The ongoing operating and service costs are covered by a grant of $1,064,712 per year from the U.S. Department of Housing and Urban Development (HUD). The purchase of the Property is expected to be funded primarily by a grant from Round 3 of the State’s Homekey program or an anticipated federal grant program for projects that increase the number of supportive housing units for persons experiencing, or at risk of experiencing, homelessness.

Supportive Housing  
  
This project will result in the renovation of a currently unused building in San Pablo to create fifty-four “micro housing” units. The housing units will be used as permanent supportive housing for qualified households experiencing, or at risk of experiencing, homelessness. Each unit will consist of approximately 350 square feet and will be equipped with a bathroom and a kitchenette.  
  
Health Services intends to allocate the proceeds of a grant from HUD in the amount of $1,064,712 to the Contra Costa County Continuum of Care Program to provide permanent supportive housing and support services at the site. The HUD grant is expected to be renewed annually. The target population of the facility is individuals experiencing homelessness who are deemed to be high utilizers of multiple public support systems.  
  
Discretionary Approvals Granted  
  
The proposed project was granted all necessary discretionary land use and permit approvals by the City of San Pablo. The building and the landscaping will be renovated to create a livable community that comports with the surrounding neighborhood.  
  
Lease Purchase Structure  
  
The project is structured as a 5-year lease with purchase. The timing of the purchase is at the County’s election and can occur at any time during the term of the lease or when the lease expires. The purchase price will depend on when the purchase occurs and will be affected by changes in the Consumer Price Index (CPI). If the property is purchased when the renovation is complete and before the lease begins, the purchase price will be approximately $19.1 million. If the purchase occurs during the term of the lease, the purchase price will increase gradually with the passage of time. If the purchase occurs at the end of the lease term, the purchase price will be approximately $21.75 million, assuming a CPI increase of 3% each year.  
  
The renovations needed to convert the existing office building to micro housing will be completed by the current building owner as tenant improvements. The renovations are expected to take approximately 18 months to complete. If the County does not purchase the property before or immediately upon the completion of the renovation, the five-year lease term will begin when the renovation is complete and possession is delivered to the County. During the first year of the lease, the rent will be approximately $1,036,800. Rent will increase each year during the lease term.  
  
The County’s purchase of the property will allow the site to remain available for permanent supportive housing for individuals experiencing, or at risk of experiencing, homelessness. Staff intends to apply for a grant from the State’s Homekey program in Round 3, when the timing of the expected completion of the renovation will correspond with Homekey completion requirements. The State has announced that Round 3 of the Homekey program will be open in September 2022. A recently announced federal program to provide funding to increase housing for the homeless will also be considered.  
  
To ensure that the Recorder’s Office will record the grant deed once the County purchases the property, a board order requesting authority to accept the grant deed will be submitted to the Board when the timing of the purchase is known.

The ability of the Contra Costa County Continuum of Care Program to provide permanent supportive housing and support services for high utilizers of multiple public support systems could be delayed and could result in higher costs.