REQUEST FOR CITY COUNCIL ACTION
DATE: 04/03/2024
TO: Honorable Mayor and City Council Members
FROM: City Manager’s Office
SUBJECT:
Title
APPROVAL OF THE SECOND AMENDMENT TO THE MERCY HOUSE HOMELESS SYSTEM OF SERVICES AGREEMENT
End
EXECUTIVE SUMMARY:
The staff report asks City Council to approve the Second Amendment to the Mercy House Homeless System of Services Agreement to support the Harrison Hope Center Shelter/Navigation Center, Pilot Transportation/Meal Services Program, HOME Tenant-Based Rental Assistance Program, Permanent Supportive Housing Program and Recuperative Care Program.
RECOMMENDED ACTION:
Recommended action
That the City Council:
a. Approve the Second Amendment to the Professional Services Agreement with Mercy House for Corona’s Homeless System of Services, to incorporate Fiscal Year 2024 funds of $4,699,255 retroactive from January 1, 2024 in the total maximum compensation amount of $8,469,544.
b. Authorize the City Manager, or his designee, to execute the Second Amendment to the Professional Services Agreement with Mercy House.
c. Authorize the City Manager, or his designee, to approve non-substantive amendments to the Professional Services Agreement, including line-item adjustments so long as any such amendments will not cause the City to exceed the approved total maximum compensation of $8,469,544, for the Second Amendment.
Body
BACKGROUND & HISTORY:
On December 7, 2022, the City Council approved the Mercy House Homeless System of Services Agreement totaling $3,988,491 for a 7-month period through June 30, 2023.
On June 21, 2023, the City Council adopted the City of Corona Budget for Fiscal Year (FY) 2024, which included $4,699,255 in funding to support the Mercy House Homeless System of Services Agreement for a 12-month period beginning July 1, 2023.
On June 21, 2023, the City Council also approved a First Amendment to the Mercy House Homeless System of Services Agreement to extend the term of the Agreement to June 30, 2024, and eliminate the $218,202 contingency thus reducing the maximum obligation of the Agreement to $3,770,283.
ANALYSIS:
Incremental Launch of Programs and Operational Cost Savings:
Although the original Agreement only budgeted 7-months of operating costs for the Homeless System of Services, cost savings were achieved for the following reasons:
1) Delays in completion of construction of the Harrison Hope Center resulting in a delayed operational opening in early June 2023.
2) Costs associated with furniture, fixtures, equipment, and other costs normally associated with the launch of a new shelter/navigation center were lower than anticipated; therefore, 100% of the $218,202 contingency was not needed and was therefore eliminated from the contract through the First Amendment.
3) Mercy House and Homeless Solutions were successful in securing a $5.1 million, 20-year project-based voucher rental subsidy grant from the County for the 5th Street Permanent Supportive Housing units; however, contract negotiations must be completed, and the grant agreement approved by the City Council and County Board of Supervisors before the 5th Street units can be fully occupied; therefore, operational costs have been less than anticipated.
4) Launch of the HOME Tenant-Based Rental Assistance Program was delayed so Mercy House could conduct a market analysis of Corona rents to raise fair market payment standards and thus open more opportunities for homeless clients to find permanent housing in Corona which has some of the highest rents in the County.
Reasons for Retroactive Payments:
When City Council approved the original Agreement on 12/7/22, the contract included provisions for an $838,031 cash advance plus monthly flat fee invoice provisions for submission of paid receipts and a reconciliation of expenses in the last quarter of the contract term. Due to the delayed implementation of programs and therefore delayed submission of paid receipts for many different programs and budget line items, Mercy House expended all operational costs for programs through December 2023. The only exception to this payment issue is the HOME Tenant-Based Rental Assistance Program which was not part of the cash advance or the monthly flat fee invoices due to HUD requirements.
Therefore, the FY 2024 funds of $4,699,255 that are being added to this Second Amendment are retroactive to January 1, 2024 as Mercy House continued to operate programs via the First Amendment term through June 30, 2024. Staff are refining the payment reconciliation process to facilitate a more timely budget balance assessment and contract renewal process for the future.
Because of the aforementioned cost savings, the FY 2025 request for Measure X funds to support the Mercy House Homeless System of Services was lower than it will be in future years.
Homeless Strategic Plan Update:
When staff returns to City Council to add FY 2025 funds to this Agreement, an update on the Homeless Strategic Plan will also be provided. The update will include outcomes and performance measures related to this Agreement as well as other components of Corona’s Homeless System of Services.
FINANCIAL IMPACT:
Funds were previously approved and appropriated through prior City Council Actions; therefore, there is no additional financial impact.
ENVIRONMENTAL ANALYSIS:
This action is exempt pursuant to Section 15061(b)(3) of the Guidelines for the California Environmental Quality Act (CEQA), which states that a project is exempt from CEQA if the activity is covered by the common sense exemption that CEQA applies only to projects that have the potential for causing a significant effect on the environment. Where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment, the activity is not subject to CEQA. This action involves the approval of a Second Amendment to the Mercy House Homeless System of Services. Approval of this Agreement and provision of homeless services will not have a significant effect on the environment. Therefore, no environmental analysis is required.
PREPARED BY: KAREN ROPER, HOMELESS SOLUTIONS MANAGER
REVIEWED BY: JACOB ELLIS, CITY MANAGER
Attachments:
1. Exhibit 1 - FY 23 Mercy House System of Services Agreement
2. Exhibit 2 - FY 23 First Amendment to the Mercy House System of Services Agreement
3. Exhibit 3 - FY 24 Second Amendment to the Mercy House System of Services Agreement