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Home My WebLink AboutStaff Report 2410-3572CITY OF PALO ALTO CITY COUNCIL Special Meeting Monday, January 13, 2025 Council Chambers & Hybrid 5:30 PM Agenda Item 14.Update on Palo Alto Homekey (Interim Housing Shelter at 1237 San Antonio Road) City Council Staff Report From: City Manager Report Type: INFORMATION REPORTS Lead Department: City Manager Meeting Date: January 13, 2025 Report #:2410-3572 TITLE Update on Palo Alto Homekey (Interim Housing Shelter at 1237 San Antonio Road) RECOMMENDATION This is an informational report as a status update on the Palo Alto Homekey project. No Council action is requested. BACKGROUND Project Homekey is an initiative of the California Department of Housing and Community Development (HCD) that supports eligible entities, including local governments, in forming partnerships with the State to purchase, renovate, or lease diverse housing options. These developments offer temporary or permanent homes for individuals facing homelessness and those vulnerable to health issues. To expedite housing solutions, Project Homekey offers numerous regulatory waivers and enforces strict timelines. In 2021, the City partnered with LifeMoves to apply for Homekey funding for a modular interim housing facility that includes on-site support services and was awarded the funds in August 2022. In November 2022, the City and LifeMoves reassessed the project’s scope due to sharp cost increases driven by economic instability, high inflation, and supply chain disruptions. LifeMoves engaged a new construction firm, Devcon, in December 2022. Although the change led to identified cost savings, it also impacted the construction timeline as the team revised project plans. Proposed savings included adjustments such as relocating the fire loop road, creating separate entrances for GreenWaste and the Palo Alto Homekey site, and repositioning buildings away from San Antonio Road to avoid interference with an existing gas line. On June 12, 2023, City Council approved a lease agreement with LifeMoves for use of 1237 San Antonio Road for a term of nine years and approved a revenue agreement with Santa Clara County to enable the County to execute an operating agreement with LifeMoves for interim housing operations.1 Additionally, Council approved $4.5 million in the City’s annual budget for the project, consisting of $2 million to help close the project’s capital funding gap, $500,000 to cover City permit fees, and $2 million to reinstate certain project elements removed as cost savings (decorative fencing, shade sails, photovoltaic system, electric vehicle charging, and storage/trash enclosure fire sprinklers). Later that summer, in August 2023, Council approved an extraterritorial utility service agreement with the City of Mountain View to connect the Homekey project to City of Mountain View water and sewer utility services.2 ANALYSIS Project Update The below timeline highlights some milestones in the Homekey project since the last time a related item appeared before Council. Table 1 Palo Alto Homekey Project Recent Milestones Date Milestone September 2023 HCD approved an extension for the Homekey project, allowing construction to be completed by February 2025. This approval followed extensive advocacy efforts by the City, in partnership with Palo Alto’s state delegation, Santa Clara County, and Townsend Public Affairs. October 2023 The City of Palo Alto and partners broke ground at the Homekey site.3 January 2024 The City facilitated a Good Neighbor Agreement between LifeMoves and GreenWaste to proactively address potential noise impacts.4 The City issued the building permit. Modular unit construction begins at an offsite factory in Pennsylvania. June 2024 City Council approved $185,000 in Community Development Block Grant (CDBG) funds for an on-site play structure and recreation area.5 September 2024 Overall construction is 67% complete as of September 31 and the first shipment of modulars arrived. December 2024 Modular production is 100% complete. Overall construction is 75% complete. 1 City Council Staff Report, June 12, 2023 https://cityofpaloalto.primegov.com/meetings/ItemWithTemplateType?id=2481&meetingTemplateType=2 2 City Council Staff Report, August 21, 2023 https://cityofpaloalto.primegov.com/meetings/ItemWithTemplateType?id=2894&meetingTemplateType=2 3 City of Palo Alto Press Release, October 31, 2023 News Release: Officials Break Ground on Homekey Palo Alto – City of Palo Alto, CA 4 See Attachment B: Good Neighbor Agreement. 