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CC - (1) Discussion of the Project Homekey Program Round 2 Application for Motel Acquisition and Rehabilitation and Consideration of the Appropriation of Local Funds for Operation and Supportive Services; (2) If Desired, Adoption of a Resolution to Submit an Application for the Creation of 38 Interim Housing Units and 35 Permanent Supportive Housing Units; and (3) Direction to the City Manager as Deemed Appropriate
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Meeting Date: December 13, 2021
Contact Person/Dept: Helen Chin/City Manager’s Office
Tevis Barnes/Housing Division/Community Development
Phone Number: 310-253-6022
Fiscal Impact: Yes [X] No [] General Fund: Yes [] No [X]
Public Hearing: [] Action Item: [X] Attachments: []
Commission Action Required: Yes [] No [] Date:
Public Notification: (E-Mail) Meetings and Agendas - City Council (12/09/2021);
Department Approval: John M. Nachbar, City Manager (12/08/2021)
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RECOMMENDATION
Staff recommends the City Council (1) discuss the Project Homekey Program Round 2 Application for motel acquisition and rehabilitation and consider the appropriation of funds for operation and supportive services; (2) if desired, adopt a resolution to submit an application for the creation of 38 interim housing units and 35 permanent supportive housing units; and (3) direction to the City Manager as deemed appropriate.
BACKGROUND
The Project Homekey Program Round 2 (Program) is a statewide program through the California Department of Housing and Community Development (HCD) that offers a funding opportunity for cities, counties, and other public entities to develop a range of permanent or interim housing types for people experiencing homelessness.
A total of $1.45 billion is made available statewide for the Program. With the completion of the Motel Reuse Study, the Program is an opportunity for the City to take advantage of funding to support the acquisition and rehabilitation of two motels that would provide housing, mental health, and social services to Culver City’s unhoused community.
Notice of Funding Availability (NOFA) Guidelines (Note: This NOFA summary only pertains to Culver City’s potential application to support the Motel Reuse Study. See attached NOFA for complete guidelines.)
1. Eligible uses include acquisition and rehabilitation of motels and hotels.
2. Capital Funds:
a. Studio or 1-bedroom units will receive a baseline of $150,000 per door.
i. Units reserved for those experiencing chronic homelessness will receive $200,000 per door.
ii. Applicant can receive up to an additional $100,000 per door in demonstrating a 1:1 in matching funds.
3. Operating Subsidy:
a. Eligible applicants are required to demonstrate a 5-year commitment to providing operating funds. This can include 2 years from the Homekey subsidy.
b. However, in order to qualify for the 2 years of Homekey subsidy, the City must demonstrate a commitment of 3-years of non-Homekey funds.
c. Units reserved for people experiencing chronic homelessness are set at $1400 per month per unit
The funding is structured to support the capital costs of the project on a per door (or unit) basis. A baseline amount of $150,000 per door is available for studio and one-bedroom units (the proposed City motel reuse is all studio units). For those experiencing chronic homelessness, the Program is making available a baseline amount of $200,000 per door (the proposed City motel reuse will target chronic high users of emergency and outreach services). The City may leverage a 1:1 local match, which would unlock an additional $100,000 in funds per door. This can yield an award of $300,000 per door or $21.9 million for the 73 proposed units.
However, the operating subsidy is tied to the City’s ability to demonstrate matching funds. If Culver City can demonstrate three years of non-Homekey operating funds, the Program can provide additional subsides for two years. If the City can demonstrate four or more years of operating funds, the Program can provide operating additional subsidies for three years. The City must demonstrate a five-year commitment to provide operating funds for the proposed project and must submit a 15-year budget which covers operations and services.
DISCUSSION
Community Need/Homeless Census
Culver City is located in Service Planning Area 5 (SPA 5) and falls under the Los Angeles Homeless Services Authority (LAHSA) Continuum of Care (CoC). A CoC is a regional planning body that coordinates the funding for housing and services for unhoused individuals and families. The LAHSA Homeless Count in 2019 reflected an increase of 12.7% in homelessness across Los Angeles County. The Westside Homeless Census Demographic Survey conducted by LAHSA noted that 82% of the unhoused population in SPA 5 are single adults aged 25 and older. Of this population, 73% are persons with addiction disorders. Culver City’s own internal homeless count in 2021 reflected an increase of 35% in homelessness since 2020. According to the 2021 Homeless Count results, there were 291 people experiencing homelessness during the evening of the Count, with 247 unsheltered individuals living on the streets or in vehicles and 44 sheltered individuals at Upward Bound House.
Creation of a Homeless Shelter
Witnessing the growth of homelessness in Culver City and in the region, the City continues to implement goals outlined in the 2018 Council-adopted Plan to Prevent and Combat Homelessness (Plan). Under the Plan, Goal 1 is to Increase Bridge Housing Options and Increase the Numbers of Persons served. More specifically, Action 1a calls for the creation of an emergency shelter through the conversion of a local motel. The submission of a Program application will allow the City to effectuate this goal.
Some of the goals in the Plan include the creation of a safe parking program on a City-owned lot, enhanced coordination and collaboration with local and regional agencies, and continued outreach efforts through St. Joseph Center and internal City teams. Additionally, the City is pursuing the development of a mobile crisis program to support people experiencing behavioral health disorders and homelessness.
