REPORT TO COUNCIL
SUBJECT
Title
Action on the Agreement for the Funding and Operation of the Santa Clara Family Community Interim Housing Project Between the City and County for the City to Provide Limited Funding for the Operation of a 30-unit Homekey Interim Housing Development on Santa Clara County-Owned Land Located at the Southeast Corner of Lawrence Expressway and Benton Street
Report
EXECUTIVE SUMMARY
Consistent with City of Santa Clara (City) adopted plans to end homelessness the City and County of Santa Clara (County) have been exploring potential development of a project on County owned land at Benton and Lawrence. The City endorsed the 2020-2025 Community Plan to End Homelessness in the County and approved resolutions finding that the problem of homelessness in the County is a crisis. On May 7, 2024 the City Council adopted the sixth cycle Housing Element which included the following commitment under Action 1. Provision of a Variety of Housing Types specifies:
“By 2030, increase access to interim housing units, rapid rehousing, and emergency shelter beds by 30% from 453 in 2023 to 589, with a discrete objective to create broad based support for interim housing.”
The Santa Clara Family Community Interim Housing Project was presented to the City Council in April 25 and May 2, 2023 and consistent with the City Council direction, the City supported the County’s application for Homekey funding. The State of California awarded $25.7 million in Homekey Round 3 funds on June 30, 2025, to construct and operate the Santa Clara Family Community, a key milestone in the City’s efforts to expand housing and supportive services for unhoused community members. With State funding in place, the City and County have negotiated an agreement to memorialize certain conditions of the City’s funding following direction from the City Council.
The proposed project is comprised of 30 housing units along with support services and amenities for unhoused families with minor children in Santa Clara. The project will be operated by LifeMoves, a nonprofit. The key terms for City support that have been negotiated are as follows:
• 30 units designed as suites for families.
• The project will serve families with minor children for at least a period of 30 years.
• The project will prioritize local Santa Clara families.
• The operator will check sex offender registry of clients prior to enrollment and those confirmed on the registry will not be allowed to access the facility.
• Quarterly community meetings for the first two years of project operations to receive feedback and concerns.
• County will provide quarterly reports on unduplicated clients served, average length of stay, returns to homelessness, and a summary expenditure report outlining costs City funding contributed to.
Because the terms address City objectives and concerns for unhoused families, with priority to local families and ensures those obligations last at least 30 years, staff is recommending approval of the agreement.
The City agreement for funding is important because it is the best mechanism for City interests to be addressed with ability to enforce. Otherwise, the County could develop project as they see fit as they own the land with no need for City discretionary approval.
The County and LifeMoves are co-sponsors on the state Homekey application. The City is only a funding partner with $6,592,139 to apply towards the first seven years of operations of the project. The City has no other funding obligation beyond this amount and any future City funding for this project would require City Council approval.
Homekey projects are subject to SB 35 streamlining so no discretionary actions are required the development. SB 35 projects still need the same ministerial approvals as other projects -- i.e. building, grading, and encroachment permits, and the LifeMoves development team submitted a building permit application on October 31, 2025. The building permit is currently under final review.
The purpose of this item is to receive direction from the City Council on the Staff recommendation to approve the proposed Agreement for Funding and Operation of the Santa Clara Family Community Interim Housing (“Proposed Funding Agreement”) to provide limited funding for the operations of the Santa Clara Family Community.
BACKGROUND
On August 24, 2021, the City Council held a Study Session on Homeless Encampments and Vehicle Dwelling facilitated by the Police Department. This discussion addressed intervention strategies, including applying to the California Project Homekey program to develop and operate an interim housing site for unhoused people in Santa Clara. The staff agreed to return with further analysis and a potential proposal for an interim housing project in Santa Clara utilizing the Homekey program.
