Modesto City Council
October 13, 2026

April 21, 2026
Standard parts orders shall be based on current pricing listing dated Jan 1, 2026 (Included) HSQ looks forward to meeting your maintenance needs.

Please contact the undersigned if you have any questions.

Sincerely yours,
Gus Jimenez
Vice President
Chief Operations Officer (COO)

HSQ Tech INC.
26227 Research Road
Hayward, Ca. 94545
Phone: 510-259-3713 (Direct)
Cell: 925-209-8580
Email: [email protected]
http://www.hsq.com
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HSQ Tech INC. 26227 Research Road
Hayward, California 94545-3725
Phone: (510) 259-1334
Fax: (510) 259-1392
www.hsq.com

BUILDING THE TECHNOLOGY THAT DRIVES SMARTER SYSTEMS
An Equal Opportunity Employer California Contractor’s License 378393 M:\2-CUSTOMER DIRECTORY\MOD - Modesto\Modesto - Sole Source Letters\Modesto - Sole Source - 042126.Docx Email: [email protected]
April 21, 2026
City of Modesto
1221 Sutter Avenue
Modesto, CA 95351
Attention: Marc Avila
Reference: Sole Source Letter
HSQ Technology Maintenance, Parts and Repairs
Gentlemen:

This letter is to certify that HSQ Tech Inc., is the manufacturer of the HSQ MISER SCADA System, the HSQ Series 2500, including 25x86, Remote Terminal Units (RTUs), and all associated boards for said System and RTUs.

As the manufacturer, we are the only authorized company that supports the hardware and software for both the MISER SCADA System and the RTUs along with MISER SCADA Client Software and XView for Windows and provides MISER System Management Training and Certification.

We are a sole source manufacturer and do not sell or authorize support through distributors or any other agency, and we are the only authorized repair facility.

If you have any questions, please call the undersigned at 800/486-6684.

Sincerely yours,
Gus Jimenez
Vice President
Chief Operations Officer (COO)
26227 Research Road
Hayward, Ca. 94545
Phone: 510-259-3713 (Direct)
Cell: 925-209-8580
Email: [email protected]
http://www.hsq.com
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M:\2-CUSTOMER DIRECTORY\1-Maintenance Agreement\2026\2604-002-MA - Modesto_042126\2604-002-MA - Modesto IT - Agreement.docx Rev: Aug 16

AGREEMENT FOR MAINTENANCE SUPPORT SERVICE
HSQ TECH INC. and CITY OF MODESTO

SUPERVISORY CONTROL AND DATA ACQUISITION SYSTEM
Maintenance Agreement No. 2604-002-MA
This Agreement is made and entered into this 21st day of April, 2026, by and between HSQ TECH INC., hereinafter referred to as “HSQ,” and CITY OF MODESTO, hereinafter referred to as “CUSTOMER,” for the SCADA System located at City of Modesto, 1221 Sutter Avenue, Modesto, CA 95351...

TERM
This Agreement shall be effective November 1, 2026, and shall continue for a term of thirty-six (36) months through October 31, 2029. for base 3 year contract. Option Years will be pending City’s approval.

SCOPE OF WORK
In consideration of payment by CUSTOMER, HSQ agrees to provide telephone support for questions regarding operations of, or problems arising with, the SCADA system. Telephone support will be available 24x7 from HSQ’s Hayward, California, factory at 510-259-1334 and at 800 225-0354 after normal business hours.

HSQ will endeavor to restore satisfactory system operation during ‘after-hours’ events, but may defer less critical support activities to the next business day. This is based on twelve (12) site visits per year of one (1) day each and includes 24/7 telephone support.

Please note that telephone support is intended to maintain system functionality, and is not intended to be an unlimited technical resource for the Operations and Maintenance Staff; HSQ reserves the right to request additional compensation for work outside of the normal scope of telephone support.

Work included:
• Operation or maintenance questions from Customer authorized staff. • Assist in diagnosing software or hardware problems for HSQ supplied equipment • Provide fixes for any latent software or hardware defects provided by HSQ • Access Customer System as available for any of the above issues Work Excluded:
• Support for New Development added by customer to SCADA • Development of custom software including reports, control blocks, VCL • Significant modifications to the System Database for points or Graphics unless it is required to restore system functionality in the event of a hardware or software failure • System issues caused by end user related Graphics, new or modified • System Network issues caused by City IT Group that affect SCADA • Preparations of new Drawings or Documentation
• Any material or equipment
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M:\2-CUSTOMER DIRECTORY\1-Maintenance Agreement\2026\2604-002-MA - Modesto_042126\2604-002-MA - Modesto IT - Agreement.docx Rev: Aug 16
Agreement for Telephone Support Service

The City of Modesto will need to provide a list of authorized staff for the IT and Water Department contacts to originate support calls.

Standard parts orders shall be based on current pricing listing dated Jan 1, 2026 (Included) Site Visits: (twelve [12] site visits per year of one [1] day each) Site visits are coordinated between Customer and HSQ Support Services:
• Customer shall provide the scope of work expected for each visit in order to assign to the appropriate HSQ support Engineer
• Site visits include labor only and may include training, maintenance, or assisting with the development of minor software modifications
• Unused / Unscheduled Site trips will not be credited or refunded.

PAYMENT
In consideration of the above support services, CUSTOMER agrees to pay HSQ the following:
 Year 1 – November 1, 2026 thru October 31, 2027 - $56,160.00. This will be billed at $4,680.00 per month for 12 months.
 Year 2 – November 1, 2027 thru October 31, 2028 - $57,840.00 to be billed at $4,820.00 per month for 12 months
 Year 3 - November 1, 2028 thru October 31, 2029, will be at the rate of $59,520.00. This will be billed at $4,960.00 per month for 12 months.
 The First option year (4) covering November 1, 2029 thru October 31, 2030, will be at the rate of $61,320.00. This will be billed at $5,110.00 per month for 12 months.  The Second option year (5) covering November 1, 2030 thru October 31, 2031, will be at the rate of $63,120.00. This will be billed at $5,260.00 per month for 12 months.

All invoices are payable upon receipt.

ACCEPTANCE
By CUSTOMER: By HSQ TECH INC.:

Signature Signature
Gustavo Jimenez
Typed/Printed Name Typed/Printed Name
Vice President (COO)
Title Title
April 22, 2026
Date Date
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1 Exhibit C:

Insurance Requirements for Most Contracts
(Not for Professional Services or Construction Contracts) Contractor shall procure and maintain for the duration of the contract insurance against claims for injuries to persons or damages to property which may arise from or in connection with the performance of the work hereunder and the results of that work by the Contractor, his agents, representatives, employees or subcontractors.

MINIMUM SCOPE AND LIMIT OF INSURANCE
Coverage shall be at least as broad as:

1. Commercial General Liability (CGL): Insurance Services Office Form CG 00 01 covering CGL on an “occurrence” basis, including products and completed operations, property damage, bodily injury and personal & advertising injury with limits no less than $2,000,000 per occurrence. If a general aggregate limit applies, either the general aggregate limit shall apply separately to this project/location (ISO CG 25 03 or 25 04) or the general aggregate limit shall be twice the required occurrence limit.

2. Automobile Liability: ISO Form Number CA 00 01 covering any auto (Code 1), or if Contractor has no owned autos, hired, (Code 8) and non-owned autos (Code 9), with limit no less than $1,000,000 per accident for bodily injury and property damage.

3. Workers’ Compensation: as required by the State of California, with Statutory Limits, and Employer’s Liability Insurance with limit of no less than $1,000,000 per accident for bodily injury or disease.

If the contractor maintains broader coverage and/or higher limits than the minimums shown above, the City of Modesto requires and shall be entitled to the broader coverage and/or the higher limits maintained by the contractor. Any available insurance proceeds in excess of the specified minimum limits of insurance and coverage shall be available to the City of Modesto.

Umbrella or Excess Coverage
The Contractor may use Umbrella or Excess Policies to provide the liability limits as required in this agreement.

This form of insurance will be acceptable provided that all of the Primary and Umbrella or Excess Policies shall provide all of the insurance coverages herein required, including, but not limited to, primary and noncontributory, additional insured, Self-Insured Retentions (SIRs), indemnity, and defense requirements. The Umbrella or Excess policies shall be provided on a true “following form” or broader coverage basis, with coverage at least as broad as provided on the underlying Commercial General Liability insurance. No insurance policies maintained by the Additional Insureds, whether primary or excess, and which also apply to a loss covered hereunder, shall be called upon to contribute to a loss until the Contractor’s primary and excess liability policies are exhausted.

The insurance policies are to contain, or be endorsed to contain, the following provisions:

Additional Insured Status
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2 The City of Modesto, its officers, officials, employees, and volunteers are to be covered as additional insureds on the CGL policy with respect to liability arising out of work or operations performed by or on behalf of the Contractor including materials, parts, or equipment furnished in connection with such work or operations.

General liability coverage can be provided in the form of an endorsement to the Contractor’s insurance with coverage equal to ISO form CG 2010. For completed operations, a separate endorsement equal to ISO form CG 2037 is required.

Primary Coverage
The Additional Insured coverage under the Contractor’s policy shall be “primary and non-contributory” and will not seek contribution from the City’s insurance or self-insurance and shall be at least as broad as CG 20 01 04 13. The City of Modesto does not accept endorsements limiting the Contractor’s insurance coverage to the sole negligence of the Named Insured.

Notice of Cancellation
Each insurance policy required above shall provide that coverage shall not be canceled, except with notice to the City of Modesto.

Waiver of Subrogation
Contractor hereby grants to City of Modesto a waiver of any right to subrogation which any insurer of said Contractor may acquire against the City of Modesto by virtue of the payment of any loss under such insurance.

Contractor agrees to obtain any endorsement that may be necessary to affect this waiver of subrogation, but this provision applies regardless of whether or not the City of Modesto has received a waiver of subrogation endorsement from the insurer.

Self-Insured Retentions
All Self-insured retentions must be disclosed to Risk Management for approval and shall not reduce the limits of liability. The City of Modesto may require the Contractor to purchase coverage with a lower retention or provide proof of ability to pay losses and related investigations, claim administration, and defense expenses within the retention. Any and all deductibles and SIRs shall be the sole responsibility of Contractor or subcontractor who procured such insurance and shall not apply to the Indemnified Additional Insured Parties.

Acceptability of Insurers
Insurance is to be placed with insurers with a current A.M. Best’s rating of no less than A:VII, unless otherwise acceptable to the City of Modesto.

Verification of Coverage
Contractor shall furnish the City of Modesto with original certificates and amendatory endorsements or copies of the applicable policy language effecting coverage required by this clause and a copy of the Declarations and Endorsements Pages of the CGL and any Excess policies listing all policy endorsements. All certificates and endorsements are to be received and approved by the City of Modesto Risk Services before work commences.

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3 obligation to provide them. The City of Modesto reserves the right to require complete, certified copies of all required insurance policies, including endorsements required by these specifications, at any time. City reserves the right to obtain a full certified copy of any insurance policy and endorsements. Failure to exercise this right shall not constitute a waiver of right to exercise later.

Subcontractors
Contractors shall require and verify that all subcontractors, or other parties hired for this work, purchase and maintain coverage for indemnity and insurance requirements as least as broad as specified in this agreement to the extent they apply to the scope of the subcontractor’s work with the same certificate of insurance requirements and naming as additional insureds all parties to this contract.

Special Risks or Circumstances
City of Modesto reserves the right to modify these requirements, including limits, based on the nature of the risk, prior experience, insurer, coverage, or other special circumstances.

Certificate Holder Address
Proper address for mailing certificates, endorsements and notices shall be:

City of Modesto
Attn: Risk Management
1010 10th Street
Modesto, CA 95354
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Part Number Description List Price
8600-3343F 25x86 Logic Processor – Standard (two buses with two Ethernet ports) $ 2,500.00 8600-3343L 25x86 Logic Processor – Low Power $ 2,000.00 8601 Bus Board (Replacement) $ 650.00
8602 Control Board (Replacement) $ 800.00
8600-386X Latest CPU Exchange for 386 or 486 CPU $ 950.00 8600-V8 Version 8 Software Upgrade (only available for 9579 and 9588 processors) $ 400.00 CPF-UP Compact Flash Upgrade $ 450.00
Part Number Description List Price
1046 8-Channel Digital DC Input Board $ 225.00
1047 8-Channel Digital DC Output Board $ 225.00
1332 8-Channel Relay Output Board $ 325.00
8646 12-Channel DI/12-Channel DO Termination Board (25x86 Only) $ 450.00 Part Number Description List Price
HSQ-6015 7-Channel RTD Input Module $ 675.00
HSQ-6017 8-Channel Analog Input / 2-Channel Digital Output Module $ 570.00 HSQ-6018 8-Channel Thermocouple Input / 8-Channel Digital Output Module $ 790.00 HSQ-6050 12-Channel Digital Input / 6-Channel Digital Output Module $ 415.00 HSQ-6051 12-Channel Digital Input / 2-Channel Digital Output or 2-Channel Counter Input Module $ 415.00 HSQ-6052 8-Channel Digital Input / 8-Channel Digital Output $ 440.00 HSQ-6060 6-Channel Digital Input / 6-Channel Relay Module $ 460.00 HSQ-6066 6-Channel Digital Input / 6-Channel Power Relay Module $ 400.00 HSQ-6217 8-Channel Analog Input Module $ 615.00
HSQ-6224 4-Channel Analog Output / 4-Channel Digital Input Module $ 645.00 HSQ-6250 8-Channel Digital Input / 7-Channel Digital Output Module $ 430.00 HSQ-6256 16-Channel Digital Output Module $ 430.00
HSQ-6260 6-Channel Relay Output Module $ 430.00
HSQ-6266 4-Channel Digital Input / 4-Channel Relay Output Module $ 430.00 Part Number Description List Price
2535 4-Channel Digital Input to Analog Input Adapter Board $ 90.00 2508 32-Channel Analog Input Board $ 1,350.00
2509 32-Channel Digital Input Board $ 530.00
2534 32-Channel Intelligent Digital Input $ 1,100.00
2533 32-Channel Digital Output $ 610.00
2548 16-Channel Relay Digital Output $ 550.00
2569 16-Channel Digital Input / 16-Channel Digital Output Board $ 690.00 1368 Digital Input Conversion Expansion Board (125 VDC in) – Left entry (for use w/2509 & 2534 expansion boards) $ 280.00 1369 Digital Input Conversion Expansion Board (125 VDC in) – Right entry (for use w/2509 & 2534 expansion boards) $ 280.00

