Special Notice / Hearing: None__
Vote Required: Majority
To: Honorable Board of Supervisors
From: Raymond Hodges, Director Department of Housing
Subject: Allocation of additional Measure K funds to the County Housing Voucher Program (CHV Program) for permanent supportive housing projects.
RECOMMENDATION:
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Measure K: Adopt a resolution
A) Approving an increase under the County Housing Voucher Program in monthly rental payment subsidies for the Casa Esperanza permanent supportive housing project in an amount not to exceed $425,000 per year, and adjusted annually, for the remainder of the 15-year contract term, consisting of Measure K funds, as specified in Attachment A; and
B) Approving an additional commitment of four (4) studio apartment unit rental subsidies under the County Housing Voucher Program for the Shores Landing permanent supportive housing project, increasing the total number of subsidized homes for seniors to 44 studio apartments and 10 one-bedroom apartments for the remainder of the 15-year contract term consisting of Measure K funds, with a total increase in subsidy of approximately $100,000 per year, as adjusted under the terms of the agreement for the remainder of the contract term, as specified in Attachment A; and
C) Authorizing the Director of the Department of Housing, or designee, to negotiate and execute contracts and other documents or amendments, subject to review and approval as to form by the County Attorney, as necessary to provide additional County Housing Voucher Program funding for the Casa Esperanza and Shores Landing projects as indicated in Attachment A and approved by this resolution.
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BACKGROUND:
On March 22, 2022, the Board accepted staff’s recommendation for a $4 million commitment in Measure K funds to pilot a rental subsidy program known as the County Housing Voucher Program (CHV Program). In August 2023, Board approved an additional $4 million annual commitment to the CHV Program. These Measure K funds provide an ongoing commitment to subsidize monthly rents for formerly homeless households in the County, which is subject to biennial appropriations approved by the Board. This commitment from the County will provide a stable long-term rental subsidy for at least 200 formerly homeless households and ultimately move the County towards reaching and maintaining functional zero homelessness.
Under the CHV Program, a fixed monthly subsidy is paid directly to property owners and/or operators to cover a portion of their tenants’ rent. This funding provides an ongoing operating subsidy to help ensure the project’s fiscal stability. Under the CHV Program, the subsidy is typically valued at approximately $2,000 a month per unit, depending on unit size and in alignment with the maximum affordable rent for a household earning 60 percent of the Area Median Income (AMI), as published annually by the State’s California Tax Credit Allocation Committee (CTCAC). Tenants contribute no more than 30 percent of their gross income towards the payment of rent and utilities.
The affordable housing owner and/or operator is responsible for providing access to high quality, on-site supportive services to tenants in coordination with any pre-existing County-provided services. The CHV Program helps ensure that formerly homeless households with the lowest incomes in the County are not disproportionately cost burdened by rents and have access to intensive supportive services that will enable them to retain their housing.
The CHV Program has prioritized funding subsidies for permanent supportive housing developments acquired using State Homekey (“Homekey”) Program funds. Homekey was launched to provide funding to rapidly sustain and expand the inventory of housing for people experiencing homelessness or at-risk of homelessness and impacted by COVID-19. Homekey presented an opportunity for local public agencies to purchase motels and a broad range of other building types to increase community capacity to respond to homelessness and the COVID-19 pandemic.
Through Homekey, the County was able to purchase, among others, two hotels in Redwood City and convert them to permanent supportive housing for formerly homeless households. The County acquired a Town Place Suites Hotel which has been converted into a 95-apartment community for unhoused seniors, now called Shores Landing. The County acquired and converted a Comfort Inn motel into a 51-apartment community that is now known as Casa Esperanza. A third hotel, Ramada Inn, now known as 721 Airport Blvd in South San Francisco, was purchased in 2024. The conversion will be completed by the end of this year with full occupancy expected by February 2027. The Homekey program offered some operating funds for initial operations at these properties, but the State did not provide long-term rental subsidies to support continuing operations.
