TO: HONORABLE MAYOR
AND CITY COUNCIL
FROM: Erik L. Soliván
Jim Shannon
SUBJECT: See Below DATE: December 3, 2024
Approved:
Date:
12/6/2024
COUNCIL DISTRICTS: 2, 3, 6, 7
SUBJECT: Actions Related to Grant Agreements for Multiple Emergency Interim Housing Program Sites
RECOMMENDATION
(a) Adopt a resolution authorizing the Housing Director, or his designee, to negotiate and execute amendments to extend existing Emergency Interim Housing program grant agreements with the following nonprofit service providers:
(1) HomeFirst Services of Santa Clara County (Emergency Interim Housing sites:
Monterey Bernal and Rue Ferrari) in an amount not to exceed $4,119,175 retroactive from January 1, 2025 through June 30, 2025; (2) HomeFirst Services of Santa Clara County (Bridge Housing Community sites:
Mabury and Felipe) in an amount not to exceed $2,552,889 retroactive from January 1, 2025 through June 30, 2025;
(3) PATH (Emergency Interim Housing site: Evans Lane) in an amount not to exceed $2,191,261 retroactive from January 1, 2025 through June 30, 2025; and (4) LifeMoves (Emergency Interim Housing site: Guadalupe) in an amount not to exceed $1,718,504 retroactive from January 1, 2025 through June 30, 2025.
(b) Adopt the following 2024-2025 Appropriation Ordinance amendments in the Real Property Transfer Tax Fund:
(1) Decrease the Measure E – 15% Homeless Support Programs Reserve by $1,718,504; and
(2) Increase the Interim Housing Construction and Operations (15% Homeless Support Programs) appropriation to the Housing Department by $1,718,504.
COUNCIL AGENDA: 12/17/24
FILE: 24-2348
ITEM: 2.22
HONORABLE MAYOR AND CITY COUNCIL
December 3, 2024
Subject: Actions Related to Grant Agreement for Multiple Emergency Interim Housing Program Sites
SUMMARY AND OUTCOME
The Housing Department recommends extending four existing Emergency Interim Housing (EIH) program grant agreements, totaling $10,581,829 of state and local funds, to maintain the continuity of site operations at six EIH program sites (EIH sites), beginning January 1, 2025 through June 30, 2025, while numerous EIH operational changes are developed. The Housing Department plans to extend the current EIH grant agreements through June 2025 to minimize service disruptions and allow sufficient time for a comprehensive service and budget analysis. The variances in costs across the interim housing portfolio are a catalyst for the Housing Department’s push for the standardization of supportive service operations, service delivery, and the centralization of purchasing for the delivery of essential services. Table 1 outlines a cost summary of the six EIH sites discussed in this memorandum.
Table 1 – Cost Summary of EIH Sites
EIH Site Units Service
Provider Investment Per Unit Term1
(Days)
Per Unit
Per Day
Monterey -
Bernal 78 HomeFirst $2,008,098 $25,745 180 $143
Rue Ferrari 82 HomeFirst $2,111,077 $25,745 180 $143
Mabury 38 HomeFirst $1,276,444 $33,591 180 $186
Felipe 38 HomeFirst $1,276,445 $33,591 180 $186
Evans Lane 49 PATH $2,191,261 $44,720 180 $248
Guadalupe 96 LifeMoves $1,718,504 $17,901 180 $99
Over the next six months, the Housing Department will continue working with our partners to centralize the purchasing of meal provisions, site security, and property and asset management in order to maximize the economies of scale for cost savings and consistency of services, thus allowing our partners to focus on their strengths in supportive service delivery to EIH program participants.
In addition, as preparation for the resulting new grant agreements beginning in July 2025, the Housing Department is looking to standardize policies and procedures across all EIH sites, implement new property and asset management activities, and establish standard operational costs across the Housing Department’s interim housing portfolio.
1 Term end date, as recommended in this memorandum, is June 30, 2025.
HONORABLE MAYOR AND CITY COUNCIL
December 3, 2024
Subject: Actions Related to Grant Agreement for Multiple Emergency Interim Housing Program Sites
BACKGROUND
The current EIH grant agreements were originally approved by City Council on October 24, 2023, when the Housing Department presented recommendations to City Council for improving EIH site operations and reducing costs2. City Council approved the strategy to integrate these recommendations into current and upcoming EIH sites; however, the recommendations of the HomeBase study did not take into consideration the following three critical points of analysis of EIH site operations:
1) Fiscal constraints of unsubsidized continuing operating costs; 2) Benefits of central purchasing for services outside the core competencies of the supportive service providers; and
3) Growth of the interim housing portfolio, including implementing operating standards for EIH site operations, reducing operating costs, reorienting our partners toward core supportive service delivery, and setting up a comprehensive performance tracking protocol.
