Staff recommends the City Council adopt the attached resolution authorizing the submittal of a joint application for Homekey Round 2 funds with other Alameda County cities and Bay Area Community Services (BACS) to acquire homes and convert them to supportive shared housing for people experiencing homelessness.  Specifically, the resolution:

1. Authorizes, and directs, the submission of a joint Application with BACS and other jurisdictions within Alameda County to the State of California Housing and Community Development Department ("HCD") in response to the Homekey Notice of Funding Availability, and to apply for Homekey grant funds in a total amount not to exceed $20,000,000; and,

2. Authorizes, and directs, entering into, executing, and delivering a Standard Agreement with the Department in a total amount not to exceed $20,000,000, and any and all other documents required or deemed necessary or appropriate to secure the Homekey funds from the Department and to participate in the Homekey Program, and all amendments thereto if the Application is approved; and,

3. Acknowledges that the City shall be subject to the terms and conditions specified in the Standard Agreement, and that the NOFA and application will be incorporated in the Standard Agreement by reference and made a part thereof; that any and all activities, expenditures, information, and timelines represented in the application are enforceable through the Standard Agreement; and, that funds are to be used for the allowable expenditures and activities identified in the Standard Agreement; and,

4. Authorizes the City Manager, or their designee, to approve the final joint Application to the State and execute the Application and the Homekey Documents on behalf of the City of Union City for participation in the Homekey Program.

This agenda item is in alignment with the following:

Goal C, Strategy 3: Develop a multi-departmental approach to address homelessness through coordination with staff, community organizations and Alameda County.

In 2020, the State of California created the Homekey Program, which provides funding to local agencies and jurisdictions to acquire, rehabilitate, or master lease a variety of housing types, including hotels, motels, and other buildings, for the purpose of providing interim or permanent housing options for persons experiencing homelessness.

Administered by the California Department of Housing and Community Development (HCD), the program’s first award cycle made $600 million in grant funding available to local public entities, including cities, counties, or other local public entities, within California to purchase and rehabilitate a variety of housing types in order to serve people experiencing homelessness or at risk of serious illness from COVID-19.  

The first funding cycle in 2020 provided $75 million to projects in Alameda County, including the acquisition of hotels participating in the Project Roomkey Program, the rehabilitation of a former student dormitory into a shelter and permanent supportive housing, and the acquisition of single-family homes to provide shared housing. 

The State of California’s 2021/2022 budget provides at least $2.75 billion in acquisition and rehabilitation funds, as well as $1 billion in funds for operating expenses. These funding amounts represent the State's largest investment in housing for the homeless. The goal of the next Homekey funding cycle, which is referred to as Homekey Round 2, is to house tens of thousands of individuals experiencing homelessness. The State has also established priorities for project readiness, team experience, racial equity, and community impact.

Applications for Homekey Round 2 funds will be available on a continuous, over-the-counter basis until May 2, 2022, but the deadline to access a geographic set-aside for Bay Area jurisdictions as well as a bonus award is January 31, 2022. Awarded projects will receive grants of up to $200,000 per housing unit, depending on the size of the unit and the sub-population served, in capital funds for acquiring and rehabilitating the sites. No local match is required for projects under this threshold, and projects with a local match may be eligible for an additional $100,000 per housing unit. Operating subsidies ranging from $1,000-$1,400 per unit per month are also available for units assisted with Homekey funds for two to three years, depending on the amount of local operating match provided. Program requirements for grantees include completing the project within twelve months of receiving the award, applying the core components of Housing First approach to addressing homelessness and using local Coordinated Entry System (CES) prioritization protocols.

Staff is requesting the City Council adopt a Resolution authorizing the submittal a joint application for Homekey Round 2 funds with other Alameda County cities and Bay Area Community Services (BACS) to acquire homes and convert them to supportive shared housing for people experiencing homelessness.  

Since 1973, BACS has successfully operated supported independent living homes in Alameda  and Contra Costa County. Under this highly cost-effective program model, BACS acquires, owns, operates, and manages small-site, scattered, residential properties for individuals with special needs, including those experiencing homelessness. Each resident is paired with a Care Coordinator who helps them build independent living skills through job support, benefits assistance, mental health support, financial assistance, job support, group activities, and money management. Residents learn skills by sharing responsibilities for cleaning, paying bills, and running their household.

