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HomeMy WebLinkAboutSecure Res Treatment Facility UpdateDepartment of Administrative Services Dave Kanner, County Administrator October 29, 2009 TO: Board of Commissioners FROM: Dave Kanner, county administrator RE: Secure residential treatment facility 1300 NW Wall St, Suite 200, Bend, OR 97701-1960 (541) 388-6570 - Fax (541) 385-3202 www.co.deschutes.or.us Staff first began discussing the SRTF project with the Board nearly a year ago. This arose after the state decided, as part of the State Hospital Master Plan, to decentralize certain services now provided at the state psychiatric hospital, and to provide for new, smaller facilities in other parts of the state. The County offered to construct for the state a secure residential treatment facility with the agreement that the County would be entitled to use a certain number of beds for local patients. This evolved into a somewhat different understanding wherein the state will use all of the beds in the SRTF, but will also contract with Telecare to operate two five -bed residential treatment homes (RTH) in which the County will be entitled to use six of the ten beds. All costs for this project and for the operation of these facilities are borne by the state. The following table illustrates the planned beds and their usage. As a measure of their commitment to the project, the state last April provided the County with $750,000. About $126,000 of this has already been spent on design and some site preparation work. In addition, Telecare is in the process of leasing or purchasing two facilities that it will use for the smaller RTHs. The County needs to issue full faith and credit bonds in order to raise the money required to actually build the SRTF. We have been waiting for some kind of intergovernmental agreement with the state before taking a resolution to the Board that would authorize us to issue the debt. Mark Pilliod's October 27 memo to you explains the various Enhancing the Lives of Citizens by Delivering Quality Services in a Cost -Effective Manner State Hospital PSRB State Hospital Civil Commit. County Beds 16 -bed SRTF 7 9 0 5 -bed RTH 0 4 6 5 -bed RTH 0 _ Total 7 13 6 As a measure of their commitment to the project, the state last April provided the County with $750,000. About $126,000 of this has already been spent on design and some site preparation work. In addition, Telecare is in the process of leasing or purchasing two facilities that it will use for the smaller RTHs. The County needs to issue full faith and credit bonds in order to raise the money required to actually build the SRTF. We have been waiting for some kind of intergovernmental agreement with the state before taking a resolution to the Board that would authorize us to issue the debt. Mark Pilliod's October 27 memo to you explains the various Enhancing the Lives of Citizens by Delivering Quality Services in a Cost -Effective Manner machinations we have gone through trying to get an agreement in place. I must emphasize that such an agreement is not necessary in order to issue FF&C bonds. The state's position at this point is that they already have an agreement with the County to provide this service element and that the additional money to cover the operation and debt service can be appropriated to us via an amendment to that existing agreement. Although it can be argued that the state could disappropriate these funds in the next round or some other future round of budget cuts, it should be noted that the state did not cut funding for this particular service element in the '09 legislative session and never has done so in the past. The state must house PSRB and civil commitment patients. It effectively, therefore, has no choice except to provide funding for this purpose and cut other services instead. Attached is a letter from Madeline Olson, deputy director of the Addictions and Mental Health Division, in which she notes this fact. Given the state's obvious commitment to this project and the fact that we have already accepted a substantial down payment from the state for it, I recommend that we move forward and prepare for a bond issue using our allocation of Recovery Zone Economic Development Bonds. Again, a separate IGA is not required for the issuance of these bonds (which are FF&C bonds) and we have already agreed to have this facility built and operational by August 31, 2010, a deadline that I believe we'll need to renegotiate with the state. Staff looks forward to answering your questions about this at the November 4 work session. DESCHUTES COUNTY LEGAL COUNSEL MARK E PILLIOD /OI Legal Counsel m^ Ext. 6625 TO: Board of Commissioners