In most American cities, the lowest-cost, permanent, rental housing is the single-room-occupancy (SRO) residential hotel. During the 1970s and early 1980s, major cities across the U.S. demolished or converted their SRO housing stock to make way for redevelopment. In San Diego, California, this left the downtown area with a total of 65 SRO hotels containing 3,333 rooms--far below the needs of the City, where the number of homeless was estimated to be between 3,000 and 5,000 and low-income and impoverished individuals numbered 160,000. In addition, San Diego's housing market was one of the least affordable in the nation. The loss of so much affordable housing was devastating to the elderly, disabled, and working poor people who took advantage of SRO hotels, considered the "last rung of housing" before homelessness.
The crisis of homelessness is nation-wide, but San Diego was the first city in the country to address the dwindling supply of SRO units as a step towards a solution. City officials broke through legal and financial barriers to stabilize and expand its stock of SROs. Within a year of the approval of the SRO Preservation and Relocation Assistance Ordinances in 1987, 2,200 new SRO units were built, or were under construction or in planning stages, and 700 older units were rehabilitated.
The SRO program has been accomplished through a coordinated effort between city government agencies, the San Diego Housing Commission, nonprofit advocacy groups, and developers. City officials worked with private developers to modify zoning, building, and housing codes to encourage new construction, thereby allowing developers to make a profit without subsidies. The City also provided financial incentives by reducing water and sewer connection and capacity charges and offering low-interest, deferred-payment loans. Over $25 million in private financing has been invested in new construction to date.
In 1988, the first new, non-subsidized SRO hotel in San Diego built in 75 years was opened. Since then the program has demonstrated that building small units with shared bath and kitchen facilities can be profitable and, more importantly, affordable to low-income individuals for whom homeless shelters and the street are the last alternatives.
The program is also introducing a new type of housing unit, known as "the living unit," which, in terms of size and amenities, is a cross between an SRO hotel room and a studio apartment. With greater square footage and, at minimum, a partial kitchen and bathroom, it is considered safer and more marketable than the SRO unit. The building of living units is made possible by a new state law passed in 1988. Once city and county ordinances are in place to regulate living unit planning, design, and construction, another much-needed housing option will be available for one- and two-person, low-income households.