5 Council Report, June 22, 2024, https://cityofpaloalto.primegov.com/meetings/ItemWithTemplateType?id=5122&meetingTemplateType=2&comp iledMeetingDocumentId=10522 By early October 2024, the construction team had completed installing underground utilities, pouring the building pads, installing the elevator, framing the community building, and delivering three modular housing units. However, there have been significant delays relating to modular production. These delays, as detailed in the memo from LifeMoves included as Attachment A, have been mitigated as much as feasible by focusing on sitework and changing construction activity sequencing (e.g., installing light posts). The initial anticipated date to set the modulars was November, but as of mid-December, 45 modules, approximately 2/3 of the total units had arrived in California. These units require additional mechanical component installation and exterior finishing once delivered in California. Once all units have arrived, been finished and set, the construction team will provide a recovery schedule. Upon receipt of the recovery schedule, staff will inform Council of overall schedule impacts. Should the recovery schedule be insufficient to meet the required HCD deadlines, the City, Santa Clara County, and LifeMoves will request an extension with HCD. FISCAL/RESOURCE IMPACT This report is for information sharing only. No additional funding is requested with this item. As reported previously, the Palo Alto Homekey project is funded with $26.6 million in Project Homekey funds from HCD, combined with City and Santa Clara County funding, generous local donations, including from Palo Alto Community Fund, Sobrato Philanthropies, and The Peery Foundation. The City’s initial financial contributions to the project included land for the project, staff time, and a pledge of $1 million a year towards operations, for seven years. In response to a capital funding gap, last year City Council approved contributing $4.5 million to capital costs, consisting of $2 million towards unspecified capital costs, $2 million towards specific project elements (solar and EV chargers, decorative fencing, and sunshade sails). Additionally, earlier this year, the City approved $185,000 in CDBG funds towards a recreation area. STAKEHOLDER ENGAGEMENT Stakeholder engagement includes regular and additional as-needed meetings between partners (LifeMoves, Santa Clara County Office of Supportive Housing, and Santa Clara County Housing Authority). Staff and LifeMoves will plan press events during significant milestones such as when the units are being stacked/set and at the opening of the facility. Also, this informational report serves as an update to the public about the project status. ENVIRONMENTAL REVIEW This item is presented only for Council’s information and therefore it is not a project subject to environmental review by the California Environmental Quality Act (CEQA). ATTACHMENTS Attachment A: Schedule Update Memo Attachment B: Good Neighbor Agreement APPROVED BY: Ed Shikada, City Manager 2550 Great America Way, Suite 201 Santa Clara, CA 95054 650.685.5880 www.lifemoves.org Board of Directors Melissa Selcher CHAIR Lori Castillo Martinez 1st VICE CHAIR Lauren Koenig 2nd VICE CHAIR Greg Eckert TREASURER Pamela Weiss SECRETARY Sheriff Christina Corpus Ahmed Khatib May Topper Danielle Fontaine Laura Green Ajwang Rading Carrie O. Plietz Tammy Crown Leslie Little Chair Emeritus Circle Patrick Heron Rod Ferguson Marcia Pade Christina Dickerson William “Bill” Regan Joe Stockwell CEO Aubrey Merriman LifeMoves 2550 Great America Parkway, Suite 201 Santa Clara, CA 95054 December 18, 2024 Palo Alto City Council 250 Hamilton Ave Palo Alto, CA 94301 RE: Palo Alto Homekey Schedule Update Dear City Council Members, Progress has continued both onsite and offsite for the Palo Alto Homekey Project. Since our last update, we have completed the following items: ü Completed fabrication of the modular units in Berwick, PA ü Completed all site work that is feasible prior to setting modules ü Connected to Palo Alto Electric with permanent power anticipated any day ü Finished the exteriors for the community building and elevator shaft ü Delivered most modular units to a staging yard, with all units anticipated to be delivered by end of December o Modules at staging yard: 45 o Modules in transit from PA: 21 o Modules in PA ready to ship: 1 This project has encountered and successfully navigated a series of unique challenges inherent to modular construction. Our modular manufacturing supplier, VBC, made the strategic decision to shift production from their anticipated Tracy, California facility to their main factory in Berwick, Pennsylvania. While this move ultimately ensured the highest quality housing units by leveraging VBC's experienced workforce and established production lines, it did necessitate adjustments to our initial timeline. Despite a slower-than-anticipated start, production steadily increased as the factory crews gained familiarity with the intricacies of our specific modules. We are pleased to report that production is now 100% complete. VBC has attributed the initial production delay to the integration of cast iron plumbing, a unique requirement for our project not standard in East Coast construction, and the ongoing challenges of filling all vacant positions within their factory. Currently, 21 modules are en route to staging yard, facing the potential delays of winter weather conditions. We are closely