The Stay Inn in northeast Denver will turn into housing for people experiencing homelessness. City Council approved the $9 million purchase Tuesday.
The city plans to use the hotel and its 95 rooms, located at 12033 E. 38th Ave., for supportive housing with social services like therapy and nursing care for people experiencing homelessness.
The city hopes to open the building to residents towards the end of 2023.
U.S. Rep. Diana DeGette announced plans to buy the property using a mix of city and federal funds in spring of 2021, but the project stalled amid budget negotiations in Congress until the federal funds came through.
"There is no one-size-fits-all type of solution that will solve our city's housing crisis," DeGette said. "What we need, now, more than ever, is an all-hands-on-deck approach. And we need all levels of government working together to come up with creative new solutions to address this extremely complex issue."
While funding ultimately came through, the wait raised the project's cost. In March 2022, Denver expected the entire project to cost $7.8 million, including purchasing, renovating and running the building. Now, the city purchased the old inn with partial renovations for $9 million.
"Most of the difference in cost can be attributed to market conditions," said Department of Housing Stability (HOST) spokesperson Derek Woodbury. "It took us nearly two years to secure funding and to complete due diligence necessary for using federal funds."
The city initially planned to use the building for immediate shelter and then turn it into longer term housing a few years later. But the timing of the project and renovations prompted the city to shift to immediately opening the site as supportive housing units, according to HOST.
It's one of many efforts to use local and federal funds to convert old hotels into housing.
At the end of 2022, DeGette secured federal funds to buy and convert Clarion Hotel, and Mayor Michael Hancock approved over $23 million in American Rescue Plan Act money to go towards hotel and other property acquisition for housing. The money comes as homelessness remains a major issue across the country; in Denver, the number of people in shelter rose from around 4,500 to 5,500 between 2020 and 2021.
"The solution to homelessness is housing, and we will continue to pull on every lever available to create more homes for our unhoused residents," Hancock said in a press release about the Stay Inn project.
The building's current owner, a private LLC called IH Holdings 16, originally planned to turn the old inn into a nicer hotel. But when the pandemic hit, the company began working with the city. The company completed renovations before the sale to help convert the building, including adding kitchenettes and furnishing the lobby and rooms and upgrading electrical and sprinkler systems.
"Given its location, very close to a light rail, given what it is, an affordable hotel project... we thought that it would be a great asset for the city," said Hugo Weinberger, co-founder of IH Holdings.
With the purchase approved, the Department of Housing Stability (HOST) will soon open requests for proposals to partner with the city in finishing renovations and running the building and its support services.
This article was updated to include comments from HOST.
