REPORT/RECOMMENDATION TO THE BOARD OF SUPERVISORS
OF SAN BERNARDINO COUNTY
AND RECORD OF ACTION
June 23, 2026
FROM
ROB GILLIAM, Acting Director, Community Development and Housing Department
SUBJECT
Title
Approval of Operational Funding for 450 North G Street in San Bernardino
End
RECOMMENDATION(S)
Recommendation
1. Authorize the use of $3,473,191 from Homeless Housing, Assistance and Prevention Program Grant Round 1 and Round 2 to support operating costs associated with 450 North G Street in San Bernardino, including property management, security, maintenance, and related operating expenses.
2. Authorize the use of $1,619,221 from the Housing and Homelessness Incentive Program Grant to support operating costs associated with 450 North G Street in San Bernardino, including property management, security, maintenance, and related operating expenses.
3. Authorize the use of $562,092 from Permanent Local Housing Allocation Round 3 funding to support operating costs associated with 450 North G Street in San Bernardino, including property management, security, maintenance, and related operating expenses.
4. Authorize the Auditor-Controller/Treasurer/Tax Collector to post the necessary budget adjustments to the 2025-26 budget, as detailed in the Financial Impact section (Four votes required).
(Presenter: Rob Gilliam, Acting Director, 382-3983)
Body
COUNTY AND CHIEF EXECUTIVE OFFICER GOALS & OBJECTIVES
Operate in a Fiscally Responsible and Business-Like Manner.
Foster Sustainable Development Through Strategic Partnerships.
Provide for the Safety, Health and Social Service Needs of County Residents.
FINANCIAL IMPACT
Approval of the recommendations will not result in the use of additional Discretionary General Funding (Net County Cost). The operating cost support for 450 North G Street in San Bernardino (Property), totaling $5,654,504, is funded by $3,473,191 from Homeless Housing, Assistance and Prevention (HHAP) Program Rounds 1 and 2 funds; $1,619,221 from Housing and Homelessness Incentive Program (HHIP) funds; and $562,092 from Permanent Local Housing Allocation (PLHA) Round 3 funds.
The Community Development and Housing Department (CDH) requests the following adjustments to its 2025-26 budget:
|
Funds Center |
Commitment Item |
Description |
Action |
Amount |
WBSE |
|
6210002506 |
53003205 |
Public Assistance |
Increase |
$3,473,191 |
- |
|
6210002506 |
37008880 |
Fund Balance Reserves - Available Reserve |
Decrease |
$3,470,014 |
- |
|
6210002506 |
55305030 |
Operating Transfers Out |
Decrease |
$3,177 |
- |
|
6210002493 |
53003205 |
Public Assistance |
Increase |
$1,619,221 |
- |
|
6210002493 |
55305030 |
Operating Transfers Out |
Decrease |
$1,619,221 |
- |
BACKGROUND INFORMATION
In 2020, in response to the COVID-19 pandemic and the urgent need to expand housing options for individuals experiencing homelessness, San Bernardino County (County) pursued acquisition and conversion of existing hotel properties through the California Department of Housing and Community Development’s (HCD) Homekey Program (Homekey). The Board of Supervisors (Board) prioritized rapid deployment of housing units and the creation of affordable, service-enriched housing to strengthen the County’s homeless response system.
Consistent with this direction, the County jointly applied with Shangri-La Industries, LLC (Developer), 450 G Street, LP, and Step Up on Second, Inc. for Homekey funding to acquire and convert the Property into housing for individuals and families experiencing or at risk of homelessness.
On September 15, 2020 (Item No. 39), the Board approved Resolution No. 2020-171 authorizing the submission of an application for Homekey grant funds and take necessary actions to secure and administer the funding. Following the Board’s authorization and the subsequent award of the Homekey grant funds, the County entered into a Standard Agreement with HCD and the Developer, establishing the terms and conditions for use of the Homekey funds and requiring the Property to be operated in compliance with Homekey Program requirements, including affordability and occupancy restrictions.
Subsequently, the Developer defaulted on its obligations under the Homekey Standard Agreement. On or about January 9, 2024, HCD filed a lawsuit in Los Angeles County Superior Court (California Department of Housing and Community Development v. Shangri-La Industries LLC, et al., Case No. 24STCV00629), alleging breach of contract and related claims. The County and other parties were also named as defendants. To resolve the litigation and protect the public investment, the parties negotiated a settlement that led to the County’s acquisition of the Property.
On May 29, 2025, the Office of Homeless Services (OHS) and CDH executed a Memorandum of Understanding outlining the roles and responsibilities of each department in the administration of HHAP funds.
On June 18, 2025 (Item No. 49), the Board approved a budget adjustment to fund a Capitalized Operating Subsidy Reserve account using HHAP Rounds 1 and 2 funds, in the amount of $3,473,191, for expenses related to affordable permanent housing units, emergency shelters, or interim shelters serving an extremely low-income population. The current item authorizes the use of those funds, together with HHIP and PLHA funds, to support eligible operating expenses now that the County has acquired the Property and is responsible for ongoing operations.
On March 10, 2026 (Item No. 35), the Board approved the acquisition of the Property, the Purchase and Sale Agreement (Agreement No. 26-130), as well as the Side Agreement (Agreement No. 26-131), under which HCD contributed $1,350,000 as the Purchase Price Contribution and committed an additional $617,300 in HCD Repairs Contribution Grant funding towards required Americans with Disabilities Act repairs.
On April 8, 2026, the County acquired the Property. Upon acquisition, the County immediately began incurring costs to stabilize property operations, including property management, security, and other operating expenses necessary to maintain safe and stable living conditions for residents and preserve the Property while planning for substantial rehabilitation. These conditions have created significant ongoing operating pressures that exceed routine property management expenses. While rental revenue is anticipated to offset a portion of these costs, operating expenses exceed projected revenues.
Approval of the recommendations will authorize the use of previously awarded HHAP, HHIP, and PLHA funding sources to support ongoing operations at the Property, allowing the County to maintain safe and stable operations while preserving the Property as housing for individuals and families experiencing or at risk of homelessness.
PROCUREMENT
Not applicable.
REVIEW BY OTHERS
This item has been reviewed by County Counsel (Suzanne Bryant, Deputy County Counsel, 387-5455) on June 8, 2026; Auditor-Controller, Treasurer, Tax Collector (Charlene Huang, Auditor-Controller Manager, 382-7022) on June 9, 2026; and County Finance and Administration (Paul Garcia, Administrative Analyst, 387-4205) on June 10, 2026.