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sr-121311-3d10 City of City Council Report Santa Monica City Council Meeting: December 13, 2011 Agenda Item: 3D To: Mayor and City Council From: Andy Agle, Director of Housing and Economic Development Subject: Housing Capacity Grant to Provide Permanent Supportive Housing Recommended Action Staff recommends that the City Council authorize the City Manager to negotiate and execute a two -year contract with Step Up on Second (SUOS), a Santa Monica -based nonprofit agency, for an amount not to exceed $234,000, to facilitate development of permanent supportive housing in Santa Monica. Executive Summary In September 2011, staff issued a Request for Proposals to increase the supply of permanent supportive housing (special needs housing) consistent with the City's goals. SUOS was the only applicant for the grant. The proposed Housing Capacity Grant would provide funding to enhance the capacity of SUOS to develop permanent supportive housing for chronically homeless persons living with mental illness, targeting persons identified on the City's Service Registry. SUDS has a demonstrated track record in developing, owning and operating special needs housing for homeless persons living with mental illness. The amount of the two -year grant is $234,000. Background The Housing Capacity Grant (previously known as the Housing Development Services Grant) has been funded since 2007 through the Community Development Program (CD Program) administered by the Human Services Division. In order to better align the grant with City goals for affordable housing development, the grant was shifted from the CD Program to the Housing and Economic Development Department budget for oversight and monitoring. The funding source and amount of the grant is consistent with previous years. Discussion The purpose of the grant is to enhance the development capacity of locally based nonprofit housing developers to increase the supply of permanent supportive housing. 1 The Housing Division works with nonprofit organizations to develop affordable housing opportunities that enhance the quality of life for low- income and vulnerable populations, including homeless persons. This affordable housing is targeted to persons on the Santa Monica Service registry, a database of chronically homeless persons with high vulnerability, based upon their age, length of time on the streets and physical /mental health issues. The City has also committed $247,645 for FY2011 -12 in social service funding to SUOS through the Human Services Grant Program. This funding, combined with County and private funding, subsidizes the operation of supportive programs to stabilize participants, including medical, case management, psychiatric care, vocational training and meal assistance. Experience has shown that homeless persons are likely to remain permanently housed when provided with case management and support services. City policy is to increase the number of permanent, supportive affordable housing units in Santa Monica through a range of strategies including new construction, acquisition and rehabilitation, housing subsidies, resource matching, and collaboration with local social service providers. One method to achieve this is to provide financial assistance for the hiring of skilled and experienced staff to ensure the creation of successful special needs housing. Creating such housing is especially challenging due to complex financing structures. The proposed grant is consistent with Goals 2c, 2g and 2j of the 2008 -2014 Housing Element and Objectives SP -1 and CD -6 of the 2010 -2015 Consolidated Plan, which were adopted by the City Council: ® 2c: Provide Technical and Financial Assistance for Housing Production: Continue to provide financial and technical assistance to nonprofit housing providers to support the development of affordable housing, including special needs housing. ® 2g: Facilitate the Development and Maintenance of Special Needs Housing: Continue to utilize existing and new financial resources and strengthen partnerships with service providers to create and retrofit existing housing for special needs households. ® 2j: Facilitate the reduction of the number of homeless individuals living on the streets of Santa Monica through the provision of a range of housing options, with an emphasis on affordable, permanent, supportive housing: 2 Continue to seek and leverage funds that contribute to the development of a range of permanent, supportive housing options, within and outside of Santa Monica. • SP -1: Increase the supply of appropriate and supportive housing for special needs populations. • CD -6: Homeless: Support efforts to help chronically homeless, homeless veterans or near - homeless Santa Monica residents secure or maintain adequate permanent housing and receive necessary supportive services. Contractor Selection On September 28, 2011, the Housing Division issued a Request for Proposals (RFP) seeking qualified CHDO's to provide permanent supportive housing which would respond to the needs of low- income homeless persons with mental illness in Santa Monica. The RFP was posted on the Housing Division's website and was listed on Planet Bids, the City's online bidding site. SUOS was the only applicant that submitted a proposal to the City. The proposal was reviewed by City Housing Division staff. SUOS is a Santa Monica -based nonprofit agency and a Housing and Urban Development Department- designated Community Housing Development Organization (CHDO) with a proven track record in both affordable housing development and providing permanent supportive housing for homeless persons living with mental illness. SUOS has completed three permanent supportive housing developments with 90 residences. SUOS currently has an additional development in Santa Monica in the predevelopment stage involving 34 proposed residences. The Housing Capacity Grant would continue funding the SUOS staff costs for a grant writer and housing assistant, and a portion of the staff costs for the housing development and acquisitions director, assistant controller and chief executive officer. Together, these staff will seek and obtain grants for housing development and support services, provide property management, research, acquire and develop properties suitable for permanent supportive housing, oversee housing /service programs and provide financial reporting. Staff recommends that the Housing Capacity Grant be awarded to SUOS to continue 3 the City support of their comprehensive approach toward moving Santa Monica homeless persons from the street into permanent housing and the community. Financial Impacts & Budget Actions The grant award of $234,000 to SUOS represents two years of funding, divided equally. Funds in the amount of $117,000 for the first year (FY11 -12) of the contract are included in the FY11 -13 adopted budget at account 01264.571100. Funds in the amount of $117,000 for the second year of the contract (commencing during FY2012- 13) are also included in account 01264.571100. Prepared by: James Kemper, Housing Administrator Andy Agle, Director C/ Housing and Economic Development M Forwarded to Council: Rod Gould City Manager Reference Contract No. 9517 (CCS).