Catholic Community Services proposes takeover of Good Neighbor shelter; city asked for up to $301,898 bridge funding

Catholic Community Services of Southern Arizona (CCS) told the Sierra Vista City Council at a work session it is prepared to assume operations of the Good Neighbor Alliance (GNA) homeless shelter and asked the city for bridge funding capped at $301,898 to keep the shelter open while CCS pursues Medicaid billing and other revenue sources.

CCS executives Elena Dwyer, chief executive officer, and Terrence Watkins, executive director of Housing and Medical Respite Services, outlined plans to keep the shelter open seven days a week, expand case management and behavioral-health services, seek licensure and Medicaid reimbursement, and pursue grants and other public funding. The city’s draft program agreement would distribute funding across three fiscal years and require invoiced, verifiable expenses before reimbursements are paid.

The request matters because Good Neighbor Alliance has been operating with a structural budget gap. CCS said GNA’s most generous donation year produced about $180,000 in contributions against roughly $313,000 in personnel costs, producing a personnel shortfall of about $133,000; when utilities, food and other operating costs are included CCS estimated the annual operating deficit approaches $200,000. CCS described its takeover plan as a multi-year transition that combines additional staffing, case management and new revenue streams to reduce that shortfall.

CCS described immediate operational changes it would make if the merger is completed by Feb. 1: end the nightly 8 p.m. requirement that residents leave the shelter, perform comprehensive holistic assessments for each resident, and provide 24/7 case management, peer support and assistance with benefits and employment services. “Under the current operating structure, individuals have to leave at 8 o’clock because there’s no staffing to cover them. We will remove that requirement,” said Terrence Watkins, executive director of Housing for CCS.

Watkins and Dwyer told council members CCS expects to secure several new revenue lines to support operations. CCS plans to seek behavioral-health licensure from the Arizona Department of Health Services and to bill through Arizona’s Medicaid managed-care contracts and the Arizona Health Care Cost Containment System; CCS also said it would apply for state and federal housing and emergency shelter programs (including Arizona Department of Housing funding, FEMA, Cochise County sources, Arizona Department of Economic Security and national foundations), pursue Access H2O enhanced shelter funding, and explore adding a few medical-respite beds that could generate revenue via hospital referrals.

City staff said the proposed program agreement would be administered on a reimbursement basis: the agreement is capped at $301,898; the current fiscal-year impact would be $98,384 with $30,000 proposed as an upfront payment to address immediate cash needs, followed by a requested $150,950 in next year’s budget and a further $52,566 thereafter, depending on timing and completion of the merger. “The program agreement is capped at $301,898,” said a city staff member who presented the agreement. Staff said the city would reconcile invoices and verifiable expenses against Exhibit A of the agreement before issuing reimbursement checks and that there are termination clauses for misuse or for convenience with 30 days’ notice.

Council members pressed CCS and staff for supporting financial documents, timelines and assurances. CCS said it has spent months reviewing GNA financials and staffing and would provide the council with the pro forma and the underlying financial detail requested. CCS provided conservative target timelines at the work session: behavioral-health licensure and Medicaid billing within about 12 months; additional grant and program funding within 6–18 months; Access H2O application and award within 6–12 months; and medical respite set-up in 12–18 months if pursued.

City staff stressed oversight and accountability measures in the draft agreement: quarterly or periodic financial activity reports, documentation of the number of people served, homeless-status verification, services provided, revenue raised by source and variance against breakeven projections. Staff also said the agreement modeled the city’s subrecipient/program services agreements used for other grant-funded programs and had been reviewed by management, the city attorney and procurement staff.

No formal action was taken at the work session. City staff said the council will have three options on the Thursday council agenda: approve the agreement as presented, approve with amendments, or not proceed. Staff also said the agreement will not take effect until CCS and GNA complete due diligence and the parties execute the merger/transfer paperwork. City staff and CCS both said they will provide the council with additional financial detail before the Thursday meeting.

Council members expressed support for preserving shelter capacity while asking for safeguards so public funds are not spent without measurable progress toward sustainability. Several council members recommended preserving a small budget line for the shelter in future budgets even if the city’s transitional funding is reduced. CCS asked that Good Neighbor Alliance-branded shelter operations remain named Good Neighbor and said the GNA board and most grant-funded services would convert into CCS-managed programs as part of the takeover.

The council’s formal vote on the agreement was not scheduled at the work session; staff said the matter would appear on the upcoming consent/regular meeting agenda with documentation of final due diligence and the agreement exhibits. Council members also requested staff supply the council with the GNA pro forma and other financial backup ahead of the Thursday meeting.