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DISCUSSION
City of San Bernardino
Request for Council Action
Date: February 4, 2026
To: Honorable Mayor and City Council Members
From: Gabriel Elliott, Director of Community Development & Housing Department: Community Development & Housing
Subject: Amendment No. 3 to the Motel Voucher Program
Professional Services Agreement with PA-AN, Inc. and
Namaste Sitiye, Inc. (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 Amendment No. 3 to the Professional Services Agreement with PA-AN, Inc. and Namaste Sitiye, Inc., extending the term, increasing the not to exceed amount, and revising the terms of the agreements to ensure continuity and support continued effective implementation of the Motel Voucher Program; and
2. Authorize the City Manager, or their designees, to take any further actions and execute any further agreements or documents as necessary, including minor and substantive changes, after review by the City Attorney, as necessary to effectuate the implementation of the Motel Voucher Program.
City Manager's Comments
The City Manager recommends approval of Amendment No. 3. The Ostrems Way location will no longer be used for the Motel Voucher Program.
Executive Summary
The City of San Bernardino administers the Motel Voucher Program as part of its comprehensive homelessness response strategy. The City entered into a Professional Services Agreement (PSA) with SB Motel North LLC to provide interim shelter services at the Motel 6 North property located at 1960 Ostrems Way, San Bernardino, CA 92407. The operator has informed the city that Motel 6 North is no longer able to fulfill obligations under the PSA. To preserve program continuity, staff recommends terminating the existing agreement and amending the existing Professional Services 3 1
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Agreements with PA-AN, Inc. (Studio 6 Suites) and Namaste Sitiye, Inc. (Roadway Inn). This action is consistent with the U.S. Department of the Treasury’s Interim Final Rule (Federal Register, Vol. 88, No. 222), which allows the city to replace contracts when a contractor is unable to perform. The City and SB Motel North LLC mutually determined that Motel 6 North is unsuitable for continued program operations and agreed to transition services to Studio 6 and Rodeway Inn. This amendment ensures uninterrupted program delivery, preserves bed capacity, and allows the City to expend Community Development Block Grant CARES Act (CDBG-CV) funds by the expenditure deadline of October 22, 2026.
Background
The Motel Voucher Program provides non-congregate shelter for individuals and families experiencing homelessness, addressing immediate needs while the city develops the permanent SB HOPE Campus. The program is funded through American Rescue Plan Act (ARPA) State Local Fiscal Recovery Funds (SLFRF), Public Local Housing Allocation (PLHA), and Community Development Block Grant CARES Act (CDBG-CV) allocations, with the CDBG-CV funds specifically supporting emergency shelter and services to prevent, prepare for, and respond to the impacts of COVID-19 among vulnerable populations.
The Motel Voucher Program was initiated to prevent the spread of COVID-19 by reducing reliance on congregate shelter settings and enabling individuals and families experiencing homelessness to isolate in non-congregate environments safely. The program prepares the City to address public health emergencies by maintaining flexible, immediately deployable shelter capacity that can be activated during disease outbreaks or other crisis events. It responds to the impacts of COVID-19 by providing rapid emergency housing to vulnerable populations who are at heightened risk of severe illness, including unsheltered individuals, families, and those with underlying health conditions, while ensuring access to safe shelter during inclement weather and public health emergencies.
On March 20, 2024, the Mayor and City Council approved the Motel Voucher Program by authorizing Professional Services Agreements with SB Motel North LLC for the Motel 6 North property at 1960 Ostrems Way, San Bernardino, CA 92407; PA-AN, Inc., for the Studio 6 Suites property at 607 West 5 th Street, San Bernardino, CA, 92410; and Namaste Sitiye, Inc. for the Roadway Inn property at 1150 South E Street, San Bernardino, Ca, 92408.
On November 20, 2024, the Council approved Amendment No. 1, which expands the program's capacity to 130 rooms/200 beds and extends the term to December 31, 2026.
On April 2, 2025, the Council approved Amendment No. 2 to correct budget obligations and incorporate CDBG funds.