monitoring their transit and projecting their arrival at the staging yard before the end of the year. Upcoming phases of construction, particularly siding, roofing, and the crucial setting of the modules, are weather dependent. Significant rain or wind could impact the overall schedule in the coming months. However, once the modules are set, interior finish work can 2550 Great America Way, Suite 201 Santa Clara, CA 95054 650.685.5880 www.lifemoves.org Board of Directors Melissa Selcher CHAIR Lori Castillo Martinez 1st VICE CHAIR Lauren Koenig 2nd VICE CHAIR Greg Eckert TREASURER Pamela Weiss SECRETARY Sheriff Christina Corpus Ahmed Khatib May Topper Danielle Fontaine Laura Green Ajwang Rading Carrie O. Plietz Tammy Crown Leslie Little Chair Emeritus Circle Patrick Heron Rod Ferguson Marcia Pade Christina Dickerson William “Bill” Regan Joe Stockwell CEO Aubrey Merriman proceed largely unaffected by winter weather. Proactively, we accelerated the paving of the site, which will help mitigate potential weather-related delays. Our dedicated team, in close collaboration with our general contractor, DevCon, remains committed to maximizing site work progress in preparation for the modules' arrival. This involves a modified sequencing of site elements to ensure efficient integration with the modules once they are set. Due to the factors outlined above, the projected completion date has been adjusted from January 2025 to June 2025, with initial occupancy expected to follow in July 2025. DevCon is diligently developing a comprehensive recovery schedule that explores all options to accelerate the project timeline. This schedule will be finalized and confirmed once the modules are successfully set. We remain steadfast in our commitment to delivering this project with the highest levels of quality and efficiency. We are confident that this development will be a source of pride for the community and will provide exceptional living spaces for our future clients. Regards Paul Simpson Chief Financial Officer Main Project Site Staging Yard Interior shots from production line in Berwick, PA Good Neighbor Agreement LifeMoves Palo Alto LifeMoves and the City of Palo Alto ( “Developers”) are joint applicants coordinating the development and construction of a shelter at 1237 San Antonio Road, Palo Alto (“Project”). LifeMoves will be the Lead Service Provider (LSP) at the Project, serving households experiencing homelessness (“Clients”). Developers have conducted a Noise Study, prepared by Salter and dated May 12, 2023, and will implement the recommendations contained within the Noise Study. The Noise Study was developed to analyze the potential impacts associated with operations from GreenWaste of Palo Alto, LLC (“GreenWaste”), which is contracted by the City of Palo Alto to provide refuse services in the City. GreenWaste had no input into the Noise Study. Developers, LSP, and GreenWaste met on October 12, 2023, to discuss potential noise impacts and proactively address them. In order to facilitate a good neighbor relationship, this document formally acknowledges that Developers, LSP, and GreenWaste understand the following to be true:  GreenWaste operations are expected to typically begin each morning at 3:00 AM and conclude by 5:00 PM. Normal operations include noise associated with trucks, including but not limited to backing up (i.e. “beeping”), and picking up/setting down large metal containers.  Prior to intake, LSP will inform Clients of the anticipated noise impacts associated with living at the property.  LSP will offer noise mitigation tools to Clients, which may include earplugs or white noise machines.  GreenWaste will not exceed the noise levels permitted under the Palo Alto Municipal Code.  GreenWaste will use electric vehicles at the site as often as possible if available and commercially reasonable to perform the work (electric vehicles are quieter than diesel operated vehicles).  When commercially reasonable, GreenWaste will prioritize container pick up and drop off at the rear of the site, as far from the Project as possible under current operations.  Both parties will be in communication with one another if circumstances change materially on either site.  Contact information is provided for representatives below. In the event that contact information or designated contact person changes, all parties shall be notified and provided new contact information. Contact Information LSP: Andrew Niklaus Interim Chief Program Officer LifeMoves (650) 685-5880 aniklaus@lifemoves.org GreenWaste: Eric Cissna General Manager GreenWaste of Palo Alto, LLC (650) 798-5994 Eric.Cissna@greenwaste.com DocuSign Envelope ID: EDAD815E-0EB3-461A-BE1B-D47CC810D784 We, signed below, have read and agree to the terms in this Good Neighbor Agreement. _________________________________ Eric Cissna General Manager GreenWaste of Palo Alto, LLC _________________________________ Andrew Niklaus Interim Chief Program Officer LifeMoves DocuSign Envelope ID: EDAD815E-0EB3-461A-BE1B-D47CC810D784