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DISSCUSSION
City of San Bernardino
Request for Council Action
Date: May 21, 2025
To: Honorable Mayor and City Council Members
From: Bill Gallardo, Interim City Manager;
Gabriel Elliott, Director of Community Development and
Housing
Department: Community Development and Housing
Subject: Award Professional Services Agreement Between the City of San Bernardino and Helping Hearts California,
LLC/Helping Hearts Hulen, LLC for the Operation of
the SB HOPE Campus in an amount not to exceed
$2,395,075 for Phase 1 and $300,000 for Phase 2 and
annually thereafter (All Wards)
Recommendation:
It is recommended that the Mayor and City Council of the City of San Bernardino, California:
1. Authorize the City Manager to Execute a Professional Services Agreement with Helping Hearts California, LLC in the amount not to exceed $2,395,075 for Phase 1 shelter and recuperative care operations at SB HOPE Campus and an estimated $300,000 for Phase 2 operations and annually thereafter if required; and
2. Adopt Resolution No. 2025-297 to amend the Fiscal Year 2024-2025 Operating Budget authorizing the allocation of $2,395,075 from Permanent Local Housing Allocation funds for the operations of the SB HOPE Campus; and
3. Authorize the Director of Finance and Management Services to amend the FY2024/2025 Adopted budget for the appropriation of $2,395,075 in both revenues and expenditures; and
4. Authorize the City Manager or designee to take any further actions and execute any further agreements or documents as necessary to implement operations at SB HOPE Campus.
Executive Summary
The SB HOPE Campus is a central element of the City of San Bernardino’s strategy to 2 5
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address homelessness by integrating interim housing, recuperative care, and comprehensive supportive services to facilitate individuals’ transitions into permanent housing. Following a competitive procurement process, the City has selected Helping Hearts as the operator and is now seeking approval from the Mayor and City Council.
To support Phase 1 start-up and operational costs, Permanent Local Housing Allocation (PLHA) 2020 funds totaling $2,395,075.40 will be allocated. This allocation includes establishing an operating reserve of $450,580 to bolster financial stability during the initial phase. Thereafter, annual operating costs are estimated to be approximately $300,000, largely offset by anticipated revenue from CalAim reimbursements. Beginning in Fiscal Year 2026-27, General Funds previously allocated for homeless-related services will be earmarked to cover ongoing operations.
Background
The City’s Navigation Center, hereby referred to as SB HOPE Campus or “Navigation Center”, serves as the cornerstone of the City’s long-term plan to address homelessness.
Phase 1 of SB HOPE Campus is slated for completion during the first quarter of FY 2026.
Phase 1 will include 100 beds for shelter, recuperative care, and short-term post- hospitalization stays. Phase 2 will follow and add an additional 100 shelter beds, bringing the total campus capacity to 200 upon completion.
Unhoused men and women will receive assistance with interim housing, recuperative care, and a comprehensive range of onsite supportive services, including case management, housing navigation, homeless diversion, job training, and placement, documentation readiness, life skills development, mental health services, and substance use disorder counseling. The development of the SB HOPE Cam us and its pending operation has been a heartfelt process that involves several key actions:
On October 27, 2022: The City hosted a Homeless Workshop that identified the critical need to increase shelter bed capacity for those experiencing homelessness.
On December 7, 2022, the Mayor and City Council allocated $12,450,000 in ARPA funds to construct SB HOPE Campus.
On February 1, 2023: The City declared a Homelessness State of Emergency in response to the escalating crisis.
On May 17, 2023: The Mayor and City Council approved the Homelessness Declaration Implementation Plan, which emphasized the urgent need for emergency and interim shelters due to existing shelters operating near-full capacity.
On July 19, 2023: The City Council amended $9,732,162 in Permanent Local Housing Allocation (PLHA) Funds of which $1,232,740.52 was reallocated to support interim shelter activities.
On March 15, 2023, the Mayor and City Council approved an allocation of $4,299,672 of HOME-ARP funds to assist with the design and construction of the Navigation Center.
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On June 21, 2023, the Mayor and City Council adopted the FY 2023-24 Annual Action Plan, which included an allocation of $1,901,365 in CDBG funds for the Navigation Center.