PARTS AND SERVICE PRICE LIST
(Effective January 1, 2026)
Logic Processors (RTUs)
2500 - 25x86 Series Interface Boards
6000/6200 Series Remote I/O Modules for 25x86 and 1000 RTUs 2500 - 25x86 Series Expansion Boards
HSQ Tech Inc.
26227 Research Road,
Hayward, California 94545-3725
Phone: (510) 259-1334
Toll Free: (800) 486-6684
HSQPrice List_2024 Confidential - Not for Distribution Effective January 1, 2024 #22..
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Part Number Description List Price
2511 Power Box Assembly $ 200.00
2585 RTU Battery Backup Controller $ 490.00
CP10.241-S1 Power Supply ( 24 VDC / 10 Amp) – DIN Rail· $265.00 $ 290.00 2572 Communications Board — provides 2 serial ports and indicator lights for 6000 series RTUs and the HSQ-1110 RTU $ 160.00 2592 Communications Board — provides 4 serial ports and 1 Ethernet port for 25x86 RTUs (9579, 9588, and 3343 $ 225.00 PTA Pulse to Analog Card — converts a DO pulse duration to an analog value $ 150.00 HSQ-RX2800 HSQ Integrity rx2800 i6 Server/Workstation: w/ VMS Keyboard and Mouse, 24” LCD Monitor,16 GB RAM, 147 GB /
Contact HSQ
HSQ-RXPWR2 Redundant Power Supply for HSQ-RX2800· $ 750.00 HSQ-XVIEWWRKPRO MISER XView for Windows Professional Workstation Contact HSQ HSQ-SYS-146 146 GB System Disk (configured)· Contact HSQ HSQ-HST-300 300 GB History Disk (configured) Contact HSQ HSQ-TELE8HR Telephone Support, Basic (eight hours a day, five days a week) Contact HSQ HSQ-TELE24HR Telephone Support, Complete (twenty-four hours a day, seven days a week) Contact HSQ Part Number Description List Price
HSQ-6000R Communication Ribbon Cable (HSQ-6000 to 2572) $ 100.00 HSQ-CBL1 Ribbon Cable (2 connectors, 1 foot length) $ 75.00 RTUDIAG-CBL RTU Diagnostics Cable, connects 2500 series and x86 RTUs series to serial port $ 100.00 Part Number Description List Price
HSQ-MISER-A MISER License (non-redundant server) Contact HSQ HSQ-MISER-B MISER License (redundant server) Contact HSQ HSQ-MISER-C MISER License (workstation) Contact HSQ
MISER-DR Standard MISER Device Driver (existing NCC) Contact HSQ XVIEW-WIN XView for Windows (XView only, full client version) Contact HSQ XVIEW-UP XView for Windows Upgrade (XView only, client upgrade version) Contact HSQ WIN-XCD XView for Windows, Exceed Edition, Full Version (XView and XServer software) Contact HSQ WIN-XCD-UP XView for Windows, Exceed Edition, Upgrade Version (XView and XServer software) Contact HSQ HSQ-TALK MISERtalk Software (Email Notification / Text Message) Contact HSQ HSQ-VCL MISER VisualCL Software (Server) Contact HSQ
HSQ-VCLW VisualCL Software for Windows (Client) Contact HSQ HSQ-POR MISER Web Portal Contact HSQ
HSQ-POR-UP MISER Web Portal Upgrade Contact HSQ
HSQ-SRV-WIN ODBC Server for Windows (database software) Contact HSQ HSQ-ODBC ODBC Bridge for MISER (database software) Contact HSQ HSQ-ODOC ODBC Bridge with Oracle for MISER Contact HSQ
HSQ-ODRD ODBC Bridge (redundant software) Contact HSQ
RTU-DIAG RTU Diagnostic Software (CD-ROM) (Includes software, manual, and two (2) hours telephone support.) $ 1,200.00 Part Number Description List Price
HSQ-MOM MISER Operator Manual $ 150.00
HSQ-TRM MISER Technical Reference Manual $ 175.00
HSQ-SYS MISER System Manual $ 150.00
HSQ-VCLM VisualCL Manual $ 150.00
HSQ-XVIEW XView for Windows Installation Manual $ 150.00 HSQ-XDRAW XDraw User Manual $ 150.00
HSQ-RTU86 HSQ Logic Processor and RTU User Manual $ 200.00 HSQ-DIAG RTU Diagnostic Manual $ 125.00
HSQ-CDR MISER Manuals on DVD $ 175.00
Communication Cables
Software
Documentation
System Accessories
HSQPrice List_2024 Confidential - Not for Distribution Effective January 1, 2024 #22..
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Item Description Rate
Senior Engineer - Normal Senior Service Software Engineer, Based on 8 Normal Business Hours (4-Hour Minimum) $250/Hour Senior Engineer - Overtime Senior Service/Software Engineer, Holiday/Overtime Hours (8-Hour Minimum) $375/Hour Service Engineer - Normal Service Engineer (hardware and software), Based on 8-Normal Business Hours (4-Hour Minimum) $200/Hour Service Engineer - Overtime Service Engineer (hardware and software), Holiday/Overtime Working Hours (8-Hour Minimum) $300/Hour Item Description List Price
Airfare Airline Travel plus taxes Contact HSQ
Lodging Hotel plus associated parking fee and taxes Contact HSQ Vehicle Car Rental and Insurance Coverage Contact HSQ
Daily Stipend Pier Diem (daily) for meals Contact HSQ
Mileage At Local Vehicle Mileage Rate plus margin Contact HSQ Parts and Material Quoted As Required Contact HSQ

1. All prices are FOB Hayward, California and are exclusive of sales tax. Taxes and transport charges are prepaid and will be added to the invoice.

2. VISA and MasterCard are accepted, subject to a 5% surcharge.

3. Prices are subject to change. Call or email for current prices.

4. Minimum parts order is $500.00.

5. New items are warranted for one (1) year.

6. Repair items are warranted for ninety (90) days.

7. Extended warranty is available on most items.

8. The prices on this list do not apply to parts damaged as a result of improper use or acts of God.

9. If no part number is listed, please call. The application will dictate the specific part number.

11. Service rates are based on 8 normal business day hours (8am-5pm PST M-F excluding Holidays) and do not including travel and living expenses.

Telephone (510) 259-1334
Toll Free Number (800) 486-6684
Parts and Production [email protected]
Sales [email protected]
Repairs [email protected]
Website hsq.com
RMA Repair Forms www.hsq.com/RMA
Training and Support https://hsq.com/index.php/support/ Knowledge Base Center https://hsq.com/index.php/documentation/ Travel Expenses and In-Transit Rates
Terms And Conditions

10. Quantity discounts are available for the 25x86 series interface, expansion boards, and other parts based on meeting quantity limits for each product part. • Qty. 10 -20 = 5%
• Qty. 21- 34 = 10%
• Qty. 35 or more = 15%
Contacts and Links
Repairs
Repair pricing for HSQ products is based on time and material at a rate of $200.00 per hour. There is a $300.00 evaluation fee for all repair items. Shipping cost shall be dd d d d h f d
Service
HSQPrice List_2024 Confidential - Not for Distribution Effective January 1, 2024 #22..
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FINANCIAL INTEREST DISCLOSURE
Any contract award therewith will require approval by a majority vote of the City of Modesto’s City Council.

In order to have full transparency in any City of Modesto commercial actions, the City Council may not approve an agreement between the City and the Vendor until all person with a direct or indirect financial interest of greater than $2,000 in the Vendor are identified by name.

Vendor must therefore complete this Financial Interest Disclosure Form, listing by name all parties that have a material financial interest in the agreement, contract or development right.

PLEASE NOTE, any Council action that requires a Financial Interest Disclosure cannot be considered by the City Council until the required reporting is made. That means that City Council agenda items without the disclosure will be removed from the Council agenda.

Financial Interest Disclosure to City of Modesto
The Vendor shall identify any person with a financial interest in the Vendor by name, below.

For the purposes of this disclosure, a “Financial Interest” shall have the meaning contained in Modesto Municipal Code section 2-10.02.

Persons having an aggregate economic interest in the Vendor less than two thousand dollars ($2,000.00) at all times prior to final Council action of the proposed contract are not required to be listed on the Financial Interest Disclosure.

Notwithstanding the foregoing, a Financial Interest Disclosure is not required for a Vendor meeting the financial criteria for listing on the New York or the Pacific Stock exchanges unless it is reasonably foreseeable that a City Council decision will increase or decrease that entity's gross revenues or expenses by one million dollars ($1,000,000) or more and the requirements of Modesto Municipal Code Section 2-10.03(h) are satisfied.

It is the legal obligation of all applicants for approval of an agreement or of an application for development rights to verify in writing, under penalty of perjury, that the identity of each person having a material financial interest in the Vendor is true, correct and complete. By signing below, the applicant understands that this information is provided under penalty of perjury, and that intentionally supplying misinformation or deception may result in either invalidation of the agreement or application, or criminal prosecution for misdemeanor violation of the Modesto Municipal Code, or both. Negligent provision of misinformation shall be grounds for invalidation. In accordance with the Modesto Municipal Code, each applicant has a continuing obligation to maintain the truth, accuracy and completeness of the financial interest disclosure information provided below until after final consideration by the City Council of any matter arising out of or relating to the agreement or application.
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Print Names of Persons Having a Financial Interest in Vendor Receiving this Agreement:

First Name, Last Name
First Name, Last Name
First Name, Last Name
First Name, Last Name
First Name, Last Name
First Name, Last Name
First Name, Last Name
First Name, Last Name
First Name, Last Name
First Name, Last Name
First Name, Last Name
First Name, Last Name
First Name, Last Name
First Name, Last Name
First Name, Last Name
By signing this document, I agree to the information contained within.

Bidder Company Name:

Name of Vendor Signatory:

Signature of Vendor Representative:
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California Levine Act Disclosure
California Government Code Section 84308, also known as the "Levine Act", prohibits City “officers” from participating in any action related to a license, permit, or other entitlement for use (a “proceeding”) if such member accepts, solicits, or directs political contributions from a party to the proceeding or their agent totaling more than $500 while the proceeding is pending before the agency, and for twelve (12) months following the date a decision concerning the proceeding has been made. The Levine Act also requires disclosure of such contribution by a party to the proceeding.

Section 84308(a)(4) of the Levine Act defines an "officer" as follows: “Officer” means any elected or appointed officer of an agency, any alternate to an elected or appointed officer of an agency, and any candidate for elective office in an agency. The term “officer” is further defined 2 Cal. Code Regs. Section 18438.1, which states:

An officer of an agency includes only those persons who make, participate in making, or in any way attempt to use their official position to influence a decision in the license, permit, or entitlement for use proceeding, or who exercise authority or budgetary control over the agency of officers who may do so, and:
(1) Serve in an elected position, including an official appointed to an elected position due to an interim vacancy or an election otherwise canceled because the official was the sole candidate for the position; (2) Serve as a member of a board or commission;
(3) Serve as the chief executive of a state agency, or county, city or district of any kind; or (4)Have decision making authority with respect to the proceeding involving a license, permit, or other entitlement for use and is also a candidate for elected office or has been a candidate for elective office in the 12 months prior to the proceeding.

A list of Modesto City Council Board Members can be found online at: Modesto City Council https://modestogov.com/706/Council-Members (modestogov.com). The party making this certification is responsible for determining whether a recipient of a political contribution is a City officer prior to answering the following questions:

1. Have you, your company, or any agent on behalf of you or your company, made any political contributions of more than $500 to any City officer, in the twelve (12) months preceding the date of the submission of your proposals or the anticipated date of any Council action related to this contract?
___ YES If yes, please identify the Council Member(s):
___ NO

2. Do you, or your company, or any agent on behalf of you or your company, anticipate or plan to make any political contribution of more than $500 to any City officer in the twelve (12) months following any Council action related to this contract?
___ YES If yes, please identify the Council Member(s):
___ NO
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Answering YES to either of the questions above does not preclude the City of Modesto from awarding a contract to your firm or taking any subsequent action related to the contract. It may, however, preclude the identified City officer from participating in any actions related to such contract.

HEREBY CERTIFY UNDER PENALTY OF PERJURY UNDER THE LAWS OF THE STATE OF CALIFORNIA THAT THE FOREGOING IS TRUE AND CORRECT.
_________________ _____________________________
Date Signature of authorized individual

_____________________________
Company/Applicant Name
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CITY OF MODESTO

COUNCIL AGENDA REPORT
DATE OF MEETING:

October 13, 2026
Date: September 11, 2026
TO: Mayor and City Council
THROUGH: Joseph P. Lopez, City Manager
FROM: Jessica Hill, Director of Community and Economic Development SUBJECT: Permanent Local Housing Allocation (PLHA) Cycle 2 Five-Year Plan Approval and Program Application
CONTACT: Edgar Garcia, Community Development Manager
[email protected], 209-571-5101
DESCRIPTION:

Hearing to approve the City of Modesto’s Permanent Local Housing Allocation (PLHA) Cycle 2 Five-Year Plan in an amount not to exceed $4,254,350, and the Program Application for the Year-Six (2024) allocation in the amount of $680,696 and the YearSeven (2025) allocation in the amount of $729,126. (Funding Source: Permanent Local Housing Allocation Funds)
STRATEGIC PLAN ELEMENT:

This item supports quality of life consistent with the City Council’s 2025-2026 Strategic Plan Goal C: In partnership with public agencies, develop and implement a comprehensive housing and homelessness action plan.

BACKGROUND:

The Permanent Local Housing Allocation (PLHA) Program was created by California’s 2017 Building Homes and Jobs Act (SB 2), which added a $75 recording fee to certain real estate documents to fund affordable housing. Administered by the California Department of Housing and Community Development (HCD), PLHA provides a stable, ongoing source of funding for cities and counties to address unmet affordable housing needs and increase housing supply. Funding is distributed through non-competitive formula grants to entitlement jurisdictions over a five-year period.

HCD issued the Cycle 1 PLHA Notice of Funding Availability (NOFA) on February 26, 2020, and the City applied and was approved for a five-year award totaling $5,604,319. #23..
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City Council, October 13, 2026
Permanent Local Housing Allocation (PLHA) Cycle 2 Five-Year Plan Approval and Program Application Page 2 of 5
On July 14, 2020, by Resolution No. 2020-318, the City of Modesto adopted the Cycle 1 Five Year Plan (The Plan), establishing funding priorities, alignment with the City’s Housing Element and Consolidated Plan Priority Needs, target populations to be served, and guidelines for the reuse of program income. In accordance with the adopted Plan, the City used PLHA funds to support the development of permanent supportive housing, including the following projects.
• James Street Apartments (2022) – 7 units
• 1208 9th Street Youth Housing (2023) – 14 units
• Vine Street Project (2024) – 34 units
On June 9, 2026, by Resolution No. 2026-213, the City Council approved an amendment to the Cycle 1 PLHA Plan to reallocate funding toward homeownership activities including down-payment assistance initiatives. The City has spent $3,445,694 on projects with Cycle 1 funding to date, with pending funding commitments to The Salvation Army Emergency Shelter.

On July 16, 2026, HCD announced the PLHA Cycle 2, 2024-2028 NOFA and guidelines.

As part of the NOFA, HCD released the estimated five-year allocation amounts for Entitlement Local Governments, as well as the year-six and year-seven formula allocations, which represent the first two years of Cycle 2. The City’s year-six and yearseven allocations as well as the estimated total five-year allocation are outlined below. • Year-Six Allocation: $680,696
• Year-Seven Allocation: $729,126
• Total Estimated Five-Year Allocation Amount not to exceed: $4,254,350 In order to receive this funding, the City must adopt a new Five-Year Plan establishing funding priorities in alignment with the Housing Element and community needs. The City must also submit an amended PLHA program policy to align with updated guidelines, provide opportunities for public comment in accordance with the established PLHA Policy, and have the plan formally accepted by the City Council.

DISCUSSION:

The City intends to apply for the PLHA year-six and year-seven allocations in an amount totaling $1,409,822. This application represents the first two years of the City’s Cycle 2, Five-Year PLHA Allocation. The City also intends to submit a Five-Year Plan, outlining funding priorities over the next five years for the approximate five-year allocation totaling $4,254,350.

The PLHA guidelines identify the following eligible activities for Cycle 2 funding. • Activity 1 - Rental Housing: Supports predevelopment, development, acquisition, rehabilitation, and preservation of affordable rental housing (including multifamily and other rental types), acquisition of foreclosed/vacant properties for rental use, #23..
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City Council, October 13, 2026
Permanent Local Housing Allocation (PLHA) Cycle 2 Five-Year Plan Approval and Program Application Page 3 of 5
matching contributions to housing trust funds, and fiscal incentives that help cities approve or invest in affordable rental projects
• Activity 2 - Homeownership: Supports predevelopment, development, acquisition, rehabilitation, and preservation of affordable owner-occupied housing, including single-family homes and ADUs; allows matching contributions to housing trust funds; supports acquisition/rehab of foreclosed or vacant homes for resale; provides accessibility modifications; and offers homeownership opportunities such as down payment assistance
• Activity 3 - Homelessness Assistance: Provides services and housing for people experiencing or at risk of homelessness, including rapid rehousing, rental assistance, case management, shelter and navigation center operations, hotel/motel vouchers, and the development, rehabilitation, or preservation of permanent supportive or transitional housing
The City’s proposed Five-Year Plan is outlined in the table below. The year-six and yearseven funding allocations represent actual awards confirmed by HCD, while the allocations for year-eight through year-ten represent estimated awards to be announced.

PLHA Eligible
Activity
YearSix
Allocati
on
YearSeven
Allocati
on
YearEight
Allocati
on
*Estima
te
YearNine
Allocati
on
*Estima
te
YearTen
Allocati
on*Esti
mate
Total
Approxim
ate FiveYear
Allocation
Activity 3 -
Homelessness
Assistance
Operating and
Capital Costs for
Emergency
Shelters, New
Construction of
Permanent
Supportive
Housing (95%)
$
646,661
$
692,670
$
900,767
$
900,767
$
900,767
$
4,041,633
Program
Administration
(5%)
$ 34,035 $ 36,456 $ 47,409 $ 47,409 $ 47,409 $ 212,717
Total Allocation $
680,696
$
729,126
$
948,176
$
948,176
$
948,176
$
4,254,350
Staff proposes allocating 95% of each year’s allocation towards Activity 3: Homelessness Assistance in support of local emergency shelter operations, as well as the new #23..
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City Council, October 13, 2026
Permanent Local Housing Allocation (PLHA) Cycle 2 Five-Year Plan Approval and Program Application Page 4 of 5
construction of permanent supportive housing. The City will also reserve 5% of each year’s allocation for program administration. This plan is in alignment with the priority needs identified in the 2025-2030 Consolidated Plan accepted by Council on June 24, 2025, by Resolution No. 2025-245, including addressing and preventing homelessness.

Following approval of this item, City staff will be incorporating any comments received and will be submitting the Plan to HCD by October 15th.

FISCAL IMPACT:

The funding source is the State of California Department of Housing and Community Development (HCD) Permanent Local Housing Association (PLHA) Grant, and all funding will reside in Fund 1120. There will be no impact to the General Fund.

COMMITTEE RECOMMENDATION:

This item was presented to Citizen’s Housing and Community Development Committee on September 10, 2026, and was recommended to forward to Council for approval.

CEQA/NEPA REQUIREMENTS:

This item does not constitute a “project” within the meaning of California Environmental Quality Act (CEQA) Guidelines Section 15378 and requires no environmental review.

