TO:
Honorable Mayor and Members of the City Council
THROUGH:
Talyn Mirzakhanian, City Manager
FROM:
Nicky Petroff, Senior Management Analyst
SUBJECT:Title
Consideration of a Resolution Approving a Professional Services Agreement with Beach Cities Health District for the Use of Opioid Settlement Funds Toward Eligible Capital and Construction Costs Associated with the allcove Beach Cities Facility in an Amount Not-to-Exceed $130,000, Including a Corresponding Appropriation and Revenue Adjustment. (Unbudgeted) (City Manager Mirzakhanian)
A) ADOPT RESOLUTION NO. 26-0111
B) APPROPRIATE FUNDS
Body
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RECOMMENDATION:
Staff recommends that the City Council:
1. Adopt Resolution No. 26-0111 approving a Professional Services Agreement with Beach Cities Health District (BCHD) for the use of opioid settlement funds toward eligible capital and construction costs associated with the allcove Beach Cities facility in an amount not to exceed $130,000; and
2. Appropriate $130,000 and approve a $130,000 adjustment to revenues in the General Fund to recognize the reimbursement from available opioid settlement funds.
FISCAL IMPLICATIONS:
If the agreement with Beach Cities Health District is approved, an expenditure appropriation of $130,000 is needed, along with a $130,000 adjustment to revenues in the General Fund, to recognize the reimbursement from available opioid settlement funds.
BACKGROUND:
In 2021 and 2023, the City joined nationwide settlement agreements with opioid manufacturers, distributors, and pharmacies to resolve litigation related to their role in the opioid epidemic. As a participating subdivision, the City receives opioid settlement funds that are restricted for opioid remediation activities consistent with the terms of the settlements and applicable California Department of Health Care Services (DHCS) requirements.
In 2023, the City Council approved an agreement with BCHD to utilize opioid settlement funds for substance abuse and opioid remediation services. The agreement established several eligible service areas, including counseling and referral services, naloxone distribution and training, substance abuse education and prevention programs, and support for individuals experiencing homelessness with opioid use disorder. BCHD also assists the City with recordkeeping and information necessary to meet opioid settlement reporting requirements.
As part of the City’s ongoing management of opioid settlement funds, staff continues to identify existing and potential expenditures that meet the restricted uses established for these funds.
BCHD currently operates allcove Beach Cities, an integrated behavioral health center serving youth and young adults ages 12 to 25. Services include mental health, physical health, substance use, peer and family support, and education and employment services. BCHD is constructing a 9,000-square-foot permanent all-cove Beach Cities facility at 1272 Beryl Street in Redondo Beach, which is scheduled for completion in Spring 2027. The new facility is being constructed in part with a $6,336,702 Behavioral Health Continuum Infrastructure Program (BHCIP) grant awarded through DHCS.
Staff sought technical assistance from DHCS to determine whether opioid settlement funds could be used toward the construction of the allcove Beach Cities facility. DHCS confirmed that the proposed use is an allowable expenditure under Exhibit E, Schedule B, Category C, “Connect People Who Need Help to the Help They Need (Connections to Care),” and qualifies as a High Impact Abatement Activity for the creation of new or expanded substance use disorder treatment infrastructure, which may include cost overruns for BHCIP projects.
The proposed agreement provides up to $130,000 in available opioid settlement funds to BCHD for eligible capital and construction costs associated with the allcove Beach Cities facility. The City will reimburse BCHD for actual, documented, eligible costs, up to the $130,000 maximum contribution.
Opioid settlement funds are restricted funds that may only be used for eligible opioid remediation activities. Applying these restricted funds to the proposed contribution allows the City to support eligible project costs without the use of General Fund monies, thereby lessening the potential impact on the General Fund.
DISCUSSION:
Since opening in November 2022, allcove has seen more than 19,000 visits and over 2,200 young people enrolling in services. One in seven young people enrolled in services is a Manhattan Beach resident, in addition to the support provided by BCHD and allcove staff on MBUSD campuses, including wellness and prevention assemblies, grief support and counseling, and the community diversion program. Utilizing available opioid settlement funds for the allcove Beach Cities facility allows the City to support the development of substance use disorder treatment infrastructure that will serve Manhattan Beach and the broader South Bay community while ensuring the funds are used for an eligible opioid remediation activity.
The City’s contribution will support the construction of new or expanded infrastructure that enables BCHD to provide and expand access to substance use disorder treatment, prevention, screening, referral, and related behavioral health services through allcove Beach Cities. Eligible costs may include construction, construction materials, labor, equipment incorporated into the facility, and other construction-related costs directly attributable to the facility's construction.
Under the agreement, BCHD must first expend its full $6,336,702 BHCIP grant award. Following expenditure of the BHCIP award, BCHD may submit invoices to the City for eligible construction costs incurred thereafter. Each invoice must include reasonable documentation of the construction costs for which reimbursement is requested. The City will reimburse BCHD for actual, documented, eligible costs up to the maximum contribution of $130,000.
Funds provided under the agreement may not be used for ongoing operating expenses, personnel costs, program services, general administrative expenses, or other non-construction expenditures. BCHD will also be required to maintain sufficient records demonstrating that the City’s contribution was used for eligible construction costs and provide information necessary for the City’s annual opioid settlement reporting requirements.
The City’s contribution is not payment for individual services, service units, counseling sessions, referrals, trainings, or other direct services provided by BCHD. The City’s existing agreement with BCHD for substance abuse and opioid remediation services will remain in place; however, the use of opioid settlement funds under that agreement will be paused while available funds are directed toward eligible construction costs under the proposed agreement. Any increase to the City’s $130,000 maximum contribution would require a written amendment to the proposed agreement.
Approval of the proposed agreement will allow the City to utilize available opioid settlement funds for an eligible use that supports expanded substance use disorder treatment infrastructure, while establishing requirements for the appropriate use and documentation of the funds.
Therefore, staff recommends that the City Council adopt Resolution No. 26-0111 approving a Professional Services Agreement with Beach Cities Health District for the use of opioid settlement funds toward eligible capital and construction costs associated with the allcove Beach Cities facility in an amount not to exceed $130,000, appropriate $130,000, and approve a $130,000 adjustment to revenues in the General Fund to recognize reimbursement from available opioid settlement funds.
PUBLIC OUTREACH:
After analysis, staff determined that public outreach was not required for this agreement.
LEGAL REVIEW:
The City Attorney has approved the agreement as to form.
ATTACHMENTS:
1. Resolution No. 26-0111
2. Agreement - Beach Cities Health District