The plans threw the town into an uproar. Scanlon, and more than 1,000 other local residents and business owners, signed a petition to keep the homeless out of the hotel.

“We didn't say we're against it. We said we're against it here,” Scanlon says. “And that's not being prejudiced, just pragmatic.”

The hotel sits at the gateway to the burgeoning downtown commercial district. Scanlon and other opponents say the building should go to a thriving business. Like a hotel, or a restaurant.

“You could get bed tax. You could get the food tax,” Scanlon says. “That could be a financial gain for the city, as opposed to a financial drain.”

Opponents feel so strongly about the hotel that they filed a lawsuit to block the sale. It failed. They threatened to recall the mayor for supporting the project. That didn’t work. Now they’ve put a measure on next June's ballot that would ban all social services from downtown.

But leaders of the hospitality center say there’s been community pushback at every location they considered.

“Part of it is simply that 'not in my backyard,' ” says Executive Director Anna Shaw.

But when they landed at the Old Coast Hotel, it really hit a nerve. Shaw says people have nostalgia for watching sports at the polished wood bar, and seeing their teams win. One man proposed to his wife here 20 years ago.

“I think some people have a feeling that it’s kind of too good for the homeless and the mentally ill,” Shaw says.

The building is more than 100 years old and is considered an architectural gem. The hallway walls are pressed tin. The hotel rooms upstairs still have Victorian details -- layered window dressings, wainscoting, marble fireplaces.

Shaw says that when homeless people have a nice place to stay like this, they do better.

“Because people's self-esteem is higher. It’s much harder to throw trash on the floor when the room looks beautiful like this,” Shaw says. “If it’s really squalid, there’s no incentive to behave.”

She says being downtown is also important. It’s easier for people to get to appointments, and it helps reduce stigma when people are integrated into the community.

“Lots of homeless people and people impaired with mental illness feel marginalized,” she says. “It’s important that folk get to come to a place where the value we place on them is expressed through the building.”

But Anne Marie Cesario, a retired social worker, says that’s not the way to combat stigma.

“That’s like using people as guinea pigs in order to further some liberal’s idea about consciousness raising,” she says. “It's inappropriate.”

Cesario is one of several mental health professionals opposed to the downtown location. She says it’s not private enough, especially for people who suffer from paranoia.

“They don't want to be seen when they go to the doctor. They don't want to be seen when they go to the therapist,” she says. “That building is on one of the busiest corners in town, and it's a four-way stop.”

She, and other members of the Concerned Citizens of Fort Bragg, believe a more appropriate location would be the former social services building on the edge of town, near the hospital and police station. Or an old motel on Highway 1. Or a building 3 miles north of Fort Bragg.

The Hospitality Center declined all those properties. And now the Concerned Citizens group is hoping voters will pass their ballot measure prohibiting social services in the downtown commercial district, retroactive to Jan. 1, 2015.

But even if the measure does pass, it’s unclear what impact it will have on the Old Coast Hotel. An analysis from the city attorney’s office says that, under legal precedents, the Hospitality Center would most likely be allowed to continue operating at the hotel. It would be grandfathered in under any new zoning rules as a “non-conforming use.”

“This will result in nothing but lawsuits,” says Scott Menzies, who runs a tai chi studio in town, and helped organize another group of small business owners, called Go Fort Bragg, who are against the ballot measure.

“The measure is so broad-reaching, it will cause far more collateral damage,” he says. “They’re using a cannon that targets every other social services organization in the business district.”

All the tension and fighting is frustrating for Debbie Gibney, a client of the Hospitality Center.

“I’m bipolar and I have post-traumatic stress syndrome, from being an abused wife,” she says. “I take medication and I see a therapist regularly.”

Gibney is 58. A few years ago, she was forced to retire early from her job. Then she lost her home. She got help at the Hospitality Center, and now she’s back on her feet, helping other homeless people at the Old Coast Hotel.

“I’m proud to walk in here,” she says. “Because of the beauty of the building, and the reception that we get here, and the way the staff accepts us and loves us unconditionally.”

At the agency’s previous location, in a strip mall near the DMV, clients had to wait in an alleyway for appointments. But since moving to the Old Coast Hotel, Gibney notices the clients are more relaxed and more respectful.