Redlands approves nonprofit to pursue ownership of former Good Nite Inn supportive housing property

REDLANDS, Calif. — City Council unanimously approved the formation of the Redlands Housing Corporation, a nonprofit that could eventually acquire and operate the permanent supportive housing property at the former Good Nite Inn. 

Why it matters: The former Good Nite Inn, located at 1675 Industrial Park Avenue, currently provides permanent supportive housing and services to people experiencing homelessness. Creating the Redlands Housing Corporation is a step toward preserving that housing and establishing a long-term ownership structure for the property.

Details: The council's vote does not mean the city has purchased the property. Instead, it creates the nonprofit entity that could be used to acquire and operate the property if the city and its public agency partners reach an agreement.

During the council discussion, Councilmember Paul Barich asked how much acquiring the property could cost the city.

Assistant City Manager Danielle Garcia said the city is still negotiating with state and county officials and that "there's a lot of dust that needs to be settled."

Garcia said the city believes state and county funding will cover roughly 95% to 98% of the acquisition cost. When Barich asked whether the city had a ballpark estimate of its share, Garcia said it could be roughly $700,000.

The proposed corporation will be organized for charitable purposes. Its responsibilities will include owning and operating real property that expands housing opportunities in Redlands and receiving grants, donations and other resources to support those goals.

The five sitting members of the City Council will serve as the corporation's Board of Directors, with membership automatically changing as the makeup of the council changes. The Mayor will serve as Board Chair, the Mayor Pro Tempore as Vice Chair, the City Manager as President, the City Clerk as Secretary and the City Treasurer as Treasurer.

Background: In 2021, City Council directed staff to explore housing solutions for people experiencing homelessness.

Through the state's Homekey Program, the city partnered with Shangri-La Industries, LLC and Step Up on Second, Inc. to convert the Good Nite Inn property into permanent supportive housing. The project opened in early 2023.

Shangri-La, a for-profit developer, later defaulted on its contractual obligations, resulting in state litigation and foreclosure of the property. A handful of other low-income housing projects across Southern California faced similar challenges due to alleged fraudulent activity by Shangri-La.

The city and the current property owner have continued working together to keep the housing and supportive services operating while pursuing a long-term ownership solution.

Outside legal counsel recommended creating the Redlands Housing Corporation. The corporation would be able to acquire, own, administer and operate housing assets while keeping its operations and obligations legally separate from the city.

Moving forward: The Redlands Housing Corporation is expected to hold its first organizational meeting after the Sept. 1 City Council meeting. The corporation will appoint officers and complete the administrative steps needed to begin operations.

Any future agreements, funding decisions, operating arrangements or property acquisition documents requiring City Council approval will come before the council separately.

For now, the council's unanimous vote establishes the nonprofit structure that could eventually allow Redlands to take ownership of the property and preserve its use as permanent supportive housing.