REPORT

DATE ISSUED: July 14, 2006

SUBJECT: Long-term Lease and Rehabilitation of the City-owned Real Property located at 1614-16 Ocean Avenue for Affordable Housing for Chronically Homeless Persons

AGENDA: Housing Commission Agenda of July 20, 2006

SUMMARY

Issue: Should the City issue a Request for Proposals to identify and select a nonprofit owner to establish a long-term lease, rehabilitate, operate, manage, and provide supportive services for permanent housing for occupancy by very low-income, chronically homeless persons at the City-owned real property located at 1614-16 Ocean Avenue?

Recommendation: Staff recommends that the City Council:

1. Authorize staff to issue a Request for Proposals (RFP) to establish a long-term lease of the City-owned residential apartment building at 1614-16 Ocean Avenue as affordable special needs rental housing for chronically homeless persons.

2. Through an RFP process, authorize staff to identify and recommend to the City Council a nonprofit organization and the other development team members, including a supportive services provider, to rehabilitate, operate, manage and provide supportive services at the building at 1614-16 Ocean Avenue for permanent housing for occupancy by very low-income, chronically homeless persons.

Previous Related Actions: Not applicable.

EXECUTIVE SUMMARY

The Community Priority adopted by City Council in the FY2006-07 Budget addressing the impacts of homelessness on the community includes a goal to “develop local supportive housing options for chronically homeless and mentally ill people.”

Staff recommends that a Request for Proposals (RFP) be issued to establish a long-term lease and rehabilitate the City-owned apartment building located at 1614-16 Ocean Avenue for permanent affordable housing for very low-income, chronically homeless persons. Staff will solicit proposals from interested teams of housing/social service providers, to lease, rehabilitate, manage and provide supportive services at the property for the target population. Staff is working with the U.S. Department of Housing and Urban Development (HUD) to determine if occupancy may be limited to women only, as staff believes a targeted program would optimize the housing and social service resources in the site, considering that there is already a drop-in program for homeless women (Daybreak Center) on the first floor of the building. Staff will evaluate the responses to the RFP and return to Council at a later date with recommendations.

DISCUSSION

There is an urgent need for permanent housing for chronically homeless women. It is estimated that on any given day there are between 100 and 300 chronically homeless women on the streets of Santa Monica. Providing seventeen units of permanent affordable housing, in conjunction with supportive services, would begin to address their need for permanent affordable housing.

1614-16 Ocean Avenue

In 1973, the City purchased 1614-16 Ocean Avenue, a seventeen unit residential rental property with two commercial units (a total of nineteen units), for the purpose of expanding highway access to Pacific Coast Highway (PCH). The PCH improvements were never carried out and the property has remained in City ownership ever since. Over the past several decades, the Housing Division has overseen the management of this rent controlled property.

Currently, the building, constructed in 1953, is partially occupied by OPCC’s Daybreak Center, a social services program that provides emergency assistance, counseling and services for homeless mentally ill women. Daybreak Center currently leases five units on the first floor to provide day services to its clients. An additional seven units are occupied by residential tenants and seven units are currently vacant and in the process of being rehabilitated.

Staff recommends that upon transfer of the property and completion of the rehabilitation, the remaining seven units be leased to chronically homeless women. The seven existing tenants would be allowed to remain in the building. Through attrition, these units will be reoccupied by chronically homeless women.

The RFP Process and Anticipated City Participation

Subject to City Council approval, the RFP will require that respondents include a qualified nonprofit corporation with the capacity to develop and manage special needs affordable housing for the target population. Supportive services may be provided by the owner directly or subcontracted to a qualified provider.

The RFP process, from release to staff recommendation of a nonprofit provider, is currently estimated to take three to four months. At the end of the RFP process, staff will return to City Council with a recommended proposal that includes the selection of a

qualified nonprofit housing provider with supportive housing capability, the structure of a

long-term lease, the plan for building management, a supportive services plan, and a financing plan for the rehabilitation of the property and the supportive services.

Staff anticipates that the long-term lease and rehabilitation of the property will require a commitment of City housing trust funds to be financially feasible. Given that the City has recently upgraded or replaced various building systems, staff estimates that, if approved, a City rehabilitation loan for additional work required will be in the $500,000 to $700,000 range. The commitment of a housing trust fund loan would be approved by the City Council at the time Council approves the nonprofit service provider.

Prepared by: Bob Moncrief, Housing Manager

Ron Barefield, Housing Administrator

Mike Strader, Senior Administrative Analyst