City Council member Bob Dillon has agreed to reconsider
modifying a grant given to the developer of a struggling homeless
shelter, breathing some life back into the beleaguered project
after the council split on the issue last month.
City Council member Bob Dillon has agreed to reconsider modifying a grant given to the developer of a struggling homeless shelter, breathing some life back into the beleaguered project after the council split on the issue last month.
At Dillon’s request Monday night, the council agreed to bring back a proposal from nonprofit developers South County Housing and EHC LifeBuilders to turn EHC’s $240,000 grant from the city into a loan South County will assume and repay. The potential reorganization will extend the time South County has to build EHC’s down-sized development, but will provide a guaranteed repayment to the city. Otherwise, Gilroy would have had to hire a collection agency to recoup the $181,000 the city has already given to EHC as part of the 2003 grant.
“We might’ve ended up paying $181,000 in legal fees trying to get back that money, and (City Administrator Tom Haglund) said it’s as good as gold that EHC will go bad on that loan,” Dillon said. “Converting that project into an asset is better for the city’s balance sheet than writing the deal off or paying good money to go after bad money.”
Dillon originally voted against the proposal along with Councilmen Dion Bracco and Craig Gartman because he said he was uncomfortable with financial problems associated with the Sobrato Homeless Shelter, located at 9389 Monterey Road in north Gilroy. Councilman Perry Woodward, a real estate lawyer, recused himself last month and again Monday because his law firm, Terra Law, represented EHC in the past.
Dillon also met with Santa Clara County Supervisor Don Gage, who encouraged Dillon to reconsider, he said. The county will consider a similar loan rearrangement with EHC and South County at an unspecified date in the near future, albeit for a much larger loan of nearly $2.5 million the county gave EHC between 2002 and 2006. The project has been in the planning stages for the past decade, back when Gage was mayor of Gilroy.
The Sobrato site currently has 60 “transitional housing” units built and managed by South County Housing for residents rising out of poverty and homelessness. Those units were all occupied in 2006, before EHC improved the site’s infrastructure in preparation for its 140-bed homeless shelter. However, that shelter has never materialized because private and public donors have withdrawn. Instead of a 140-unit homeless shelter, South County Housing imagines 35 studio apartments along with space for mental health and education services.
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