DATE:
February 21, 2023
TO:
Paul Buddenhagen, City Manager
FROM:
Charles S. Bryant, Community Development Director
SUBJECT:
Resolution Of The City Council Of The City Of Emeryville Authorizing The City Manager To Submit An Application For Prohousing Incentive Pilot Program Funds From The California Department Of Housing And Community Development, Execute The Request For Funds, And Enter Into A California Standard Agreement Recommendation
Staff recommends that the City Council adopt the above-entitled resolution authorizing the City Manager to submit an application, execute a request for funds, and enter into an agreement for grant funding in response to the California Department of Housing and Community Development (HCD) Prohousing Incentive Pilot (PIP) program.
Background
In an effort to address the housing crisis in the State of California, as part of the 2019-2022 Budget Act, the legislature enacted Assembly Bill 101, which established the Prohousing Designation Program. The Prohousing Designation Program identifies local policies that jurisdictions should consider adopting to address housing needs and affordability, and identifies State programs and grants for which Prohousing designated jurisdictions should receive preference or additional points. On July 28, 2022, the City Council authorized the City Manager to submit an application for Prohousing Designation to HCD for review.
On December 15, 2022, HCD released a Notice of Funding Availability (NOFA) for approximately $26 million for the PIP to reward local governments with Prohousing Designations with additional funding to accelerate affordable housing production and preservation. The NOFA specifies that 14.9% of the funds are available to jurisdictions in the Bay Area region.
The PIP awards grant funds based on an applicant’s Prohousing Designation Program score and population size. Total potential award amounts are determined by adding an applicant’s “base award amount” with a “bonus award amount”. The base award amounts are based on population estimates as of January 1, 2021, and the City of Emeryville is eligible for a base award of $75,000. Bonus award amounts are calculated by multiplying an applicant’s Prohousing Designation score by 10,000, up to a maximum of $500,000. Therefore, the maximum amount of PIP funding the City could receive is $575,000.
Eligible uses of PIP funding include:
The predevelopment, development, acquisition, rehabilitation, and preservation of multifamily, residential live-work, rental housing that is affordable to extremely low-, very low-, low-, and moderate-income households, including necessary operating subsidies.
Affordable rental and ownership housing that meets the needs of a growing workforce earning up to 120 percent of area median income, or 150 percent of area median income in high-cost areas.
Matching portions of funds placed into local or regional housing trust funds.
Matching portions of funds available through the Low- and Moderate-Income Housing Asset Fund pursuant to subdivision (d) of Section 34176 of the California Health and Safety Code.
Capitalized reserves for services connected to the creation of new permanent supportive housing, including, but not limited to, developments funded through the Veterans Housing and Homelessness Prevention Bond Act of 2014 (Proposition 41).
Assisting persons who are experiencing or at risk of homelessness, including providing rapid rehousing, rental assistance, navigation centers, emergency shelters, and the new construction, rehabilitation, and preservation of permanent and transitional housing.
Accessibility modifications.
Efforts to acquire and rehabilitate foreclosed or vacant homes.
Homeownership opportunities, including, but not limited to, down payment assistance.
Fiscal incentives or matching funds to local agencies that approve new housing for extremely low-, very low-, low-, and moderate-income households.
Applicants must meet all of the following threshold requirements for participation in the PIP:
An adopted housing element in substantial compliance, as determined by HCD Housing Element Annual Progress Report submittal pursuant to Government Code Section 65400 for the current or prior year, as applicable A completed Prohousing Designation with an authorizing resolution must be submitted prior to or in conjunction with the PIP application A complete application as determined by HCD.
A resolution authorizing submittal of the application to the PIP that materially comports with the PIP’s requirements and is legally sufficient as determined in HCD’s reasonable discretion, including the identification of an authorized representative.
Compliance with state and federal housing laws as determined at the sole discretion of HCD.
Applications must be submitted by March 15, 2023, with an authorizing resolution, and applicants must obtain Prohousing designation by March 30, 2023 to be eligible for PIP funds. Those selected for a grant award will be required to enter into a Standard Agreement within the timeline to be provided by HCD.
Discussion
The City is seeking PIP funding to support rental housing development costs. Eligible uses of the funds would include: 1) necessary operating subsidies needed for multifamily rental housing that is affordable to extremely low-, very low-, and low-income households and 2) capitalized reserves for services connected to the creation of new permanent supportive housing.