DATE: October 26, 2009 RE: Secure Residential Treatment Facility FILE NO.: The purpose of this memo is to outline the options available to the County in its effort to achieve the most favorable financing for design and construction of a secure residential treatment facility (SRTF) in Deschutes County. The Board is well aware that Central Oregon needs additional residential spaces and treatment options, including a facility for mental health clients,. who represent a security risk. The County has made a commitment to design and construct such a secure facility on land donated by the County for this purpose. The County has also informally agreed with the State (Addictions and Mental Health or AMH) to allocate space to persons transferred to such a facility by the State, with the concurrence of Deschutes County Health Services and the facility operator. Residents in the secure facility would be people on conditional release by the Oregon Psychiatric Security Review Board or patients at the Oregon State Hospital on a civil commitment. The State has already contributed $750,000 to apply toward this project and the County has already spent some of that money on design/engineering; and encasing the irrigation canal. The concern is that the County intends to issue full faith and credit obligations, and while it is unnecessary that the County identify a specific, reliable funding, stream, some assurance is desirable for budgeting purposes. The Board has asked that the State provide some form of assurance that it will continue to fund mental health services and thus provide a source of funds for debt service. The conflict here is that the State is constitutionally prohibited from encumbering funds from one biennium to the next. The County is aware of this restriction, as demonstrated in the Intergovernmental Agreement for the Financing of Community Mental Health, Developmental Disability and Addiction Services. Initially, the arrangement between the State, the County and the facility operator. Telecare, had Telecare entering into a lease agreement with the County and getting payment directly from the State (AMH) to cover both operational costs and lease payments. Lease payments would enable the County to make debt service. However, payments to the operator would depend upon occupancy of the facility, i.e., if only a portion of beds were filled, the operator would receive proportionally less. The County Administrator asked that I prepare a form of agreement which might be used to assure a steady payment stream from the State without violating the Constitutional prohibition on extending credit. With the assistance of outside counsel I prepared such agreement, amending the anticipated agreement between the State and Telecare and enabling the County to take over operations, if Telecare defaulted. Since the structure of this transaction later changed to what l: describe next, the County's proposed amendment to the State-Telecare agreement was abandoned. The best the State could offer in this regard has been a letter from the Deputy Assistant Director of AMH reciting the history of funding support for this program from the State Legislature since the 1989-91 biennium, when community mental health budget was first adopted. This initial arrangement was later changed. To strengthen the County's hand in facility and program oversight Telecare would still lease the facility from the County, but the County would receive payments directly from the State in an amount designed to cover both the cost of Telecare's operating the facility, as well as lease payments. There are several concerns with this arrangement. First, while the County would be able to directly oversee Telecare's performance, the County was not directly involved in selecting Telecare as the area provider. The State conducted its selection process in accordance with state law, OAR 125-247-0288(2)(c)(B) and ORS 279A.050(6)(a)(A). I have requested background material from the State to document the selection process it followed and to determine whether the County can legally enter into direct contract negotiations with the Telecare without further competitive procurement. In order to avoid possible dispute in the future the Board may wish to proceed with a contract -specific special procurement under ORS 279B.085(1)(b), which would enable the County ultimately to contract directly with Telecare for the operation of the SRTF and the related facilities. Another concern is the basis on which the County would disburse funds to Telecare. The State's suggested approach is to use funds received by the County under the bi-annual State agreement (Intergovernmental Agreement