San Bernardino council directs staff to pursue regional partners, county support to close SB Hope funding gap

San Bernardino city staff told the City Council at a special meeting called to order at 3:30 p.m. that the SB Hope navigation campus faces a construction and operating shortfall and proposed three ways to address it: proceed as the city’s sole operator, pursue a regional cost‑sharing model with neighboring cities, or sell/lease the completed project to San Bernardino County.

Cassandra Searcy, deputy director of homelessness and housing, said the city has layered federal and state funding in the project and highlighted a recent Homekey 3 award: "the city was awarded $35,000,000 in Homekey 3," a senior staff member told the council. Staff emphasized fund covenants and compliance obligations tied to HUD and HCD awards.

The presentation to council laid out operating scenarios for phase 1 (100 beds) and phase 2 (200 beds). Staff said start‑up and contingency costs bring first‑year exposures into the low millions, and that ongoing operating costs could range widely depending on Medi‑Cal/CalAIM reimbursements and utilization. City staff modeled a roughly $11,000,000 construction shortfall plus additional operating exposures; during council discussion some members summarized a total funding gap near $13,894,000 based on the estimates presented.

Gina Zorak, managing director with Crede (development manager for the SB Hope campus), told the council the project moved to volumetric modular construction to lower costs and accelerate schedule; she said civil plans and interior layouts were nearing final submittal. Zorak noted the $2,000,000 estimate of residual cost risk could change when the general contractor bid is awarded.

To limit single‑entity exposure and preserve bed priority for San Bernardino residents, staff recommended exploring a regional MOU that would let partner cities buy guaranteed bed access and share the remaining operational gap. Staff showed an illustrative allocation model and said Redlands, Colton and Highland have expressed interest; Loma Linda had signaled preliminary interest.

After extended Q&A from council members about CatalAIM dependence, bed allocation rules, partner cost shares, and city oversight obligations, the council unanimously approved a motion directing staff to: (1) pursue negotiations for a regional partnership and county contribution to address the $11 million construction shortfall; (2) prepare options to sell, lease, or convey the campus to the county while reserving bed access for the city; and (3) study development uses for the city‑owned Palm Field (consultant or internal study), including affordable housing concepts. Mayor Pro Tem Canas moved the motion and Council member Ortiz seconded; the motion passed by voice vote with all present members voting yes.

The motion requires staff to return with detailed options, draft agreement structures and compliance implications, and means the council will consider formal partner MOUs or a sale/transfer structure in coming weeks. Staff said they would use available reserves temporarily if necessary to avoid delaying construction while negotiations continue.

Next steps noted by staff include finalizing the general contractor award, confirming the county’s willingness to commit funds, and returning to council with firm cost allocations and proposed agreements. The presentation also reiterated that the Lutheran Social Services men’s navigation site (140 beds) has a certificate of occupancy target in late February and phased occupancy thereafter, while SB Hope will proceed toward completion under the procurement schedule staff provided.