Oakland City Council
October 15, 2024
AGENDA REPORT
TO: Jestin D. Johnson FROM: Emily Weinstein
City Administrator Director, Housing and
Community Development
SUBJECT: Lake Merritt Lodge Successor DATE: October 2, 2024
City Administrator Approval Date:
RECOMMENDATION
Staff Recommends That City Council Adopt A Resolution Amending Resolution No. 90204 C.M.S., Which Awarded A Grant Agreement To Housing Consortium Of The East Bay In An Amount Not To Exceed $6,800,000 For Fiscal Year (FY) 24/25 And An Additional $6,800,000 For Fiscal Year (FY) 25/26, Contingent On Fund Availability In The Biennial Budget, To Operate And Move An Existing Emergency Shelter Program To The 110-Room Jack London Inn, to: (A) Increase The Amount Per FY Up To $7,9000,000 (B) Authorize The City Administrator To Change The Location Of the Program If The Number Of Shelter Beds Is Greater Than Or Equal To 88 And If The Total Cost Does Not Exceed The Per FY Award And (C) To Extend The Initial Term Through December 31, 2025
EXECUTIVE SUMMARY
Adoption of this proposed resolution would authorize the City Administrator to provide a grant to Housing Consortium of the East Bay (HCEB) to lease and operate a location of similar or greater size (at least 88 units) as a continuation of this emergency shelter program. The City of Oakland (City) has identified multiple alternatives that could be a viable home for HCEB’s emergency shelter program and is currently working with HCEB to finalize a location. This resolution provides the City Administrator the opportunity to approve the HCEB program’s continuation at a property that will align with the City’s priorities and optimize HCEB’s program and service delivery. Staff anticipate this will result in an improved quality of life for program participants and may lead to more program capacity to serve unhoused Oaklanders.
BACKGROUND / LEGISLATIVE HISTORY
The Community Homelessness Services Division has contracted with HCEB since May 1, 2021, to operate an emergency shelter program prioritizing medically fragile and/or age 60 and older unsheltered Oaklanders at Lake Merritt Lodge. On May 7, 2024, the Council adopted Resolution No. 90204 C.M.S., which authorized the transfer of this program to the Jack London Inn.
Jestin Johnson (Oct 4, 2024 09:45 PDT)
Oct 4, 2024
Jestin D. Johnson, City Administrator
Subject: Lake Merritt Lodge Successor
Date: October 2, 2024 Page 2
Oakland City Council
October 15, 2024
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0 Negotiations for the use of the Jack London Inn site were ultimately unsuccessful, so an alternate location must be identified to continue the emergency shelter program.
The Lake Merritt Lodge Program
Homelessness continues to be a key challenge for the City, with 5,490 unhoused residents in the 2024 Point-in-time Count. Of these residents, 3,664 were unsheltered. A majority of the unsheltered homeless residents of Oakland are Black, despite Black residents being a minority of Oakland’ overall population. As indicated in Figure 1, homelessness in Oakland has expanded significantly in recent years:
Figure 1: Oakland’s Point in Time count data over time.
2017 2019 2022 2024
Homeless Count 2761 4071 5055 5493
On March 29, 2021, the City Council approved Resolution No. 88572 C.M.S. au thorizing the City Administrator to negotiate and enter into an occupancy agreement for Lake Merritt Lodge and to select a service provider for building and program operations at the site.
On A
pril 27, 2021, the City entered into a lease agreement with VIMA Harrison LLC for Lake Merritt Lodge. The parties renewed the lease annually through fiscal year 23/24. The most recent lease expired on June 30, 2024 and is currently in holdover status.
On July 12, 2021, the City entered into a professional services agreement with Housing Consortium of the East Bay to provide operations and programming at Lake Merritt Lodge for medically fragile and/or age 60 and older unsheltered Oaklanders. The parties have amended the agreement several times. The most recent agreement expired on June 30, 2024.