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Discussion
The Motel Voucher is a cornerstone of the City’s emergency shelter system. The motel owner, Shanup Patel, notified the city that Motel 6 North can no longer support the program services. In partnership, the city and the operator agreed to transition services to the Studio 6 Suites, located at 607 5th St., and the Rodeway Inn, located at 1150 S. E. St., San Bernardino, CA 92408, under the same ownership.
The purpose of Amendment No. 3 is to:
1.Revise the funding structure of the agreements: This amendment allows the city to pay for services using any of the following funding sources: CDBG-CV, ARPA, or PLHA. This flexibility enables City staff to prioritize funds with earlier expenditure or expiration deadlines while preserving funding sources with longer sunset periods. With the cancellation of the SB Hotel North agreement, remaining unspent funds for $992,427.18 will be reallocated to Namaste Sitiye, Inc. (Roadway Inn) with a revised not-to-exceed compensation amount of $1,309,922.31 and PA-AN, Inc. (Studio 6 Suites) with a revised not-to-exceed compensation amount of $1,421,561.37.
2.Revise room allocation: Following the cancellation of the SB Hotel North agreement, and to preserve the program’s overall capacity, the room distribution at the remaining two motels will be increased. This adjustment maintains the program’s total capacity of 130 rooms and 200 beds.
Current Motel Room Distribution:
Motel Single
Rooms
Double
Rooms
Total
Rooms
Total
Beds
Motel 6 – SB Hotel North LLC 20 40 60 100
Roadway Inn – Namaste Sitiye, Inc. 20 20 40 60
Studio 6 – PA-AN, Inc. 20 10 30 40
Total: 60 70 130 200
Revised Motel Room Distribution:
SB HOTEL
NORTH LLC
(Motel 6)
Encumbrance
Amount
Expenses
To Date
Remaining
Balance
Funding
Adjustments
Revised not-
to-exceed
Total $1,075,200.00 $82,772.82 $992,427.18 $(992,427.18) $-
PA-AN INC
(Studio 6)
Encumbrance
Amount
Expenses
as of
01/20/26
Remaining
Balance
Funding
Adjustments
Revised not-
to-exceed
Total $733,640.00 $467,487.00 $266,153.00 $692,095.37* $1,425,735.37 *Includes a reduction of $15,000.00 of funds that are no longer available for use on this project
NAMASTE
SITIYA INC
(Rodeway)
Encumbrance
Amount
Expenses
as of
01/20/26
Remaining
Balance
Funding
Adjustments
Revised not-
to-exceed
Total $1,073,000.00 $346,565.50 $726,434.50 $236,922.31* $1,309,922.31 *Includes a reduction of $48,409.50 of funds that are no longer available for use on this project 3 1
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Motel Single
Rooms
Double
Rooms
Total
Rooms
Total
Beds
Motel 6 – SB Hotel North LLC 0 0 0 0
Roadway Inn – Namaste Sitiye, Inc. 40 50 90 140
Studio 6 – PA-AN, Inc. 20 20 40 60
Total: 60 70 130 200
3.Include language prohibiting blackout dates: The existing agreements do not address blackout dates, which have led to operational challenges during periods of high local demand (e.g., concerts or large events), when motels prioritize other guests and require program participants to vacate or relocate.
This amendment stipulates that there shall be no blackout dates for motel rooms allocated to the program, ensuring uninterrupted access for participants throughout their planned stay.
4.Strengthen Oversight and Documentation for Repair Reimbursements:
The revision to the provision strengthens the City’s oversight and cost-control authority over hotel repair reimbursements by requiring City preapproval, inspection rights, detailed documentation, and compliance with check-in/check- out procedures as conditions for reimbursement, while clarifying that the City is only responsible for damages it caused and is not obligated to pay for unapproved or undocumented repairs.
5.Extend the agreement term through June 30, 2027: The current period of performance ends on December 31, 2025. Extending the term will allow the City to continue providing critical interim shelter services to individuals experiencing homelessness while the SB Home Campus is under development, ensuring continuity of services for vulnerable populations.
Additionally, approval of Amendment No. 3 will enable the City to:
Maintain service continuity by transitioning to an alternate property without disruption to program participants.
Ensure regulatory compliance with Treasury’s Interim Final Rule (Federal Register, Vol. 88, No. 222), which explicitly allows contract replacement in cases of contractor default or inability to perform.
