25C - AMEND AGMT WITH MERCY HOUSE

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Approve Amendments and Contract With Mercy House February 18, 2020 Page 2 The initial proposal and contract were prepared prior to securing a facility and was based on experience from other shelter operation budgets. Once a location was secured, it was found that the facility improvements and operation costs exceeded the proposed budget. The areas that created the biggest increase to the budget were utilities, fencing, and leasing costs. To pay for the deficit accrued in year one and for the ongoing operation of the Link shelter through the end of the contract term, it is necessary to increase the contract amount by $398,123 to cover both Year One deficits and projected costs for Year Two. In September 2018, the City entered into a Memorandum of Understanding (MOU) with the County to relocate the Courtyard Emergency Homeless Shelter to a more suitable location and to expand shelter beds for the specific use by the City of Santa Ana. Upon receiving and recognizing $3,690,886 in Homeless Emergency Aid Program (HEAP) funds from the State of California, Business, Consumer Services and Housing Agency, the City committed the use of $3.5 million for this purpose. When the MOU became null and void, the City re -obligated the funds for use at the Link shelter and for the new permanent shelter. In order to use a portion of the HEAP funds for the Link, it is necessary to execute an agreement with Mercy House contract to include the conditions of the grant and include applicable State requirements governing the use of the HEAP funds. The $2,300,000 in HEAP funds shall count toward the total agreement of $6,398,123 from the City to Mercy House for the Link shelter. On June 4, 2019, the City Council authorized the City Manager and the Clerk of the Council to execute agreements with non-profit homeless service providers as part of the 2019-2020 Emergency Solutions Grant (ESG) Program. Mercy House was awarded $316,491 for ESG activities including $200,000 for operations at the Link shelter. At the close of Fiscal Year 2018-19, unspent funds from the ESG Program recipients totaling $5,910.43 were recaptured for redistribution. Staff recommends utilizing these unspent funds to help off -set the increased cost of operations at the Link. The additional $5,910.43 shall count toward the amount of funds due from the City to Mercy House. Should the need for the Link shelter to be extended beyond October 14, 2020, a separate staff report will be prepared for consideration by the City Council. STRATEGIC PLAN ALIGNMENT Approval of this item supports the City's efforts to meet Goal #1 - Community Safety, Objective #6 (enhance Public Safety Integration, communication and community outreach); Goal #5 - Community Health, Livability, Engagement & Sustainability, Objective #4 (support neighborhood vitality and livability) and Objective #6 (Focus projects and programs on improving the health and wellness of all residents). FISCAL IMPACT The $2,300,000 in HEAP funds and the $5,910.43 in ESG funds shall count toward the total agreement of $6,398,123 due from the City to Mercy House for the Link shelter. If all the recommended actions are approved, the anticipated expenditure plan is as follows: 25C-2