REPORT TO THE CITY COUNCIL FROM: JENNIFER CLARK, Director Planning & Development Department PHIL SKEI, Assistant Director Planning & Development Department BY: JILLIAN GAYTAN, Senior Management Analyst Homeless Services Division SUBJECT ..Title Approve the First Amendment to the Repair Services Agreement with the Housing Authority of the City of Fresno (Fresno Housing) to amend The Valley Inn (Property) repairs and maintenance budget of $2,651,648 by $258,975.53 for a total amended contract amount of $2,910,623.53. The Valley Inn is located at 933 North Parkway Drive, Fresno, California (APN 449-335-32). ..Body RECOMMENDATION Staff recommends the City Council approve the First Amendment to the Repair Services Agreement with Fresno Housing, to increase the previously approved budget of $2,651,648 by $258,975.53 for a total amended contract amount of $2,910,623.53, for repairs and maintenance at The Valley Inn (Property), located at 933 North Parkway Drive, Fresno, California (APN 449-335-32). EXECUTIVE SUMMARY The Housing Authority of the City of Fresno has requested an amendment to the executed and approved Repair Service Agreement dated September 1, 2022, to include an additional $258,975.53 for repairs and maintenance of the Property for the HomeKey program for a total fee of $2,910,623.53. The additional budget requested is a result of significant, unexpected plumbing repairs needed in order to bring the shelter units up to code and compliant with the Americans with Disabilities Act. BACKGROUND On December 9, 2021, City Council adopted Resolution 2021-317 authorizing staff to submit applications to the California Department of Housing and Community Development's (HCD) second round of funding under the Homekey Program (Homekey 2) for the acquisition, rehabilitation, and operation of expanded housing for persons experiencing homelessness. Accordingly, staff submitted an application for the Valley Inn, located at 933 N. Parkway Drive, Fresno 93728, and on July 21, 2022, the City was awarded $17,672,672. On August 4, 2022, the City's Homekey agreement was fully executed with HCD. Included in the City's Homekey award for the Valley Inn was a development budget totaling $2,651,648 which included mechanical upgrades, installation of a fire sprinkler system, common space upgrades, enhanced security features, and new furnishings, among other improvements. Rehabilitation of this motel did not displace any clients and was completed by October 23, 2023, to continue to provide 106 shelter beds for those who are homeless or at risk of homelessness. During the remodeling of the ADA units, additional costs were incurred to bring the units up to code and address extremely deteriorated plumbing conditions which were discovered between the first and second floor. The additional expenses incurred by the discovered damage included the demolition, abatement, drywall and flooring repairs, new paint, toilet accessories, and plumbing. Staff recommend increasing the Fresno Housing agreement by $258,975.53 to cover incurred expenses due to ADA remodeling and plumbing damage. ENVIRONMENTAL FINDINGS Staff has performed a preliminary environmental assessment of this Project and has determined it falls within the Categorical Exemption set forth in CEQA Guidelines Sections 15301/Class 1 (existing facilities) and 15332/Class 32 (in-fill development) which exempt projects involving a negligible or no expansion of an existing facility or are in an area considered in-fill development. These exemptions apply because this project involves the purchase of Valley Inn without expansion of the facility, and it is located in an in-fill area and is less than five acres in size. Staff determined under the CEQA Guidelines this project fits within the definition of existing facilities in Section 15301/Class 1 and in-fill in Section 15332/Class 32, as Categorically Exempt from further CEQA review. Staff has determined that none of the exceptions to Categorical Exemptions set forth in the CEQA Guidelines, Section 15300.2 applies to this project. LOCAL PREFERENCE Local preference is not applicable because of the use of State funds. FISCAL IMPACT There is no impact on the City's General Fund as a result of this action because the City is using Homekey funds already received for this project to fund the additional expenses. Attachment: First Amendment to the Agreement with Housing Authority Original Agreement