California may have to pay $300M for COVID-19 homeless hotel program after FEMA caps reimbursement

SAN FRANCISCO (AP) — California cities and counties still don’t know how much they’ll have to pay for Gov. Gavin Newsom’s pandemic program to house homeless people in hotel rooms after the Federal Emergency Management Agency said in October that it was limiting the number of days eligible for reimbursement.

State and local officials say they were stunned to learn via an October letter that FEMA would only pay to house homeless people at risk of catching COVID-19 for at most 20 days — as opposed to unlimited — starting June 11, 2021, which is when Gov. Gavin Newsom rescinded the sweeping stay-at-home order he issued in March 2020.

In response, the Governor’s Office of Emergency Services requested that FEMA reconsider the policy change, saying that it would cost cities and counties at least $300 million at a time when budgets are tight and that local governments had relied on assurances that the federal government would pick up the cost.

Late Tuesday, FEMA said in a statement that it will review California’s Jan. 31 letter, but that all states had been provided “the same guidance and policy updates throughout the pandemic.”

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Newsom announced the hotel housing program — called Project Roomkey — in March 2020 as part of the state’s response to the pandemic. Homeless advocates heralded it as a novel way to safeguard residents who could not stay at home to reduce virus transmission. FEMA agreed to pay 75% of the cost, later increasing that to full reimbursement.

California officials argued to the federal agency that no notice was provided on the policy change.

Robert J. Fenton, the regional administrator for California who wrote the October letter, told CalMatters, which was first to report on the discrepancy last week, that the policy was not new.

“What I’m doing is clarifying the original guidance of the original policy and providing that back to them,” he told the nonprofit news organization.

FEMA declined Tuesday to make Fenton available to The Associated Press for an interview.

Brian Ferguson, a spokesperson for Cal OES, said earlier Tuesday that inaction by FEMA “would have a chilling effect on the future trust of local governments and the federal government” in times of crisis.