RECOMMENDED COUNCIL ACTION:

Staff Recommendations:

Resolution approving the City of Modesto’s Permanent Local Housing Allocation (PLHA) Cycle 2 Five-Year Plan in an amount not to exceed $4,254,350, and the program application for the Year-Six (2024) allocation in the amount of $680,696 and the YearSeven (2025) allocation in the amount of $729,126.

Resolution amending the Fiscal Year 2026-2027 annual operating and non-capital project fund budgets to appropriate the Permanent Local Housing Allocation (PLHA) Cycle 2 grant funds, authorize applicable revenue, expenditures, and transfers, and establish projects for the year-six (2024) PLHA allocation in the amount of $680,696 and the yearseven (2025) PLHA allocation in the amount of $729,126. #23..
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City Council, October 13, 2026
Permanent Local Housing Allocation (PLHA) Cycle 2 Five-Year Plan Approval and Program Application Page 5 of 5
Approved by:

Jessica Hill, Director of Community and
Economic Development
Joseph P. Lopez, City Manager
Attachments:

1. Resolution

2. Resolution – Budget

3. State-required Resolution

4. PLHA Five-Year Plan

5. Amended PLHA Program Policy

6. Amended PLHA Program Policy – Redline Edits
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10/13/2026/CED/EGarcia/Item X 1 2026-XX

MODESTO CITY COUNCIL
RESOLUTION NO. 2026-XX
RESOLUTION APPROVING THE CITY OF MODESTO’S PERMANENT LOCAL HOUSING ALLOCATION (PLHA) CYCLE 2 FIVE-YEAR PLAN IN AN AMOUNT NOT TO EXCEED $4,254,350, AND THE PROGRAM APPLICATION FOR THE YEAR-SIX (2024) ALLOCATION IN THE AMOUNT OF $680,696 AND THE YEAR-SEVEN (2025) ALLOCATION IN THE AMOUNT OF $729,126
WHEREAS, the Permanent Local Housing Allocation (PLHA) Program was created by California’s 2017 Building Homes and Jobs Act (SB 2), which added a $75 recording fee to certain real estate documents to address unmet affordable housing needs and increase housing supply; and WHEREAS, funding is distributed through non‑competitive formula grants to entitlement jurisdictions over a five‑year period; and WHEREAS, on July 14, 2020, by Resolution No. 2020-318, the City of Modesto adopted the Cycle 1 Five-Year Plan (The Plan), establishing funding priorities, alignment with the City’s Housing Element and Consolidated Plan Priority Needs, target populations to be served, and guidelines for the reuse of program income; and
WHEREAS, Cycle 1 funds supported permanent supportive housing projects including James Street Apartments (7 units), 1208 9th Street Youth Housing (14 units), and the Vine Street Project (34 units); and WHEREAS, on June 9, 2026, by Resolution No. 2026‑213, the City Council approved an amendment to the Cycle 1 PLHA Plan to allocate funding toward homeownership activities including down-payment assistance initiatives; and
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10/13/2026/CED/EGarcia/Item X 2 2026-XX
WHEREAS, the City has spent $3,445,694 in Cycle 1 funding on projects to date, with pending funding commitments to The Salvation Army Emergency Shelter; and
WHEREAS, on July 16, 2026, HCD announced the PLHA Cycle 2, 2024- 2028 NOFA and guidelines, which included the year-six (2024) and year-seven (2025) formula allocations to Entitlement Jurisdictions, and the total estimated five-year allocation amounts; and
WHEREAS, the City is awarded a year-six allocation in the amount of $680,696 and a year-seven allocation in the amount of $729,126, with a total five-year estimated allocation amount not to exceed $4,254,350; and WHEREAS, in order to receive this funding, the City must adopt a new Five-Year Plan establishing funding priorities in alignment with the Housing Element and community needs, submit an amended PLHA program policy to align with updated guidelines, provide opportunities for public comment in accordance with the established PLHA Policy, and have the plan formally accepted by the City Council; and
WHEREAS, the City’s proposed Five-Year Plan allocates 95% of annual PLHA funds to Activity 3 - Homelessness Assistance, including emergency shelter operations and new construction of permanent supportive housing, and reserves 5% of each annual allocation for program administration; and WHEREAS, this plan is in alignment with the priority needs identified in the 2025-2030 Consolidated Plan accepted by Council on June 24, 2025 by Resolution No. 2025-245, including addressing and preventing homelessness. #23..
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10/13/2026/CED/EGarcia/Item X 3 2026-XX
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of Modesto that it hereby approves the Permanent Local Housing Allocation (PLHA) Cycle 2 Five-Year Plan in an amount not to exceed $4,254,350, and the program application for the year-six (2024) allocation in the amount of $680,696 and the year-seven (2025) allocation in the amount of $729,126.

The foregoing resolution was introduced at a regular meeting of the Council of the City of Modesto held on the 13th day of October, 2026, by Councilmember ?, who moved its adoption, which motion being duly seconded by Councilmember ?, was upon roll call carried and the resolution adopted by the following vote:

AYES: Councilmembers: ?
NOES: Councilmembers: ?
ABSENT: Councilmembers: ?
ATTEST: ____________________________-
____
DIANE NAYARES-PEREZ, City
Clerk
(SEAL)
APPROVED AS TO FORM:

BY: ____________________________________
JOSE M. SANCHEZ, City Attorney
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10/13/2026/CED/EGarcia/Item X 1 2026-XX

MODESTO CITY COUNCIL
RESOLUTION NO. 2026-XX
RESOLUTION AMENDING THE FISCAL YEAR 2026-2027 ANNUAL

OPERATING AND NON-CAPITAL PROJECT FUND BUDGETS TO

APPROPRIATE THE PERMANENT LOCAL HOUSING ALLOCATION (PLHA) CYCLE 2 GRANT FUNDS, AUTHORIZE APPLICABLE REVENUE,

EXPENDITURES, AND TRANSFERS, AND ESTABLISH PROJECTS FOR THE YEAR-SIX (2024) PLHA ALLOCATION IN THE AMOUNT OF $680,696 AND THE YEAR-SEVEN (2025) PLHA ALLOCATION IN THE AMOUNT OF
$729,126
WHEREAS, the Permanent Local Housing Allocation (PLHA) Program was created by California’s 2017 Building Homes and Jobs Act (SB 2), which added a $75 recording fee to certain real estate documents to address unmet affordable housing needs and increase housing supply; and WHEREAS, funding is distributed through non‑competitive formula grants to entitlement jurisdictions over a five‑year period; and WHEREAS, on July 16, 2026, HCD announced the PLHA Cycle 2, 2024- 2028 NOFA and guidelines, which included the year-six (2024) and year-seven (2025) formula allocations to Entitlement Jurisdictions, and the total estimated five-year allocation amounts; and
WHEREAS, the City is awarded a year-six allocation in the amount of $680,696 and a year-seven allocation in the amount of $729,126, with a total five-year estimated allocation amount not to exceed $4,254,350; and WHEREAS, in order to receive this funding, the City must adopt a new Five‑Year Plan aligned with the Housing Element and community needs, submit an amended PLHA program policy reflecting updated guidelines, provide #23..
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10/13/2026/CED/EGarcia/Item X 2 2026-XX
opportunities for public comment, and obtain formal City Council approval of the plan; and
WHEREAS, the City’s proposed Five-Year Plan allocates 95% of annual PLHA funds to Activity 3 - Homelessness Assistance, including emergency shelter operations and new construction of permanent supportive housing, and reserves 5% for program administration; and
WHEREAS, a financial analysis has been completed and it has been determined that the Fiscal Year 2026-2027 annual operating and non-capital project fund budgets must be amended to appropriate these funds; and WHEREAS, all funding will reside in Fund 1120, and there will be no impact to the general fund.

NOW, THEREFORE, BE IT RESOLVED by the Council of the City of Modesto that it hereby amends the Fiscal Year 2026-2027 annual operating and non-capital project fund budgets to appropriate the Permanent Local Housing Allocation (PLHA) Cycle 2 grant funds, authorize applicable revenue, expenditures, and transfers, and establish projects for the year-six (2024) PLHA allocation in the amount of $680,696 and the year-seven (2025) PLHA allocation in the amount of $729,126.

BE IT FURTHER RESOLVED, that the City Manager, or his designee, is hereby authorized to take the necessary steps to implement the provisions of this resolution.
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10/13/2026/CED/EGarcia/Item X 3 2026-XX
The foregoing resolution was introduced at a regular meeting of the Council of the City of Modesto held on the 13th day of October, 2026, by Councilmember ?, who moved its adoption, which motion being duly seconded by Councilmember ?, was upon roll call carried and the resolution adopted by the following vote:

AYES: Councilmembers: ?
NOES: Councilmembers: ?
ABSENT: Councilmembers: ?
ATTEST: ____________________________-
____
DIANE NAYARES-PEREZ, City
Clerk
(SEAL)
APPROVED AS TO FORM:

BY: ____________________________________
JOSE M. SANCHEZ, City Attorney
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_____________
___________________________________________________________ __________________________________________________________________ AUTHORIZING RESOLUTION OF _______________________________

AUTHORIZING THE APPLICATION AND ADOPTING THE PLHA PLAN FOR THE

PERMANENT LOCAL HOUSING ALLOCATION PROGRAM
________________________________________________ of the ________________________________________________________ of _______________________________hereby consents to, adopts, and ratifies the following resolution:

A. WHEREAS, the Department is authorized to provide up to $296 million under the SB 2 Permanent Local Housing Allocation Program Formula Component from the Building Homes and Jobs Trust Fund for assistance to Cities and Counties (as described in Health and Safety Code section 50470 et seq. (Chapter 364, Statutes of 2017 (SB 2)).

B. WHEREAS the State of California (the “State”), Department of Housing and Community Development (“Department”) issued a Notice of Funding Availability (“NOFA”) dated 10/15/2024 under the Permanent Local Housing Allocation (PLHA) Program;
C. WHEREAS _______________________________ is an eligible Local government who has applied for program funds to administer one or more eligible activities, or a Local or Regional Housing Trust Fund to whom an eligible Local government delegated its PLHA formula allocation.

D. WHEREAS the Department may approve funding allocations for PLHA Program, subject to the terms and conditions of the Guidelines, NOFA, Program requirements, the Standard Agreement, and other contracts between the Department and PLHA grant recipients;
NOW THEREFORE BE IT RESOLVED THAT:

1. If Applicant receives a grant of PLHA funds from the Department pursuant to the above referenced PLHA NOFA, it represents and certifies that it will use all such funds in a manner consistent and in compliance with all applicable state and federal statutes, rules, regulations, and laws, including without limitation all rules and laws regarding the PLHA Program, as well as any and all contracts Applicant may have with the Department.

2. Applicant is hereby authorized and directed to receive a PLHA grant, in an amount not to exceed the five-year estimate of the PLHA formula allocations, as stated in Appendix B of the current NOFA ______________________ in accordance with all applicable rules and laws.
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3. Applicant hereby agrees to use the PLHA funds for eligible activities as approved by the Department and in accordance with all Program requirements, Guidelines, other rules and laws, as well as in a manner consistent and in compliance with the Standard Agreement and other contracts between the Applicant and the Department.

4. Pursuant to Section 302(c)(4) of the Guidelines, Applicant’s PLHA Plan for the 2019-2023 Allocations is attached to this resolution, and Applicant hereby adopts this PLHA Plan and certifies compliance with all public notice, public comment, and public hearing requirements in accordance with the Guidelines.

5. If applicable: Applicant certifies that it was delegated by _______________________ to submit an application on its behalf and administer the PLHA grant award for the formula allocation of PLHA funds, pursuant to Guidelines Section 300(c) and 300(d), and the legally binding agreement between the recipient of the PLHA funds and the Applicant is submitted with the PLHA application.

6. If applicable: Applicant certifies that it has or will subgrant some or all of its PLHA funds to another entity or entities. Pursuant to Guidelines Section 302(c)(3), “entity” means a housing developer or program operator, but does not mean an administering Local government to whom a Local government may delegate its PLHA allocation.

7. If applicable: Applicant certifies that its selection process of these subgrantees was or will be accessible to the public and avoided or shall avoid any conflicts of interest.

8. If applicable: Pursuant to Applicant’s certification in this resolution, the PLHA funds will be expended only for eligible Activities and consistent with all program requirements.

9. If applicable: Applicant certifies that, if funds are used for the acquisition, construction or rehabilitation of for-sale housing projects or units within for-sale housing projects, the grantee shall record a deed restriction against the property that will ensure compliance with one of the requirements stated in Guidelines Section 302(c)(6)(A),(B) and (C).

10. If applicable: Applicant certifies that, if funds are used for the development of an Affordable Rental Housing Development, the Local government shall make PLHA assistance in the form of a low-interest, deferred loan to the Sponsor of the Project, and such loan shall be evidenced through a Promissory Note secured by a Deed of Trust and a Regulatory Agreement shall restrict occupancy and rents in accordance with a Local government-approved underwriting of the Project for a term of at least 55 years.

11. Applicant shall be subject to the terms and conditions as specified in the Standard Agreement, the PLHA Program Guidelines and any other applicable SB 2 Guidelines published by the Department.

12. ______________________________________ is/are authorized to execute the PLHA Program Application, the PLHA Standard Agreement and any subsequent amendments or modifications thereto, as well as any other documents which are related to the Program or the PLHA grant awarded to Applicant, as the Department may deem appropriate.
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PASSED AND ADOPTED at a regular meeting of the __________________________ this day of, 2024, by the following vote:

AYES: ABSTENTIONS: NOES: ABSENT:

Signature of Approving Officer:_______________________________ ___________________________________________
INSTRUCTION: The attesting officer cannot be the person identified in the resolution as the authorized signor

CERTIFICATE OF THE ATTESTING OFFICER
The undersigned, Officer of _________________________________ does hereby attest and certify that the ________________________ Resolution is a true, full and correct copy of a resolution duly adopted at a meeting of the
__________________________________ which was duly convened and held on the date stated thereon, and that said document has not been amended, modified, repealed or rescinded since its date of adoption and is in full force and effect as of the date hereof.

ATTEST:

Signature of Attesting Officer
_________________________
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Permanent Local Housing Allocation
(PLHA) Plan – Cycle 2
Prepared by:

Community and Economic Development Department
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Permanent Local Housing Allocation (PLHA) Plan
Introduction
The Permanent Local Housing Allocation (PLHA) Program was created by California’s 2017 Building Homes and Jobs Act (SB 2), which added a $75 recording fee to certain real estate documents to fund affordable housing. Administered by the California Department of Housing and Community Development (HCD), PLHA provides a stable, ongoing source of funding for cities and counties to address unmet affordable housing needs and increase housing supply.

Funding is distributed through non‑competitive formula grants to entitlement jurisdictions over a five‑year period.

On July 16, 2026, HCD announced the PLHA Cycle 2, 2024-2028 NOFA and guidelines. As part of the NOFA, HCD released the estimated five-year allocation amounts for Entitlement Local Governments, as well as the 2024 and 2025 formula allocations, which represent the first two years of Cycle 2. The City’s 2024 and 2025 awards as well as the estimated total FiveYear allocation are outlined below. • 2024 Allocation: $680,696
• 2025 Allocation: $729,126
• Total Estimated Five-Year Allocation Amount not to exceed: $4,254,350 In order to receive this funding, the City must adopt a new Five-Year Plan establishing funding priorities in alignment with the Housing Element and community needs. The City must also submit an amended PLHA program policy to align with updated guidelines, provide opportunities for public comment in accordance with the established PLHA Policy, and have the plan formally accepted by the City Council. The following Plan shows the City’s intended uses for the Estimated Five-Year Allocation in the amount of $4,254,350. #23..
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City of Modesto PLHA Five-Year Plan (2024-2028 Allocations) §302(c)(4)(A) Describe the manner in which allocated funds will be used for eligible activities.

Over the next five years, the City of Modesto will use the PLHA for the development of new affordable housing projects within the City limits of Modesto, and operational support for local emergency shelter operations. These activities support the City’s ongoing efforts to address homelessness and increase affordable housing opportunities for Modesto residents.