for the Financing of Community Mental Health, Developmental Disability and Addiction Services) as the method of paying for Telecare's operation of the facility while enabling the County to meet debt service. This two-year agreement currently serves as a conduit for funding a variety of services connected with mental health. The State identified Service Element 28 as the specific provision enabling State funds to be used to pay Telecare for SRTF operating costs. The State also suggested that the County could withhold some funds from Telecare under Service Element 20, designed for non- residential treatment, on the theory that Telecare would be responsible for lease payments and Service Element 20 provides that funds can be used in part to assist clients in obtaining and maintaining housing. A third option might be to have the State become tenant of the SRTF under a lease agreement with the County. This lease would be similar to the lease of the Deschutes Services Bldg and the future lease of the OSP/911 building. Like those leases, it would contain a "subject to appropriation" provision allowing the State to cancel if the Legislature cancels funding. The State would also enter into an agreement with Telecare to operate the facility. While the PSRB clients are not wards of the State, the State can order persons subject to PSRB jurisdiction to stay in SRTF's. This arrangement avoids potential problems the County might encounter, not having undertaken a competitive procurement, but still directly negotiating with Telecare over the terms of the operating agreement. The State could also negotiate the terms of Telecare's compensation based on its selection process and on terms it is already familiar with. The problem for the State under this scenario is that the payments it makes to Telecare can be reimbursed from Medicare. On the other hand if the State is the tenant, its lease payments would not be subject to Medicare reimbursement, but would be payable entirely from State funds. Staff Recommendation The County would enter into a lease/operating agreement with Telecare. Funding for such operation would be provided by the State through its community mental health assistance agreement. Such funds would be allocated to operating expenses payable to Telecare and lease payments withheld by the County to meet debt service obligations. The County would need to negotiate a lease/operating agreement with Telecare outlining specific services and fees payable therefor, as well as lease provisions. There may be examples from other jurisdictions of both components. This agreement would encompass both the SRTF, to be utilized principally by persons under PSRB jurisdiction, as well as the two other non -secure facilities to be utilized principally by persons under County jurisdiction. In the event funding were for some reason discontinued or reduced to unacceptable levels, the County would have the option to terminate the agreement and operate its own facility as residential housing for persons with mental health problems. The County (acting through the Contract Review Board) would need to follow a process leading to adoption of a special procurement and thus enable a direct contract with Telecare. This would be justified largely upon the competitive process followed by the State. Copy: Dave Kanner, County Administrator Scott Johnson, Director, Deschutes County Health Services Department regon Theodore R. Kulongoski, Governor October 9, 2009 Scott Johnson, Director Deschutes County Mental Health Department 2577 NE Courtney Drive Bend, OR 97701 Dear Scott: Department of Human Services Addictions and Mental Health Division 500 Summer Street NE E86 Salem, OR 97301-1118 Voice 503-945-5763 Fax 503-378-8467 As we discussed during our telephone conversation October 7, I agreed to provide a brief statement of fact regarding the funding for the operation of residential treatment services. Darcy Strahan has provided the statutory and rule citation for the department's procurement process for client services to the county attorney. Since the implementation of the 1989-91 community mental health budget, the department has not cut funding for the operation of residential treatment services created as part of the process for decreasing the size of state hospitals. Over that period of time, the department has worked with local programs to create specialty residential services that allowed the department to downsize Oregon State Hospital and close Dammasch State Hospital. More than 1,000 community placements and residential beds have been created. The funding for the provision of these services was not cut by the department or the Legislature