updates.