This evening the Council will consider the approval of an agreement with LAHSA to conduct the Greater Los Angeles Homeless Count from Calendar Years 2022 -2025 and approve funding to develop a localized Homeless Management Information System (HMIS) for in-house data tracking to better understand and target resources. If these items are approved, they will be part of the City’s comprehensive support infrastructure that strengthens the City’s ability to connect people experiencing homelessness with appropriate services and housing. Many of the programs outlined serve as integral parts to this infrastructure, from meeting people where they are at, providing services through trauma-informed care, building and maintaining relationships, connecting people to the services they want, and ultimately moving people into stable and supportive housing. A critical part of meaningfully addressing homelessness in Culver City is providing shelter and housing, a place indoors where people can find safety and stabilization. Outreach and data tracking alone cannot solve homelessness, but the creation of homes can. Through the Program the City has an opportunity to create 73 units of both interim and permanent supportive housing.
Application Viability and Competitiveness
Staff from the Community Development Department and the City Manager’s Office evaluated the viability and competitiveness of a City application based on the Program evaluation criteria. Responses will be evaluated on the criteria of 1) Site control and commitment of non-Homekey funds (up to 40 points), 2) Experience with the development, ownership, or operation of projects similar in scope and size of the proposed project (up to 55 points), 3) Racial equity and community engagement (up to 20 points), and 4) Community impact and site selection (up to 92 points). The maximum allowable score is 207 with applicants needing to score at least 120 points to be eligible for funding. Staff’s best estimate is that the City’s application has the potential to score on the upper end of the range, making the City application fairly competitive to receive a funding award under the Program.
Costs
One of the challenges for a small city is being able to fund the full spectrum of housing, operations, and supportive services. The costs to provide outreach, services, and housing have a disproportionate impact on a smaller city’s budget. Additionally, due to Culver City’s population size, the City is not entitled to some funding programs through the United States Department of Housing and Urban Development (HUD) or through the State.
While staff continues to research grant and funding opportunities through Los Angeles County and through the State, substantial and ongoing funding remains a huge challenge. To date, staff has identified capital funding through the Program. If awarded, the Program, along with our local matching funds, will cover acquisition and rehabilitation. However, in order to submit a viable application and qualify for the small operating subsidy, the City would have to demonstrate the ability to provide at least five years of operating funds. In consideration of developing a program with low barriers and targeted mental health, case management, and substance use services, the estimated costs for operating both interim and permanent supportive housing is $4.91 million annually.
Staff, with the assistance of Mayor Fisch, have held several discussions with the Los Angeles County Homeless Initiative Office and Board of Supervisor Holly Mitchell’s office to identify operating funds to support our application. On November 16, 2021, the Board of Supervisors passed a motion which allocates operating funds to support cities applying for the Program. While this motion is a step in the right direction, it identifies only $10 million of one-time funding for the 88 cities in Los Angeles County. The Los Angeles County Homeless Initiative Office has the discretion to determine the amount of funding interested cities would receive. County staff have indicated we will receive $588,000 per year for three years from this source for permanent supportive housing operating costs. In addition, the County will provide an additional $189,000 per year for five years for these costs. So, at this point the County will provide a total of $777,000 per year for the first three years for permanent supportive housing operating costs. In addition, we can potentially secure through Project Homekey an additional $1,226,400 in operating funding for years four and five of operations.
This creates an estimated annual operations funding gap of $4,133,000 annually for the first three years, and $3,494,600 in years four and five.
1) Staff requests that the City Council consider the foregoing, and if desired consider appropriating funds for the remaining operating and supportive services. The City will need to commit to underwriting these operational funding requirements in order to submit a viable application.
2) If the Council directs staff to submit a Homekey application, staff requests that the Council approve the proposed authorizing resolution (Attachment 2). If approved by City Council, the amount of the City’s committed funding will be inserted into the proposed resolution, where indicated, prior to being executed by the Mayor.
FISCAL ANALYSIS
While there is no fiscal impact in discussing the Program application, should the Council decide to proceed with allocation of funding for operations and supportive services, the below provides some overall cost estimates.
The updated total acquisition and rehabilitation cost for the conversion of two motels to create interim and permanent supportive housing units is estimated at $29.2 million. Currently, the City is in receipt of $3.4 million from the State through Senator Sydney Kamlager’s efforts and up to $7.3 million can be dedicated from the City’s Low- and Moderate-Income Housing Asset Fund (LMIHAF) to support capital costs. It is our intent to secure $21.9 million from Project Homekey. Hopefully, the $3.4 million can be used to offset our $7.3 million LMIHAF source of funding.
To better understand the estimated total operating costs of $4.91 million, staff researched a similar interim housing program funded by the Los Angeles County Department of Health Services (DHS). Operations and supportive services for interim housing, which involves intensive and comprehensive mental health and addiction services, costs about $3.7 million annually. Permanent supportive housing requires less supportive services and would cost about $1.21 million annually due to the ability of the individuals to live more independently.
ATTACHMENTS
1. Project Homekey Notice of Funding Availability
2. Authorizing Resolution
MOTION
That the City Council:
1. Discuss the Project Homekey Program Round 2 Application for motel acquisition and rehabilitation and consider the appropriation of funds for operation and supportive services; and
2. If desired, adopt a resolution to submit an application for the creation of 38 interim housing units and 35 permanent supportive housing units; and
3. Provide direction to the City Manager as deemed appropriate.