The City’s proposed Five-Year Plan is outlined below. The 2024 and 2025 funding allocations represent actual awards confirmed by HCD, while 2026-2028 allocations represent estimated awards to be announced.
2024 Allocation
• Activity 3 – Homelessness Assistance (95%): $646,661
• Type of Homeless Assistance Activity: Operating and Capital Costs for Emergency Shelters
• Percentage of Funds Allocated for the Proposed Affordable Housing Activity:
95%
• Area Median Income Level Served: 30%
• Unmet share of the RHNA at the AMI Level: N/A
• Projected Number of Households Served: 50
• Period of Affordability for the Proposed Affordable Rental Housing Activity:

N/A
• Program Administration (5%): $34,035
• Total 2024 Allocation: $680,696
2025 Allocation
• Activity 3 – Homelessness Assistance (95%): $692,670
• Type of Homeless Assistance Activity: Operating and Capital Costs for Emergency Shelters
• Percentage of Funds Allocated for the Proposed Affordable Housing Activity:
95%
• Area Median Income Level Served: 30%
• Unmet share of the RHNA at the AMI Level: N/A
• Projected Number of Households Served: 50
• Period of Affordability for the Proposed Affordable Rental Housing Activity:

N/A
#23..
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• Program Administration (5%): $36,456
• Total 2025 Allocation: $729,126
2026 Allocation *Estimate
• Activity 3 – Homelessness Assistance (95%): $900,767
• Type of Homeless Assistance Activity: Operating and Capital Costs for Emergency Shelters
• Percentage of Funds Allocated for the Proposed Affordable Housing Activity:
95%
• Area Median Income Level Served: 30%
• Unmet share of the RHNA at the AMI Level: N/A
• Projected Number of Households Served: 50
• Period of Affordability for the Proposed Affordable Rental Housing Activity:

N/A
• Program Administration (5%): $47,409
• Total 2026 Allocation Estimate: $948,176
2027 Allocation *Estimate
• Activity 3 – Homelessness Assistance (95%): $900,767
• Type of Homeless Assistance Activity: Operating and Capital Costs for Emergency Shelters
• Percentage of Funds Allocated for the Proposed Affordable Housing Activity:
95%
• Area Median Income Level Served: 30%
• Unmet share of the RHNA at the AMI Level: N/A
• Projected Number of Households Served: 50
• Period of Affordability for the Proposed Affordable Rental Housing Activity:

N/A
• Program Administration (5%): $47,409
• Total 2027 Allocation Estimate: $948,176
2028 Allocation *Estimate
• Activity 3 – Homelessness Assistance (95%): $900,767
• Type of Homeless Assistance Activity: Operating and Capital Costs for Emergency Shelters
• Percentage of Funds Allocated for the Proposed Affordable Housing Activity:
95%
• Area Median Income Level Served: 30%
• Unmet share of the RHNA at the AMI Level: N/A
• Projected Number of Households Served: 50
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• Period of Affordability for the Proposed Affordable Rental Housing Activity:

N/A
• Program Administration (5%): $47,409
• Total 2028 Allocation Estimate: $948,176
The City will utilize 95% of each year’s allocation towards Activity 3: Homelessness Assistance in support of local emergency shelter operations, as well as the development, rehabilitation, or preservation of permanent supportive or transitional housing. The City will also reserve 5% of each year’s allocation for program administration. §302(c)(4)(B) Provide a description of the way the Local government will prioritize investments that increase the supply of housing for households with incomes at or below 60 percent of Area Median Income (AMI).

The City will award PLHA funds based on the timing and completeness of applications received. In alignment with PLHA requirements, the City will prioritize projects that increase housing for households at or below 60% of AMI. Applications will be evaluated on overall project strength, including feasibility, alignment with program goals, and the extent to which the proposal serves the targeted income levels.

This approach ensures that PLHA resources are directed to households with the greatest need while supporting strong, well‑structured affordable housing projects. It also aligns with the priority needs identified in the City’s 2025–2030 Consolidated Plan. Activity 3 resources will be directed to projects and programs serving extremely low‑, very low‑, and low‑income individuals and families experiencing or at risk of homelessness. §302(c)(4)(C) Provide a description of how the Plan is consistent with the programs set forth in the Local Government’s Housing Element.

Funding will be allocated to projects based on local needs identified through the City’s 2025–2030 Consolidated Plan Needs Assessment, as well as the 6th Cycle Housing Element. High priority needs identified in the Consolidated Plan include addressing and preventing homelessness and increasing affordable housing. The application scoring framework prioritizes projects that demonstrate the capacity to perform, leverage multiple funding sources, and complete activities that assist households within 24 months of receiving funding commitments.

The City’s Plan is also consistent with Goal 2 of the Housing Element: providing a broad range of housing opportunities to meet the needs of all income levels. To maintain a consistent pipeline of affordable housing development and support the goals outlined in the Housing Element, the City uses an application process and awards PLHA funds based on priority needs (Consolidated Plan and alignment with the City’s Housing Element), and #23..
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funding availability. This approach helps ensure continued progress toward meeting local housing needs and advancing Housing Element programs related to affordable housing production, preservation, and supportive resources.

Activities Detail
The City of Modesto will utilize PLHA funds for the below activity. §301(a)(3) - Homelessness Assistance: Provides services and housing for people experiencing or at risk of homelessness, including rapid rehousing, rental assistance, case management, shelter and navigation center operations, hotel/motel vouchers, and the development, rehabilitation, or preservation of permanent supportive or transitional housing
§302(c)(4)(E)(i) Provide a detailed and complete description of how allocated funds will be used for the proposed Activity.

PLHA Activity 3 funds will be used to support local emergency shelter operations.

This remains a significant need in the community, as shelters play a critical role in providing immediate safety, stabilization, and access to services for individuals and families experiencing homelessness. The City will accept applications for funding and award funding based on priority needs identified in the Consolidated Plan Needs Assessment, alignment with PLHA program goals, and funding availability.

In addition to emergency shelter operations, PLHA funds will also be allocated to support the construction of permanent supportive housing. These funds will be made available to affordable housing developers based on applications received. Applications will be reviewed for completeness, project feasibility, and alignment with PLHA program goals, with priority given to projects that include new affordable housing units serving households with incomes at or below 60% of AMI.

The City has extensive experience administering these types of housing and shelter investments. City staff works closely with the local Continuum of Care (CoC), affordable housing developers, and community partners to expand resources across the housing and homelessness response system.

In recent years, the City has emphasized the development of permanent supportive housing as an effective strategy to address homelessness. Through the coordinated entry system, the City has completed and achieved occupancy for several projects, including 53 permanent supportive housing units at Jenny’s Place. The City also has several additional projects in the pipeline that will continue to increase the affordable housing stock and enhance the local shelter and supportive housing system. The combination of housing development and shelter operations supported through PLHA funding allows the City to continue making meaningful progress toward reducing homelessness and improving housing stability for its most vulnerable residents.
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§302(c)(4)(E)(iii) A description of major steps/actions and a proposed schedule for the implementation and completion of the Activity.

Implementation of Activity 3 will include multiple components. The City will provide funding for shelter operations that serve individuals experiencing or at risk of homelessness, beginning in January 2027.

The City is also actively exploring the development of permanent supportive housing. All awarded affordable housing projects will be secured through a loan agreement, promissory note, Deed of Trust, and Regulatory Agreement. City staff are well trained in both ongoing project oversight and long-term monitoring to ensure compliance throughout project implementation and during the required affordability period. #23..
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Permanent Local Housing Allocation (PLHA)
Program Policy
Prepared by:

Community and Economic Development Department
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Table of Contents
Permanent Local Housing Allocation (PLHA) Program Policy......................................................... 3 Background.................................................................................................................................. 3 Section 1. Introduction................................................................................................................ 4 Section 2. Cancellation and Termination .................................................................................... 4 Section 3. Definitions .................................................................................................................. 5 Section 4. Eligible Activities....................................................................................................... 10 Section 5. Project Selection....................................................................................................... 13 Section 6. Grant Administration................................................................................................ 13 Section 7. Citizen Participation ................................................................................................. 16 Section 8. Accounting Records.................................................................................................. 16 Section 9. Deadlines and Funding Requirements..................................................................... 16 Section 10. Reporting & Monitoring ......................................................................................... 16 Attachment A – Program Income Reuse Account Plan ................................................................ 18 #23..
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Permanent Local Housing Allocation (PLHA) Program
Policy
Background
The Permanent Local Housing Allocation (PLHA) Program was established under the Building Homes and Jobs Act to provide an ongoing, reliable source of funding that supports local efforts to address unmet housing needs across California. The PLHA Formula Allocation Guidelines set forth the program’s purpose, requirements, eligible uses, and administrative framework, offering cities a structured method for advancing projects and programs that improve housing stability and affordability within their communities.

Under these guidelines, PLHA funding is allocated annually to eligible local governments according to formulas derived from federal Community Development Block Grant (CDBG) distribution methods. The PLHA program is designed to expand the supply of affordable housing, preserve existing units, increase homeownership opportunities, and provide homelessness assistance—integrating updated definitions, activity categories, compliance standards, and reporting obligations.

Within this framework, Modesto administers its PLHA formula allocation in a manner that supports long-term planning, aligns with the City’s adopted Housing Element, responds to current and emerging community needs, and ensures compliance with state requirements. The policy establishes the local procedures, administrative responsibilities, and accountability measures necessary for implementing eligible PLHA activities, developing and maintaining a Five-Year Plan, managing program income, and meeting all reporting and monitoring obligations identified in the State guidelines.

This Policy serves as Modesto’s formal operating guide for PLHA funding and is intended to ensure transparent, consistent, and effective stewardship of state housing resources. #23..
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Section 1. Introduction
The City will administer the PLHA Program consistent with the State of California’s Formula Allocation Guidelines (Article I, Section 100). This policy establishes local procedures for applying for, administering, committing, expending, and reporting PLHA funds allocated to Modesto. It ensures full compliance with the PLHA Program Guidelines issued by the California Department of Housing and Community Development (HCD), which retains authority to amend or suspend program provisions. The City will implement PLHA per statutory authority in Health and Safety Code Section 50470 and in alignment with Article I and II of the PLHA Guidelines. (Citation: Article I, Section 100; Article II, Section 200).

PLHA funds are distributed by the State according to statutory formulas: ninety percent of available funds are allocated through the federal CDBG formula under 42 USC 5306, and ten percent are allocated among non‑entitlement jurisdictions. Funding availability is announced through Notices of Funding Availability (NOFAs), and jurisdictions may apply for their current allocation and up to two previous unclaimed allocation years. Eligible applicants include metropolitan cities, urban counties, and non‑entitlement local governments, with the option to delegate program administration to another local government or a Local or Regional Housing Trust Fund through a legally binding agreement for the full five‑year cycle.

Section 2. Cancellation and Termination
The City will adhere to Article IV, Section 402, acknowledging HCD authority to issue stop-work orders, terminate agreements, request repayment, and impose penalties for reporting deficiencies. If HCD determines the City is not meeting the terms of the Standard Agreement, it may issue a stop‑work notice. The City will immediately cease all work until HCD provides written authorization to resume. HCD may terminate the Standard Agreement for non‑compliance and will provide at least 30 days’ written notice, identifying deficiencies and allowing the City to submit required documentation within the stated timeframe. Failure to meet reporting requirements may result in a three‑month correction period. If deficiencies are not cured, the City will forfeit the next year’s PLHA formula allocation and be ineligible for competitive awards until reporting compliance is restored. HCD may require repayment of funds, offset future allocations, or pursue any legal remedies if the City fails to comply with PLHA Guidelines or the Standard Agreement. If Modesto participates with a co‑applicant, all partners may be impacted by stop‑work orders or termination due to any party’s non‑compliance. HCD is not responsible for damages resulting from termination #23..
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Section 3. Definitions
The City will apply all definitions included in Article I, Section 101 of the PLHA Guidelines as outlined below.
(a) “Accessory Dwelling Unit” or “ADU” means a dwelling unit which is attached, detached or located within the living area of the existing dwelling or residential dwelling unit and which provides complete independent living facilities for one or more persons pursuant to Government Code (GC) Section 65852.2 and 65852.22. It shall include permanent provisions for living, sleeping, eating, cooking, and sanitation on the same parcel as the single- family dwelling. An Accessory Dwelling Unit also includes the following: an efficiency unit, as defined in Section 17958.1 of the HSC, or a manufactured home, as defined in Section 18007 of the HSC.
(b) "Activity" means any single eligible undertaking carried out as part of an Applicant's allocation(s) under the Program.
(c) “Activity Delivery (AD)” means funds for allowable costs incurred for implementing and carrying out eligible PLHA Activities. The AD covers the costs of staff directly carrying out the activity in addition to equipment and supplies that are necessary for successful completion of the activity.
(d) “Administrative Expenses (AE)” are costs for staff time and overhead costs for planning and general administration of the PLHA eligible activity. Administrative expenses cover the cost of planning, general management, oversight , and coordination of the eligible PLHA Activity and other costs as approved by the Department . (e) “Affordable” means a housing unit that satisfies at least one of the following criteria:
a. If the unit is being rented to L ow-Income, Very Low-Income or Extremely L owIncome households, it complies with the Multifamily Housing Program Guidelines
Section 7312 and the Section 7301 definition of “Affordable Rent” b. If the unit is being sold, it is offered at an “Affordable housing cost”, as published in the Fannie Mae Selling Guide, Part B, Debt to Income Ratios , as updated annually and it complies with the income limits stated in the definitions of Moderate- Income and Lower -Income in this section
c. If the unit is being rented to Moderate- Income households, it is available at a gross rent, including a utility allowance, that does not exceed 30 percent of the applicable income eligibility level, and complies with the definition of ModerateIncome in these guidelines #23..
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(f) "Affordable Owner -Occupied Workforce Housing" (AOWH) means owner -occupied housing per HSC Section 50092.1 that is affordable to persons and families of Low- or Moderate- Income, as that term is defined in HSC Section 50093, except in High- cost areas where Moderate -Income shall include households earning up to 150 percent of AMI
(g) “Allocation” means funds that are calculated annually for each eligible applicant and are non-competitive. The Allocation refers to the year the funds were collected. For example, 2024 Allocation means the funds made available from revenues collected between January 1, 2024 and December 31, 2024. Allocations are typically made available under a Notice of Funding Availability in the calendar year after the Allocation Year
(h) “Annual Progress Report” (APR) means the Housing Element APR required by GC Section 65400 on the prior year’s activities and due to the Department April 1 of each year. (i) “PLHA Annual Report" means a form issued by the Department and completed by a Local Government awarded PLHA funds on which the Local Government documents the uses and expenditures of any allocated funds and outcomes achieved. (j) "Applicant" means an eligible Local Government applying for the program to administer one or more eligible activities. Applicant also means a Local or Regional Housing Trust Fund delegated by an eligible Local Government to apply for the program and administer its allocation in accordance with all program rules. (k) “Area Median Income” or “AMI” means the most recent applicable county median family income published by the Department, available at the following link:
https://www.hcd.ca.gov/grants-and-funding/income-limits/state-and-federal-income rent-and-loan-value-limits
(l) “At risk of homelessness” has the same meaning as defined in Title 24 CFR part 578.3.

This would apply to individuals or families at or below 30% AMI. (m) “Capitalized Reserve for Services” means the reserve funded by the Local Government pursuant to Section 301 to address supportive service budget deficits attributable to shortfalls in service funding sources.
(n) “Comprehensive Housing Affordability Strategy” or “CHAS” means annual data compiled by the United States Census Bureau for the U.S. Department of Housing and Urban Development (HUD) to document the extent of housing problems and housing needs, particularly for low-income households.
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(o) "Community Development Block Grant" or "CDBG" means the program created pursuant to Title I of the Housing and Community Development Act of 1974, 42 U.S.C. 5301 et seq., as amended.
(p) “Department” means the California Department of Housing and Community Development, a public agency of the State of California. (q) “Disbursed” means PLHA funds that have been requested using the Permanent Local Housing Allocation Request for funds (RFF) form by the deadline established each year and have been released by the Department to the awardee. (r) “Expended” means PLHA funds which have been awarded and encumbered in a Standard Agreement by HCD and spent by the Local Government on the previously approved PLHA program or project.
(s) “Extremely Low Income” has the meaning set forth in HSC Section 50106, which is a maximum of 30 percent of AMI. Grantees shall utilize income limits issued by the Department at the following link: https://www.hcd.ca.gov/grants-and-funding/income limits/state-and-federal-income-rent-and-loan-value-limits (t) “Fund” means the Building Homes and Jobs Trust Fund pursuant to HSC Section 50470. (u) “Grantee” or “Grantees” means the Local Government that has received an award from the Department and has executed the Standard Agreement. (v) “High-cost area” means those counties defined as high cost by the Federal Housing Finance Agency (at: https://www.fhfa.gov/DataTools/ and those counties for which HUD adjusted the Very Low Income and Low-Income rents due to high costs (at:
https://www.huduser.gov/portal/pdrdatas_landing.html), as published by the Department in the annual PLHA Notice of Funding Availability. (w) “Housing Development Financing Committee (HDFC)” means the committee responsible for the coordination of affordable housing resources and multifamily housing programs effective July 1, 2026.
(x) “Local Government” means any city, including a charter city, any county, including a charter county, or a city and county, including a charter city and county. (y) “Local Housing Trust Fund” or “Regional Housing Trust Fund” means a public, joint public and private fund or charitable nonprofit organization described in Section 501(c)(3) of the Internal Revenue Code, which was established by legislation, ordinance, resolution (including nonprofit articles of incorporation), or a public-private partnership organized to receive specific revenue to address local or regional housing needs. #23..
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(z) “Low or Lower Income” has the meaning set forth in HSC Section 50079.5, which is a maximum of 80 percent of AMI. Grantees shall utilize income limits issued by the Department at the following link: https://www.hcd.ca.gov/grants-and-funding/income limits/state-and-federal-income-rent-and-loan-value-limits . (aa) “Moderate-Income” has the meaning set forth in HSC Section 50093, which is a maximum of 120 percent AMI, or in High-cost areas, 150 percent of AMI. Grantees shall utilize income limits issued by the Department at the following (bb) “Multifamily Housing” means a structure or set of structures with common financing, ownership, and management, and which collectively include(s) five or more dwelling Units.
(cc)“Multifamily Housing Program” means the affordable housing program established in Chapter 6.7 (commencing with section 50675) of Part 2 of Division 31 of the Health and Safety Code.
(dd) “Navigation Center” has the meaning set forth in GC 65660, which is a housing first, low-barrier, service-enriched shelter focused on moving people into permanent housing that provides temporary living facilities while case managers connect individuals experiencing homelessness to income, public benefits, health services, shelter, and housing.
(ee) “Non-entitlement Local Government” means a Local Government in an area which is not a metropolitan city or part of an urban county, a Local Government that, as of September 1, 2017, was an incorporated city with a population of less than 50,000 or a county with an unincorporated area population of less than 200,000 persons which had not entered into a three-year Urban County Cooperation Agreement, or a Local Government that was not otherwise entitled to receive CDBG funds directly from HUD. (ff) “Operating Subsidies” means payments to owners of affordable housing developments that make the housing more affordable by covering a portion of the ongoing costs of operating the development. Such payments would have the same effect as rental assistance.
(gg) “Owner-occupied” means a dwelling which is occupied by the owner and includes a single-family dwelling or a dwelling unit in a stock cooperative, as defined by Business and Professions Code (BPC), Section 11003.2, a community apartment project, as defined by BPC Section 11004, or a condominium project, as defined by subdivision (c) of BPC Section 11004. 5.
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(hh) "Plan" means the document submitted by the Applicant to the Department as part of a complete application in which the Applicant proposes to use allocated funds for at least one eligible Activity. The Plan shall have a term of five years. In succeeding years, the Local Government is required to obtain the approval of the Department for any amendments made to the Plan.
(ii) “Permanent Local Housing Allocation Program", “Program”, or "PLHA" means the program developed to annually allocate 70 percent of the moneys deposited into the Fund pursuant to HSC Section 50470(b)(2)(B)(i).
(jj) “Permanent Supportive Housing” has the same meaning as in HSC Section 50675.14, that is, housing with no limit on the length of stay, that is occupied by the target population, and that is linked to onsite or offsite services that assist the supportive housing residents in retaining the housing, improving his or her health status, and maximizing his or her ability to live and, when possible, work in the community.