On October 4, 2023, the Mayor and City Council adopted Resolution No. 2023- 144 for the Strategic Initiatives, approving an annual allocation of $2,000,000 for Homelessness Services Sustainability beginning FY 2026/27. On November 1, 2023, the Mayor and City Council accepted $808,358.87 in Homeless Housing, Assistance, and Prevention (HHAP) Round 3 grant funds from the County of San Bernardino for the Navigation Center. On February 29, 2024, the City submitted its application to HCD for its 2020-2023 PLHA allocation. The city is eligible to receive approximately $4,257,232, which will be programmed to assist people who are experiencing or at risk of homelessness. The City has requested the 2020 PLHA allocation for $2,521,132.00, which will help cover administration and operational expenses. On September 4, 2024, the Mayor and the City Council adopted Resolution 2024- 201, reaffirming the declaration of a Homelessness State of Emergency. On December 9, 2024, the City released a Request for Proposal (RFP) to find a qualified professional organization to operate the SB HOPE Campus.
Discussion
The City released a Request for Proposal (RFP) on December 9, 2024, seeking a shelter and recuperative care operator to manage the day-to-day operations of SB HOPE Campus. Proposals were invited from qualified agencies with experience operating homeless shelters, recuperative care centers, or both. This approach provided flexibility, allowing the City to select either a single operator specializing in both services or two separate operators, one for shelter care and one for recuperative care.
The city utilized the web-based platform PlanetBids to streamline the procurement process and facilitate bidding. The RFP closed on January 16, 2025, and the City received two (2) proposals. Finalists were notified on January 20, 2025. Applicants were required to have experience with CalAIM invoicing, a funding mechanism under Medi-Cal. Revenue generated through CalAIM/Medi-Cal reimbursements will help offset SB HOPE Campus operational costs, reducing the City’s financial burden.
Helping Hearts California, LLC (HHCA) submitted a proposal showcasing extensive experience, adequate staffing, and a strong understanding of working within San Bernardino County's Continuum of Care (CoC). HHCA possesses the infrastructure, partnerships, industry knowledge, and resources to pioneer ground-breaking CalAIM programs and is committed to collaborating with other agencies as needed to deliver direct services (e.g., mental health, substance use disorder counseling, and workforce development), implement a screening and matching tool to assist clients in accessing County benefits and ensure timely data entry into the Homeless Management and Information System (HMIS). HHCA agrees to provide core services (shelter, housing assistance, and case management) and wrap-around supportive services directly or in 2 5
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partnership with local non-profits, fostering collaboration, comprehensive care, and resource leveraging.
HHCA will provide recuperative care and short-term post-hospitalization services directly and will be responsible for submitting Community Support Services invoices to HMOs for CalAim reimbursements.
Service Prioritization for City Residents
HHCA commits to prioritizing unhoused City residents. All campus activities will be documented in monthly, quarterly, and year-end reports in a format specified by the City. Helping Hearts California staff will work closely with the City on programming and provide all necessary documentation for invoicing and accounting. Individuals must first receive a homeless certification from the City’s Homeless Outreach or Quality of Life Team, which will verify the residency origin and tie to the City. Once certified, participants will be transported to the SB HOPE Campus if needed. Unhoused individuals who are not City residents may access services if they can provide documentation demonstrating ties to the City, such as a California ID or government- issued ID, government forms showing a City address, or documentation linking them to City-related employment, education, medical services, or treatment.
CalAim Revenue
Medicaid is a national program that is referred to as Medi-Cal in the State of California.
CalAim, is a derivative of Medi-Cal that allows health insurance to pay for services that aren't considered traditional medical care, such as recuperative care (medical respite) and services to help homeless Californians find and keep housing. A key feature of CalAIM is Enhanced Care Management (ECM), which covers a wide array of community supports like those offered at SB HOPE Campus. ECM allows invoicing for the unhoused community, including healthcare services, housing assistance, and other comprehensive services, under a coordinated care plan managed by a dedicated care manager.
Estimated Operating Expenses
As a certified Medi-Cal provider, HHCA has extensive experience with CalAIM invoicing and Community Supports billing. It has created a financial strategy that utilizes CalAim revenue to offset operating costs. The organization aims to maximize CalAIM funding opportunities to sustain service delivery and reduce the City's financial burden.