during the financial crises following Ballot Measure 5 in the mid 1990s. The funding for these services was not cut by the department or the Legislature during the major reductions in the 2001-03 biennium and in the 2003-05 biennium. I have been a member of the mental health management staff since September 1989 when Barry Kast, Assistant Administrator for Mental Health hired me as his Budget and Operations Manager. I was Assistant Administrator for Mental Health from 1994 until 2001 when the department was reorganized and I became the Deputy Assistant Director for Addictions and Mental Health. If you need this letter in alternate format, please call 503-945-5763 (Voice) or 800-375-2863 (TTY) "Assisting People to Become independent, Healthy and Safe" An Equal Opportunity Employer HSS1601 (11/06) Scott Johnson October 9, 2009 Page 2 I hope this information will be helpful to you in your briefing with the Board of County Commissioners. Please let me know if I may be of further assistance. Sincerely, 7214--el-(---h4 .--22/1. Okewid, Madeline M. Olson Deputy Assistant Director MMO:je cc: Richard Harris Len Ray Darcy Strahan regon Theodore R. Kulongoski, Governor May 6, 2009 Scott Johnson, Director Deschutes County Health Services 2577 NE Courtney Drive Bend, OR 97701 Dear Mr. Johnson: Department of Human Services Addictions and Mental Health Division 500 Summer Street NE E86 Salem, OR 97301-1118 Voce 503-945-576-3 Fax 503-378-8467 As part of the ECLO request for proposals, Deschutes County proposed the development of a secure residential treatment facility (SRTF), serving a combined population of Psychiatric Security Review Board (PSRB) residents, Extended Care Management Unit (ECMU) residents, and Deschutes County referred residents. During a videoconference on January 16, 2009, all parties agreed to include only PSRB and ECMU residents in the proposed SRTF. The beds for Deschutes County referred residents would be moved to the proposed development of two (2) residential treatment homes (RTH) and the two (2) current adult foster homes • The proposed developments are as follows: • Deschutes Recovery Center - A sixteen (16) bed (SRIF), serving eight (8) individuals who are deemed (ECMU) eligible and eight (8) individuals who are under the jurisdiction of the (PSRB). • Two (2) RTHs Each home will provide housing for a five (5) individuals, for a combined totalof ten (10) .placements. These placements will serve either individuals who are deemed ECMU eligible or individuals referred by Deschutes County. The County is providing the land for the SRTF development in exchange for.Six (6) County referred beds. The six beds will float between the two (2) RTH's and the two (2) existing AFH's. The Deschutes County Mental Health Department will have 'sole` discretion'in deterrriiriiig Who' is eligible for placement in the County referred beds, using criteria approved by the Addictions and Mental Health Df iSkbn . fl 'I • T': 'ir';.J.'(^� }e, 1. `t ?TTY' (I:" r..... 1.. . If you need this letter in altemate format, please call 503-945-5763 (Voice) or 800-375-2863 (TTY) "Assisting People to Become independent, Healthy and Safe" An Equal Opportunity Employer Hss1601 (11/O(i) Scott Johnson, Director Deschutes County Health Services May 6, 2009 Page 2 Addictions and Mental Health will provide funding for development of the three facilities based on requirements outlined in the Award Letter and facility operations based on requirements outlined in the County Contract. Addictions and Mental Health is not in a position to guarantee Deschutes County bond payments for the next 30 years and encourages the County to work with Telecare, their development partner for the three facilities, to develop a similar long term relationship. We thank you for your commitment to the development of community placements in Deschutes County. Sincerely, Len Ray, L. .S.W., B.C.D. Administrator, Adult Mental Health Services DS/cec Cc: Lori Hill, Deschutes County Mental Health Darcy Strahan, AMH Cissie Bollinger, AMH Tony Guillen, AMU File regon Theodore R. Kulongoski, Govemor April 3, 2009 Dennis R. Luke, Board Chair Deschutes County Board of Commissioners 1300 NW Wall Street Bend, OR 97701 Department of Human Services Addictions and Mental Health Division 500 Summer Street NE E86 Salem, OR 97301-118 Voice 503-945-5763 Fax 503-378-8467 Re: Approval of AMH Housing Development Award for Deschutes County Recovery Center SRTF Building Additions Dear Mr. Luke: I am pleased to inform you that the Addictions and Mental Health Division (AMH) has conditionally approved a grant award in the amount of $75,000 for the Deschutes County Recovery Center project located in Deschutes County. The funds are for the development of a 16 -bed SRTF for persons with serious mental illness. This final award is in addition to the $675,000 previously awarded through grant #126155. It is important to note that the funds cannot be used to refund or reimburse any expenses or costs that occurred prior to the date of this award letter. All conditions listed below must be met before your award is committed. All requirements as specified in the award letter dated August 18, 2008 are applicable to this additional award. Including specifications listed below. Please respond in writing to the following conditions to obtain final approval of the award. 