The 89-bed Lake Merritt Lodge program has cumulatively served over 260 Oakland residents and connected over 100 residents with permanent housing. In line with the demographics of unhoused Oaklanders as a whole, approximately two-thirds of the Lake Merritt Lodge program clients are Black and approximately two-thirds of the program clients are male. The program is Unhoused Residents
Jestin D. Johnson, City Administrator
Subject: Lake Merritt Lodge Successor
Date: October 2, 2024 Page 3
Oakland City Council
October 15, 2024
generally viewed as one of the most successful shelter programs funded by the City, with a return-to-unsheltered homelessness rate under 10%.
While the owner of the Lake Merritt Lodge has performed an admirable public service by partnering with the City on this program over the past three years, she has informed the City she plans to sell the property. With the lease in holdover status and the owner seeking the prompt return of the property, the City therefore needs to urgently identify an alternative location for the program.
The Jack London Inn
On May 7, 2024, the Council adopted Resolution No. 90204 C.M.S., which authorized the
transfer of the Lake Merritt Lodge program to the 110-unit Jack London Inn. At the time of the resolution adoption, Jack London Inn stood out as an option to expand program capacity while costing less on a per unit basis. Under the proposed program, HCEB would lease the property from the owner, and the City would cover both the lease and operating cost in a grant to HCEB.
Negotiations for the use of the Jack London Inn site were ultimately unsuccessful, so staff have again begun to explore alternate locations for the program operation.
ANALYSIS AND POLICY ALTERNATIVES
New Housing Inventory Brings New Shelter Options
Oakland, and especially Downtown Oakland, has been home to a boom in new housing production over the last decade. Since the beginning of 2019, at least 9,891 new housing units have been completed in Downtown Oakland and surrounding neighborhoods. Many of these projects were financed and began construction before the COVID-19 pandemic. With the pandemic-related disruption to Bay Area-based technology sector employment and such a large amount of rental inventory becoming available simultaneously, market rents for high-end apartment buildings have fallen by as much as a quarter between 2019 and 2024
1. Another
approximately 900 units of housing are currently under construction in the greater downtown area.
A consequence of this surge in housing supply is that many developers with new buildings are keen to explore master-leasing arrangements to avoid an otherwise slow lease-up process.
Multiple property owners have therefore approached the City with an interest in leasing their units for homeless housing. While the future location of the Emergency Shelter Program was not confirmed at this time of this report’s publication, staff have narrowed the search to a set of recently built market rate housing options. There are several benefits to master-leasing a market-rate housing project for the continuation of the Emergency Shelter Program, including modern insulation/heating systems, reduced maintenance needs, and no lost transient occupancy tax from a hotel change of use. Staff anticipates that the new home of the Emergency Shelter Program will provide the current Lake Merritt Lodge program tenants with a better quality of life. From the City’s exploration of real estate options to date, it appears likely
1 https://www.sfchronicle.com/realestate/article/oakland-rent-prices-decline-19458121.php Jestin D. Johnson, City Administrator
Subject: Lake Merritt Lodge Successor
Date: October 2, 2024 Page 4
Oakland City Council
October 15, 2024
that the change of location will expand the number of available program beds in the Emergency Shelter Program.
Benefits of Continuing This Emergency Shelter Program
This proposed resolution will advance the Citywide Housing, Economic, and Cultural Security priority by maintaining or increasing the number of clean, dignified shelter beds accessible to the homeless community in Oakland. Participants in this program will continue to benefit from the support in a program where case management, housing navigation, and other support services are available. While the COVID pandemic is deemed over, this shelter will continue to prioritize medically fragile individuals with the ability to refer homeless households directly into the program. Should vacancies occur without immediate referrals from the medically fragile population there will be an option to fill beds with non-medically fragile households to ensure full utilization of the program.
While the location of the program would change under this resolution, the funding model for this program would remain the same. Under this funding model, the City will provide HCEB with a grant that pays for HCEB to lease the program site and pays for HCEB’s program operation costs. This would remove the need for the City to directly lease any property.
