DATE: 07/01/2026
TO: Honorable Mayor and City Council Members
FROM: Housing and Homeless Solutions, City Manager’s Office 2026-231
REQUEST FOR CITY COUNCIL ACTION
SUBJECT:
MERCY HOUSE SECOND AMENDMENT TO THE FIRST AMENDED AND RESTATED
AGREEMENT
EXECUTIVE SUMMARY:
The staff report asks City Council to approve the Second Amendment to the First Amended and Restated Services Agreement with Mercy House, to support the Harrison Hope Center Shelter/Navigation Center, Make It Cozy Home Furnishing Program, Respite Care Program, HOME Tenant-Based Rental Assistance Program, and the Permanent Supportive Housing Program.
RECOMMENDED ACTION:
That the City Council:
a. Approve the Second Amendment to the First Amended and Restated Professional Services Agreement with Mercy House for Corona’s Homeless System of Services, effective July 1, 2026 to June 30, 2027, in the total maximum compensation amount of $4,209,038.
b. Authorize the City Manager, or his designee, to execute the Second Amendment to the First Amended and Restated Professional Services Agreement with Mercy House.
c. Authorize the City Manager, or his designee, to approve non-substantive amendments to the Second Amendment to the First Amended and Restated Professional Services Agreement with Mercy House, including periodic updates to the HOME TBRA Guidelines and the Shelter Operations Plan, which are part of the original agreement and more operational and procedural in nature, as well as term extensions and budget line-item adjustments, so long as any such amendments will not cause the City to exceed the approved total maximum compensation of $4,209,038.
BACKGROUND & HISTORY:
On December 7, 2022, the City Council approved the Mercy House Homeless System of Services Agreement (Mercy House Agreement) totaling $3,988,491 for a 7-month period through June 30, 2023.
On June 21, 2023, the City Council adopted the City of Corona Budget for Fiscal Year (FY) 2024, which included $4,699,255 in funding to support the Mercy House Agreement for a 12-month period beginning July 1, 2023. The City Council approved a First Amendment to the Mercy House Agreement and extended the term to June 30, 2024, eliminated the $218,202 contingency, and reduced the not-to-exceed obligation of the Mercy House Agreement to $3,770,283.
On April 3, 2024, the City Council approved a Second Amendment to the Mercy House Agreement, which added $4,699,255 of FY 2024 funding, bringing the not-to-exceed obligation to $8,469,544. The Mercy House Agreement term did not change.
On August 21, 2024, the City Council approved a Third Amendment to the Mercy House Agreement to extend the term to December 31, 2024. The not-to-exceed obligation of the Mercy House Agreement did not change.
On November 20, 2024, the City Council approved the First Amended and Restated Mercy House Agreement retroactive from July 1, 2024, to June 30, 2025, for a not-toexceed obligation of $8,279,868 for FY 2025. City Council’s approval of this agreement facilitated the incorporation of multiple federal and state grants. Accordingly, the agreement was retroactive back to July 1, 2024, to meet grant deadlines, maximize use of grant funds, and leverage the limited City of Corona Measure X funding.
On August 6, 2025, the City Council approved the First Amendment to the First Amended and Restated Mercy House Agreement for the term of July 1, 2025, to June 30, 2026, in the amount of $5,547,735.
ANALYSIS:
On May 6, 2026, the City Council approved the FY 2026-27 Annual Action Plan for the Community Development Block Grant and HOME Investment Partnership Programs. As part of this approval, $660,317 was allocated to Mercy House to support the HOME Tenant-Based Rental Assistance Program (TBRA), which supports Homeless Strategic Plan goals to permanently house the homeless and prevent homelessness for at-risk households.
Due to the high cost of housing, residents regularly call the City to request rental assistance. Unfortunately, the Mercy House TBRA Program has been at capacity for the past few months. The $660,317 allocation to the HOME TBRA program continues to support permanent housing placements for shelter graduates, and homeless prevention rental assistance to prevent additional residents from falling into homelessness.
Additionally, the proposed FY 2027 agreement with Mercy House includes estimated rent subsidy revenue from project-based vouchers, as allocated by the Riverside County Housing Authority. Although the rent subsidies are paid by the County to Mercy House, they are included in the agreement budget given the 5th Street Housing units are connected to the City’s services contract with Mercy House. The estimated project-based voucher revenue will not only reduce City costs, but also increase contract resources for permanent housing placements.
The City’s system of services approach integrates multiple strategies using Federal, State, County, and City funds. As a result, allocated City funds have been maximized to prevent homelessness and address homelessness for many Corona residents. Exhibit 3 of this staff report provides a high-level overview of the number of people served, and related outcomes of success since the Mercy House Agreement was approved by City Council in December of 2022.
HOMELESS STRATEGIC PLAN:
The recommended actions support multiple goals and strategies in the City’s Homeless Strategic Plan, including:
Goal 1: Develop a Systems-Oriented Approach to
Address Homelessness
Goal 2: Develop a Low-Barrier Emergency
Shelter/Navigation Center
Goal 3: Develop Permanent Supportive and
Affordable Housing Solutions
Goal 8: Develop a Homeless Prevention Initiative
Goal 10: Expand Data Tracking Systems to
Measure System Performance
FINANCIAL IMPACT:
Funding for the Second Amendment to the First Amended and Restated Mercy House Agreement was included in the Adopted FY 2027 Budget approved by the City Council on June 3, 2026. California Department of Housing and Community Development (HCD) has not yet released the formula Notice of Funding Availability; therefore, the amount of Permanent Local Housing Allocation (PLHA) funds budgeted for this agreement in FY 2027 is an estimate. Staff will return to the City Council with a supplemental budget appropriation request if necessary. In addition, the State now requires 20% of all formula PLHA funds to be used for homeownership programs. To prepare for potential budget shortfalls impacting the operation of the Harrison Hope Center, staff will be requesting the carryover of $300,000 in FY 2026 Measure X funds in the Quarter 4 Budget Update on August 5, 2026. Finally, the Project-Based Voucher Revenue referenced in the contract budget is paid directly by the County to Mercy House but is included in the system-ofservices contract budget to display reductions in City costs and increases in permanent housing placements.
ENVIRONMENTAL ANALYSIS:
This action is exempt pursuant to Section 15061(b)(3) of the Guidelines for the California Environmental Quality Act (CEQA), which states that a project is exempt from CEQA if the activity is covered by the common sense exemption that CEQA applies only to projects that have the potential for causing a significant effect on the environment. Where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment, the activity is not subject to CEQA. This action involves the approval of a Second Amendment to the First Amended and Restated Mercy House Homeless System of Services Agreement. Approval of this agreement and provision of the related homeless services will not have a significant effect on the environment. Therefore, no environmental analysis is required.
PREPARED BY: KAREN ROPER, HOUSING & HOMELESS SOLUTIONS MANAGER REVIEWED BY: JACOB ELLIS, CITY MANAGER
ATTACHMENTS:
1. Exhibit 1- Second Amendment to the First Amended and Restated Professional Services Agreement with Mercy House
2. Exhibit 2 - Redline of Second Amendment to the First Amended and Restated Agreement with Mercy House
3. Exhibit 3 - Mercy House Corona System of Care Outcomes and Achievements