In November 2021, the Santa Clara County Board of Supervisors asked staff at the County’s Office of Supportive Housing (OSH) to identify County-owned parcels for interim housing. The County evaluated sites based on several factors, including lot size, accessibility for construction equipment, proximity to transit, and access to utilities, medical services, and grocery stores. In addition, County staff considered the current location of permanent, interim housing options across the County and worked with local jurisdictions that were interested in expanding interim housing options in their communities. County staff identified the County-owned vacant property located at the southeast corner of Lawrence Expressway and Benton Street and confirmed that it met certain physical site characteristics and could be made available for interim housing.
In spring 2022, the City convened a Homelessness Taskforce, which included stakeholders from each City Council District including a few people with lived experience of housing instability. The taskforce met six times and wrapped up in October 2022. Input from this process was incorporated into the City’s draft Homelessness Response Plan.
In late 2022, LifeMoves and the Sobrato Foundation approached the County with a proposal to build interim housing on the Benton/Lawrence site. County staff then reached out to City staff to discuss the proposal. As proposed, the project would be financed primarily through a California Project Homekey grant, County grant funding, philanthropic funding, and funding from the City. The proposal required an application to the third round of grant funding for the California Homekey Program.
On January 10, 2023, the City Council held a Study Session to discuss the first draft of the City’s Homelessness Response Plan prepared by Homebase and City staff based on input from the City’s Homelessness Taskforce. The presentation identified shelter and interim housing as options to address homelessness in Santa Clara. During the Study Session, staff shared information about a potential Homekey opportunity at the Benton/Lawrence site. The City Council asked staff to conduct robust community outreach and to further explore a possible interim housing development at this location.
Following Council’s direction in early 2023, the City worked closely with OSH and LifeMoves to create a project webpage and organize and promote two in-person and two virtual meetings to gather resident input over the course of several weeks. The meetings were well attended, with 300-400 attendees at each meeting. The community raised many concerns, with a key focus on the suitability of the site, impacts on public safety, general neighborhood compatibility, and the viability of the project. As a result of this community input, the project team made significant changes to the project including reduced density from an original proposal of 124 units to 30 units and changing the target population from singles/couples to only families with children.
On May 2, 2023, the City Council approved the following motion in a 4 to 3 vote to:
• Authorize the City Manager’s Office to negotiate and execute a three-party letter of intent between LifeMoves, the County of Santa Clara, and the City of Santa Clara that defined roles and responsibilities for the financing, operations and construction management for the Homekey grant application for the property located at Lawrence Expressway and Benton Street in a final form approved by the City Attorney;
• Authorize the County of Santa Clara to update the City of Santa Clara's Permanent Local Housing Allocation 5-year plan by adding activity six to the County's PLHA plan to assist persons who are experiencing or at risk of homelessness and allocating year 3, 4, and 5 funding, after deducting administrative costs, to the Benton/Lawrence interim housing to help fund operations; and
• Provide direction to return to City Council for approval of a budget amendment appropriating up to $5,500,000 from special revenue funds for operations at the Benton/Lawrence interim housing site; and include an Annual Review in the Letter of Intent.
On June 14, 2023, the City Manager signed a letter acknowledging the City’s funding commitment and included specific conditions on the City’s financial support of the project. The letter noted that approval of the City’s final business terms will take the form of an agreement that is subject to City Council approval. Such approval would occur closer to financing according to the City's general underwriting parameters and per requirements of the State Homekey Program, the County, and other funders. The agreement would require a restrictive covenant to be recorded and would be subject to terms and conditions to be negotiated between the parties that include restrictions on the use, operation, and occupancy of the project for families; submission of an annual management and security plan; and a process for collecting community input in the early years of operations.
On June 27, 2023, as part of the FY 2023/24 and FY 2024/25 Operating Budget Adoption, the City Council approved the transfer of $5,124,369 ($3,524,369 from the Housing Authority Fund and $1,600,000 (Santana West Settlement) from the City Affordable Housing Capital Fund) to the City Affordable Housing Fund for the Benton/Lawrence Project. On October 29, 2024, the City Council approved the FY 2024/2025 budget amendment in the City Affordable Housing Fund, recognizing an increase to the beginning fund balance in the amount of $5,124,369, and increasing the capital outlay appropriation in the amount of $5,124,369, and allocating the remaining balance of $1,470,000 in PLHA funds (for a total City contribution of $6,594,369) to secure state Homekey Round 3 funds to construct and operate the proposed project.
