Agenda #: 5.6
Meeting Date: March 19, 2024
TO: Honorable Mayor and Members of the City Council
FROM: Daniel Fox, City Manager
TITLE: CREATION OF A NEW SPECIAL REVENUE FUND TO MANAGE
TRANSACTIONS USING THE CITY'S PERMANENT LOCAL HOUSING
ALLOCATION ("PLHA") GRANT FUNDS.
STRATEGIC
GOAL: Responsible Stewardship of Public Resources
RECOMMENDATION:
A. Approve a new Special Revenue Fund No. 224 ("PLHA Housing Fund") to manage program activities with Permanent Local Housing Allocation ("PLHA") grant funds; B. Establish a revenue budget of $358,416 and an expense budget of $358,416 in Fund 224 for the issuance of HIP/CHIP loans with PLHA funds administered by the Los Angeles County Development Authority; and
C. Determine that the proposed action does not constitute a project and is therefore exempt from the California Environmental Quality Act (“CEQA”).
FINANCIAL 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. For FY 2023/24, the City has been allocated $358,416. No additional funding is required to participate in the program. Under the City’s contract with the Los Angeles County Development Authority (LACDA), the City must first fund PLHA-eligible activities through normal budget expenditures, and then submit reimbursement requests to LACDA.
BACKGROUND AND DISCUSSION:
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.
On June 20, 2023, the City Council adopted Resolution No. 2023-25 approving the City’s participation in the PLHA Program to expand the Home Improvement Program by increasing the maximum loan amount from $20,000 to $30,000, and extending the program to income-eligible condominium owners, and authorizing the City Manager to enter into a reimbursable contract with LACDA.
Shortly after the City Council’s action, LACDA advised its participant cities that, because State funds were involved, prevailing wage requirements may apply to all PLHA funded activities. If true, the use of PLHA funds to issue HIP/CHIP loans would not have been feasible because home repair contractors typically cannot pay prevailing wages for the types of home improvements envisioned under the City’s HIP. The execution of the reimbursable contract was thus tabled pending a final interpretation on the applicability of prevailing wages to PLHA-funded HIP/CHIP loans.
On February 29, 2024, LACDA informed the City that our PLHA-funded HIP/CHIP projects are exempt from prevailing wages. As a result, staff directed LACDA to proceed with the execution of the reimbursable contract to enable the City to begin issuing HIP and CHIP loans.
The creation of a new Special Revenue Fund No. 224 is recommended for Council approval which will be used to record all PLHA-sourced transactions, enabling staff, its auditors and other stakeholders to readily track how these monies are being used, and assure that the funds are being managed in compliance with applicable program policies and interagency contracts. In addition, it is also recommended that the Council establish a FY 2023/24 revenue budget of $358,416 and expenditure budget of $358,416 for the new Fund 224.
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.
PREPARED BY:
REVIEWED BY: