REPORT TO SHASTA COUNTY BOARD OF SUPERVISORS

BOARD MEETING DATE:  March  21, 2017
CATEGORY:  Regular - Health and Human Services-6.

SUBJECT:

Mental Health Services Act, Special Needs Housing Program

Supervisorial District No. :  All

DEPARTMENT CONTACT:  Donnell Ewert, Agency Director, (530) 245-6269

STAFF REPORT APPROVED BY:  Donnell Ewert

RECOMMENDATION

Take the following actions regarding the Local Government Special Needs Housing Program (SNHP): (1) Approve and authorize the Chairman to sign the Participation Agreement with the California Housing Finance Agency (CalHFA) for participation in the SNHP and for CalHFA to provide housing development expertise and real estate lending services which requires Shasta County to pay CalHFA a five percent, one-time participation fee of up to $22,800, based on the transfer of up to $456,000 in Shasta County Mental Health Services Act (MHSA) funds to CalHFA, and a three percent, one-time fee of up to $9,087 on $302,895 in unencumbered funds authorized by the Board of Supervisors on September 20, 2016, for assignment to CalHFA; and (2) approve and authorize the Health and Human Services Agency (HHSA) Director to sign: (a) the Assignment Agreement with CalHFA to transfer up to $456,000 in Shasta County MHSA funds to CalHFA, effective upon the date the Assignment Agreement is signed by the HHSA Director; and (b) all documents, including retroactive, to effectuate transfer of funds pursuant to the Assignment Agreement.

SUMMARY

N/A

DISCUSSION

On October 7, 2008, the Board of Supervisors assigned $2,686,000 in MHSA funds to CalHFA to support the creation of permanent supportive housing in Shasta County.  Of those funds, $2,459,368 are currently encumbered to fund the Woodlands project, located in Redding. Because most of the statewide one-time MHSA housing funds have been expended, CalHFA discontinued the MHSA Permanent Supportive Housing Loan Program May 30, 2016.  Therefore, the balance of the unencumbered funds must be released to counties or transferred over to the SNHP.  The new CalHFA SNHP operates in a fashion similar to the expired program whereby CalHFA will provide expertise and administrative functions.   The fee for participation in the SNHP is 3% for all unencumbered funds being transferred from the old program to the new program, and 5% for any new monies assigned to the SNHP.  All program participation fees are non-refundable and payable upon receipt of funds by CalHFA.

On September 20, 2016, the Board authorized the assignment of the remaining unencumbered balance of $226,632, plus approximately $76,263 in earned interest to CalHFA for use on a second project to be located in Eastern Shasta County.  With additional Community Services and Supports (CSS) funds up to $456,000, the total amount allocated to CalHFA for the Eastern Shasta County project is not to exceed $758,895.  

As housing for individuals with serious mental illness continues to be a priority for Shasta County, HHSA is currently working on developing a second permanent supportive housing project, which will be located in the eastern area of the County. The HHSA is interested in participating in the SNHP for this proposed new development.  Through a Request for Quotes process, Northern Valley Catholic Social Service (NVCSS) was selected as the partner developer for this project.  NVCSS has a long history and experience in developing and managing housing for at-risk populations, and they are currently a partner in the Woodlands development.  It is the intent of NVCSS to use MHSA dollars to purchase a property and to partner with the Shasta County Housing and Community Actions Program (HCAP) to apply for grant funding to rehabilitate the property.  The HCAP has also agreed to provide Housing and Urban Development (HUD) rental vouchers for the MHSA units.  The HHSA will be responsible for providing direct support services to the MHSA tenants, possibly through a contract with a community provider, and to refer eligible individuals to NVCSS for tenancy and assistance with that process.  Northern Valley Catholic Social Service is currently looking for an existing property that will meet the requirements of this program.  

The HHSA does not have direct expertise in developing housing.  Signing an agreement with CalHFA to participate in the SNHP will provide the County with service expertise and assurances that HHSA is unable to provide, including:  analysis of the financial viability of proposed projects, underwriting of proposals,  review of scope of construction and/or rehabilitation, project budget development that includes sustainability, loan documents, progress monitoring during construction/rehabilitation through occupancy, and administration of any capitalized operating subsidy reserves while available.  The HHSA will not assign or transfer new MHSA CSS funds to CalHFA until total development costs are known for the Eastern County project.  At that time, HHSA will only assign sufficient new MHSA CSS funds to cover the costs of developing the project and the related SNHP fees.

Today’s action requests the Board of Supervisors to approve the CalHFA SNHP Participation Agreement, and authorize the HHSA Director to sign the CalHFA Local Government SNHP Assignment Agreement to authorize the transfer of the allocation of up to $456,000 in MHSA CSS funds to the SNHP for completion of an Eastern Shasta County Permanent Supportive Housing project.   The proposed actions  enable the County  have access to the expertise and administrative functions of CalHFA and supports Shasta County’s approved MHSA plan for developing permanent supportive housing by providing the necessary resources and services for individuals with behavioral health needs. The County will not be obligated to provide support to the program until such time that it enters into an agreement with the selected partner developer, NVCSS.

ALTERNATIVES

The Board may choose not to participate in the CalHFA SNHP; and if so, then all Shasta County unencumbered funds with CalHFA will be returned to Shasta County.   Any returned funds would have to be used for an MHSA Permanent Supportive Housing project for people with Serious Mental Illness, or families with children with Severe Emotional Disorders, within three years of the receipt of the funds.

OTHER AGENCY INVOLVEMENT

County Counsel has reviewed and approved the Participation and Assignment agreements as to form. Risk Management has approved the agreements. The Housing and Community Action Programs Director has reviewed and supports the recommendation. This recommendation has been reviewed by the County Administrative Office. 

FINANCING

The funding referenced in this Staff Report has been included in the FY 2016-17 (BU 404) MHSA Adjusted Budget.  There is no impact to the General Fund with the approval of this recommendation. The funds transferred to CalHFA will not be encumbered until such time that the County takes the next step to move the project forward and enters into an agreement with the selected partner developer.