The County then submitted a completed Homekey grant application for the project. Between September 2023 through July 2024, HCD awarded over $818.0 million in Homekey Round 3 funds to 49 projects across California. The majority of funds had been awarded and staff assumed the Benton/Lawrence project would not be funded. However, in August 2024, the County received a letter from HCD inquiring if the project was still viable and informing the County that an award was still under consideration if previously identified funding sources could be reconfirmed.
On May 7, 2024 the City Council adopted the sixth cycle Housing Element with a commitment to increase interim housing units, rapid rehousing and emergency shelter beds.
On October, 29, 2024, the City Council approved a FY 2024/25 budget amendment in the City Affordable Housing Fund to carryover the $5,124,369 for the Benton/Lawrence project. The Council also voted to allocate the remaining balance of $1,470,000 in PLHA funds (for a total City contribution of $6,594,369) to secure State Homekey Round 3 funds to construct a three-story 30-unit interim family housing development on a County-owned site at Lawrence Expressway and Benton Street. On November 13, 2024, the City submitted another conditional letter to the County acknowledging the City’s funding commitment. This letter is included as Attachment 1.
As an update to the funding amount, in February 2025, the City and County amended the PLHA Consortium Agreement and slightly reduced the allocation of PLHA funds for this project from $1,470,000 to $1,467,770 based on actual funds that were available. This combined with committed local funds in the amount of $5,124,369, reduced the City’s total contribution from $6,594,369 to $6,592,139.
On June 30, 2025, the State announced the grant award of $25.7 million in Homekey Round 3 funds for the construction and operation of the Santa Clara Family Community. On October 31, 2025, the County and LifeMoves submitted a building permit which is now currently being processed. As this is a Homekey project and meets all standards per California Government Code § 65913.4, (also known as Senate Bill 35 from 2017), no discretionary entitlements are required and only a Building Permit is required.
A detailed timeline for this project is included as Attachment 2.
DISCUSSION
In response to growing concerns about homelessness, the County of Santa Clara (County) and the City of Santa Clara (City) endorsed the 2020-2025 Community Plan to End Homelessness in the County and approved resolutions finding that the problem of homelessness in the County is a crisis. In July 2021, the City Council indicated interest in finding a site that could be used to develop a new emergency interim housing facility by leveraging the State of California’s Homekey Program which provides funding for construction and operations. This was reinforced by the finding that homelessness increased by 35% in the City from 2019 to 2022 according to the Santa Clara County Homeless Census and Survey, and the finding that more interim housing is needed in Santa Clara by the City’s Homelessness Task Force. In a follow up Study Session held by the City on April 21, 2026, County staff shared that in the City, for every 1 household housed, 1.5 became homeless in 2025.
Beginning with a 2021 City Council Study Session on homelessness and vehicle dwelling, the City explored opportunities through California’s Project Homekey program for interim housing. Over the next two years, the County’s Office of Supportive Housing (OSH), LifeMoves, and the Sobrato Foundation collaborated with City staff to develop a Homekey program proposal, conduct extensive community outreach, and address resident concerns by revising the project scope to a three-story 30-unit interim supportive family housing development which prioritizes Santa Clara families with minor children. This project was designed specifically to help families with minor children to recover from being unhoused giving them a chance for health and stability until they can find permanent housing.
Interim Housing and Homekey Requirements:
Interim housing is part of a larger coordinated entry system that includes emergency shelter, rapid rehousing, transitional housing, and permanent supportive housing. Interim housing projects are essential in California to bridge the critical gap between living on the streets and securing permanent housing because new permanent housing cannot be built fast enough. Interim housing provides a safe, dignified, stable, and supportive environment where unhoused individuals and families can connect to vital services including food, basic housewares, help accessing benefits, daycare, job search, medical care, mental health counseling, housing search assistance and more. Interim housing typically provides private sleeping quarters, extended stays, and on-site supportive services. The Santa Clara Family Community Interim Housing Project will serve as a temporary respite between homelessness and permanent housing. According to OSH, in 2025, 66% of families exited interim housing programs to permanent supportive housing.