Permanent supportive housing may include associated facilities if used to provide services to housing residents. Permanent supportive housing does not include “health facility” as defined by HSC Section 1250 or any “alcoholism or drug abuse recovery or treatment facility” as defined by HSC Section 11834.02 or “Community care facility” as defined in HSC Section 1502, “Mental health rehabilitation centers” as defined in Section 5675 of the Welfare and Institutions Code (WIC), or other residential treatment programs.
(kk) “Project” means a residential structure or set of residential structures that an Applicant constructs, acquires, rehabilitates, preserves, incentivizes, or causes to be constructed, acquired, rehabilitated, or incentivized that is Affordable. Project includes Affordable Owner-Occupied Workforce Housing, Multifamily Housing, Rental Housing Developments, and Single-family Dwellings.
(ll) “Regional Housing Needs Allocation" or "RHNA" means the share of the regional housing need represented by persons at all income levels within the area significantly affected by the general plan of the city or county allocated to an Applicant Local Government pursuant to GC Section 65584(b)
(mm) “Single-family” or “Single-family Dwelling” means a single unit providing complete, independent living facilities for one family, including permanent provisions for living, sleeping, eating, cooking, and sanitation, and existing as a separate interest of real property, such as a detached single-family dwelling or a townhouse. #23..
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(nn) “Sponsor” means the legal entity or combination of legal entities with continuing control of a Rental Housing Development, as that term is defined in California Code of Regulations title 25, section 8301 subdivision (p). Where the borrowing entity is or will be organized as a limited partnership, Sponsor includes the general partner or general partners who have effective control over the operation of the partnership, or, if the general partner is controlled by another entity, the controlling entity. Sponsor does not include the seller of the property to be developed as the rental housing Project, unless the seller will retain control of the Project for the period necessary to ensure Project feasibility as determined by the Department.
(oo) “Standard Agreement” means the STD 213 and all exhibits thereto that is entered into by an applicant and the Department and obligates the applicant to, among other things, perform one or more Activities or cause such Activities to be performed. (pp) “Very Low Income” has the meaning set forth in HSC Section 50105, which is a maximum of 50 percent of AMI. Grantees shall utilize income limits issued by the Department at the following link: https://www.hcd.ca.gov/grants-and-funding/income limits
Section 4. Eligible Activities
The City will utilize awarded PLHA funds only for activities listed under Article III, Section 301, including the following

1. Rental Activities (Up to 120% AMI or 150% AMI in High-Cost Areas) a. The payment of predevelopment, development, acquisition, rehabilitation, preservation costs, necessary operating subsidies, or any combination thereof, for Multifamily Housing
b. The payment of predevelopment, development, acquisition, rehabilitation, preservation costs, or any combination thereof, for Affordable rental housing that does not meet the definition of Multifamily Housing.
c. Matching Portions of Funds placed into Local or Regional Housing Trust Funds for rental activities. The PLHA funds and the matching funds must be placed into the account for the housing trust fund and then used to complete one or more of the eligible PLHA rental activities.
d. Matching portions of funds available through the Low- and Moderate Income Housing Asset Fund pursuant to subdivision (d) of HSC Section 34176 for rental activities. The PLHA funds and the matching funds must be placed into a housing #23..
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trust account and then used to complete one or more of the eligible Activities under this paragraph (1).
e. Acquisition and rehabilitation of foreclosed or vacant properties for use as affordable rental housing.
f. Fiscal incentives made by a county to a city within the county to incentivize approval of one or more Affordable rental housing Projects, or matching funds invested by a county in an Affordable rental housing development Project in a city within the county, provided that the city has made an equal or greater investment in the Project. The county fiscal incentives shall be in the form of a grant or lowinterest loan to an Affordable housing Project. Matching funds invested by both the county and the city also shall be a grant or low-interest deferred loan to the Affordable rental housing Project.

2. Affordable Owner-Occupied Workforce Housing Activities (Up to 120% AMI or 150% AMI in High-Cost Areas)
a. The payment of predevelopment, development, acquisition, rehabilitation, or preservation costs, including any combination thereof, for Affordable SingleFamily ownership housing. b. The payment of predevelopment, development, acquisition, rehabilitation, or preservation costs, or any combination thereof, for ADUs. ADU shall be used as a primary residence by its occupant.
c. Matching portions of funds placed into Local or Regional Housing Trust Funds for ownership activities. The PLHA funds and the matching funds must be placed into the account for the housing trust fund and then used to complete one or more of the eligible PLHA homeownership activities
d. Matching portions of funds available through the Low- and Moderate Income Housing Asset Fund pursuant to subdivision (d) of HSC Section 34176 for ownership activities. The PLHA funds and the matching funds must be placed into an account and then used to complete one or more of the eligible PLHA homeownership activities.
e. Acquisition and rehabilitation of foreclosed or vacant properties to be sold as affordable ownership housing.
f. Accessibility modifications to Owner-Occupied Housing. g. Homeownership opportunities, including, but not limited to, down payment assistance.

3. Homelessness Assistance Activities (Up to 30% AMI)
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a. Capitalized reserves for services connected to the preservation and creation of Permanent Supportive Housing.
b. Assisting persons who are experiencing or at risk of homelessness, including, but not limited to, providing rapid rehousing, rental assistance, supportive/case management services that allow people to obtain and retain housing including CARE Act petitioning under Chapter 1 (commencing with section 5970) of Part 8 of Division 5 of the Welfare and Institutions Code, operating and capital costs for navigation centers and emergency shelters, vouchers for temporary hotel/motel stays, and the new construction, rehabilitation, and preservation of permanent and transitional housing.
i. This Activity may include sub-awards to Administrative Entities as defined in HSC Section 50490 subdivision (a)(1-3) that were awarded HEAP/HHAP funds under Chapter 5 (commencing with section 50210), Chapter 6 (commencing with section 50216), and Chapter 6.5 (commencing with section 50230) of Division 31 of the Health and Safety Code for rental assistance to continue assistance to these households.
ii. Applicants must provide rapid rehousing, rental assistance, navigation centers, emergency shelter, and transitional housing activities in a manner consistent with the housing first practices described in 25 CCR, Section 8409, subdivision (b)(1)-(6) and in compliance with WIC Section 8255(b)(8). iii. An Applicant allocated funds for the new construction, rehabilitation, and preservation of Permanent supportive housing shall incorporate the core components of housing first, as provided in WIC Section 8255, subdivision I. PLHA funds used for the Activities under this Section 301 subdivision (a)(1)(A), (B), and (a)(2)(A)(i) must result in the development, rehabilitation, or preservation of housing by the end of the Standard Agreement term.

II. The City shall use no more than 5 percent of the allocation for costs related to the administration of the Activity(ies) for which the allocation was made. Staff and overhead costs directly related to carrying out the eligible Activities described in Section 301 are “activity costs” and not subject to the cap on Administrative Expenses. The City may share any funds available for Administrative Expenses with entities that are administering its allocation.

III. If applicable, two or more Local Governments that receive PLHA allocations may expend that money on an eligible jointly funded project as provided for in Section 50470 (b)(2)(B)(ii)(IV). An eligible jointly funded project must be an eligible Activity pursuant to Section 301(a) and be located within the boundaries of one of the Local Governments. #23..
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If applicable, the City may use the flow of PLHA funds to incentivize private lender loans and to guarantee payments for some or all public agency bond financings for activities consistent with the uses identified in Section 301. This loan guarantee Activity must be identified and fully explained in the Applicant’s five-year Plan.

Section 5. Project Selection
I. The City of Modesto determines which projects to fund under the PLHA Program by evaluating each proposed project for consistency with the City’s adopted PLHA Plan and the eligible activity categories defined in the PLHA Guidelines. The City accepts applications as funding is made available. In selecting projects, the City prioritizes those that satisfy the following criteria:
a. Address urgent community needs (if applicable)
b. Reflect comments received through the citizen participation process outlined in Section 7 of this policy
c. Support priority needs identified in the City’s Consolidated Plan Needs Assessment
d. Advance the goals established in the City’s Housing Element e. Assist households at or below 60 percent AMI if applicable to the proposed project.

Projects must fall within an authorized PLHA activity category. If a project is eligible under PLHA Guidelines but not included in the City’s adopted PLHA Plan, and is determined to be in the community’s best interest, the City may pursue a PLHA Plan amendment through the citizen participation process outlined in Section 7 of this policy and submit the amendment to HCD for approval.

Section 6. Grant Administration
The City will comply with all threshold requirements described in Article III, Section 302, including the below
I. Housing Element compliance - The City of Modesto, and any delegated jurisdiction if applicable, shall maintain a Housing Element that has been adopted by the City Council and subsequently found by the California Department of Housing and Community Development (HCD) to be in substantial compliance with State Housing Element Law (Government Code Section 65585). Compliance must be current at the time of PLHA award. The City will reference HCD’s published Housing Element Compliance Status list to verify compliance.
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II. Annual Progress Report submission - The City of Modesto must submit its Annual Progress Report (APR), as required by Government Code Section 65400, for the relevant Allocation Year(s) to HCD no later than the date the City submits its PLHA application.

APRs are mandatory, and no alternative reports may be submitted in place of the APR.

III. Complete NOFA application - The City shall submit a complete PLHA application by the deadline established in the applicable Notice of Funding Availability (NOFA). The application must include the following minimum components:
a. The application must request a PLHA allocation pursuant to Section 200 for one or more eligible activities identified in Section 301.
b. The application must include a City Council–approved resolution authorizing submittal of the PLHA application.
c. If the City allocates PLHA funds to an external developer or program operator, the City shall certify in its resolution that its selection process will be publicly accessible and free of conflicts of interest. The City shall comply with Health & Safety Code Section 50470 et seq., PLHA Guidelines, and all program requirements throughout the Standard Agreement term. For this provision, “entity” refers to a housing developer or program operator, not a local government receiving delegated PLHA funds.
d. The application must include a Five‑Year PLHA Plan pursuant to Article III, Section 302(c) containing the following components:
i. Description of eligible uses of PLHA funds.
ii. Prioritization strategy for investments that increase housing supply for households earning at or below 60 percent of Area Median Income (AMI).

Any program serving households at or below 60 percent AMI fulfills this requirement.
iii. Consistency analysis demonstrating alignment with the City’s adopted Housing Element programs.
iv. Evidence of public review and adoption, including City Council approval by resolution.
v. For each activity in the Plan, the City must include:

1. A description of the activity and the percentage of funding allocated.

2. Expected number of households served at each income level and comparison to unmet RHNA need by income category.

3. Major implementation steps and proposed schedule.
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4. The period and level of affordability as required in subsections (6) and (7).

IV. Requirements for Owner-Occupied Housing - The City shall certify that PLHA-funded owner-occupied acquisition, construction, or rehabilitation projects will include a recorded deed restriction with the following minimum terms:
i. Rehabilitation: 10 years
ii. Acquisition or construction: 20 years
iii. Accessory Dwelling Units (ADUs): 10 years
b. For acquisition or rehabilitation, PLHA funds may be provided as a grant or loan.

The home must remain the primary residence of an income-qualified homeowner for at least 10 years.
c. For acquisition or rehabilitation of mobile home parks, assistance shall be provided as a loan and the property must be restricted for a minimum of 35 years.
d. If the home is no longer the homeowner’s primary residence (sale, transfer, lease), the City must ensure compliance with one of the following:
i. Repayment of the PLHA loan and interest to the City’s PLHA account for reuse under Section 301.
ii. Sale of the home at an affordable housing cost to an income‑qualified household.
iii. Execution of an equity‑sharing agreement, with proceeds reused consistent with PLHA requirements.
iv. For mobile or manufactured homes not on permanent foundations, assistance may be offered as a grant or forgivable loan, with income qualification and primary residence requirements for a minimum of 10 years.

V. Requirements for Affordable Rental Housing
a. If PLHA funds are used for affordable rental development, the City shall provide assistance in the form of a low‑interest, deferred loan to the project sponsor.

Loan terms must be secured through a Promissory Note and Deed of Trust, with a Regulatory Agreement restricting occupancy and rents for at least 55 years consistent with City underwriting.
b. For mobile home park acquisition or rehabilitation, loans shall be low‑interest (not exceeding 3 percent), may be forgivable at term-end, and shall include a Regulatory Agreement restricting occupancy and rents for at least 35 years.

VI. Program Income Reuse Plan
a. The City shall maintain a reuse strategy describing how program income from loan repayments will be reinvested into PLHA‑eligible activities listed in Section 4 of this policy. The City shall follow procedures outlined in Attachment A. #23..
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Section 7. Citizen Participation
I. The City of Modesto is committed to ensuring transparent, accessible, and meaningful public participation in the development and administration of its PLHA funds. All public engagement and Council actions will comply with PLHA Program Guidelines Section 302.

II. The City of Modesto will ensure that the public has an adequate opportunity to review and comment on the PLHA Five‑Year Plan as required by Section 302(c)(4)(D) of the PLHA Guidelines. To meet this requirement, the City will conduct a public hearing with a 15‑day public notice and will present the PLHA Plan to the appropriate Council Committee and the City Council for adoption by resolution.

Section 8. Accounting Records
I. The City will maintain accounting records as required by Article IV, Section 400, including separate ledger accounts, PLHA expenditure documentation, Generally Accepted Accounting Principles (GAAP) compliance, and minimum retention of five years Section 9. Deadlines and Funding Requirements
I. The City of Modesto must submit a PLHA Plan to the Department, and the Plan must receive written approval from the Department before an award can be issued. The City may amend its Plan if the Department provides prior written approval. Any amendment that reallocates more than 10 percent of PLHA funds to Activities under Section 301 requires prior written approval from the Department and approval by the City Council at a public meeting.

II. The City must submit its initial PLHA application within 48 months of the budget appropriation for the Allocation Year. Any funds not applied for by the deadline will revert to the Housing Rehabilitation Loan Fund for the Multifamily Housing Program.

III. After finalizing the Standard Agreement and attachments, the City will follow Department instructions for signing and submitting all required documents within the provided timeline. Once the Standard Agreement is executed, the City must submit project-specific commitment documents to the Department for prior written approval. After approval, the City may request 100% of allocated funds for eligible expenditures, subject to the Standard Agreement.

II.

Section 10. Reporting & Monitoring
The City will comply with Article IV, Section 401 requirements, including annual, close-out reporting, monitoring of rental and AOWH projects, and responding to audit requests. #23..
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I. Annual Reports: Submitted each year by July 31 pursuant to HSC Section 50470(b)(2)(B)(ii)(III), covering the prior July 1–June 30 period. Reports will document uses of funds, expenditures, activity outcomes, and any proposed amendments to approved activities or schedules. Annual Reports will be signed by the City’s PLHA Administrator and the Authorized Representative designated by Council resolution.

II. Budget Modifications: The City may submit revised budgets to HCD when adjustments occur in the total budgeted or expended amount for any eligible activity. If modifications are needed outside of regularly scheduled reporting, staff will coordinate directly with HCD.