On June 18, 2024, City Council prioritized establishing quantitative contractual goals and outcomes for asset management at all EIH sites, which are partially implemented as outlined in the EIH grant amendments recommended in this memorandum.3
ANALYSIS
During the next six months, the Housing Department will continue the process of analyzing the costs of all shelter and interim housing sites and developing policies and procedures to establish a standard of service for all site operators regarding supportive services, staffing plans, and property and asset management.
Policies and Procedures
The Housing Department, in collaboration with HomeBase, has been drafting policy and procedure guidelines to establish universal and transparent operating standards for all EIH sites. These guidelines will include revised standards, set outcomes-based
2 Item #: 8.3, File #: 23-1460, Date: October 24, 2023, Title: Interim Housing Financial Stability – Study of City Interim Housing and Actions Related to Interim Housing Grant Agreements, Web link:
https://sanjose.legistar.com/gateway.aspx?M=F&ID=554399c4-5bed-456c-abf8-d85567ef5f19.pdf 3 Item #: 2.23, File #: 24-147329, Date: June 18, 2024, Title: Actions Related to Grant Agreements for Multiple Programs Serving Households Experiencing Homelessness for Fiscal Year 2023-2024, Web link:
https://sanjoseca.primegov.com/api/compilemeetingattachmenthistory/historyattachment/?historyId=b13e 3d54-c2ff-4d38-9e2a-a6a9e5420e23
HONORABLE MAYOR AND CITY COUNCIL
December 3, 2024
Subject: Actions Related to Grant Agreement for Multiple Emergency Interim Housing Program Sites
performance measures, and comprehensive policies aligned with applicable requirements.
To enhance evaluation and effectiveness, the Housing Department is collecting robust data on service provider performance while expanding the policy and procedure guidelines to include asset management plans for EIH sites. Table 2 outlines the asset management tools and reports under development to ensure effective EIH site management.
Table 2 – Asset Management Tools and Reports
Asset
Management
Tool/Report
Purpose Cadence
Unit Event
Tracker
This tool is designed to enhance reporting accuracy
and improve operational efficiency by tracking unit
occupancy, turnover, and maintenance data.
Weekly
Unit
Inspection
Report
A detailed report that lists maintenance and
structural issues to project capital expenses and
proactively addresses these issues to save costs.
Semi-Annual
Unit Turnover
Expense
Report
A detailed report providing total costs associated
with unit turnovers to provide historical data for each unit and, more accurately, project costs of property
maintenance of an EIH site.
Semi-Annual
Physical
Needs
Assessment
A comprehensive evaluation of a property's physical
condition, identifying existing maintenance issues,
building code violations, and potential future repair
needs to determine the long-term viability of the
property and prioritize necessary capital
expenditures for its upkeep.
Annual
The goal will be to include the policy and procedure guidelines in new EIH program grant agreements at the beginning of Fiscal Year 2025-2026. The Housing Department will conduct quarterly compliance reviews for all relevant data gathered through the asset management reports and establish routine meetings with EIH program site operators to foster transparency between all partners and enhance collaboration to achieve more effective outcomes.
Cost Analysis
The Housing Department’s interim housing portfolio is undergoing a comprehensive cost analysis. A comprehensive pro forma recently developed has highlighted significant
HONORABLE MAYOR AND CITY COUNCIL
December 3, 2024
Subject: Actions Related to Grant Agreement for Multiple Emergency Interim Housing Program Sites
variances across the portfolio. The resulting cost analysis will be used to refine the pro forma to improve the projection of future expenses of each EIH site. One main component of the cost analysis, as it relates to the EIH program, is standardizing a per- unit-cost model across all EIH sites. This will allow staff to better control the costs of current and upcoming EIH sites without sacrificing service delivery. The cost analysis of the EIH sites consists of four main elements: meal provisions, site security, property and asset management, and supportive services staffing plans.
Staff are developing property and asset management guidelines for current and future EIH site operators to follow, ensuring the efficient operation, maintenance, and stewardship of the physical facility and its resources. This includes the cost of routine unit turnover, more efficient use of funding – including prevailing wage – for unit repairs, and ongoing preventative maintenance to extend unit viability. The primary goal is to create a safe, comfortable, and well-maintained environment for EIH program participants while maximizing the lifespan and utility of the EIH site's assets. Once all property and asset management costs are identified, the Housing Department can better project future costs related to physical site needs as a part of the pro forma currently in development.
The cost analysis will result in a standardized framework that separates property management and service costs into distinct budget categories. This approach will provide EIH site operators with greater visibility of financial expectations while allowing the Housing Department to maintain consistent budgetary oversight across all EIH sites.
