TITLE:
title
AMENDMENTS TO PROFESSIONAL SERVICE AGREEMENTS WITH MERCY HOUSE & BRACKEN’S KITCHEN FOR SERVICES AT THE COSTA MESA BRIDGE SHELTER
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DEPARTMENT: CITY MANAGER’S OFFICE
PRESENTED BY: NATE ROBBINS, NEIGHBORHOOD IMPROVEMENT MANAGER
CONTACT INFORMATION: NATE ROBBINS, NEIGHBORHOOD IMPROVEMENT MANAGER, 714-754-5274
RECOMMENDATION:
recommendation
Staff recommends the City Council:
1. Approve Amendment No. 2 to the Professional Services Agreement with Mercy House, increasing the compensation by $197,894 for a new annual not-to-exceed amount of $2,383,180.
2. Approve Amendment No. 4 to the Professional Services Agreement with Bracken’s Kitchen, increasing the compensation by $91,250 for a new annual not-to-exceed amount of $492,750.
3. Authorize the City Manager and City Clerk to execute all agreements and any amendments to the agreements.
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BACKGROUND:
Costa Mesa Bridge Shelter
In April 2021, the City of Costa Mesa (City) opened the 69-bed permanent Bridge Shelter (Shelter) located at 3175 Airway Avenue. In July 2023, the City Council voted to add sixteen (16) beds at the Shelter, increasing the total capacity to 85 guests. The Shelter provides interim housing and wrap-around services to approximately 220 individuals annually and, since opening its doors, has facilitated the placement of over 170 people into permanent housing.
Shelter Operations
In July 2021, the City executed a Shelter Operator Agreement with Mercy House to run the day-to-day operations at the Shelter at an annual cost of $2,000,000 or $28,986 per guest. In July 2023, Shelter capacity was increased to 85 beds and the Shelter Operator Agreement was amended, increasing the Not-To-Exceed (NTE) contract amount to $2,185,286 per year or $25,709 per guest.
Kitchen Operations
In April 2022, the City executed a Kitchen Operator Agreement with Bracken’s Kitchen to operate the Shelter’s commercial kitchen at an annual cost of $328,500, or $12.50 per guest, per day. In July 2023, Shelter capacity was increased to 85 beds and the Kitchen Operator Agreement was amended, increasing the NTE contract amount to $401,500 per year. The per-person cost did not increase.
Behavioral Health Care
In March 2024, the City received an award of $3,555,128 in Behavioral Health Bridge Housing (BHBH) funds from the Orange County Health Care Agency (OCHCA) to add fifteen (15) behavioral health beds and associated services, including a full-time case manager, at the Shelter. The term of the award is for over a two-year period from March 27, 2024, through June 30, 2026, which was established with a Memorandum of Understanding with OCHCA. These behavioral health beds are for exclusive use by Costa Mesa guests and bring the Shelter to its maximum allowable capacity of 100 individuals.
Increasing the shelter bed capacity from 85 to 100 requires amendments to the Shelter Operator and Kitchen Operator agreements to accommodate the increased cost of serving fifteen (15) additional guests.
ANALYSIS:
Shelter Operator Agreement Amendment
Mercy House, the Shelter operator, is proposing to operate the Shelter for up to 100 guests at an annual cost of $2,383,180 or $23,831 per guest. The annual increase of $197,894 is the result of market rate salary adjustments, an average of +8% annually, for all Mercy House shelter staff, as well as increased staffing and operation costs to accommodate the 15 BHBH clients. Specifically, Mercy House is hiring additional logistics and safety coordination staff, and increasing the budgets related to security, client services and supplies, shuttle lease and maintenance, insurance, IT and communication needs, and volunteer expenses due to their increased costs of providing said services.
While case management of shelter guests is transitioning to the City, Mercy House will continue to be responsible for overall shelter operations, including janitorial, logistics, transportation, volunteer coordination, and security. This change is reflected in the updated Mercy House Scope of Work (Exhibit “A” of Attachment 1).
The proposed amendments to the scope allow the City to directly hire staff through its recruitment process, emphasizing the desired experience and skillset related to Shelter case management and providing consistency in staffing levels while ensuring Shelter guests will receive the highest level of care, positively impacting outcomes related to health, employment, and housing.
Kitchen Operator Agreement Amendment
The Shelter Kitchen Operator, Bracken’s Kitchen, is proposing to operate the Shelter’s kitchen for up to 100 guests at an annual cost of $492,750 or $13.50 per person, per day. Bracken’s Kitchen is requesting an increase of $91,250 to cover their cost to feed the additional 15 guests, procure high-quality food items, and staff the kitchen. This is the first cost increase requested by Bracken’s Kitchen since executing the original Kitchen Operator Agreement in April 2022. These changes are reflected in the contract amendment (Attachment2).
Behavioral Health Bridge Housing Grant Funds
The City was awarded grant funding from the OCHCA to add 15 behavioral health beds and associated services at the Shelter. For the period July 1, 2024 through June 30, 2025, expenses eligible for reimbursement include up to $570,001 for subcontracts for shelter operations and associated services, $118,000 for services supplies, $200,591 for staff salaries and benefits, including one Community Outreach worker dedicated to BHBH, and $83,459 per year for indirect costs, for a projected annual reimbursement of $972,051.
As outlined above, BHBH grant funds will be used to cover the cost increase of $197,894 to amend the Shelter Operator Agreement, and $91,250 to amend the Kitchen Operator Agreement.
ALTERNATIVES:
The City Council can choose to deny approval of the amendments and request staff to negotiate alternative cost proposals from Mercy House and Bracken’s Kitchen.
FISCAL REVIEW:
There is no impact to the General Fund (Fund 101) as the increased costs associated with adding bed capacity at the Bridge Shelter and amendments to the Mercy House and Bracken’s Kitchen contracts are offset by grant reimbursement in the Behavioral Health Bridge Housing Fund (Fund 229). Revenue and expense appropriations in the amount of $972,051 are included in FY 2024-25 to cover the costs of the additional15 behavioral health beds at the Shelter. This is a two-year fully reimbursable grant.
LEGAL REVIEW:
The City Attorney’s office has reviewed this report and approved it as to form and has approved the proposed amendments to the relevant agreements.
CITY COUNCIL GOALS AND PRIORITIES:
This item supports the following City Council Goal:
• Diversify, Stabilize and Increase Housing to Reflect Community Needs
• Strengthen the Public’s Safety and Improve the Quality of Life
CONCLUSION:
Staff recommends the City Council:
1. Approve Amendment No. 2 to the Professional Services Agreement with Mercy House, increasing the compensation by $197,894 for a new annual not-to-exceed amount of $2,383,180.
2. Approve Amendment No. 4 to the Professional Services Agreement with Bracken’s Kitchen, increasing the compensation by $91,250 for a new annual not-to-exceed amount of $492,750.
3. Authorize the City Manager and City Clerk to execute all agreements and any amendments to the agreements.