Without CalAIM revenue, the estimated annual operating costs for the SB HOPE Campus would range between $7 million and $8 million annually. However, leveraging CalAIM funding will significantly reduce the City's financial obligation. HHCA estimates that the City's total cost for Phase 1 will be $1,944,495, which includes:
$1,644,495 in start-up costs
$300,000 for first-year operations
To ensure financial stability, the City will allocate an additional $450,580 in operating 2 5
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reserves to cover unexpected expenses or risks. This brings the total funding for operations to $2,395,075, which will be sourced from 2020 PLHA dollars. The necessary funding has been earmarked to support continued program sustainability and operational needs.
By utilizing CalAIM funding, the City can offset a substantial portion of long-term operational expenses, minimizing the City’s financial burden while ensuring the sustainability of the SB HOPE Campus.
If Phase 2 is completed by the beginning of Year 2, the City's operating costs will be fully offset, ensuring long-term financial sustainability. However, if Phase 2 is delayed, the City may need to allocate an additional $300,000 annually until the expansion is implemented. The City has sufficient funding sources to support operational costs during the start-up and expansion phases and can allocate additional funds if unforeseen expenses arise. Operating expenses for Phase 1 will be covered by 2020 PLHA funds, while Phase 2 operating costs, if necessary, will be funded through General Funds beginning in Fiscal Year 2026-27.
Contingency Plan in Case of Federal Cuts
The federal Medicaid program in California, known as Medi-Cal, is currently facing potential cuts. The scope of services, programming, and annual costs at SB HOPE Campus are based on assumptions about Medi-Cal/CalAIM funding, which would cover most of the services offered. Below are the two key assumptions in light of potential cuts:
Phase 1 Budget S ummaryS um of T otalS tart-Up Costs$1,944,495Commercial K itchen and Laundry $251,400Living/Common/Dinning A reas Capital Cost$77,040G roup T v/Common A rea Capital Cost$56,100Conference R oom/G roup Capital Cost$6,865A dministrative S taff Capital Cost$154,190S leeping S pace Capital Costs$1,098,900Operating Costs$300,000G rand T otal$1,944,495Phase 1 Budget OverviewS um of T otalPhase 1$1,944,495Initial S tart-Up F unding$1,644,495City Operating Cost (P hase 1)$300,000Operating R eserves$450,580Operating R eserves (P LHA F unds 2020) $450,580G rand T otal$2,395,075 2 5
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Assumption 1-No Cuts to Medi-Cal/CalAim Funding
oEligibility: 100% Medi-Cal eligibility for all programs, except for Short- Term Post-Hospitalization/Shelter Beds, which assumes 80% Medi-Cal eligibility.
oCity's Contribution: The City would pay $300,000 annually for operational expenses
The CalAim waiver expires on December 31, 2026. If it is not renewed or if the Center for Medicare and Medicaid Services (CMS) or federal guidelines change to reduce or eliminate the CalAIM program or Medicaid eligibility, Assumption 2 will apply. Assumption 2- Cuts to Medi-Cal/CalAim Funding
oImpact on Services: HHCA could not administer the full scope of projected programs and services, which would be scaled back to traditional shelter housing (no recuperative care or short-term post- hospitalization services).
Activities scaled back to traditional shelter
oCity’s Contribution: The City would be required to pay $3,276,819 annually to operate a 200-bed campus.
The City, in coordination with HHCA, has developed a contingency plan to ensure that the SB HOPE Campus remains operational should Assumption 2 occur. While the CalAIM waiver remains in effect through December 31, 202, thus safeguarding Phase 1 from potential federal funding cuts, Phase 2 would require the City to cover an increased annual operational cost of $3,276,819. Under this scenario, services would be scaled back as previously outlined. Funding for Phase 2 operations is anticipated to come from a combination of Permanent Local Housing Allocation (PLHA) funds and General Fund resources (2 million dollar General Fund allocation available FY 2026- 2027 for homelessness-related initiatives.
It is important to note that if Phase 2 is not completed by Year 2 (FY 2026-2027), and federal reductions to Medi-Cal/CalAIM are significant, the City's average annual cost to operate a 100-bed facility would be approximately $1,638,409.50.