California’s Homekey program requires employment of Housing First, see Attachment 5, in its property management and tenant participation selection practices. Homekey projects must accept participants regardless of sobriety, participation in services or treatment, history of incarceration, or credit or eviction history. While the Santa Clara Family Community Interim Housing Project is subject to these Homekey requirements, the County will require the project operator to conduct a Sex Offender Registry Verification process prior to enrollment and if confirmed to be on the registry, those clients will not be allowed to access this facility while the project serves homeless families with minor children. Beyond this, State Law does not allow additional background checks for Homekey projects. However, if a resident is not following the operator’s guidelines, and their actions are creating safety concerns for other residents or staff, they can be exited quickly from the program.
Interim housing alone cannot end homelessness. Local jurisdictions must continue to build affordable housing and Permanent Supportive Housing (PSH) so residents can transition from temporary housing to permanent housing options. PSH is different from interim supportive housing because tenants hold standard leases and pay a portion of their income toward rent. PSH is intended for residents with long term case management and service needs.
Project Overview:
The Santa Clara Family Community Interim Housing Project was thoughtfully designed to create inviting exterior elevations with contemporary materials and landscaping throughout. The project site is buffered to the south by Calabazas Creek, to the north by Benton Street and commercial/retail 7-Eleven, to the east by an existing church, and to the west by Lawrence Expressway. The project is designed as one three-story building, with a single-point of entry, surface parking and ground floor space for providing services. The building will contain 30 units for families with 90 doors (bedrooms). Each unit will have a single exterior door, kitchenette, three bedrooms and one or two bathrooms depending on the configuration. The amenity spaces for families with children include a staffed welcome area, childcare facility with its own outdoor space for children ages 18 months - 5 years, a food pantry, warming kitchen, cafeteria, laundry room, staff offices, therapy spaces, utility room, storage room and community room for use by the residents. The outdoor areas of the project will include an internal courtyard for multi-purpose activities, a dog park along Calabazas Creek, and a community garden and rooftop deck for resident use.
To better understand interim housing project operations and site designs, City and County staff along with Santa Clara Police Department (SCPD) staff toured multiple LifeMoves sites in San Jose, Redwood City, Menlo Park, and San Mateo. The sites that were most similar to the proposed Santa Clara project were located in Menlo Park and San Mateo. The tours provided additional understanding of operations, amenities, security, daycare and supportive services. LifeMoves provided performance data on each of these sites, and this information is included in Attachment 3.
City staff have been coordinating questions about site security with the SCPD. The proposed project includes a single point of entry from the parking lot and will include a staffed front desk, electronic key entry, and multiple security cameras. The project will only allow residents to enter as guests who are permitted on-site. City staff and SCPD will establish regular communication with LifeMoves management, facilitate site specific training before the site opens, coordinate 24-hour points of contact, procedures for reporting criminal activity, hold regular meetings to discuss operational issues, trends, and share appropriate information regarding facility operations while respecting resident privacy. As required by the Building Code, the project will have secured and alarmed access for the main cafeteria on the first floor. In addition, the daycare will have a separate entrance and play area.
Agreements and Responsibilities:
The co-sponsors for the project are County and LifeMoves. The City is not a co-sponsor or a co-applicant for the Homekey funding. As co-applicants, County and LifeMoves will enter into a standard agreement with the California Department of Housing and Community Development (HCD). The County, LifeMoves and HCD will also execute a declaration of restrictive covenant that will be recorded against the property and restricting its use as interim housing and includes maintenance and repair obligations. The County and LifeMoves will be solely responsible for ensuring the project is constructed and operated for the 30-year term. County and LifeMoves will also enter into an agreement with each other.
As part of the May 2, 2023 City Council action, staff were directed to draft a Letter of Intent to help define the terms of the City’s funding commitment. City staff drafted some initial terms and shared them with the County. Once the Homekey funds were awarded, the County and City began working on a more robust form of legal agreement. This agreement was intended to implement the City Council’s direction while balancing the operational restrictions set by the Santa Clara County Continuum of Care’s Coordinated Assessment System and other State and federal policies.
Under the proposed agreement between the City and County, the City will contribute a maximum of $6,592,139 to apply towards the first seven years of operations of the project. The first payment is not due until after issuance of final certificate of occupancy for the project. The City has no other funding obligation beyond this amount. Any additional or future City funding for the project would require City Council approval in its sole discretion.
Since June 2025 when the Round 3 funds were awarded to the County, it took several rounds of negotiation between the City and County to prepare the current form of the agreement that is now under consideration. The full text of the proposed agreement can be found in Attachment 4, and a summary of key terms is provided below:
Agreement Term:
The agreement is a seven-year term, with annual installment payments of $941,734.14. The agreement will terminate one year after the payment of the seventh and proposed final annual installment of the City’s operational funding. The City and County can mutually agree to extend the agreement beyond seven-year term, but any such extension would be subject to prior City Council approval in its sole discretion.
County Responsibilities:
• Population Served: The County will require the project to exclusively serve homeless families with minor children so long as such a restriction does not render available beds vacant beyond the point allowed by State guidelines, and so long as it does not prevent the County or project operator from complying with the requirements of the Homekey Standard Agreement between the County, operator and the State of California. This obligation will remain in place for 30 years and will extend beyond the 7-year term of the overall agreement.
• Sex Offender Registry Verification: Clients referred to the Project will be checked by LifeMoves staff against the public sex offender registry prior to enrollment and if confirmed to be on the registry, those clients will not be allowed to access this facility. No additional background checks will be conducted as this must follow Housing First guidelines according to the Homekey NOFA. The Proposed Funding Agreement expressly states that under no circumstances will the agreement require the County or project operator to violate applicable State or federal laws. This obligation will remain in place for 30 years.
• Local Preference: The project will prioritize “Families” which shall be defined as a family unit that includes at least one minor child or a child who is 18 and enrolled in high school., and this requirement will remain in place for 30 years.
• Site Security: The County should require the project operator to provide the City with reasonable access to monitoring reports and related non-confidential or privileged records, and site visits. The County will work in good faith to collaborate with the City to respond to and address any issues or concerns raised regarding the operation of the project. This obligation will remain in place for 30 years.
• Quarterly Community Meetings: The agreement requires the County and LifeMoves, in coordination with City staff, to host one community meeting prior to certificate of occupancy and quarterly community meetings for the first two years of operations. These meetings will be open to anyone who wishes to attend. The purpose of these meetings will be to receive and respond to community feedback on issues or concerns that arise. If the City determines additional Community Meetings are needed, the County or project operator will host such additional meetings provided that at least one City staff member is in attendance. These meetings will be hosted virtually unless determined that in-person meetings are needed. Staff recommended a community meeting format rather than an “oversight committee” format because it is more flexible and allows all who wish to attend to be involved.
• Project Description: Exhibit A of the agreement outlines certain physical features that help ensure certain amenities are provided on site. Key amenities include: welcome area, childcare facility with its own outdoor space for children ages 18 months - 5 years, dining and pantry, warming kitchen, cafeteria, laundry room, therapeutic spaces, utility room, storage room and community room for use by the residents. The outdoor areas of the Project will include a multi-use lawn area, dog park, community garden and rooftop deck for resident use.
• Reporting: For the Term of the Agreement, the County will provide quarterly reports on the number of unduplicated clients served, demographics, clients served who are affiliated with the City, exit destinations, average length of stay, returns to homelessness, and a summary of actual expenses that have been covered by City funding.
City Responsibilities:
• City Funding. City shall pay the County a total maximum amount of $6,592,139 through seven annual installment payments of $941,734.14 to offset a portion of the project’s operating expenses. The City will not be responsible for covering construction costs or any other costs beyond what is included in the agreement between the City and County.