III. Close-Out Reporting: Following full expenditure of funds and completion of PLHA-funded activities, the City will submit a close-out report (as part of the Annual Report), documenting activity outcomes such as units created and individuals served.

IV. Recordkeeping Requirements - The City will maintain PLHA records and files at a level sufficient to demonstrate compliance with all PLHA program obligations as required by Section 401 of the PLHA Guidelines. Records will be retained for a minimum of five years following submission of the close‑out report, or longer if required by the Standard Agreement.

V. Monitoring Requirements - The City is responsible for long‑term monitoring of PLHA‑funded activities, including the following if applicable:
a. Rental Housing Developments: Ensuring compliance with occupancy and rent restrictions, reserve requirements, and habitability standards for the duration of the regulatory period.
b. Assistance to Owner‑Occupied Housing (AOWH): Verifying that homes assisted with PLHA funds remain owner‑occupied.

If requested by HCD, the City will obtain a report from a qualified, licensed third party certifying disbursement amounts and identifying funded activities. Such reports may be incorporated into the City’s annual single audit (A‑133), when applicable. The City acknowledges that failure to comply with PLHA reporting or monitoring requirements may result in repayment of funds or other remedies available to HCD. #23..
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Attachment A – Program Income Reuse Account Plan
The City of Modesto will manage and reuse program income generated from PLHA‑assisted activities in accordance with the requirements of the PLHA Guidelines and the City’s adopted PLHA Plan. Program income includes all repayments of PLHA loan principal and interest.

I. Repayments of PLHA loan principal and interest will be deposited into the City’s bank account and separately accounted for within the City’s financial system. The City will track program income using its internal loan‑tracking system, including borrower information, loan number, grant year, and amounts repaid. All funds deposited into the reuse account will remain the property of the City. Department responsibilities are as follows:
a. Community and Economic Development Department (CED): the loan database/subledger, including borrower information, loan terms, principal and interest activity, eligibility, and program reporting.
b. Finance Department: Maintains General Ledger, reconciliation, accounting for PLHA principal, interest, and related financial records.

II. The reuse account will be an interest‑bearing account. Any interest earned will be retained in the reuse account and treated as program income subject to the same reuse requirements.

III. Program income will be reused solely for eligible PLHA activities as defined in Section 301 of the PLHA Guidelines. Reuse funds must correspond to activities approved in the City’s PLHA Plan, unless a PLHA Plan Amendment is pursued.

IV. All PLHA reuse funds shall be expended in accordance with PLHA regulations. Program income shall be reused for eligible activities only within the boundaries of the City of Modesto.

V. The City will maintain all reuse account records and supporting documentation in accordance with PLHA requirements. The California Department of Housing and Community Development (HCD) will be provided access to reuse records upon request to determine compliance with PLHA regulations.
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Permanent Local Housing Allocation Program Policy
City of Modesto
Community Development Division
1010 10th Street, Suite 3100, Modesto, CA 95354
(209) 577-5211, TDD 209- [email protected]
City of Modesto Citizen Housing and Community Development Committee (CH&CDC) Approved XXXX XX, 20XX City of Modesto City Council Approved by Resolution XXX-XX on XXXX XX, 20XX Style Definition: TOC 2: Font: (Default) Calibri, 12 pt, Do not check spelling or grammar, Tab stops: 6.68",
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Permanent Local Housing AllocaƟon (PLHA)
Program Policy
Prepared by:

Community and Economic Development Department
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Table of Contents
Background ...................................................................................................................................... 4 Section 1. Introduction .................................................................................................................... 5 Section 2. Cancellation and Termination ......................................................................................... 7 Section 3. Definitions ....................................................................................................................... 8 Section 4. Eligible Activities ........................................................................................................... 17 Section 5. Project Selection .......................................................................................................... 21 Section 6. Grant Administration .................................................................................................... 22 Section 7. Citizen Participation ...................................................................................................... 26 Section 8. Accounting Records ...................................................................................................... 26 Section 9. Deadlines and Funding Requirements .......................................................................... 28 Section 10. Reporting & Monitoring ............................................................................................. 31 Attachment A – Program Income Reuse Account Plan ..................................................................... 34 Formatted: Font: (Default) Calibri
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Permanent Local Housing Allocation (PLHA) Program Policy Background
The Permanent Local Housing Allocation (PLHA) Program was established under the Building Homes and Jobs Act to provide an ongoing, reliable source of funding that supports local efforts to address unmet housing needs across California. The PLHA Formula Allocation Guidelines set forth the program’s purpose, requirements, eligible uses, and administrative framework, offering cities a structured method for advancing projects and programs that improve housing stability and affordability within their communities.

Under these guidelines, PLHA funding is allocated annually to eligible local governments according to formulas derived from federal Community Development Block Grant (CDBG) distribution methods. The PLHA program is designed to expand the supply of affordable housing, preserve existing units, increase homeownership opportunities, and provide homelessness assistance— integrating updated definitions, activity categories, compliance standards, and reporting obligations.

Within this framework, Modesto administers its PLHA formula allocation in a manner that supports long-term planning, aligns with the City’s adopted Housing Element, responds to current and emerging community needs, and ensures compliance with state requirements. The policy establishes the local procedures, administrative responsibilities, and accountability measures necessary for implementing eligible PLHA activities, developing and maintaining a Five-Year Plan, managing program income, and meeting all reporting and monitoring obligations identified in the State guidelines.

This Policy serves as Modesto’s formal operating guide for PLHA funding and is intended to ensure transparent, consistent, and effective stewardship of state housing resources. #23..
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1. Introduction SecƟon 1. IntroducƟon

1.1. Chapter 364, Statutes of 2017 (SB 2, Atkins) was part of a 15-bill housing package aimed at addressing the state’s housing shortage and high housing costs.

Specifically, it establishes a permanent source of funding intended to increase the affordable housing stock in California. The revenue from SB 2 will vary from year to year, as revenue is dependent on real estate transactions with fluctuating activity.

The legislation directs the California Department of Housing and Community Development (HCD) to use 70 percent of the revenue collected, beginning in calendar year 2019, to provide financial assistance to local governments for eligible housing-related projects and programs to assist in addressing the unmet housing needs of their local communities. This program is hereafter referred to as the Permanent Local Housing Allocation (PLHA) program.

1.2. Guidelines for the PLHA program are organized into five Articles as follows:

1.2.1. Article I. General provisions: This article includes information on the purpose of the Guidelines, program objectives, and definitions used throughout the document.

1.2.2. Article II. Program funding: This article describes allocation formulas and methodologies, and award
amounts.

1.2.3. Article III. Formula allocation component: This article describes the requirements for Applicants to apply for funds under the formula allocation of the PLHA program.

1.2.4. Article IV. Competitive allocation component: This article describes requirements and uses for PLHA competitive allocation funds.

1.2.5. Article V. Administration: This article describes administrative functions such as terms, non-performance remedies, and reporting and monitoring requirements.

The City will administer the PLHA Program consistent with the State of California’s Formula Allocation Guidelines (Article I, Section 100). This policy establishes local procedures for applying for, administering, committing, expending, and reporting PLHA funds allocated to Modesto. It ensures full compliance with the PLHA Program Guidelines issued by the California Department of Housing and Community Development (HCD), which retains authority to amend or suspend program provisions. The City will implement PLHA per statutory authority in Health and Safety Code Section 50470 and in alignment with Article I and II of the PLHA Guidelines. (Citation: Article I, Section 100; Article II, Section 200).

PLHA funds are distributed by the State according to statutory formulas: ninety percent of available funds are allocated through the federal CDBG formula under 42 USC 5306, and ten percent are allocated among non‑entitlement jurisdictions. Funding availability is announced through Notices Formatted: Font: (Default) Calibri, 14 pt, Font color:

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of Funding Availability (NOFAs), and jurisdictions may apply for their current allocation and up to two previous unclaimed allocation years. Eligible applicants include metropolitan cities, urban counties, and non‑entitlement local governments, with the option to delegate program administration to another local government or a Local or Regional Housing Trust Fund through a legally binding agreement for the full five‑year cycle.

2. Background

2.1. California Department of Housing and Community Development

2.2. The matters set forth herein are regulatory mandates, and are adopted in accordance with the authorities set forth below:

2.2.1. Quasi-legislative regulations … have the dignity of statutes … [and]… delegation of legislative authority includes the power to elaborate the meaning of key statutory terms…

2.2.2. Ramirez v. Yosemite Water Co., 20 Cal. 4th 785, 800 (1999)

2.2.3. In consultation with stakeholders, HCD may adopt Guidelines to implement this Section, including determining allocation methodologies. Any guideline, rule, policy, or standard of general application employed by HCD in implementing this chapter shall not be subject to the requirements of the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Title 2 Government Code, Part 1 of Division 3).

2.2.4. NOTE: Authority Cited: Health and Safety Code Section 50470, subdivision (d).

2.3. PLHA State of California Grant Authority

2.3.1. These Guidelines (hereinafter “Guidelines”) implement, interpret, and make specific Chapter 364, Statutes of 2017 (SB 2, Atkins - hereinafter “SB 2”) as authorized by Health and Safety Code (HSC) Section 50470, which created the Building Homes and Jobs Trust Fund and the PLHA program. The principal goal of this program is to make funding available to eligible local governments in California for housing-related projects and programs that assist in addressing the unmet housing needs of their local communities. Twenty percent of the funding in the Building Homes and Jobs Trust Fund is required to be expended for Affordable Owner-Occupied Workforce Housing, and the program prioritizes investments that increase the supply of housing to households that are at or below 60 percent of the Area Median Income (AMI), adjusted for household size.

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These Guidelines establish terms, conditions, and procedures for local governments to submit applications to HCD for funds from the PLHA program’s three components, as listed below:

2.3.1.1. Entitlement formula component per HSC 50470(b)(2)(B)(i)(I) 2.3.1.2. Authority cited: HSC Section 50470, subdivision (d). Reference cited: HSC Section 50470, subdivision (b)(2)(A), subdivision (b)(2)(B)(i) and subdivision (b)(2)(B)(ii)(I-V).

2.4. Grant Cancelation and Termination Disclosure SecƟon 2. CancellaƟon and TerminaƟon

2.4.1. In the event that it is determined, at the sole discretion of HCD, that the grantee is not meeting the terms and conditions of the Standard Agreement, HCD shall issue a notice to stop work. Immediately upon receiving the written notice to stop work, the grantee shall cease all work under the Standard Agreement. HCD has the sole discretion to determine the grantee’s compliance with the terms and conditions after issuance of a stop work order, and to deliver a written notice to the grantee to resume work under this Standard Agreement.

2.4.2. HCD shall terminate the Standard Agreement if the grantee is not in compliance with the Guidelines or the terms and conditions of the Standard Agreement. At least 30 days prior to the effective date of the termination of the Standard Agreement, HCD shall provide written notice to the grantee of its intent to cancel the funding allocation. The notice shall specify the reason for early termination and may permit the grantee or HCD to cure any deficiency(ies) prior to the early termination date. The grantee will submit requested documents to HCD within 30 days of the early termination notice.

2.4.3. Failure to meet reporting requirements will result in notice to the grantee that it must satisfactorily cure any deficiencies within three months of the notice or it will forfeit the following year’s PLHA formula allocation and be ineligible for a competitive award. The Local government will forfeit subsequent PLHA formula allocations and be ineligible for a competitive award until HCD determines that the Local government has met reporting requirements.

2.4.4. HCD may, as it deems appropriate or necessary, request the repayment of funds from a Local government or offset future years’ funds, or pursue any other remedies available to it by law for failure to comply with the Guidelines and/or the terms and conditions of the Standard Agreement.

2.4.5. Co-Applicants may be adversely impacted by a notice to stop work and/or termination if one grantee is deemed by HCD to not meet the terms and conditions of the Standard Agreement, or fails to meet the reporting requirements outlined in Section 503.

2.4.6. NOTE: Authority cited: HSC Section 50470, subdivision (d). Reference cited:

HSC Section 50470, subdivision (b)(2)(B)(ii)(IV) and subdivision (b)(3).

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The City will adhere to Article IV, Section 402, acknowledging HCD authority to issue stop-work orders, terminate agreements, request repayment, and impose penalties for reporting deficiencies. If HCD determines the City is not meeting the terms of the Standard Agreement, it may issue a stop‑work notice. The City will immediately cease all work until HCD provides written authorization to resume. HCD may terminate the Standard Agreement for non‑compliance and will provide at least 30 days’ written notice, identifying deficiencies and allowing the City to submit required documentation within the stated timeframe. Failure to meet reporting requirements may result in a three‑month correction period. If deficiencies are not cured, the City will forfeit the next year’s PLHA formula allocation and be ineligible for competitive awards until reporting compliance is restored. HCD may require repayment of funds, offset future allocations, or pursue any legal remedies if the City fails to comply with PLHA Guidelines or the Standard Agreement. If Modesto participates with a co‑applicant, all partners may be impacted by stop‑work orders or termination due to any party’s non‑compliance. HCD is not responsible for damages resulting from termination

2.5. PLHA Program Definitions SecƟon 3. DefiniƟons

2.5.1. All terms as defined by 2019 PLHA Guidelines published and authorized by the State of California Housing and Community Development (HCD).

2.5.2. All terms not defined below shall, unless their context suggests otherwise, be interpreted in accordance with the meanings of terms described in HSC Section 50470.

2.5.2.1. “Accessory dwelling unit” (ADU) means a dwelling unit which is attached, detached or located within the living area of the existing dwelling or residential dwelling unit and which provides complete independent living facilities for one or more persons pursuant to Government Code (GC) Section 65852.2 and 65852.22. It shall include permanent provisions for living, sleeping, eating, cooking, and sanitation on the same parcel as the single-family dwelling. An Accessory dwelling unit also includes the following: an efficiency unit, as defined in Section 17958.1 of the HSC, or a manufactured home, as defined in Section 18007 of the HSC.

2.5.2.2. "Activity" means any single eligible undertaking carried out as part of an Applicant's allocation(s) under the Program.

2.5.2.3. “Affordable” means a housing unit that satisfies at least one of the following criteria:

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2.5.2.3.1. If the unit is being rented to low-income, Very low-income or Extremely low-income households, it complies with the
Multifamily Housing Program guidelines Section 7312 and the Section 7301 definition of “Affordable Rent”; or

2.5.2.3.2. If the unit is being sold, it is offered at an “Affordable housing cost”, as published in the Fannie Mae Selling Guide, Part B, Debt to Income Ratios, as updated annually
(https://www.fanniemae.com/content/guide/selling/b3/6/02.ht ml#DTI.20Ratios), and it complies with the income limits stated in the definitions of Moderate-Income and LowerIncome in this section; or

2.5.2.3.3. If the unit is being rented to Moderate-Income households, it is available at a gross rent, including a utility allowance, that does not exceed 30 percent of the applicable income eligibility level, and complies with the definition of Moderate-Income in these guidelines

2.5.2.4. "Affordable Owner-Occupied Workforce Housing" (AOWH) means owneroccupied housing per HSC Section 50092.1 that is affordable to persons and families of low or moderate income, as that term is defined in HSC Section 50093, except in High-cost areas where
Moderateincome shall include households earning up to 150 percent of AMI.

2.5.2.5. “Annual Progress Report” (APR) means the Housing Element APR required by GC Section 65400 on the prior year’s activities and due to HCD April 1 of each year.

2.5.2.6. “Annual Report" means a form issued by HCD and completed by a Local government awarded PLHA funds on which the Local government documents the uses and expenditures of any allocated funds and outcomes achieved.

2.5.2.7. "Applicant" means an eligible Local government applying for the program to administer one or more eligible activities. Applicant also means a Local or Regional Housing Trust Fund delegated by an eligible Local government to apply for the program and administer its allocation in accordance with all program rules.

2.5.2.8. “Area Median Income” or “AMI” means the most recent applicable county median family income published by HCD, available at the following link: http://www.hcd.ca.gov/grantsfunding/incomelimits/state-and-federal-income- limits.shtml

2.5.2.9. “At risk of homelessness” means the same as defined in Title 24 Section 578.3 of the Code of Federal Regulations and also includes any household receiving rental assistance funded by the California Emergency #23..
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Solutions and Housing (CESH) program or the California Homeless Emergency Aid Program (HEAP).

2.5.2.10. “Capitalized Reserve for Services” means the reserve funded by the Local government pursuant to Section 301(a)(5) to address project supportive service budget deficits attributable to shortfalls in service funding sources.

2.5.2.11. “Comprehensive Housing Affordability Strategy” or “CHAS” means annual data compiled by the United States Census Bureau for the U.S. Department of Housing and Urban Development (HUD) to document
the extent of housing problems and housing needs, particularly for lowincome households.

2.5.2.12. "Community Development Block Grant" or "CDBG" means the program created pursuant to Title I of the Housing and Community Development Act of 1974, 42 U.S.C. 5301 et seq., as amended.

2.5.2.13. “Extremely Low Income” has the meaning set forth in HSC Section 50106, which is a maximum of 30 percent of AMI. Grantees shall utilize income limits issued by HCD at the following link:
http://www.hcd.ca.gov/grants-funding/income-limits/state-andfederalincome- limits.shtml.