Agreement Term
The Agreement between the City and Helping Hearts California will commence upon the "Effective Date" and continue for five (5) years unless terminated as otherwise provided in the Professional Service Agreement. The term of this Agreement shall be automatically extended for a maximum of five (5) successive one (1) year terms unless the Agreement is amended in writing or either party gives written notice to the other of its intent not to extend the Agreement and such notice is provided no later than ninety (90) days before the end of the then-current term.
The City is building a much-needed campus to help stabilize and improve the lives of unhoused men and women. The SB HOPE Campus will provide comprehensive 2 5
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services while fostering a sense of safety, well-being, and dignity. By addressing critical gaps in support and offering low-barrier access, the campus will serve as a transformative resource facility, empowering individuals to transition toward stability and self-sufficiency.
2021-2025 Strategic Targets and Goals
The Homelessness Initiatives update relates to Key Target No 3: Improved Quality of Life.
Fiscal Impact
There is no immediate impact on the General Fund. Phase 1 operational cost of $300,000 will be covered with 2020 PLHA funds. Phase 2 operational costs will be covered under General Funds allocated to homeless-related activities beginning in Fiscal Year FY 26-27. Should the federal government significantly cut Medi- Cal/CalAim, the City’s operational cost will escalate from $300,000 to $3,276,819 annually. If Phase 2 is not completed in Year 2 (FY 26/27), and there are federal cuts to Medi-Cal/CalAim, the City will need to pay 1,638,409.50 to operate 100 beds.
General funds and PLHA funds will cover expanding cost listed.
Conclusion
It is recommended that the Mayor and City Council of the City of San Bernardino, California:
1. Authorize the City Manager to Execute a Professional Services Agreement with Helping Hearts California, LLC in the amount not to exceed $2,395,075 for Phase 1 shelter and recuperative care operations at SB HOPE Campus and an estimated $300,000 for Phase 2 operations and annually thereafter if required; and
2. Adopt Resolution No. 2025-297 to amend the Fiscal Year 2024-2025 Operating Budget authorizing the allocation of $2,395,075 from Permanent Local Housing Allocation funds for the operations of the SB HOPE Campus; and
3. Authorize the Director of Finance and Management Services to amend the FY2024/2025 Adopted budget for the appropriation of $2,395,075 in both revenues and expenditures; and
4. Authorize the City Manager or designee to take any further actions and execute any further agreements or documents as necessary to implement operations at SB HOPE Campus.
.
Attachments
Attachment 1 PSA Helping Hearts CA
Attachment 2 Resolution No. 2025-297
Attachment 3 PowerPoint Presentation
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Ward:
All Wards
Synopsis of Previous Council Actions:
December 7, 2022 Mayor and City Council authorized the use of $24,500,000 in ARPA funds to develop a Navigation Center, State of
California Homekey Round 3 Projects, Homeless/Street
Outreach, and $150,000 towards Mobile Shower Expansion.
February 1, 2023 Mayor and City Council adopted Resolution No. 2023-028 declaring a homelessness state of emergency.
March 15, 2023 Mayor and City Council approved an allocation of $4,299,672 of HOME-ARP funds to assist with the design
and construction of the Navigation Center.
May 17, 2023 Mayor and City Council adopted Resolution No. 2023-076 adopting the Homelessness State of Emergency
Implementation Strategy.
June 21, 2023 Mayor and City Council adopted the FY 2023-24 Annual Action Plan, which included an allocation of $1,901,365 in CDBG funds for the Navigation Center.
July 19, 2023 Mayor and City Council approved an Amendment to Permanent Local Housing Allocation Funds to assist
individuals experiencing homelessness.
October 4, 2023 Mayor and City Council adopted Resolution No. 2023-144 for the Strategic Initiatives, approving an annual allocation of $2,000,000 for Homelessness Services Sustainability
beginning FY 2026/27.
November 1, 2023 Mayor and City Council accepted $808,358.87 in Homeless Housing, Assistance, and Prevention (HHAP) Round 3 grant funds from the County of San Bernardino for the Navigation Center.
September 4, 2024 Mayor and the City Council adopted Resolution 2024-201, reaffirming the declaration of a Homelessness State of
Emergency.