CITY COUNCIL AGENDA REPORT
City of Anaheim
HOUSING AND COMMUNITY DEVELOPMENT
DATE: JUNE 18, 2024
FROM: HOUSING AND COMMUNITY DEVELOPMENT DEPARTMENT
SUBJECT: FOURTH AMENDMENT TO AGREEMENT WITH THE
SALVATION ARMY FOR EMERGENCY SHELTER SERVICES
(224 BED SHELTER)
ATTACHMENT (Y/N): YES ITEM# 26
GOVERNMENT CODE § 84308 APPLIES: YES
RECOMMENDATION:
That the City Council, by Motion:
1. Approve the Fourth Amendment to the Agreement Regarding Homeless Shelter (Original Agreement) by and between the City of Anaheim (City) and The Salvation Army for the continuation of shelter services extending the term of the agreement for one additional year to expire on June 30, 2025.
2. Increase the maximum contract authority to a not to exceed amount of $42,036,000 which includes additional authority to reimburse the Salvation Army for services rendered from February 1, 2023, to June 30, 2023, in the amount of $3,500,000 and $6,768,000 for anticipated cost to be incurred over the contract extension period of July 1, 2024, to June 30, 2025; and
3. Authorize the City Manager, or his designee, to execute the Fourth Amendment to the Original Agreement, and to execute subsequent amendments or documents necessary for the continuation or administration of shelter services at 1455 S. Salvation Place, provided they are approved by the City Attorney and do not increase the total maximum reimbursement amount payable to The Salvation Army.
DISCUSSION:
The Anaheim City Council approved the Original Agreement (Agreement) with The Salvation Army (TSA) for the provision of a minimum of 200 emergency shelter beds on November 13, 2018. Under the terms of the Agreement, TSA allowed the use of its land to construct and operate a low-barrier emergency shelter consistent with defined standards and criteria and the City agreed to reimburse TSA for construction and operating costs not to exceed $14 million. The Original Agreement expired on January 31, 2021, two years after the commencement date.
Fourth Amendment to Salvation Army Agreement
June 18, 2023
Due to the continuing need for shelter beds in Anaheim, on November 10, 2020, the City Council amended the Original Agreement to extend the emergency shelter operation by two years, to January 31, 2023, and increased the contract authority by $11 million for shelter operations. The shelter now includes 224 beds.
During the term of the First Amendment, the City was the recipient of additional funds from the U.S Department of Housing and Urban Development to help minimize the spread of the Coronavirus among all populations, including persons experiencing homelessness. Given that the shelter housed a significant number of Anaheim’s unhoused population, staff recommended the use of Emergency Solutions Grant-CARES Act (ESG-CV) in the amount of $3.5 million, to help offset some of the costs associated with shelter operations as well as to implement necessary health mitigation measures including isolation trailers. While the ESG-CV funds were intended to be an offset, it was not entirely clear to AES that these funds did not represent an increase in contract authority and subsequently, they were booked in their financial systems as added funds. During this same period, AES also experienced a significant change in financial personnel, causing a backlog in billing.
Consequently, at the end of the contract extension period, AES reported that they had sufficient funds to continue operations for an additional six months. Using the authority embedded in the contract, on February 1, 2023, the City Manager approved a six-month extension, the Second Amendment, for term only (no additional funding), establishing a new contract expiration date as June 30, 2023.
On June 27, 2023, the City Council passed the Third Amendment to the Original Agreement, extending the emergency shelter's operation by an additional year and increasing the maximum reimbursement amount in the contract to $31,768,000. The extension included a reimbursement amount of $6,768,000 for anticipated cost to be incurred for operations of 224 shelter beds over the contract extension period of July 1, 2023 to June 30, 2024.
The Salvation Army remains a dedicated, steadfast City partner. As the City’s premier shelter operator, they have consistently delivered the services specified in the original contract and maintained open communication on all matters. This past year, we have worked collectively to bring new fiscal personnel up to speed on contract and billing matters. Through this work, we identified that the Second Amendment should have been extended for both term and Contract Authority, thus allowing the ESG-CV to be used for covering shelter operations. To correct this matter, staff is requesting that the Fourth Amendment include an increase in Contract Authority, which covers the upcoming year (July 2024- June 2025) and also includes the operational period of February 1, 2023 – June 30, 2023, to permit for reimbursement of services already rendered. The ESG-CV funds were used to cover services rendered under the First Amendment (February 1, 2021 to January 31, 2023). To ensure the contract is maintained in compliance going forward, the Fourth Amendment introduces language adding a 10% penalty for any future late billing.
All other terms of the Original Agreement remain unchanged.
Fourth Amendment to Salvation Army Agreement
June 18, 2023
Staff recommends approving the proposed Fourth Amendment to the Original Agreement, which is set to expire on June 30, 2024. This allows the existing shelter operations to continue as well as enables the partnership between AES and the City to build on the work to bring forth a comprehensive campus to address the varied needs of individuals exiting homelessness and to increase permanent housing options. Notably, the partnership has begun to yield definitive results as performance data indicates that 23% of shelter residents have successfully moved into permanent housing.
In the upcoming contract year, AES and city staff will continue to build on current momentum to identify more housing options and to address gaps in services. A current exploratory conversation involves the potential to add drug treatment beds and other sober living support services to assist shelter residents to begin the transition back to community.
IMPACT ON BUDGET:
The City’s budget includes the additional contract authority and one-year extension funding. The City has also been successful in securing to date $16,177,961.93 from State and Federal grants (HEAP, HHAP Rounds 1-4 and ESG) that assisted in the funding of shelter operations and has applied for a fifth round of Homeless Housing Assistance and Prevention (HHAP) program grant funds.
Respectfully submitted,
Grace Ruiz-Stepter
Housing and Community Development Director
Attachments:
1. Fourth Amendment
2. Original Agreement and First – Third Amendments