SALT LAKE CITY — Of the one-time, $20 million the Utah Legislature has promised to Salt Lake City for land purchase and construction of four new homeless resource centers, the city has already spent half — on two of the sites.

That leaves only $10 million in state money over the next three years to spend on not only two other sites, but also an estimated $40 million in construction costs.

The state is also expected to provide another $7 million in ongoing funding for prevention programs. But will it be enough to help pay for the new model that's meant to revolutionize the way Utahns receive homeless services?

When factoring in Salt Lake County contributions, expected private donations and federal grants, city officials say yes — though it's not yet crystal clear where all the money will come from.

"No one ever anticipated the $27 million from the state to be the total amount needed," Matthew Rojas, Mayor Jackie Biskupski's spokesman, said Friday.

"No one is really concerned about the cost. Of course, we have our eyes on the dollars as fiscally responsible stewards of taxpayer money, but we're confident we'll have enough."

Council Chairman Stan Penfold, however, said he has "fair concern" about the cost gap, but anticipates a large chunk of it will be swallowed by private donors.

Whatever remains, Penfold said would likely come out of the city's budget, though he's not sure yet what those costs may be.

In the meantime, with some shelters slated to break ground this year and perhaps others in 2018, Penfold said, "It's really critical that we do a good job managing these dollars."

Purchases

Of the four sites Salt Lake City leaders have named for the future 150-bed centers, so far two have cost the city about $10 million. In October, the Salt Lake Redevelopment Agency set aside just under $12 million for the land purchases, which would then be reimbursed through the state's $20 million commitment.

The priciest — and the most controversial — is the 653 E. Simpson Ave. (2300 South) site in Sugar House, which the city has agreed to purchase for nearly $7 million, according to the city's purchase contracts.

Yet, the 2.8-acre property has a total assessed value of just under $2.7 million, according to the Salt Lake County Assessor's Office.

The city's second site, a 3-acre industrial yard at 275 W. High Ave. (1475 South) in the Central City neighborhood, is under contract for $3 million. However, Salt Lake County assessed that property for about $1.2 million.

Rojas attributed the difference in assessed value and market value to competitive markets and developer appeal.

When asked about the purchase price of the sites in a Ballpark Community Council meeting Thursday night, Biskupski and Mike Reburg, the mayor's economic development director, assured residents the prices are fair.

"We were very mindful in making sure that negotiations on the purchases remained realistic as far as value goes," Biskupski said.

The prices the city paid — even for the Sugar House location — are not surprising, said Tom Mulcock, an appraiser with an office in Sugar House.

"Assessed value is seldom a fair value in the open market," especially in a booming market like Sugar House, Mulcock said, adding that buyer and seller motivation could have also impacted negotiations.

Though city documents indicate the Simpson Avenue facility would encompass a 1.2-acre property that's currently leased by Lil' Learner's day care, a dance studio, a cafe and a beauty school, the city's purchase contract included eight other parcels south of Simpson Avenue that house three rented homes and commercial parking.

All nine parcels were owned and sold by Forest Corp.

The 275 W. High Ave. site was sold by Mark Aletto, owner of Aloha Towing.

Future costs

Salt Lake City has entered into an agreement to buy the 131 E. 700 South property — currently a Deseret Industries building — in the next three years from The Church of Jesus Christ of Latter-day Saints.

The Salt Lake County Assessor's Office values the property at about $2.5 million, but it's not yet known how much the site will actually cost the city.

Rojas said he wasn't aware of any discussions yet about the price tag with the church.

The fourth site, 648 W. 100 South, is owned by the city's Redevelopment Agency. Rojas said the state is expected to reimburse the city for its fair market value. Salt Lake County assesses the property at nearly $739,000.

Subtracting the two property's combined assessed values of $3.2 million from the $10 million in one-time state funding that the city hasn't already entered contracts to spend, that leaves about $6.8 million in state money for construction — if the city buys the two properties at their assessed values.

Rojas said architect estimates put construction costs at about $10 million per shelter or roughly $40 million total.

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Sugar House residents blast mayor, city council for homeless shelter decision

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When asked how the rest of the construction costs will be paid once the $20 million in one-time state funding runs out, Rojas said city officials expect private donations and possible grants to take care of the remaining construction costs.

Rojas pointed to the $4 million donation pledged by 79-year-old businessman Pat King last month, adding that other donors are expected to step forward. Penfold expects donors to take care of between a third or half of the remaining cost.

While Rojas says the mayor's office is not anticipating spending any city money on the construction of the facilities, Penfold thinks differently. The councilman said "it's probable" that more will have to come from the city's budget.

"When (the council) insisted on going from two sites to four sites, we knew we would increase the costs," he said. "I'm not speaking for the rest of the council, but I do think there is a responsibility on the part of the city to provide some of the funding for this."

Penfold also said it's possible that city officials could request additional state money if needed. But Rojas said, for now, city leaders are focusing on securing the next two years of funding from the Legislature.

"We are incredibly grateful that the state is partnering on this," Rojas said. "We are working hard to demonstrate we can get this done."

Services

While Salt Lake City is responsible for site acquisition and construction, Salt Lake County will be spending millions more in homeless programs as the new centers come online.

In addition to the $7 million in ongoing state funding pledged by the state for prevention programs, Salt Lake County will pump $11.5 million in new money over the next four years for Pay for Success programming.

Salt Lake County currently spends about $10 million a year on homeless services, said Michelle Schmitt, spokeswoman for Salt Lake County Mayor Ben McAdams.

City leaders have said the Road Home's downtown shelter is expected to shut down when the four sites become fully operational. About $1 million a year of the state's funding will be used to maintain the Road Home's Midvale family shelter.

Additionally, Salt Lake City has set aside $18 million in Redevelopment Agency money for affordable housing initiatives — a cause Penfold hopes will be joined by Utah and Davis counties.

In conjunction with the city's four new centers, Salt Lake County also plans to open a 150-bed community resource center for families and single women that provides affordable, transitional, supportive and market-rate housing as well as education, health and employment services.

The county also plans to build two other 70- to 90-bed facilities to provide housing and detox services for single men and single women with children.

The location of the community resource center and the single men facility's location have not yet been determined, but the single women facility will be at 697 W. 4170 South in Murray, an existing facility currently owned by Volunteers of America.

Pending confirmation of private funding, the facility will open in phases starting in early 2018, said Shaleane Gee, director of special projects and partnerships at the county.

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