2.5.2.14. “Fund” means the Building Homes and Jobs Trust Fund pursuant to HSC Section 50470.

2.5.2.15. “High-cost area” means those counties defined as high cost by the Federal Housing Finance Agency (at:
https://www.fhfa.gov/DataTools/ and those counties for which HUD adjusted the Very low income and low-income rents due to high costs (at:
https://www.huduser.gov/portal/pdrdatas_landing.html ), as published by HCD in the annual PLHA Notice of Funding Availability. 2.5.2.16. “Local government” means any city, including a charter city, any county, including a charter county, or a city and county, including a charter city and county.

2.5.2.17. “Local Housing Trust Fund” or “Regional Housing Trust Fund” means a public, joint public and private fund or charitable nonprofit organization described in

2.5.2.18. Section 501(c)(3) of the Internal Revenue Code, which was established by legislation, ordinance, resolution (including nonprofit articles of incorporation), or a public-private partnership organized to receive specific revenue to address local or regional housing needs.

2.5.2.19. “Low or Lower Income” has the meaning set forth in HSC Section 50079.5, which is a maximum of 80 percent of AMI. Grantees shall utilize income limits issued by HCD at the following link:
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2.5.2.20. “Moderate-Income” has the meaning set forth in HSC Section 50093, which is a maximum of 120 percent AMI, or in High-cost areas, 150 percent of AMI. Grantees shall utilize income limits issued by HCD at the following link: http://www.hcd.ca.gov/grantsfunding/incomelimits/state-and-federal-income-limits.html.

2.5.2.21. “Non-entitlement local government” means a Local government in an area which is not a metropolitan city or part of an urban county, a Local government that, as of September 1, 2017, was an incorporated city with a population of less than 50,000 or a county with an unincorporated area population of less than 200,000 persons which had not entered into a three-year Urban County Cooperation Agreement, or a Local government that was not otherwise entitled to receive CDBG funds directly from HUD.

2.5.2.22. “Operating subsidies” means payments to owners of affordable housing developments that make the housing more affordable by covering a portion of the ongoing costs of operating the development. Such payments would have the same effect as rental assistance.

2.5.2.23. “Owner-occupied” means a dwelling which is occupied by the owner and includes a single-family dwelling or a dwelling unit in a stock cooperative, as defined by Business and Professions Code (BPC), Section 11003.2, a community apartment project, as defined by BPC Section 11004, or a condominium project, as defined by subdivision (c) of BPC Section 11004. 5.

2.5.2.24. "Plan" means the document submitted by the Applicant to HCD as part of a complete application in which the Applicant proposes to use allocated funds for at least one eligible Activity. The Plan shall have a term of five years. In succeeding years, the Local government is required to obtain the approval of HCD for any amendments made to the Plan, as set forth in Section 302(c)(5).

2.5.2.25. “Permanent Local Housing Allocation Program", “Program”, or "PLHA" means the program developed to annually allocate 70 percent of the moneys deposited into the Fund pursuant to HSC Section 50470(b)(2)(B)(i).

2.5.2.26. “Permanent supportive housing” has the same meaning as in HSC Section 50675.14, that is, housing with no limit on the length of stay, that is occupied by the target population, and that is linked to onsite or offsite services that assist the supportive housing residents in retaining the housing, improving his or her health status, and maximizing his or her ability to live and, when possible, work in the community.

Permanent supportive housing may include associated facilities if used to provide services to housing residents. Permanent supportive housing does not include “health facility” as defined by HSC Section 1250 or #23..
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any “alcoholism or drug abuse recovery or treatment facility” as defined by HSC Section 11834.02 or “Community care facility” as defined in HSC Section 1502, “Mental health rehabilitation centers” as defined in Section 5675 of the Welfare and Institutions Code (WIC), or other residential treatment programs.

2.5.2.27. “Regional Housing Needs Allocation" or "RHNA" means the share of the regional housing need represented by persons at all income levels within the area significantly affected by the general plan of the city or county allocated to an Applicant Local government pursuant to GC Section 65584(b).

2.5.2.28. “Sponsor” means the legal entity or combination of legal entities with continuing control of a Rental Housing Development. Where the borrowing entity is or will be organized as a limited partnership, Sponsor includes the general partner or general partners who have effective control over the operation of the partnership, or, if the general partner is controlled by another entity, the controlling entity. Sponsor does not include the seller of the property to be developed as the rental housing Project, unless the seller will retain control of the Project for the period necessary to ensure Project feasibility as determined by HCD.

2.5.2.29. “Very Low Income” has the meaning set forth in HSC Section 50105, which is a maximum of 50 percent of AMI. Grantees shall utilize income limits issued by HCD at the following
link:
http://www.hcd.ca.gov/grants-funding/income-limits/state-andfederalincome- limits.shtml.

2.5.3. NOTE: Authority cited: HSC Section 50470, subdivision (d). Reference cited: HSC Section 50470.5 and 50470, subdivision (b)(2).

2.5.4. City of Modesto’s application eligibility is defined as Eligible Applicants for the entitlement formula component described in Section 100(b)(1) are limited to the metropolitan cities and urban counties allocated a grant for the federal fiscal year 2017 pursuant to the federal CDBG formula specified in 42 USC, Section 5306.

The City will apply all definitions included in Article I, Section 101 of the PLHA Guidelines as outlined below.
(a) “Accessory Dwelling Unit” or “ADU” means a dwelling unit which is attached, detached or located within the living area of the existing dwelling or residential dwelling unit and which provides complete independent living facilities for one or more persons pursuant to Government Code (GC) Section 65852.2 and 65852.22. It shall include permanent provisions for living, sleeping, eating, cooking, and sanitation on the same parcel as the #23..
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single- family dwelling. An Accessory Dwelling Unit also includes the following: an efficiency unit, as defined in Section 17958.1 of the HSC, or a manufactured home, as defined in Section 18007 of the HSC.
(b) "Activity" means any single eligible undertaking carried out as part of an Applicant's allocation(s) under the Program.
(c) “Activity Delivery (AD)” means funds for allowable costs incurred for implementing and carrying out eligible PLHA Activities. The AD covers the costs of staff directly carrying out the activity in addition to equipment and supplies that are necessary for successful completion of the activity.
(d) “Administrative Expenses (AE)” are costs for staff time and overhead costs for planning and general administration of the PLHA eligible activity. Administrative expenses cover the cost of planning, general management, oversight , and coordination of the eligible PLHA Activity and other costs as approved by the Department . (e) “Affordable” means a housing unit that satisfies at least one of the following criteria:
a. If the unit is being rented to L ow-Income, Very Low-Income or Extremely L owIncome households, it complies with the Multifamily Housing Program Guidelines Section 7312 and the Section 7301 definition of “Affordable Rent” b. If the unit is being sold, it is offered at an “Affordable housing cost”, as published in the Fannie Mae Selling Guide, Part B, Debt to Income Ratios , as updated annually and it complies with the income limits stated in the definitions of Moderate- Income and Lower -Income in this section
c. If the unit is being rented to Moderate- Income households, it is available at a gross rent, including a utility allowance, that does not exceed 30 percent of the applicable income eligibility level, and complies with the definition of ModerateIncome in these guidelines (f) "Affordable Owner -Occupied Workforce Housing" (AOWH) means owner -occupied housing per HSC Section 50092.1 that is affordable to persons and families of Low- or Moderate- Income, as that term is defined in HSC Section 50093, except in High- cost areas where Moderate -Income shall include households earning up to 150 percent of AMI
(g) “Allocation” means funds that are calculated annually for each eligible applicant and are non-competitive. The Allocation refers to the year the funds were collected. For example, 2024 Allocation means the funds made available from revenues collected between January 1, 2024 and December 31, 2024. Allocations are typically made available under a Notice of Funding Availability in the calendar year after the Allocation Year #23..
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(h) “Annual Progress Report” (APR) means the Housing Element APR required by GC Section 65400 on the prior year’s activities and due to the Department April 1 of each year. (i) “PLHA Annual Report" means a form issued by the Department and completed by a Local Government awarded PLHA funds on which the Local Government documents the uses and expenditures of any allocated funds and outcomes achieved. (j) "Applicant" means an eligible Local Government applying for the program to administer one or more eligible activities. Applicant also means a Local or Regional Housing Trust Fund delegated by an eligible Local Government to apply for the program and administer its allocation in accordance with all program rules.
(k) “Area Median Income” or “AMI” means the most recent applicable county median family income published by the Department, available at the following link:
https://www.hcd.ca.gov/grants-and-funding/income-limits/state-and-federal-income rentand-loan-value-limits (l) “At risk of homelessness” has the same meaning as defined in Title 24 CFR part 578.3. This would apply to individuals or families at or below 30% AMI. (m) “Capitalized Reserve for Services” means the reserve funded by the Local Government pursuant to Section 301 to address supportive service budget deficits attributable to shortfalls in service funding sources.
(n) “Comprehensive Housing Affordability Strategy” or “CHAS” means annual data compiled by the United States Census Bureau for the U.S. Department of Housing and Urban Development (HUD) to document the extent of housing problems and housing needs, particularly for low-income households.
(o) "Community Development Block Grant" or "CDBG" means the program created pursuant to Title I of the Housing and Community Development Act of 1974, 42 U.S.C. 5301 et seq., as amended.
(p) “Department” means the California Department of Housing and Community Development, a public agency of the State of California.
(q) “Disbursed” means PLHA funds that have been requested using the Permanent Local Housing Allocation Request for funds (RFF) form by the deadline established each year and have been released by the Department to the awardee.
(r) “Expended” means PLHA funds which have been awarded and encumbered in a Standard Agreement by HCD and spent by the Local Government on the previously approved PLHA program or project.
(s) “Extremely Low Income” has the meaning set forth in HSC Section 50106, which is a maximum of 30 percent of AMI. Grantees shall utilize income limits issued by the #23..
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Department at the following link: https://www.hcd.ca.gov/grants-and-funding/income limits/state-and-federal-income-rent-and-loan-value-limits (t) “Fund” means the Building Homes and Jobs Trust Fund pursuant to HSC Section 50470. (u) “Grantee” or “Grantees” means the Local Government that has received an award from the Department and has executed the Standard Agreement. (v) “High-cost area” means those counties defined as high cost by the Federal Housing Finance Agency (at: https://www.fhfa.gov/DataTools/ and those counties for which HUD adjusted the Very Low Income and Low-Income rents due to high costs (at:
https://www.huduser.gov/portal/pdrdatas_landing.html), as published by the Department in the annual PLHA Notice of Funding Availability.
(w) “Housing Development Financing Committee (HDFC)” means the committee responsible for the coordination of affordable housing resources and multifamily housing programs effective July 1, 2026.
(x) “Local Government” means any city, including a charter city, any county, including a charter county, or a city and county, including a charter city and county. (y) “Local Housing Trust Fund” or “Regional Housing Trust Fund” means a public, joint public and private fund or charitable nonprofit organization described in Section 501(c)(3) of the Internal Revenue Code, which was established by legislation, ordinance, resolution (including nonprofit articles of incorporation), or a public-private partnership organized to receive specific revenue to address local or regional housing needs. (z) “Low or Lower Income” has the meaning set forth in HSC Section 50079.5, which is a maximum of 80 percent of AMI. Grantees shall utilize income limits issued by the Department at the following link: https://www.hcd.ca.gov/grants-and-funding/income limits/state-and-federal-income-rent-and-loan-value-limits . (aa) “Moderate-Income” has the meaning set forth in HSC Section 50093, which is a maximum of 120 percent AMI, or in High-cost areas, 150 percent of AMI. Grantees shall utilize income limits issued by the Department at the following (bb) “Multifamily Housing” means a structure or set of structures with common financing, ownership, and management, and which collectively include(s) five or more dwelling Units.
(cc)“Multifamily Housing Program” means the affordable housing program established in Chapter 6.7 (commencing with section 50675) of Part 2 of Division 31 of the Health and Safety Code.
(dd) “Navigation Center” has the meaning set forth in GC 65660, which is a housing first, low-barrier, service-enriched shelter focused on moving people into permanent housing that provides temporary living facilities while case managers connect individuals #23..
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experiencing homelessness to income, public benefits, health services, shelter, and housing.
(ee) “Non-entitlement Local Government” means a Local Government in an area which is not a metropolitan city or part of an urban county, a Local Government that, as of September 1, 2017, was an incorporated city with a population of less than 50,000 or a county with an unincorporated area population of less than 200,000 persons which had not entered into a three-year Urban County Cooperation Agreement, or a Local Government that was not otherwise entitled to receive CDBG funds directly from HUD. (ff) “Operating Subsidies” means payments to owners of affordable housing developments that make the housing more affordable by covering a portion of the ongoing costs of operating the development. Such payments would have the same effect as rental assistance.
(gg) “Owner-occupied” means a dwelling which is occupied by the owner and includes a single-family dwelling or a dwelling unit in a stock cooperative, as defined by Business and Professions Code (BPC), Section 11003.2, a community apartment project, as defined by BPC Section 11004, or a condominium project, as defined by subdivision (c) of BPC Section 11004. 5.
(hh) "Plan" means the document submitted by the Applicant to the Department as part of a complete application in which the Applicant proposes to use allocated funds for at least one eligible Activity. The Plan shall have a term of five years. In succeeding years, the Local Government is required to obtain the approval of the Department for any amendments made to the Plan.
(ii) “Permanent Local Housing Allocation Program", “Program”, or "PLHA" means the program developed to annually allocate 70 percent of the moneys deposited into the Fund pursuant to HSC Section 50470(b)(2)(B)(i).
(jj) “Permanent Supportive Housing” has the same meaning as in HSC Section 50675.14, that is, housing with no limit on the length of stay, that is occupied by the target population, and that is linked to onsite or offsite services that assist the supportive housing residents in retaining the housing, improving his or her health status, and maximizing his or her ability to live and, when possible, work in the community. Permanent supportive housing may include associated facilities if used to provide services to housing residents. Permanent supportive housing does not include “health facility” as defined by HSC Section 1250 or any “alcoholism or drug abuse recovery or treatment facility” as defined by HSC Section 11834.02 or “Community care facility” as defined in HSC Section 1502, “Mental health rehabilitation centers” as defined in Section 5675 of the Welfare and Institutions Code (WIC), or other residential treatment programs.
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(kk) “Project” means a residential structure or set of residential structures that an Applicant constructs, acquires, rehabilitates, preserves, incentivizes, or causes to be constructed, acquired, rehabilitated, or incentivized that is Affordable. Project includes Affordable Owner-Occupied Workforce Housing, Multifamily Housing, Rental Housing Developments, and Single-family Dwellings.
(ll) “Regional Housing Needs Allocation" or "RHNA" means the share of the regional housing need represented by persons at all income levels within the area significantly affected by the general plan of the city or county allocated to an Applicant Local Government pursuant to GC Section 65584(b)
(mm) “Single-family” or “Single-family Dwelling” means a single unit providing complete, independent living facilities for one family, including permanent provisions for living, sleeping, eating, cooking, and sanitation, and existing as a separate interest of real property, such as a detached single-family dwelling or a townhouse. (nn) “Sponsor” means the legal entity or combination of legal entities with continuing control of a Rental Housing Development, as that term is defined in California Code of Regulations title 25, section 8301 subdivision (p). Where the borrowing entity is or will be organized as a limited partnership, Sponsor includes the general partner or general partners who have effective control over the operation of the partnership, or, if the general partner is controlled by another entity, the controlling entity. Sponsor does not include the seller of the property to be developed as the rental housing Project, unless the seller will retain control of the Project for the period necessary to ensure Project feasibility as determined by the Department.
(oo) “Standard Agreement” means the STD 213 and all exhibits thereto that is entered into by an applicant and the Department and obligates the applicant to, among other things, perform one or more Activities or cause such Activities to be performed. (pp) “Very Low Income” has the meaning set forth in HSC Section 50105, which is a maximum of 50 percent of AMI. Grantees shall utilize income limits issued by the Department at the following link: https://www.hcd.ca.gov/grants-and-funding/income limits

2.6. Eligible Activities Section 4. Eligible Activities

2.6.1. Eligible Activities are limited to one or more of the following:

2.6.1.1. The predevelopment, development, acquisition, rehabilitation, and preservation of multifamily, residential live-work, rental housing that is Affordable to Extremely low-,Very low-, Low-, or Moderate-income households, including necessary Operating subsidies.

2.6.1.2. The predevelopment, development, acquisition, rehabilitation, and preservation of Affordable rental and ownership housing, including Accessory dwelling units (ADUs), that meets Formatted: Indent: Left: 0", Hanging: 0.01", Tab stops:

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the needs of a growing workforce earning up to 120 percent of AMI, or 150 percent of AMI in highcost areas. ADUs shall be available for occupancy for a term of no less than 30 days.

2.6.1.3. Matching portions of funds placed into Local or Regional Housing Trust Funds.

2.6.1.4. Matching portions of funds available through the Low- and ModerateIncome Housing Asset Fund pursuant to subdivision (d) of HSC Section 34176.