Operating Subsidies
Operating Subsidies help make developments affordable to very low-income families who cannot afford to pay the rents that would be needed to support the property without ongoing subsidies. Operating subsidies are usually provided by the federal government through the public housing and project-based Section 8 programs, but with the reduction of funding allocated by the federal government to Public Housing Authorities, allocation of resources to support operating subsidies has become extremely competitive.
Capitalized Replacement Reserves
Replacement reserves are intended to fund the costs associated with replacing project facilities as they wear with age. These costs are “capitalized” because the funding to cover them is included up-front as a capital cost within the project's development budget. To ensure affordable rental housing is maintained for the life of the development loan, it is critical to ensure that funding is dedicated to replacement reserves.
Both the operating subsidies and capitalized replacement reserve funds could be used in support of a multifamily project seeking funding from the Measure C Housing Bond approved by the Emeryville voters in June of 2018.
Alignment with Housing Element Programs
The 2023-2031 Housing Element adopted by the City Council on December 12, 2022, includes the following programs and initiatives that PIP funds would support:
Program G: City-owned Development Opportunities. The City will provide additional financing in the form of low-interest loans to support the construction of rental units affordable to very low- to moderate-income households. A portion of the affordable units will be set-aside for special needs populations (i.e. homeless, seniors, transitional aged youth, and extremely low-income households).
Program H. Development Opportunities Fund. The City will make available funding to permit strategic acquisition or development of properties for very low- to moderate-income households. Funding can be used for acquisition and pre-development related expenses. It is estimated that 62 affordable units will be developed and that at least three of the units will be set-aside for special needs households. Funding for this program is outlined in the Housing Bond Administration and Expenditure Plan, adopted on March 2, 2021. This program will remain operational until the funding (approximately $8.3 million) is depleted or reprogramed to support another housing program.
Program K. Special Needs Housing Incentive Program. The City will provide a financial incentive for the restriction of additional Below Market Rate units for the Special Needs Population (i.e. Disabled, Transitional Aged Youth, and Homeless) at existing or new rental developments. Approximately 15 special needs units will be designated. Funding for this program is outlined in the Housing Bond Administration and Expenditure Plan, adopted on March 2, 2021. This program will be operational until the funding (approximately $4 million) is depleted or reprogrammed to support another Housing Program.
Program L. New Funding Opportunities. The City will work with affordable housing developers to identify and leverage local, state, and federal funding programs to maximize the number of affordable units available to low-, very low-, and extremely low-income households, whenever possible. Additionally, the City will continue to analyze the benefit of joining a Joint Powers Agreement (JPA), to allow the issuance of bonds in Emeryville to support middle-income housing opportunities as offered by the California Community Housing Agency (CalCHA), the California Statewide Communities Development Authority (CSCDA) or any other entity, that is created over the Planning period.
As noted above, on July 28, 2022, the City Council authorized the submittal of an application for Prohousing Designation to HCD, and Prohousing designation must be obtained by March 30, 2023 to be eligible for PIP funds. The PIP NOFA provides that the Prohousing Designation application may be submitted concurrently with the application for PIP funds, which is due on March 15, 2023. Staff has been working with HCD on the Prohousing Designation application in an effort to maximize points and anticipates the application for Prohousing Designation will be submitted in advance of the March 15, 2023, deadline.
Fiscal Impact
Adoption of the authorizing resolution has no direct fiscal impact. In the event that the City’s application for PIP is awarded, up to $575,000 will be made available for the activities described above, and the funds would be incorporated into the City’s operating budget by a future action of the City Council.
Staff Communication with the Public
None.
Conflict of Interest
None.
Conclusion
Staff recommends that the City Council adopt the above-entitled resolution authorizing the City Manager to submit an application, execute a request for funds, and enter into an agreement for up to $575,000 in grant funding in response to the HCD PIP program.
PREPARED BY: Valerie Bernardo, Economic & Community Development Coordinator II REVIEWED BY: Chadrick Smalley, Deputy Director of Community Development
Approved and Forwarded to the
City Council of the City of Emeryville:
Paul Buddenhagen, City Manager
Attachment
Draft Resolution
Prohousing Incentive Pilot Resolution
City Council Meeting | February 21, 2023
City of Emeryville
CALIFORNIA
MEMORANDUM