Agenda #: 7.1
Meeting Date: June 20, 2023
TO: Honorable Mayor and Members of the City Council
FROM: Daniel Fox, City Manager
TITLE: PARTICIPATION IN THE LOS ANGELES URBAN COUNTY
PERMANENT LOCAL HOUSING ALLOCATION ("PLHA") PROGRAM.
STRATEGIC
GOAL: Responsible Stewardship of Public Resources
RECOMMENDATION:
A. Adopt Resolution No. 2023-25 approving the City's participation in Years 1 through 3 of the Los Angeles Urban County PLHA Program; identifying proposed activities for the expenditure of $649,080 in combined PLHA funding; and authorizing the City Manager to sign a reimbursable contract with the Los Angeles County Development Authority ("LACDA"); and
B. Determine that the proposed action does not constitute a project and is therefore exempt from the California Environmental Quality Act (“CEQA”).
FISCAL IMPACT:
The PLHA Program is a SB 2 funded program that provides an ongoing annual source of funding through State Property Transfer Fees. The City has been allocated a combined $649,080 in funding for Years 1 through 3 of the PLHA Program based on the State’s allocation formula. No additional funding is required to participate in the program. If the City does NOT request the funds and identify a purpose for them, the funds will be returned to the State.
BACKGROUND
The PLHA Program was approved by the State legislature in 2017. It is designed to provide an ongoing annual source of funding for the construction of affordable housing, programs to assist persons who are experiencing or are at risk of homelessness, or other housing-related assistance programs for low-to-moderate income households.
Similar to the Community Development Block Grant program for non-entitlement cities, the PLHA funding is first allocated to a regional entity, in this case the Los Angeles
County Development Authority (LACDA). The funding is then distributed to individual participating cities according to an allocation formula.
In Fiscal Years 2020-21 (“Year 1”) and 2021-22 (“Year 2”), the City was allocated a combined total of $358,416 in PLHA funding. However, as a result of “many unanticipated challenges” at the County and State levels, this funding has only recently been made available to Diamond Bar. Year 1 and 2 funding is still being withheld from LACDA partner cities that do not have certified housing elements, so Diamond Bar is fortunate to have overcome that hurdle. Similarly, the allocation of Year 3 PLHA funding was delayed and is only now being allocated to the County and its partner cities.
On April 6, 2023, LACDA issued a bulletin (Attachment 2) listing the Year 3 PLHA funding allocations for each participating city. Diamond Bar is listed as eligible to receive $290,664 in Year 3 PLHA funding, for a three-year total of $649,080. To begin receiving these funds, the City is required to adopt and submit a City Council resolution to LACDA by June 30, 2023, listing the program activities that will be funded.
Pursuant to the rules set forth by LACDA, Year 1 and 2 funds must be fully expended by December 31, 2024. Year 3 funds must be spent by December 31, 2025.
DISCUSSION
The SB 2 legislation relating to PLHA funds specifies what eligible activities these funds can be used to finance. Activities can be broadly categorized as follows:
1. Activities related to the construction or preservation of affordable housing or supportive housing;
2. Matching funds to regional housing trusts;
3. Homelessness services and prevention programs;
4. Accessibility modifications for lower-income, owner-occupied housing;
5. Acquisition and rehabilitation of foreclosed or vacant homes; and
6. Programs that expand homeownership opportunities including but not limited to down-payment assistance programs.
Of the eligible activities listed above, it is recommended that the City allocate its carryover Year 1 & 2 PLHA funding totaling $358,416, and its new Year 3 PLHA funding totaling $290,664 to expand its successful Home Improvement Program. The proposed programming of these funds is summarized below:
• Home Improvement Program Funding Augmentation – $409,080 The CDBG HIP offers deferred loans to eligible low- and moderate-income homeowners of single-family detached housing for necessary home improvements, as well as repairs to mitigate building and safety code deficiencies and/or violations.
The City’s HIP policies currently provide interest-free, deferred loans of up to $20,000 to eligible households. Loans become payable when the homes are sold or refinanced.
The City Council adopted the current HIP Program Policies in July of 2016.
Increasing construction and materials costs over the intervening seven years have progressively limited the scope of work that a $20,000 loan can accommodate, and is no longer enough to cover certain jobs, such as reroofs that require new sheathing. However, supplementing our CDBG allocation with PLHA funding would enable the City to increase individual HIP loan amounts to keep pace with rising costs, and issue more loans, without requiring cuts in the City’s other CDBG programs, such as Senior Programming and ADA curb ramp construction.
Staff recommends that the Council allocate $409,800 of the City’s PLHA funds to increase the individual HIP loan cap to $30,000 through the end of 2025. The expenditure deadlines are as follows:
o $238,416 of Year 1 and 2 funds must be spent by December 31, 2024. o $170,664 of Year 3 funds must be spent by December 31, 2025.
The approved FY 2023/24 CDBG budget allocates $120,000 to the Home Improvement Program. If the same amount is allocated in FY 2024/25 and FY 2025/26 approximately 13 HIP loans at $20,000 apiece (including administrative costs) could be issued by the end of calendar year 2025. With the recommended allocation of PLHA funds to augment the Home Improvement program, the City would be able as many as 20 HIP loans, all at proposed increased loan limit of $30,000 each.
• Condominium Home Improvement Program (“CHIP”) – $240,000 The CHIP will offer deferred loans to eligible low- and moderate-income homeowners of residential condominiums and townhomes. The program will be administered in essentially the same manner as the HIP, but staff recommends capping the loan amount to $20,000 because costlier improvements, such as roof maintenance and exterior repairs, are the responsibility of the respective condominium homeowners associations. The proposed allocation of $240,000 would fund ten $20,000 loans through the end of 2025.
According to LACDA, the City may make adjustments to the PLHA funding allocations between the two programs, if appropriate. For example, If the demand for CHIP loans is higher than anticipated, the City could reallocate funds from the HIP allocation.
ENVIRONMENTAL ANALYSIS:
The proposed action does not constitute a project under the California Environmental Quality Act (“CEQA”). As such, this matter is exempt under CEQA.
SUMMARY OF RECOMMENDATIONS:
It is recommended that the City Council adopt the attached resolution approving participation in Years 1 through 3 of the Los Angeles Urban County PLHA Program, identifying the use of $649,080 in combined PLHA funding to augment the existing Home Improvement Program (“HIP”), and establish the Condominium Home Improvement Program (“CHIP”) to expand the number of owner-occupied households eligible to receive interest-free, deferred loans for essential home improvements; and authorizing the City Manager to sign a reimbursable contract with LACDA.
LEGAL REVIEW:
The City Attorney has reviewed and approved the Resolution as to form.
PREPARED BY:
REVIEWED BY:
Attachments:
1. 7.1.a Resolution No. 2023-25
2. 7.1.b April 6, 2023 LACDA Bulletin