www.montereycountyweekly.com January 11-17, 2024 MONTEREY COUNTY WEEKLY 11 The State of California and five cities—including Salinas and King City—are working to save hundreds of Homekey apartments from foreclosure, due to a developer who the state says improperly took out third-party loans on seven properties. That developer, Shangri-La Industries, is now defaulting on those loans, endangering the fate of projects meant to house people experiencing homelessness. On Monday, Jan. 8, the California Attorney General’s Office, working on behalf of the Department of Housing and Community Development, filed a lawsuit against Shangri-La and its nonprofit partner that provides supportive services to tenants, Step Up on Second Street. Also named as defendants are the five cities where projects are located, as well as the financial institutions that loaned Shangri-La money. The cities applied for Homekey grants, provided to the state through the federal American Rescue Plan Act, with over $100 million going directly to ShangriLa for the purchase and rehabilitation of hotels, according to court documents. In addition to suing for breach of contract, HCD is asking the court for an order of “quieting and conforming title,” meaning that, if granted, the state would be recognized as a title owner of the properties. HCD is also asking that the deeds remain restricted to either 10, 15 or 55 years for supportive housing per original contracts and is suing Shangri-La, Step Up and loan companies for fraud because they allegedly entered into loans without prior written consent from HCD. It’s asking the court for all the grant money back. Shangri-La officials did not respond to requests for comment. In interviews with other news outlets, they blamed the state for not providing funds in a timely manner. HCD officials pushed back in a written statement: “The difficulties [Shangri-La] find themselves in are of their own making. HCD will continue to make every effort to ensure Homekey dollars go toward housing individuals experiencing homelessness, and not enriching developers.” Tod Lipka, president and CEO of Step Up, did respond, saying they are “surprised and devastated with the problems at Shangri-La” and the impacts on Homekey properties. Step Up has been providing services since November 2020 at the first Homekey project in Monterey County, in Salinas. Two other Salinas Homekey projects are now on hold. In King City, where Shangri-La was supposed to rehabilitate a hotel to house people previously living near the Salinas River, those people are being housed by the city in a different location at least until June, with Step Up providing services, according to Mayor Mike LeBarre. Salinas Mayor Kimbley Craig says her city is banding together with King City and three other impacted Southern California cities “doing whatever we can to, one, preserve the projects, but two, protect ourselves from the defaults of Shangri-La.” The goal is to preserve the needed housing. Big Mess The state and cities fight to save units meant for those without homes after a developer defaults. By Pam Marino King City Mayor Mike LeBarre in March 2022, shortly after the state announced it was providing $12.4 million for purchase of the Days Inn. The project is now on hold due to developer Shangri-La’s issues. NEWS “The difficulties are of their own making.” DANIEL DREIFUSS Sun - Thurs 12pm– 8pm Fri & Sat 12pm – 8:30pm 720 BROADWAY AVE. SEASIDE Call 831-899-1762 to order DINE IN / TAKEOUT / DELIVERY Great Dough Great Pizza is Thin crust & Sourdough pizzas Salads & Calzones • Pasta • Subs Draft beer on tap • Wine • Dessert Serving handmade pizzas with fresh, quality ingredients At The Oven, we believe Try Us First. We Pay The Highest! MONTEREY COIN SHOPPE Since 1970 same street for 40 years Open Mon-Fri 11am-4pm Call for an appointment: 831.646.9030 449 Alvarado St., Monterey www.montereycoinshoppe.com WE BUY Gold and SilvEr, JEWElrY, CoinS, diamondS, WatChES, art & rarE antiqUES italian sport coats outerwear jackets shirts sweaters denim carmel-by-the-sea, carmel plaza 831.625.8106 • khakisofcarmel.com selected sport coat reductions new arrivals