Oakland will give $1.6 million to the owner of a property used as a city homeless shelter and left in poor condition.
The city leased the historic Lake Merritt Lodge in 2021, at the height of the COVID-19 crisis, opening a shelter for more than 100 medically vulnerable residents. The nonprofit Housing Consortium of the East Bay had a contract with the city to operate the shelter, and property owner Vima Harrison 1 LLC provided meals and custodial services.
The shelter closed and relocated at the end of 2024, when Vima declined to renew the city’s lease. By then, tensions were high between the owner, the city, and the nonprofit service provider, with disagreements over responsibilities, behavior, and conditions at the shelter and property.
The Oaklandside toured the Lake Merritt Lodge shortly after the program closed and found it in disarray, with broken furniture, mold, and debris everywhere.
Vima filed a legal claim against the city in June 2025, alleging the city damaged the property and failed to pay rent for the last month it had a lease. The city decided to pay up rather than risk a lawsuit.
In a settlement authorized by the City Council in a closed session Thursday, Oakland will pay Vima $695,000. The city will also waive its $950,000 security deposit. The settlement amounts to just over half of the $2.9 million Vima claimed in damages.
In a report from the meeting, the city says it is not admitting fault. All councilmembers approved the settlement except for Rowena Brown, who was excused.
The city attorney’s office declined to comment on the settlement.
Mahnaz Khazen, the former managing owner of Vima, said she and her partner decided the settlement was “the most practical and responsible path forward under the circumstances.”
“Our intention was not to waste public funds or consume additional staff time in a lengthy legal dispute when those resources are better spent serving the people of Oakland,” Khazen said in a text.
Vima is hoping insurance might cover additional losses, she said.
Khazen is now a minority owner of Vima, which was purchased by the nonprofit Restorative Pathways last year. That organization has opened a new shelter at the lodge property, called Solara House. It primarily serves survivors of violence and trafficking.
Residents of the Lake Merritt Lodge moved to a new shelter in an apartment building in Uptown. Housing Consortium of the East, not the city, is the leaseholder there.
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