Promote fiscal responsibility by reallocating existing obligated funds rather than creating new obligations.
Enhance audit readiness through documented non-performance, written notice, and a mutually executed replacement agreement.
Avoid legal disputes by resolving the issue cooperatively with the operator, ensuring uninterrupted program services.
This transition demonstrates the City’s proactive contract management, safeguards federal resources, and reinforces the City’s commitment to uninterrupted shelter services.
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2021-2025 Strategic Targets and Goals
Approval of this action supports Strategic Target No. 3: Improved Quality of Life, by reducing the burden of homelessness and advancing the City’s commitment to collaborative solutions and housing stability.
Fiscal Impact
There is no fiscal impact on the General Fund. Funding for this item is supported by existing appropriations from CDBG-CV3, ARPA, PLHA, and CDBG funds previously approved for non-congregate motel shelter operations.
The SB Hotel North LLC (Motel 6) site will be closed, and the remaining unexpended and encumbered balances will be de-obligated and reallocated to other City-funded motel shelter locations to support continued operations and services for persons experiencing homelessness.
Conclusion
It is recommended that the Mayor and City Council of the City of San Bernardino, California:
1. Authorize the City Manager to execute Amendment No. 3 to the Professional Services Agreement with PA-AN, Inc. and Namaste Sitiye, Inc., extending the term, increasing the not-to-exceed amount, and revising the terms of the agreements to ensure continuity and support continued effective implementation of the Motel Voucher Program; and
2. Authorize the City Manager, or their designees, to take any further actions and execute any additional agreements or documents as necessary, including minor and substantive changes, after review by the City Attorney, as required to effectuate the implementation of the Motel Voucher Program.
Attachments
Attachment 1 – PSA with SB Hotel North LLC
Attachment 2 – Amendment No. 1 to PSA with SB Hotel North LLC Attachment 3 – Amendment No. 2 to PSA with SB Hotel North LLC Attachment 4 – PSA with PA-AN Inc
Attachment 5 – Amendment No. 1 to PSA with PA-AN Inc
Attachment 6 – Amendment No. 2 to PSA with PA-AN Inc
Attachment 7 – PSA with Namaste Sitiye Inc
Attachment 8 – Amendment No. 1 to PSA with Namaste Sitye Inc Attachment 9 – Amendment No. 2 to PSA with Namaste Sitye Inc Attachment 10 – Amendment No. 3 to PSA with PA-AN Inc
Attachment 11 – Amendment No. 3 to PSA with Namaste Sitiye Inc Attachment 12 – PowerPoint
Ward: All Wards
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Synopsis of Previous Council Actions:
Synopsis of Previous Council Actions
August 4, 2021 Mayor and City Council received a report and discussed the allocation of ARPA Funds.
December 7, 2022 Mayor and City Council approved a Homelessness Solutions Action Plan, and $24.5 million in ARPA funds to help mitigate homelessness.
February 1, 2023 Mayor and City Council declared a Homelessness State of Emergency.
May 17, 2023 Mayor and City Council approved a Homelessness State of Emergency Implementation Plan.
July 19, 2023 Mayor and City Council approved an Amendment to Permanent Local Housing Allocation Funds to assist
individuals experiencing homelessness.
August 13, 2023 Mayor and City Council approved a Substantial Amendment to FY2020-2021 Annual Action Plan associated with
Community Development Block Grant Coronavirus Relief
Funds to support interim shelter activities.
December 6, 2023 Mayor and City Council approved a Motel Voucher Program and authorized Professional Service Agreements with motel operators to provide interim shelter
March 6, 2024 Mayor and City Council approved the Emergency Shelter Program with Anand Patel in the amount of $2,751,840 while reallocating unspent PLHA funds in the amount of $327,591.
November 20, 2024 Mayor and City Council approved Amendment No. 1 to the Motel Voucher Program Professional Services Agreements
with Anand Patel (All Wards)
April 2, 2025 Mayor and City Council approved Amendment No. 2 to the Motel Voucher Program PSAs with Anand Patel, voiding
Amendment No. 1 due to administrative errors, correcting budget obligations, revising the rate schedules, and
incorporating HUD CDBG funds to continue program
operations.
CC: Eric Levitt, City Manager