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File Number: 23-149
<br />II.Conversion to Permanent Housing (After Year 5)
<br />Prior to Year 5, notify State HCD that the City intends to convert Phase 1 into
<br />permanent supportive housing. Options may include demolishing the existing
<br />interim shelter/nav center to build a higher density permanent supportive housing
<br />development. City will determine whether to continue working with HCEB or
<br />soliciting other experienced nonprofit developers through a Request for
<br />Proposals. Funding for this phase will involve a wholly separate planning and
<br />financing process separate from Homekey 3.0.
<br />The City intends to use Homekey 3.0 funding for acquisition and renovation of the motel units into
<br />code compliant shelter units and related common areas, shelter unit operations, and relocation
<br />assistance if applicable. The navigation center will primarily be funded through City and other
<br />County, State and/or federal funds.
<br />The total estimated project cost is approximately $22,000,000: $6,200,000 acquisition,
<br />$3,400,000 for rehabilitation/construction, $10,200,000 in operating/services costs over five
<br />years (or $2,000,000 annually) and $2,200,000 in miscellaneous costs including predevelopment,
<br />soft costs, and relocation. The City proposes to provide matching fund commitments of up to
<br />approximately $11,500,000.00 (see Attachment C for a summary of the City’s committed funding
<br />sources for this project). The City is requesting about up to$10,700,000 in grant funding in its
<br />Homekey 3.0 application. If awarded the $10,700,000.00, about $8,900,000 will be allocated for
<br />acquisition/construction, $1,500,000 for operating subsidy, and $300,000 in bonus funding for
<br />eligible costs. Note that these are current project cost estimates and are subject to minor
<br />changes prior to the City’s planned Homekey 3.0 application submittal in early June as the project
<br />team continues to review plans and costs/pricing.
<br />The $11,500,000 in City subsidy includes up to $7,100,000 over five years for an
<br />operating/services subsidy guaranty. Homekey 3.0 requires that applicants commit to operating
<br />the interim shelter for the first five years. For Homekey 2.0, the City Council approved up to
<br />$5,600,000.00 for an operating/services subsidy guaranty. Staff recommends that the City
<br />Council approve an increase of about $1,500,000, which would be an increase of the City’s initial
<br />subsidy from $5,600,000 to $7,100,000 over the first five years of operations, or $1,420,000
<br />annually as the subsidy guaranty. See Attachment B for the operating/services gap analysis. A
<br />key factor for the increased subsidy is that the project team developed a more realistic and
<br />effective operations/services budget.
<br />The City hired an experienced relocation consulting firm, Autotemp, to ensure compliance with
<br />State and federal relocation requirements. Autotemp has identified two eligible motel residents
<br />for relocation assistance from the City. The final Relocation Plan is under a separate City Council
<br />consideration.
<br />The City is also in negotiation to purchase the existing restaurant in the motel. Autotemp
<br />determined the restaurant was ineligible for relocation assistance, but the restaurant has provided
<br />the City an offer to sell. Staff will return for City Council review in the coming months when the
<br />parties come to terms. The plan for the restaurant space is a conversion to a community room
<br />and food service area for use primarily by navigation center clients.
<br />Page 4 City of San Leandro Printed on 5/31/2023
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