• Disbursement Process. The Proposed Funding Agreement sets forth the process for disbursement of the City Funding and includes a requirement that the County demonstrate it has adequate funds to operate the project.
Risk Management and Enforcement:
The Project will be operated by LifeMoves through an agreement between LifeMoves and the County. In that agreement, the City will be a named an additional insured and indemnified by LifeMoves.
In the event that the Project is not operated in accordance with the requirements of this Agreement for the Funding and Operation of the Santa Clara Family Community Interim Housing Project, the City has the right to enforce those obligations by legal action against the County or by terminating the Agreement for cause. After the expiration of the Agreement, for a total period of 30 years, the City shall also have the right to enforce any breach of the obligations for the project to exclusively serve homeless families, conduct sex offender registry verification, and prioritize local families.
Conclusion:
Based on recommendations by the City’s Homelessness Taskforce, the May 7, 2024 adopted Housing Element and City Council’s previous direction, staff is recommending that the City Council approve the agreement for City operational funding for the Project on the terms presented. By providing funding to the Project, the City was able to negotiate terms that prioritize service to local families and assure operations will occur in high quality and secure manner.
ENVIRONMENTAL REVIEW
As previously detailed in the May 2, 2023 Report to Council, the construction of the project is subject to a statutory exemption under the California Environmental Quality Act (“CEQA”) pursuant to Government Code section 65913.4, as enacted by Senate Bill 35 in 2017, which applies to certain types of affordable housing projects. The proposed action before the Council, a funding and operation agreement with the County of Santa Clara, does not constitute a “project” under CEQA pursuant to CEQA Guidelines section 15378(b)(4), in that it is a fiscal activity which would not directly result in any physical impacts on the environment.
FISCAL IMPACT
On June 9, 2026, as part of the FY 2026/27 and FY 2027/28 Budget adoption, the City Council approved the carryover of $5,124,369 in the City Affordable Housing Fund for the Benton/Lawrence project.
Additionally, the City will draw from the City’s Affordable PLHA fund which is administered by the County of Santa Clara on the City’s behalf. The amount of PLHA funds allocated to this project per the City and County Consortium Agreement is $1,467,770. Together these funds would bring the City’s total contribution to $6,592,139.
COORDINATION
This report was coordinated with the Finance Department, City Attorney’s Office, and City Manager’s Office.
PUBLIC CONTACT
Public contact was made by posting the Council agenda on the City’s official-notice bulletin board outside City Hall Council Chambers. A complete agenda packet is available on the City’s website and in the City Clerk’s Office at least 72 hours prior to a Regular Meeting and 24 hours prior to a Special Meeting. A hard copy of any agenda report may be requested by contacting the City Clerk’s Office at (408) 615-2220, email clerk@santaclaraca.gov or at the public information desk at any City of Santa Clara public library.
In addition, City staff mailed courtesy hard copy notices to addresses within one-quarter mile of the site, posted a large sign on the fence facing Benton Street, worked with the County to send email notifications to over 300 stakeholders who have opted in for email updates throughout the predevelopment process, and posted a notification on Nextdoor.com.
RECOMMENDATION
Recommendation
Approve and authorize the City Manager or designee to execute the Agreement for the Funding and Operation of the Santa Clara Family Community with the County of Santa Clara committing up to $6,592,139 in PLHA and local funds for operation support of the proposed Homekey family interim housing project located at Benton Street and Lawrence Expressway, on the terms and in substantially the form presented, subject to the final approval as to form by the City Attorney.
Staff
Reviewed by: Afshan Hamid, Director, Community Development Department
Approved by: Jovan Grogan, City Manager
ATTACHMENTS
1. City of Santa Clara Funding Commitment Letter - November 13, 2024
2. Timeline of Santa Clara Family Community Interim Housing Project
3. LifeMoves Interim Housing Data Sheet
4. Agreement between City of Santa Clara and Santa Clara County for the operation of a new family housing at Lawrence Expressway and Benton Street
5. California Welfare and Institutions Code on “Housing First” policies