By establishing clear expectations for EIH site operators and allowing them to advocate for efficient service delivery and property and asset management, we can ensure more effective resource allocation, promote the long-term financial sustainability of the Housing Department’s EIH program, and enable EIH site operators to focus on delivering high-quality services and maintaining the physical assets of each EIH site.
This alignment of financial and operational strategies will support the long-term success of the EIH program and its program participants.
EVALUATION AND FOLLOW-UP
Assessment of varying EIH operational models, standardization of policy and procedure guidelines across EIH sites, and in-depth cost analysis of interim housing programs will ensure new grant agreements maximize the financial and operational efficiency of current and future interim housing programs. These efforts will help align the EIH program with the Housing Department’s Housing Continuum, a model that combines shelter and housing services to achieve functional zero and makes strategic investments at critical points in the continuum. A departmental pro forma will ensure a financial framework for evaluating program costs, projecting funding needs, and guiding
HONORABLE MAYOR AND CITY COUNCIL
December 3, 2024
Subject: Actions Related to Grant Agreement for Multiple Emergency Interim Housing Program Sites
resource allocation, ultimately supporting sustainable growth and integration of the EIH program within the broader Housing Continuum.
Amending the current grant agreements as recommended in this memorandum will allow the Housing Department time to evaluate the EIH sites and, in the future, implement the above changes into grant agreements with competitive EIH site operators selected from the March 2024 request for proposals. The Housing Department will return to City Council in spring 2025 to recommend new grant agreements for Fiscal Year 2025 - 2026.
COST SUMMARY/IMPLICATIONS
1. TOTAL COST OF CONTRACT/AGREEMENT
Recommended Amendment $10,581,829
TOTAL CONTRACT/AGREEMENT AMOUNT $10,581,829
2. SOURCE OF FUNDING: Real Property Transfer Tax Fund (Measure E) and Building, and Homes and Jobs Act Fund (Permanent Local Housing Allocation Program).
3. FISCAL IMPACT: The actions recommended in this memorandum will enable the Housing Department to negotiate and execute four amendments to current grant agreements retroactive from January 1, 2025 to June 30, 2025, with three non- profit service providers supporting six EIH sites. Staff recommends reducing approximately $1.7 million in the Real Property Transfer Tax Fund, Measure E – 15% Homeless Support Programs Reserve and increasing the Interim Housing Construction and Operations (15% Homeless Support Programs) appropriation to help fund these agreements.
HONORABLE MAYOR AND CITY COUNCIL
December 3, 2024
Subject: Actions Related to Grant Agreement for Multiple Emergency Interim Housing Program Sites
BUDGET REFERENCE
The table below identifies the funds and appropriations to fund the amended grant agreements recommended in this memorandum.
Fund
No.
Appn
No.
Appropriation
Name
Total
Appropriation
Rec. Budget
Action
Amt. for
Grant
Agreement
2024-2025
Adopted
Operating
Budget
Page
Last
Budget
Action
(Date, Ord.
No.)
456 213B Housing Shelter $14,242,706 $0 $8,000,000 934
10/22/2024
Ord. No.
31130
404 8746
Measure E – 15%
Homeless Support
Programs Reserve
$1,786,369 ($1,718,504) $0 1006
10/22/2024
Ord. No.
31130
404 230G
Interim Housing
Construction and
Operations (15%
HSP)
$2,000,000 $1,718,504 $2,581,829 1006
10/22/2024
Ord. No.
31130
COORDINATION
This memorandum has been coordinated with the City Attorney’s Office.
PUBLIC OUTREACH
This memorandum will be posted on the City’s Council Agenda website for the December 17, 2024 City Council meeting.
COMMISSION RECOMMENDATION AND INPUT
No commission recommendation or input is associated with this action.
CEQA
Not a Project, File No. PP17-009, Staff Reports, Assessments, Annual Reports, and Informational Memos that involve no approvals of any City action and File No. PP17- 003, Agreements/Contracts (New or Amended) resulting in no physical changes to the environment.
HONORABLE MAYOR AND CITY COUNCIL
December 3, 2024
Subject: Actions Related to Grant Agreement for Multiple Emergency Interim Housing Program Sites
PUBLIC SUBSIDY REPORTING
This item does not include a public subsidy as defined in section 53083 or 53083.1 of the California Government Code or the City’s Open Government Resolution.
/s/
Erik L. Soliván Jim Shannon
Housing Director Budget Director
The principal author of this memorandum is Ryan Sanders, Senior Development Officer, Housing Department. For questions, please contact Cupid Alexander, Deputy Director, Housing Department, at [email protected].