1. Occupancy. The Grant is conditioned on occupancy of the community housing occurring no later than August 31, 2010. This deadline may require modification prior to project completion. If required, modifications will be made in the form of an amendment to the Grant Agreement extending this requirement as needed. 2. Insurance Requirement. AMH requires that insurance be maintained for the life of the grant. Insurance required is: oc-2UO9»i91 If you need this letter in alternate format, please call 503-945-5763 (Voice) or 800-375-2863 (TTY) "Assisting People to Become Independent, Healthy and Safe" An Equal Opportunity Employer HSS1601 (11106) Housing Development Award Letter Grantee: Deschutes County Project: Deschutes County Recovery Center April 3, 2009 Page 2 of 9 • Real Estate Hazard Insurance: coverage on all real estate that is collateral for the grant in the amount of the full replacement cost (equal to current appraisal). • Liability Insurance: is required for all grants in an amount not less than $1,000,000 with an insurance company satisfactory to AMH. • Flood Insurance: ifany portion of the collateral is located in a flood hazard zone, flood insurance, or other appropriate special hazard insurance, is required in the amounts equal to the lesser of the insurable value of the property or the maximum limit of coverage available. Please complete and return the enclosed Designation of Insurance form. This allows AMH to work directly with your insurance agent to obtain the insurance requirements prior to funding (or project completion). 3. Monthly Progress Reports. Provide AMH with a brief monthly progress report on the development of your project. Please use the attached report format. If you are already sending monthly progress reports to other funding sources, you may be able to substitute an alternative format. Annual Confirmation Reports. After completion and occupancy of your project, AMH will conduct monitoring on an annual basis. As recipient of a grant award you will be asked to complete a confirmation report to document the continued use of the property for the agreed purpose. 5. Securing State's Interest. AMH requires that investments in real property acquisition or improvement be secured. Execution of a Housing Development Grant Agreement, Promissory Note and Trust Deed will be required. The Trust Deed must be recorded and will remain a lien against the property for a term of 30 years. These documents will be available for your agency to review before closing. Housing Development Award Letter Grantee: Deschutes County Project: Deschutes County Recovery Center April 3, 2009 Page 3 of 9 The equity value on the subject property must support all secured lien positions. Any project that reflects a negative equity margin must be secured by additional collateral approved by AMH. 6. Disbursement of Award. The grant award funds will be disbursed through an escrow account. Please complete the enclosed Title Company Information form regarding the title company that will be handling this transaction for you. You will be responsible for any fees associated with this transaction. Unless the parties agree otherwise in writing, the Closing shall occur no later than June 30, 2009. 7. Use of funds. Grant awards must be used to support community housing living quarters for people with chronic mental illness. Approval of your award is based on the application that was received in response to the solicitation dated August 7, 2008. Please inform us immediately, if the housing project changes. This includes changes to your budget documents that exceed 10% for any budget category and any changes in funding commitment amounts. Oregon statutes mandate that these funds be used by June 30, 2009. If you will not use your award by this date, please inform us immediately. Your award will be withdrawn for this biennium. 