California Faces $300M Bill for COVID-19 Homeless Hotel Initiative as FEMA Reimbursement Limited

California cities and counties are uncertain about the costs of Governor Gavin Newsom’s pandemic program to house homeless individuals in hotel rooms.

This uncertainty stems from a decision made by the Federal Emergency Management Agency (FEMA) in October, limiting the number of days eligible for reimbursement.

In a surprising turn of events, state and local officials received notice from FEMA that the agency would only reimburse for housing homeless individuals at risk of COVID-19 transmission for a maximum of 20 days, starting from June 11, 2021. 

This decision, outlined in a letter, caught many off guard, as they had previously relied on assurances that FEMA would cover the cost indefinitely.

Responding to the abrupt policy change, the Governor’s Office of Emergency Services requested FEMA to reconsider, emphasizing the financial strain it would impose on cities and counties, particularly amidst tight budgets. 

California’s Argument Against FEMA

On Tuesday evening, FEMA announced its intention to carefully consider California’s appeal, emphasizing that all states had been provided with uniform guidance throughout the duration of the pandemic.

Governor Newsom initiated the hotel housing program, known as Project Roomkey, in March 2020, aiming to protect vulnerable homeless populations from COVID-19 exposure. Initially, FEMA agreed to cover 75% of the program’s costs, later extending to full reimbursement.

However, California officials argued that FEMA failed to provide adequate notice of the policy change. Robert J. Fenton, FEMA’s regional administrator for California, clarified that the policy was not new but rather a clarification of existing guidelines. Despite efforts to address concerns, FEMA declined to comment further on the matter.

The uncertainty surrounding FEMA’s reimbursement policy has raised concerns about future collaborations between local and federal authorities during crises. Brian Ferguson, a spokesperson for Cal OES, warned that FEMA’s inaction could undermine trust between governments, emphasizing the need for prompt resolution.