Q&A
Contract terms and models for shelter providers
0:29:17
·
138 sec
Commissioner Park explains the various contract terms and models used for shelter providers, highlighting the benefits of longer-term contracts.
- Typical human service contracts are 5 years with a 4-year renewal period
- Increasing use of 'not-for-profit owned contract model' with 30-year terms
- Benefits of longer-term contracts include cost-effectiveness and stability for providers
- 43 not-for-profit owned contracts in various stages from operation to predevelopment
Gale A. Brewer
0:29:17
I'll belabor it.
0:29:18
How long just generally for some of these contracts with the nonprofit providers, how long are the contract terms?
0:29:25
And then I think you answered this, but the scheduled check ins to review the status of the contracts, how is that actually done?
0:29:32
The length and the check-in.
Molly Wasow Park
0:29:33
So we have, 2 typical human service contracts and and I'm you know, there are contracts that we have with, you know, cleaning vendors and things like that that might look slightly different, but I'm speaking specifically about the human services.
0:29:46
The bulk of them are 5 year contracts with a 4 year 4 year renewal period.
0:29:52
So that is that is the majority of what we have.
0:29:55
We have also increasingly been doing, what we refer to as our not for profit owned contract model for shelters.
0:30:02
These are longer term, generally 30 year contracts where the, not for profit is able to use the the term of that contract to leverage private debt and then, do their own shelter development.
0:30:16
So rather than leasing a site from a for profit landlord that they are able to, develop and and build their own site.
0:30:26
I am very excited about that model.
0:30:29
I think it offers a lot of benefits.
0:30:31
The not for profits control their own destiny.
0:30:35
The real estate is an asset on their balance sheet.
0:30:37
They are responsible for doing their own, you know, maintenance and operation.
0:30:42
They're not at the whim of any private landlord, so that is a benefit to the not for profit.
0:30:47
It's a benefit to the client because the buildings are being built as shelter.
0:30:52
They're not an adaptation of something that that may or may not have the appropriate community, service space, recreation space, things like that, and they're of value to the city because we are paying a fixed real estate cost every, over a 30 year period.
0:31:08
In the the 9 year contracts, there's a rent escalator every 3 years, and then obviously at the 9 year mark, there is an opportunity for the landlord to to renegotiate.
0:31:17
So, it is cost effective for us to do those longer term contracts.
0:31:20
It does make for very large contracts, and I know, you know, that has has gotten some attention, but they are, at the end of the day, quite cost effective.
0:31:29
We have 43 of those ranging from in operation to in the predevelopment stage.