8. Project Development Budget. Include a budget that identifies cost for all proposed housing development activities (acquisitions and construction). Identify sources and uses of resources that will finance the housing development. Provide a brief status of each funding source (i.e. committed, application pending, etc.). Sample forms are available upon request. 9. Award Acceptance. You must complete one of the following within 15 days from the date of this award letter: a. Initial each page, sign the letter and return the original indicating your acceptance of the grant award and all the terms and conditions (a copy is Housing Development Award Letter Grantee: Deschutes County Project: Deschutes County Recovery Center April 3, 2009 Page 4 of 9 enclosed for your records); or b. If you have concerns about any of the conditions or timelines contained in this letter, contact me. I will discuss your concerns with the Community Housing, Employments and Supports Manager and if necessary we may schedule a conference with you to discuss your specific concerns. Please send the requested information to: Tony Guillen, PSRB Coordinator Addictions and Mental Health Division (AMH) 500 Summer Street NE, E-86 Salem, OR 97301-1118 I look forward to the successful completion of your housing project and appreciate your efforts to increase housing opportunities for persons with psychiatric disabilities. If you have questions or need further assistance, please call the PSRB Coordinator, Tony Guillen, at 503-947-5534 or e-mail him at anthony.guillen@istate.or.us; or the Housing Investments Coordinator, Karen Knight, at 503-945-5911 or e-mail her at karen.knight@a,state.or.us. Sincerely, ktt- Len Ray, L.C.S.W., B.C.D. Administrator, Adult Mental Health Services TG/cc Enclosures cc: Tony Guillen, PSRB Coordinator Jay Yedziniak, CBES Program Manager Housing; Development Award Letter Graiticc: Deschutes Ci runty Project: Deschutes County Recovery Center 4/3/09 Page 5of9 Karen Knight, l lousing Investments Coordinator AMUI Vile AGREED TO AND ACCEPTED ON THE TERMS AND CONDITIONS SET NORTH' ABOVE: Dt.schutes County Recovery Center Bc11(1, Deschutes Comity 11 ()using 1)cvciopmc-tit Award C1,(i07 Fund $37,:500 PSI(l3 C1,007F E+iwd - $37,500 Agciicy: Dest•liute,,,�;oun�lY By: _ c :•-�.a_.. -Dennis Luke Title: Omit. Deschutes County Board of Commissioners 09 Date Housing Development Award Letter Grantee: Deschutes County Project: Deschutes County Recovery Center April 3, 2009 Page 6 of 9 PROPOSED PROJECT SCHEDULE Project Name: Date Schedule Developed: ACTIVITY t Option/Contract executed PROPOSED DATE (month/year REVISED DATE month/ ear COMPLETED DATE (month/year * Site Acquisition Zoning Approval Site Analysis Building Permits & Fees Off-site I . •rovements Plans Completed Final Bids Contractor Selected CONSTR:tJCTION :T:O; Proposal Firm Commitment PERMANENT LOAN: ::; Proposal Written Commitment SYNDICATION AGREEMENT CONSTRUCTION BEGINS CONSTRUCTION COMPLETED CERTIFICATE OF OCCUPANCY LEASE UP COMPLETED * Indicates completion by end of month. Housing Development Award Letter Grantee: Deschutes County Project: Deschutes County Recovery Center April 3, 2009 Page7of9 AMH HOUSING DEVELOPMENT MONTHLY PROGRESS REPORT Report # Project Name: Project Contact: Contact Phone #: Reporting Dates From: To: REPORTS ARE DUE BY THE 10TH OF EACH MONTH 1. Description of project development activities accomplished in this period: 2. Activities anticipated to be accomplished by next reporting period: 3. What percentage of construction activities have you completed to date? 4: Estimated date of completion of construction: 5. Estimated date of occupancy: 6. Any change in the Proposed Project Schedule since last report? Yes No If "yes", submit an updated "Proposed Project Schedule." 7. Any change in the development of the project (i.e., number of units, target population, development team, sources/uses, proposed rents, etc)? Yes No If "yes", provide details about the change(s). An updated "Sources and Uses " form is required when the budget is adjusted by 10% or more for any sub -total or total. Housing Development Award Letter Grantee: Deschutes County Project: Deschutes County Recovery Center April 3, 2009 Page 8 of 9 CERTIFICATION: A signature for regularly mailed reports or a typed name for e-mailed reports in the signature space below certifies that the information contained in this report is true, correct and accurately reflects the progress and status of the project. Signature: Date: Printed Name: Telephone #: Mail, fax or e-mail this form to AMH: Housing and Homeless Services Unit, AMH Attn: 500 Summer Street NE, E86 Salem, Oregon 97301-1118 Fax (503) 947-5043 Housing Development Award Letter Grantee: Deschutes County Project: Deschutes County Recovery Center April 3, 2009 Page 9 of 9 -c7P'4# r