FISCAL IMPACT
The amended grant agreement will contain a mix of previously approved and newly added funding, for a net increase of $1.1 million annually for up to two years. When Council adopted the original legislation on May 7, 2024, the FY24-25 Midcycle Budget had not yet been approved. Previously approved funding for the lease and the emergency shelter program in FY 24-25 was identified in the General Purpose Fund (1010), Community Housing Services Org (78411), DP780 Administrative Project (1000017), and Fostering Safe and Healthy Communities Program (SC22).
The FY24-25 Midcycle Budget changed the source and allocated the following for the original $6.8 million grant agreement: $3,713,492 in the General Purpose Fund (1010), DP780 Administrative Project (1000017); $2,486,508 in the OPR Preservation, Litter Reduction, Homelessness Support Act Measure Q Fund (2244), DP780 Administrative Project (1000017); and $600,000 in the State of California Fund (2159), HHAP Round 5 Project (1007402).
The additional $1.1 million approved in this resolution will also come from the State of California Fund (2159), HHAP Round 5 Project (1007402). While these funds are available in the current budget, the additional year extension is contingent upon funding availability in the FY 2025-27 Biennial Budget. With future budget reconciliation and finalization, it may subsequently become necessary to close another, lower performing interim site to support this emergency shelter program.
PUBLIC OUTREACH / INTEREST
No direct public outreach was conducted in the completion of this report.
Jestin D. Johnson, City Administrator
Subject: Lake Merritt Lodge Successor
Date: October 2, 2024 Page 5
Oakland City Council
October 15, 2024
COORDINATION
This item was reviewed by the Human Services Department, Budget Bureau and Office of the City Attorney.
SUSTAINABLE OPPORTUNITIES
Economic: The homelessness crisis has an ongoing fiscal impact on the City of Oakland through an increased demand on public safety, health, and public works services. Transitioning unhoused residents into permanent housing will ultimately reduce the cost of street services and other costs associated with homeless encampments.
Environmental: No significant environmental impacts are expected from this action.
Race and Equity: According to the racial equity analysis of homelessness conducted by Oakland’s Department of Race and Equity
2, African American Oaklanders experience
disproportionate rates of homelessness compared to their percentage of the general population.
By providing more permanent supportive housing placements, this grant will help reduce the number of unhoused Oakland residents. This will consequentially reduce the impact of this racial disparity.
ACTION REQUESTED OF THE CITY COUNCIL
Staff Recommends That City Council Adopt A Resolution Amending Resolution No. 90204 C.M.S., Which Awarded A Grant Agreement To Housing Consortium Of The East Bay In An Amount Not To Exceed $6,800,000 For Fiscal Year (FY) 24/25 And An Additional $6,800,000 For Fiscal Year (FY) 25/26, Contingent On Fund Availability In The Biennial Budget, To Operate And Move An Existing Emergency Shelter Program To The 110-Room Jack London Inn, to: (A) Increase The Amount Per FY Up To $7,9000,000 (B) Authorize The City Administrator To Change The Location Of the Program If The Number Of Shelter Beds Is Greater Than Or Equal To 88 And If The Total Cost Does Not Exceed The Per FY Award And (C) To Extend The Initial Term Through December 31, 2025
2 https://everyonehome.org/wp-content/uploads/2021/02/2021-Centering-Racial-Equity-in-Homeless- System-Design-Full-Report-FINAL.pdf
Jestin D. Johnson, City Administrator
Subject: Lake Merritt Lodge Successor
Date: October 2, 2024 Page 6
Oakland City Council
October 15, 2024
For questions regarding this report, please contact Shalawn Garcia, Homeless Housing Development Program Manager, at 510-238-3715.
Respectfully submitted,
Emily Weinstein
Emily Weinstein (Oct 3, 2024 15:10 PDT)
Emily Weinstein, Director, Housing and
Community Development
Reviewed by:
Ali Gaylord, Deputy Director for Housing
Development, Housing and Community
Development
Shalawn Garcia, Homeless Housing
Development Program Manager, Housing and
Community Development
Prepared by:
Caleb Smith, Senior Policy Analyst, Housing
and Community Development
Chrissie Love, Administrative Analyst II
Community Homelessness Services, Human
Services