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File Number: 23-394 ·Five (5) year lease term. ·If needed, automatic one year extension after Year 5. Upon mutual agreement, the lease shall not exceed 10 years. The City intends to eventually convert the interim shelter/navigation center into a higher density, permanent supportive housing development, but not earlier than five years from initial operation, per Project Homekey regulations. ·Annual rent to the City will be $1. ·Lessee (HCEB) shall maintain the property in good condition during the term of the lease. ·City rehabilitation grant to HCEB for predevelopment and hard and soft construction costs will not exceed $5.2 million, which is the estimated total renovation cost. See “Financial Impacts” section below for sources of State and/or federal funds for the $5.2 million. There is no impact to the General Fund for the $5.2 million grant. Operating Subsidy Agreement (OSA) The OSA memorializes specified grant payments from the City to HCEB as necessary for the costs of operations and supportive services for the interim shelter and navigation center. Key terms of the OSA include ·Term of the OSA shall be five (5) years, which is the State mandated minimum period for Homekey grantees to demonstrate operational feasibility. ·HCEB shall maintain an operating reserve during the term of the OSA. ·The maximum annual City operating/services grant shall not exceed $9.6 million over 5 years. Year 1 annual operating/services budget is projected to be approximately $2.2 million due to about $350,000 in start up costs, while Years 2 through 5 will annually average about $1.9 million (or $7.4 million over 4 years). See “Financial Impacts” section below for sources of local, County, State and/or federal funds for the $9.6 million. The only impact on the General Fund is that the City is providing a $7.1 million operating/services subsidy guaranty over 5 years or about $1.42 million annually from General Funds, which the City Council approved on June 5, 2023 (Resolution No. 23- 058). Previous Actions ·February 9, 2021 - City Council Work Session on proposal for a new navigation center and supportive housing for the homeless. ·March 21, 2022 - City Council approved purchase and sale agreement for acquisition of the Nimitz Motel at 555 Lewelling Blvd. ·April 18, 2022 - City Council approved submittal of application to State Project HomeKey 2.0 Round. ·July 18, 2022 - Staff presentation on Project HomeKey 2.0 application. ·October 17, 2022 - City Council approved extension of the PSA to March 15, 2022. ·March 6, 2023 - City Council approved final extension of the PSA to August 30, 2023 (with option to exercise two 30-day extensions to October 30, 2023). ·March 20, 2023 - City Council approved allocation of surplus funds to projects/activities including up to $3,200,000.00 as bridge funding to acquire the Nimitz Motel if HomeKey Page 2 City of San Leandro Printed on 12/21/2023