Vallejo council approves $642,860 in opioid-settlement grants for Broadway housing project

The Vallejo City Council at a special meeting approved amending the fiscal year budget to accept $642,860.94 in opioid-settlement revenue and voted to award two grants to support the Broadway housing project: up to $389,655 to Shelter Inc. and up to $253,205.94 to Firm Foundation Community Housing. The vote carried unanimously with the mayor and Council Member Matthias absent. "The grantee shall be liable to the city for any penalties assessed against the city for the grantee's failure to comply," a staff presenter said while outlining grant terms.

Council members and staff told the council the funds come from the national opioid settlement and are being used for high-impact abatement activities that include supportive housing and services for people affected by substance use disorders. The presenter said the Department of Health Care Services reviewed the project description and "did get back to us and let us know that the project does appear to meet the criteria for the use of the funds, particularly around the different bullet points ... Construction is an allowable cost." The council also included a provision requested by members that the opioid-settlement money not be applied to developer fees for Firm Foundation Community Housing.

City staff described timeline and conditions for moving people into the Broadway project. Lease agreements and move-ins were described as anticipated to begin by August, with a ribbon-cutting planned in October. Staff said they had submitted paperwork for a Housing Assistance Payments (HAP) contract with the U.S. Department of Housing and Urban Development for 47 project-based vouchers; HUD had indicated the contract was expected to be executed by the end of the month, and voucher funding could be available "either September 1 or October 1," depending on move-in timing. Staff also said the opioid funds would cover up to 90 days of operations to allow move-ins to begin while the PBV funding is finalized.

The grant agreements include standard audit and reimbursement language: expenditures determined by an audit to be unallowable must be repaid to the city, and grantees must submit monthly written reports describing use of the funds. The presenter said ineligible costs under the national opioid settlement criteria would be subject to repayment and that grantees could be held responsible for penalties assessed against the city for noncompliance.

Members of the public raised concerns during the public-comment period. William Baker warned against admitting tenants before HUD approvals are final, saying, "if the city of Vallejo were to lambast my company, the way Shelter Inc. was last year by city professionals, I would have no qualms about sending my 180 day notice." Baker also cautioned, "If you vote in the affirmative, please commit to attending both the opening day or day ceremony. And the day when 47 eviction notices are posted on the doors at 2441 Broadway due to its bankruptcy. Be there ... The date when bankruptcy and desertion of the Broadway project arrives will be sooner than anyone here can imagine." David Marstellar Jr. urged the council to pair housing with job and economic opportunities, asking, "what are we gonna be able to offer them? Jobs or anything?" and proposing that subsidy dollars be used to create employment pipelines.

Council discussion reflected those concerns but concluded with support for the project. One council member said the decision was "not ideal" but necessary to provide housing now and described the Broadway project as an additional housing option alongside the Navigator Center and Blue Oak Landing. Another council member asked staff whether the Department of Health Care Services had been contacted about eligible uses; staff replied that they had and that DHCS indicated the project met the funding criteria. On the timing of HUD vouchers, staff said the HAP contract was in process and HUD had indicated an execution target at the end of the month.

The council's formal action was a single motion to: 1) amend the FY 2025–26 budget to accept $642,860.94 in opioid litigation fund revenue to support the Broadway project; 2) approve a grant agreement with Shelter Inc. not to exceed $389,655 and authorize the city manager to execute it; and 3) approve a grant agreement with Firm Foundation Community Housing not to exceed $253,205.94 and authorize the city manager to execute it. The motion passed without recorded dissent; the clerk announced the motion carried "unanimously with the mayor absent and Council Member Matthias absent." The council adjourned at 6:20 p.m.

Next steps identified in the meeting: execution of the grant agreements and lease paperwork, monitoring monthly reports from grantees, and awaiting HUD's execution of the HAP contract for 47 project-based vouchers. The council authorized the city manager to execute the grant agreements and accepted the audit and reimbursement provisions that would require repayment of ineligible expenditures.