A federal funding formula some local officials have criticized as unfair San Diego’s efforts to help homeless people will be re-examined next year, U.S. Housing and Urban Development Secretary Julián Castro said Monday.

Castro was in San Diego to tour the Hotel Churchill, a landmark downtown hotel that is being renovated into 72 affordable units for veterans and others.

Reps. Scott Peters, Susan Davis and Juan Vargas, all San Diego Democrats, are among the officials who have pushed for a change in the formula because it does not represent the region’s needs.

“This is really significant,” said Peters, who attended the tour. “The thing that we kept hearing was that there was a mismatch between our level of funding and the amount of homeless we had.”

San Diego County was 23rd in HUD funding in 2014, receiving $16.2 million from the federal agency, yet had the nation’s 5th largest homeless population, behind New York, Los Angeles, Las Vegas and Seattle.

An annual homeless count in January found about 8,700 people living in shelters or on the street throughout the county.

The number of homeless people in a region is only one factor in deciding how much funding HUD provides. The 1970s-era formula used by HUD also includes geographic and demographic information, the number of housing units built before 1940 and the area’s population growth.

Regions seeking federal funding must create a network called a continuum of care and submit a single combined application

Castro’s announcement that HUD will open a comment period about the funding formula next spring came as a surprise during a rooftop news conference at the Hotel Churchill..

“We want to make sure our continuum of care funding takes into account all of the factors that ought to be considered when funding is delivered,” Castro said.

While far from a guarantee that a change will come, Peters said he was pleased to have a chance to argue that San Diego is being shortchanged.

“What we wanted to do all along was have an opportunity to provide evidence about that,” he said, adding that this is a problem for many other western cities.

After touring the Hotel Churchill project, Castro praised San Diego’s efforts in helping solve homelessness in the region.

“This city is getting it right and embracing a housing-first model and looking for creative ways to increase more units,” Castro said, referring to the strategy of finding housing for homeless people as a first step in working on long-term solutions to keep them off the street.

Castro also said he was in town to let San Diego know “you’re very much on our radar screen.”

The refurbished Hotel Churchill at 827 C St. is scheduled to open next June. The original hotel opened in August 1914 in time to cater to fairgoers at Balboa Park’s Panama-California Exposition. A hint of the expo’s influence remains at the hotel in the ornate molding that surround tops of some of the five bare, concrete pillars on the ground floor, which has mostly been stripped.

The tile floor and original front desk in the lobby, along with slots for messages for guests, also remain and will be restored.

The hotel closed in 2005 and the San Diego Housing Commission acquired it in 2011.

Following a national effort to make ending veteran homelessness a priority, the hotel will have 56 units for vets, eight units for youths aging out of foster care and eight units for adults exiting the corrections system.

Redeveloping the building will cost $20.6 million. Major work on the project included demolition of the top, seventh floor, which had been built in the 1920s with non-reinforced masonry not suitable for today’s seismic standards.

The top floor has been removed, but will be rebuilt. The exterior medieval-themed mural that was added sometime in the 1980s also has been removed.

The building will be the first historical building in the city to be retrofitted with seismic structural reinforcement known as viscous dampers.

The original elevator has been removed and will be replaced with one that is compliant with the American with Disabilities Act, said Colin Miller, director of real estate development for Housing Development Partners, the Housing Commission’s development arm.

San Diego Housing Commission President and CEO Richard Gentry, Republican Mayor Kevin Faulconer, Democratic Assembly Speaker Toni Atkins, and Democratic San Diego City Councilman Todd Gloria, chair of the San Diego Regional Continuum of Care Council, were among the people who donned hard hats and fluorescent yellow vest to tour the construction site.

After viewing the ground floor, the group stopped on the sixth floor to view the construction progress. Metal framework is beginning to form walls of the units, which will be an average of 321 square feet and contain individual kitchens and private bathrooms.