SAN FRANCISCO (BCN/CBS SF) — San Francisco city officials announced $54.7 million in state funding to convert a residential hotel in the city’s South of the Market neighborhood into permanent supportive housing for people exiting homelessness.

The funding comes from the California Department of Housing and Community Development, through the state’s Project Homekey.

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The plan to convert the newly acquired building at 1321 Mission St. into permanent supportive housing is part of a larger plan by Mayor London Breed to overhaul and expand the city’s permanent supportive housing sites. Supportive housing combines coordinated services with affordable housing for people who suffer from mental or physical health issues.

“As we continue to push forward with our Homelessness Recovery Plan, we must take advantage of every opportunity and resource we have to ensure that all people receive the housing and support they need,” Breed said in a statement. “I want to thank Governor Newsom for continuing to advance Project Homekey and for pushing for policies to support our homeless residents during one of the most challenging times in our state’s history.”

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The new funding comes after the city already received $76.9 million last year through Project Homekey to purchase and operate two other newly converted permanent supportive housing sites, Hotel Diva and the Granada Hotel. The sites, which are overseen by the San Francisco Department of Homelessness and Supportive Housing, will have created more than 360 new units, city officials said.

In addition, the city is looking to acquire and convert three more properties for permanent supportive housing, potentially adding 237 additional units.

“The Mayor and Governor believe that housing is the solution to homelessness,” Department of Homelessness and Supportive Housing Executive Director Shireen McSpadden said. “It is critical that we provide more housing, shelter, prevention and diversion for those experiencing homeless in our community.”

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