DISCUSSION:
On August 1, 2023, the Board adopted Resolution No. 079847, which approved CHV Program funding to subsidize 50 units at Shores Landing and 47 units at Casa Esperanza, in connection with an approved $4,000,000 in Measure K funds, annually, which is subject to biennial appropriations.
On April 23, 2024, the Board adopted Resolution No. 080302, approving CHV Program subsidies to support an additional 4 units at Casa Esperanza, increasing the total number of units subsidized at this property to 51 studio apartments (100% of units not including the manager’s unit). These CHV program subsidies are an important component of the operating funds for these Homekey projects, which are subject to funding agreements with a fifteen-year term.
On August 13, 2024, the Board adopted Resolution No. 080574, which approved CHV Program funding to subsidize 45 units at 721 Airport Blvd.
After consultations with the operator of Casa Esperanza, Department of Housing staff has determined that increased CHV Program subsidies would sustain the long-term operations of the project. The increased subsidy would apply to each of the 51 units based on CTAC rents affordable at subsidies sized at 80 percent AMI, rather than 60 percent AMI. This increase would result in a total of an additional $425,000 per year, as adjusted under the terms of the agreement, for the remainder of the 15-year term. The project and the subsidies would serve the same population with permanent supportive housing, subject to the same eligibility requirements as under the current program.
Department of Housing staff have also consulted with the operator of Shores Landing and determined that rental subsidies for an additional 4 units would help support the long-term fiscal sustainability of the project. Similar to the terms noted above, the additional subsidy will be subject to the same eligibility requirements and serve the same population. It will also meet the Board’s priorities for the CHV Program to fund housing located in permanent supportive housing developments acquired using Homekey funds. If authorized by the Board, the number of apartments subsidized by CHV Program will increase from 40 studio apartments to 44 studio apartments, for the remainder of the 15-year term, with a total increase in subsidy of about $100,000 per year, as adjusted under the terms of the agreement, for the remainder of the 15-year term.
Attachment A submitted with this memorandum outlines the total number of rental subsidies together with the additional four units for CHV Program subsidies that are recommended for Shores Landing (totaling 44 studio apartments and 10 one-bedroom apartments), and the increased subsidies for Casa Esperanza (49 studio apartments and 2 one-bedroom apartments). Although not increased by the recommended Board action, for completeness Attachment A includes the CHV Program subsidies for 721 Airport (45 studio apartments).
By this proposed action, the committed rental subsidies will assist 150 formerly homeless households and help ensure the respective project’s long-term operating stability.
The resolution has been reviewed and approved as to form by the County Attorney.
COMMUNITY IMPACT:
The Casa Esperanza and Shores Landing projects provide a total of 101 formerly homeless households with permanent supportive housing. Shores Landing primarily serves elderly individuals, which is a segment of the population experiencing increases in homelessness in the county. The proposed action will ensure funding for services for residents of these projects and will positively impact all CHV Program participating households and further the goals of the Board to address homelessness in San Mateo County, including reaching and maintaining functional zero homelessness status.
FISCAL IMPACT:
The cost of the four additional CHV Program subsidies for Shores Landing for the first year of the remaining 11 years of the operator’s contract is approximately $100,000, which would be adjusted annually by 2%. The cost of the increases to the rental subsidies at Casa Esperanza that were originally sized at 60 percent AMI CTCAC rents and would be increased to 80 percent AMI CTCAC rents, is approximately $425,000 for the remaining 13 years of the operator’s contract.
All of the funding will be provided by Measure K and is included in the FY 2026-2027 budget. This Board action will encumber funds that are within the amounts contemplated by the Board for the CHV Program through the above-noted Board resolutions. The total annual funding for all 150 CHV program subsidies across all three projects is estimated to be $3,376,000 once 721 Airport is fully occupied. This total amount will increase by 2 percent annually for each contract according to number of years remaining in their contract and will be included in future year budgets in connection with its annual recommended budget, DOH will put aside annually a transition reserve sized at 10 percent of the total amount of CHV Program subsidies to account for any unanticipated program costs that may arise.