Motels

Hosmer St. motels convert to low-income housing in Tacoma

In a commercial corridor in South Tacoma, in an economically struggling area where crime has baffled businesses and neighbors, a $30 million market has recently sprung up.

The product is real estate. Specifically, motels.

Five former South Hosmer Street motels have been sold since June 2021, each now on the verge of transitioning to low-income housing, according to interviews, property records and an online listing.

They include the Econo Lodge, the site of two homicides this year – one after it was sold – and the Howard Johnson, the site of another. The other two corridor homicides in 2022 occurred at other unsold lodging facilities. The violence underscored the concerns of businesses and neighbors about street safety.

According to Emily Hubbard, co-owner of Sage Investment Group, the recent sales may not be the last along the corridor, with other motel and hotel owners considering unloading their businesses in moves that could change the landscape of the street. who purchased the Econo Lodge in March.

“Everything is for sale,” she says.

Over the next 18 months, Hubbard expected most of the corridor’s accommodations to change hands and likely be converted to affordable housing, adding that the owners wanted to move on because they didn’t know what to do about the crime. Due to the relatively small market for such sales, she said, the properties are unlikely to be listed on the stock exchange, meaning transactions will take place under the radar.

While one motel owner told the News Tribune he was unsure of his future plans, Councilman Joe Bushnell, whose district covers South Hosmer Street, said another hotel owner l had informed that he was considering a sale.

Bushnell called the currently seen influx of planned affordable housing “a better outcome than just leaving it as hotels or motels.”

“When you have something that has a bit more permanence…it helps create stability for workers and families who need low incomes,” he said.

But Bushnell also expressed concerns about bringing longer-term residents into the high-crime corridor. And he also worried that community resources were insufficient to manage an over-concentration of low-income housing on the street, preferring to see “badly needed” housing spread across the city as he called for bold investment in housing. mixed-income housing, infrastructure and other projects, such as parks, to improve the walkability of the corridor.

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A homeless encampment along 82nd Street between the Best Western Plus and the Hampton Inn & Suites on Hosmer Street in Tacoma, Washington on June 28, 2022. Tony Overman [email protected]

Millions of dollars worth of real estate is changing hands

Prior to June 2021, the 1.5-mile-long commercial strip was home to 13 of the city’s then-licensed 26 motels or hotels. Since then, the Howard Johnson, American Lodge, Travelodge, Comfort Inn and Econo Lodge have been discharged by former owners.

The Howard Johnson, the first to go, was purchased for $4.8 million in June 2021 by two limited liability companies tied to Seattle-based Integrated Property Management, according to Pierce County property records. The company also purchased the American Lodge and the Travelodge for $8.2 million the following month, property records show.

Although the company did not return messages seeking comment on its plans, each of the three motels it purchased now have multi-family apartment designations and the American Lodge and Travelodge were marketed online to investors. as 142 potentials of 210 and 280 square feet. studios.

The project is advertised to potential new buyers for $14.2 million.

“With the current lack of affordable housing supply, this property is well positioned to benefit from conversion to a multi-family,” the listing reads on Compass, a real estate platform.

The Comfort Inn was purchased in October for $8.8 million by affordable housing developer, Low Income Housing Institute, with assistance from the city and two other local jurisdictions. Already a temporary homeless shelter, the site is expected to be converted into 80 permanent affordable housing units in 2024, according to LIHI.

In March, Kirkland-based Sage Investment Group bought the Econo Lodge for $8.7 million, records show. The company is converting the former motel into studios or one-bedroom apartments, with a goal to open by early next year, according to Hubbard.

Property records show that the motel was built with 105 units spread over seven buildings in total, excluding an office.

South Hosmer Street: a “very weak” equity zone

The immediate area that encompasses South Hosmer Street is experiencing economic hardship, part of a larger disparity visible throughout Tacoma, where equity is much higher in the northwest and northeast parts of the city and mixed or lower elsewhere, according to the city’s Equity Index map.

Sixty-three percent of households have a median income of at least $35,000, 11 percentage points below the city average, according to the Equity Index.

Thirty percent of area units are owner-occupied, compared to 53% in Tacoma, and only a quarter of area residents have year-round access to healthy food, compared to the city’s average of 75 %.

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In addition to being attractive to investors because of the speed with which they can be created, hotel and motel conversions can contribute to the shortage of affordable housing, Hubbard said. In 2019, the city lacked about 12,000 affordable housing units for the lowest income households, according to a report commissioned by the city in June 2021 by Root Policy Research.

Hubbard also said the company hasn’t overlooked the current problems on the street, not least because they’ve faced them: contractors have been shot, as have surveillance cameras installed by the company, a she declared.

Asked how the company could ensure the safety of residents at a site that sees frequent illegal activity, Hubbard said the company is working with law enforcement to try to root out wrongdoing from the property. and had security measures in place.

“When it’s ready to hire tenants, it won’t be in that fearful state,” she said, adding that the company has experience transforming high-crime hotels.

When the Econo Lodge was sold, it was at least one instance in which a transaction was prompted by concerns about criminal activity.

A woman, contacted on a number that records show was associated with the Econo Lodge’s former owner, Tacoma Hotel Motel, LLC, said she decided to sell the motel because it was not not sure and that she was frustrated with the crime.

Tacoma Hotel Motel LLC also owns the adjacent Quality Inn & Suites. The woman, who declined to be named, said she was unsure of their plans for the property.

“To be honest, we looked at every other possible option,” said Tami Rasmussen, regional manager of the Quality Inn.

Lifeline for the most vulnerable

Bushnell said there was “no doubt” that some accommodation establishments were contributing to the escalation of crime in the corridor, but not of their own doing: he accused drug traffickers of exploiting the drug addicts, which he said invited further illegal activity.

“These hotels, in many cases, are the last stop before someone is on the street,” Bushnell said, suggesting the properties were a lifeline for the most vulnerable.

This was evident in early July in the case of Evelyn Horton, 93, who was living in an Econo Lodge motel room four months after it was sold. Much of the surrounding property was boarded up and Horton, who lived with her granddaughter and others, said they had no hot water and she had not been able to bathe since some time.

Hubbard said the Econo Lodge had about a dozen rooms with occupants the company couldn’t immediately evict due to pandemic-era rules — issues that have also been reported by other properties. accommodation.

Taran Johal, 29, manager of the Rothem Inn, which has had problems with unruly visitors and guests, said his family have no plans to sell. But like Bushnell, he believed that greater housing diversity was needed to bring meaningful progress to an area where he grew up.

“I hope the neighborhood will change,” he said.

Shea Johnson joined The News Tribune in 2022. He previously covered city and county governments in Las Vegas and Southern California. His work has been recognized by the National Headliner Awards and repeatedly by the California News Publishers Association, including as a finalist for investigative reporting. He earned his bachelor’s degree from Cal State San Bernardino.