In 2020, BACS and the City of Oakland were awarded Homekey funds for this model and successfully acquired 15 homes and created 129 units of permanent housing for people experiencing homelessness referred to as Project Reclamation. BACS proposes replicating Project Reclamation by creating a regional supportive shared housing program that can leverage the operational efficiencies of a single operator.

In August 2021, the City of Livermore issued a Request for Information to find suitable partners and projects for submittal of a Homekey Application. BACS submitted a proposal in response to the RFI (Attachment 2), which became the basis of the multi-jurisdictional application. After receiving the proposal, the City of Livermore reached out to other Alameda County cities to see if other jurisdictions wanted to be co-applicants on the application.    

The City of Hayward is participating and has offered to serve as the lead applicant for the program and assume the primary administrative responsibilities of managing the grant in coordination with BACS. The current project application budget anticipates acquiring 11 homes, 1 to 2 of which would be in Union City, with a capital award of $12.4 million dollars. If additional jurisdictions participate in the program, the funding request will be increased accordingly, not to exceed a total request of $20,000,000. 

The proposed application will not require matching funds directly from the City. BACS and the co- applicant cities would instead request operating funding from the Alameda County HOME Consortium, which would fulfill the State’s operating match requirements. If the project is awarded funds and BACS acquires a property in Union City, the City will record a 55-year regulatory agreement against the subject  property restricting the rents for extremely low-income households and establishing property maintenance and management standards. As proposed, if BACS were able to secure a residential property in the City through the program, that site would have a preference for local community members. 

If this agenda item is approved, staff will work with BACS and the other participating cities to refine the program goals, secure matching funding from Alameda County HOME Consortium and submit the application prior to the January 31, 2022 deadline for regional priority consideration. Due to the complicated nature of the multi-jurisdictional application and some of State HCD’s application requirements, should the group not be able to submit an application during the regional priority round, staff will continue to work with the other jurisdictions to submit a Homekey application to request funding from a 20% set aside allocation of funding that State HCD has identified as part of their over-the-counter rolling application process. The 20% set aside allocation of funding does allow for some additional programmatic flexibility for the multi-jurisdictional application and awards are made on a continuous basis from the State until all funding has been exhausted.  

This innovative program will provide much needed housing and support services for community members experiencing homelessness. 

There is no fiscal impact to the General Fund. Homekey grant funds will pay the full amount of capital costs required to acquire and rehabilitate the units, as well as up to three years of funding to subsidize the project operations. Staff will look to utilize other additional Federal funds, including HOME funds, to help subsidize project operations after this time period. In addition, in partnering with the City of Hayward and BACS as a co-applicant, the amount of City staff time administering the grant will be reduced as well.

Staff recommends the City Council adopt the attached resolution authorizing the submittal of a joint application for Homekey Round 2 funds with other Alameda County cities and BACS to acquire homes and convert them to supportive shared housing for people experiencing homelessness.  Specifically, the resolution:

1. Authorizes, and directs, the submission of a joint Application with BACS and other jurisdictions within Alameda County to the State of California HCD in response to the Homekey Notice of Funding Availability, and to apply for Homekey grant funds in a total amount not to exceed $20,000,000; and,
2. Authorizes, and directs, entering into, executing, and delivering a Standard Agreement with the Department in a total amount not to exceed $20,000,000, and any and all other documents required or deemed necessary or appropriate to secure the Homekey funds from the Department and to participate in the Homekey Program, and all amendments thereto if the Application is approved; and,
3. Acknowledges that the City shall be subject to the terms and conditions specified in the Standard Agreement, and that the NOFA and application will be incorporated in the Standard Agreement by reference and made a part thereof; that any and all activities, expenditures, information, and timelines represented in the application are enforceable through the Standard Agreement; and, that funds are to be used for the allowable expenditures and activities identified in the Standard Agreement; and,
4. Authorizes the City Manager, or their designee, to approve the final joint Application to the State and execute the Application and the Homekey Documents on behalf of the City of Union City for participation in the Homekey Program.