2.6.1.5. Capitalized Reserves for Services connected to the preservation and creation of new Permanent supportive housing.

2.6.1.6. Assisting persons who are experiencing or At risk of homelessness, including, but not limited to, providing rapid rehousing, rental assistance, supportive/case management services that allow people to obtain and retain housing, operating and capital costs for navigation centers and emergency shelters, and the new construction, rehabilitation, and preservation of permanent and transitional housing.

2.6.1.7. This Activity may include subawards to Administrative Entities as defined in HSC Section 50490(a)(1-3) that were awarded CESH program or HEAP funds for rental assistance to continue assistance to these households.

2.6.1.8. Applicants must provide rapid rehousing, rental assistance, navigation centers, emergency shelter, and transitional housing activities in a manner consistent with the Housing First practices described in 25 CCR, Section 8409, subdivision (b)(1)-(6) and in compliance with WIC Section 8255(b)(8). An Applicant allocated funds for the new construction, rehabilitation, and preservation of Permanent supportive housing shall incorporate the core

2.6.1.9. components of Housing First, as provided in WIC Section 8255, subdivision (b).

2.6.1.9.1. Accessibility modifications in Lower-income Owner-occupied housing.

2.6.1.9.2. Efforts to acquire and rehabilitate foreclosed or vacant homes and apartments.

2.6.1.10. Homeownership opportunities, including, but not limited to, down payment assistance.

2.6.1.11. Fiscal incentives made by a county to a city within the county to incentivize approval of one or more Affordable housing Projects, or matching funds invested by a county in an Affordable housing development Project in a city within the county, provided that the city has made an equal or greater investment in the Project. The county fiscal incentives shall be in the form of a grant or lowinterest loan to an Affordable housing Project. Matching funds investments by both the county and the city also shall be a grant or low-interest deferred loan to the Affordable housing Project.

2.6.1.12. A Local government that receives an allocation shall use no more than

2.6.1.13. 5 percent of the allocation for costs related to the administration of the Activity(ies) for which the allocation was made. Staff and overhead costs directly related to carrying out the eligible activities described in
Section 301 are “activity costs” and not subject to the cap on “administrative costs.” A Local government may share any funds available for administrative costs with entities that are administering its allocation.

2.6.1.14. Two or more Local governments that receive PLHA allocations may expend those moneys on an eligible jointly funded project as provided for in Section 50470 (b)(2)(B)(ii)(IV). An eligible jointly funded project must be an eligible Activity pursuant to Section 301(a) and be located within the boundaries of one of the Local governments.

2.6.1.15. Entitlement Local governments may use the flow of PLHA funds to incentivize private lender loans and to guarantee payments for some or all public agency bond financings for activities Formatted: Tab stops: 0.69", Centered + 3.53",
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consistent with the uses identified in Section 301 “Eligible Activities”. This loan guarantee Activity must be identified and fully explained in the Applicant’s “Plan”.

2.6.2. NOTE: Authority cited: HSC Section 50470, subdivision (d). Reference cited:

HSC Section 50470, subdivisions (b)(2)(B)(ii)(IV), (b)(2)(D)(i-x), and (b)(3).

The City will utilize awarded PLHA funds only for activities listed under Article III, Section 301, including the following

1. Rental Activities (Up to 120% AMI or 150% AMI in High-Cost Areas) a. The payment of predevelopment, development, acquisition, rehabilitation, preservation costs, necessary operating subsidies, or any combination thereof, for Multifamily Housing
b. The payment of predevelopment, development, acquisition, rehabilitation, preservation costs, or any combination thereof, for Affordable rental housing that does not meet the definition of Multifamily Housing.
c. Matching Portions of Funds placed into Local or Regional Housing Trust Funds for rental activities. The PLHA funds and the matching funds must be placed into the account for the housing trust fund and then used to complete one or more of the eligible PLHA rental activities.
d. Matching portions of funds available through the Low- and Moderate Income Housing Asset Fund pursuant to subdivision (d) of HSC Section 34176 for rental activities. The PLHA funds and the matching funds must be placed into a housing trust account and then used to complete one or more of the eligible Activities under this paragraph (1).
e. Acquisition and rehabilitation of foreclosed or vacant properties for use as affordable rental housing.
f. Fiscal incentives made by a county to a city within the county to incentivize approval of one or more Affordable rental housing Projects, or matching funds invested by a county in an Affordable rental housing development Project in a city within the county, provided that the city has made an equal or greater investment in the Project. The county fiscal incentives shall be in the form of a grant or low-interest loan to an Affordable housing Project. Matching funds invested by both the county and the city also shall be a grant or low-interest deferred loan to the Affordable rental housing Project.

2. Affordable Owner-Occupied Workforce Housing Activities (Up to 120% AMI or 150% AMI in High-Cost Areas)
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a. The payment of predevelopment, development, acquisition, rehabilitation, or preservation costs, including any combination thereof, for Affordable Single-Family ownership housing.
b. The payment of predevelopment, development, acquisition, rehabilitation, or preservation costs, or any combination thereof, for ADUs. ADU shall be used as a primary residence by its occupant.
c. Matching portions of funds placed into Local or Regional Housing Trust Funds for ownership activities. The PLHA funds and the matching funds must be placed into the account for the housing trust fund and then used to complete one or more of the eligible PLHA homeownership activities
d. Matching portions of funds available through the Low- and Moderate Income Housing Asset Fund pursuant to subdivision (d) of HSC Section 34176 for ownership activities. The PLHA funds and the matching funds must be placed into an account and then used to complete one or more of the eligible PLHA homeownership activities.
e. Acquisition and rehabilitation of foreclosed or vacant properties to be sold as affordable ownership housing.
f. Accessibility modifications to Owner-Occupied Housing. g. Homeownership opportunities, including, but not limited to, down payment assistance.

3. Homelessness Assistance Activities (Up to 30% AMI)
a. Capitalized reserves for services connected to the preservation and creation of Permanent Supportive Housing.
b. Assisting persons who are experiencing or at risk of homelessness, including, but not limited to, providing rapid rehousing, rental assistance, supportive/case management services that allow people to obtain and retain housing including CARE Act petitioning under Chapter 1 (commencing with section 5970) of Part 8 of Division 5 of the Welfare and Institutions Code, operating and capital costs for navigation centers and emergency shelters, vouchers for temporary hotel/motel stays, and the new construction, rehabilitation, and preservation of permanent and transitional housing.
i. This Activity may include sub-awards to Administrative Entities as defined in HSC Section 50490 subdivision (a)(1-3) that were awarded HEAP/HHAP funds under Chapter 5 (commencing with section 50210), Chapter 6 (commencing with section 50216), and Chapter 6.5 (commencing with section 50230) of Division 31 of the Health and Safety Code for rental assistance to continue assistance to these households.
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ii. Applicants must provide rapid rehousing, rental assistance, navigation centers, emergency shelter, and transitional housing activities in a manner consistent with the housing first practices described in 25 CCR, Section 8409, subdivision (b)(1)-(6) and in compliance with WIC Section 8255(b)(8). iii. An Applicant allocated funds for the new construction, rehabilitation, and preservation of Permanent supportive housing shall incorporate the core components of housing first, as provided in WIC Section 8255, subdivision I. PLHA funds used for the Activities under this Section 301 subdivision (a)(1)(A), (B), and (a)(2)(A)(i) must result in the development, rehabilitation, or preservation of housing by the end of the Standard Agreement term.

II. The City shall use no more than 5 percent of the allocation for costs related to the administration of the Activity(ies) for which the allocation was made. Staff and overhead costs directly related to carrying out the eligible Activities described in Section 301 are “activity costs” and not subject to the cap on Administrative Expenses. The City may share any funds available for Administrative Expenses with entities that are administering its allocation.

III. If applicable, two or more Local Governments that receive PLHA allocations may expend that money on an eligible jointly funded project as provided for in Section 50470 (b)(2)(B)(ii)(IV).

An eligible jointly funded project must be an eligible Activity pursuant to Section 301(a) and be located within the boundaries of one of the Local Governments.

If applicable, the City may use the flow of PLHA funds to incentivize private lender loans and to guarantee payments for some or all public agency bond financings for activities consistent with the uses identified in Section 301. This loan guarantee Activity must be identified and fully explained in the Applicant’s five-year Plan.

2.7. Selecting Activities that Comply SecƟon 5. Project SelecƟon

2.7.1. While there are many aspects that must be considered in selecting activities to assist under the PLHA program, there are six (6) key steps that City of Modesto Community Development Division (CDD) staff will take into consideration during the early stages of the process of determining if PLHA funds may be used to assist a proposed activity:

2.7.1.1. Determine if the activity falls within a category of explicitly authorized activities in the PLHA Plan.

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2.7.1.1.1. If an activity does not fall within a category of explicitly authorized activities as defined by Section 2.5, the activity is considered ineligible.

2.7.1.1.2. Determine if a proposed activity appears in Section 2.5, but is not allocated in the PLHA Plan and it is determined to in the best interest of the community staff will file a plan amendment with HCD following the Citizen Participation defined in Section 3.1.3.

I. The City of Modesto determines which projects to fund under the PLHA Program by evaluating each proposed project for consistency with the City’s adopted PLHA Plan and the eligible activity categories defined in the PLHA Guidelines. The City accepts applications as funding is made available. In selecting projects, the City prioritizes those that satisfy the following criteria:
a. Address urgent community needs (if applicable)
b. Reflect comments received through the citizen participation process outlined in Section 7 of this policy
c. Support priority needs identified in the City’s Consolidated Plan Needs Assessment d. Advance the goals established in the City’s Housing Element e. Assist households at or below 60 percent AMI (if applicable) Projects must fall within an authorized PLHA activity category. If a project is eligible under PLHA Guidelines but not included in the City’s adopted PLHA Plan, and is determined to be in the community’s best interest, the City may pursue a PLHA Plan amendment through the citizen participation process outlined in Section 7 of this policy and submit the amendment to HCD for approval.

3. Grant Administration (2019 PLHA Guidelines – Section 302) SecƟon 6. Grant AdministraƟon

3.1. Responsibility for Grant Administration

3.1.1. General Program Compliance: Applicants must meet all the following threshold requirements for participation in the formula allocation:

3.1.2. Housing Element compliance: The Applicant and any delegating Local government, if applicable, must have a Housing Element that has been adopted by the Local government’s governing body by the application Formatted: Indent: Left: 0", Hanging: 0.01"
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deadline and subsequently determined to be in substantial compliance with state Housing Element Law pursuant to GC Section 65585. A Local government’s current Housing Element compliance status can be obtained by referencing HCD’s website at
http://www.hcd.ca.gov/communitydevelopment/housing-element.

3.1.2.1. APR on the Housing Element submitted to HCD:

3.1.2.1.1. The Applicant and any delegating Local government, if applicable, must submit to HCD the APR required by GC
Section 65400 for the current or prior year by the application deadline date.

3.1.2.1.2. Please be advised that HCD will not accept other reports in lieu of the APR. Housing Authority Financial Reports,
Redevelopment Reports, and other similar reports will not be accepted as meeting this requirement. If uncertain of the status of the report submittal for a Local government, please contact HCD for more information.

3.1.2.1.3. Submit, by the deadline specified in the NOFA, on a form made available by HCD, a complete application
which shall meet the following minimum
requirements:

3.1.2.2. Application requests an allocation pursuant to Section 200 in order to carry out one or more of the eligible activities described in Section 301. Except for a jointly funded project as described in Section 301(c), any activities must be carried out within the jurisdiction of the City of Modesto.

3.1.2.3. Submission of the application is authorized by the City Council.

3.1.2.4. Certification in the resolution that, if the Local government proposes allocation of funds for any Activity to another entity, the Local government’s selection process shall avoid conflicts of interest and shall be accessible to the public. For the purposes of this paragraph, “entity” means a housing developer or program operator; “entity” does not mean an administering Local government to whom a Local government delegates its PLHA formula allocation, pursuant to Section 300(d).

The City will comply with all threshold requirements described in Article III, Section 302, including the below
I. Housing Element compliance - The City of Modesto, and any delegated jurisdiction if applicable, shall maintain a Housing Element that has been adopted by the City Council and subsequently found by the California Department of Housing and Community Development (HCD) to be in substantial compliance with State Housing Element Law (Government Code #23..
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Section 65585). Compliance must be current at the time of PLHA award. The City will reference HCD’s published Housing Element Compliance Status list to verify compliance.

II. Annual Progress Report submission - The City of Modesto must submit its Annual Progress Report (APR), as required by Government Code Section 65400, for the relevant Allocation Year(s) to HCD no later than the date the City submits its PLHA application. APRs are mandatory, and no alternative reports may be submitted in place of the APR.

III. Complete NOFA application - The City shall submit a complete PLHA application by the deadline established in the applicable Notice of Funding Availability (NOFA). The application must include the following minimum components:
a. The application must request a PLHA allocation pursuant to Section 200 for one or more eligible activities identified in Section 301.
b. The application must include a City Council–approved resolution authorizing submittal of the PLHA application.
c. If the City allocates PLHA funds to an external developer or program operator, the City shall certify in its resolution that its selection process will be publicly accessible and free of conflicts of interest. The City shall comply with Health & Safety Code Section 50470 et seq., PLHA Guidelines, and all program requirements throughout the Standard Agreement term. For this provision, “entity” refers to a housing developer or program operator, not a local government receiving delegated PLHA funds.
d. The application must include a Five‑Year PLHA Plan pursuant to Article III, Section 302(c) containing the following components:
i. Description of eligible uses of PLHA funds.
ii. Prioritization strategy for investments that increase housing supply for households earning at or below 60 percent of Area Median Income (AMI).

Any program serving households at or below 60 percent AMI fulfills this requirement.
iii. Consistency analysis demonstrating alignment with the City’s adopted Housing Element programs.
iv. Evidence of public review and adoption, including City Council approval by resolution.
v. For each activity in the Plan, the City must include:

1. A description of the activity and the percentage of funding allocated.

2. Expected number of households served at each income level and comparison to unmet RHNA need by income category.

3. Major implementation steps and proposed schedule.
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4. The period and level of affordability as required in subsections (6) and (7).

IV. Requirements for Owner-Occupied Housing - The City shall certify that PLHA-funded owner-occupied acquisition, construction, or rehabilitation projects will include a recorded deed restriction with the following minimum terms:
i. Rehabilitation: 10 years
ii. Acquisition or construction: 20 years
iii. Accessory Dwelling Units (ADUs): 10 years
b. For acquisition or rehabilitation, PLHA funds may be provided as a grant or loan.

The home must remain the primary residence of an income-qualified homeowner for at least 10 years.
c. For acquisition or rehabilitation of mobile home parks, assistance shall be provided as a loan and the property must be restricted for a minimum of 35 years. d. If the home is no longer the homeowner’s primary residence (sale, transfer, lease), the City must ensure compliance with one of the following:
i. Repayment of the PLHA loan and interest to the City’s PLHA account for reuse under Section 301.
ii. Sale of the home at an affordable housing cost to an income‑qualified household.
iii. Execution of an equity‑sharing agreement, with proceeds reused consistent with PLHA requirements.
iv. For mobile or manufactured homes not on permanent foundations, assistance may be offered as a grant or forgivable loan, with income qualification and primary residence requirements for a minimum of 10 years.

V. Requirements for Affordable Rental Housing
a. If PLHA funds are used for affordable rental development, the City shall provide assistance in the form of a low‑interest, deferred loan to the project sponsor. Loan terms must be secured through a Promissory Note and Deed of Trust, with a Regulatory Agreement restricting occupancy and rents for at least 55 years consistent with City underwriting.
b. For mobile home park acquisition or rehabilitation, loans shall be low‑interest (not exceeding 3 percent), may be forgivable at term-end, and shall include a Regulatory Agreement restricting occupancy and rents for at least 35 years.

VI. Program Income Reuse Plan
a. The City shall maintain a reuse strategy describing how program income from loan repayments will be reinvested into PLHA‑eligible activities listed in Section 4 of this policy. The City shall follow procedures outlined in Attachment A. #23..
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3.1.3. Community Participation Section 7. Citizen Participation

3.1.3.1. This City will allow for adequate public comment prior to and plan or plan amendment submitted for consideration.

3.1.3.2. This will include but not limited to a 15-day notice concluded by a public hearing at council.

3.1.3.3. All Plans will be in alignment with community needs as identified in the City’s HUD Annual Action Plan community outreach process.

I. The City of Modesto is committed to ensuring transparent, accessible, and meaningful public participation in the development and administration of its PLHA funds. All public engagement and Council actions will comply with PLHA Program Guidelines Section 302.

II. The City of Modesto will ensure that the public has an adequate opportunity to review and comment on the PLHA Five‑Year Plan as required by Section 302(c)(4)(D) of the PLHA Guidelines. To meet this requirement, the City will conduct a public hearing with a 15‑day public notice and will present the PLHA Plan to the appropriate Council Committee and the City Council for adoption by resolution.

Section 8. Accounting Records
I. The City will maintain accounting records as required by Article IV, Section 400, including separate ledger accounts, PLHA expenditure documentation, Generally Accepted Accounting Principles (GAAP) compliance, and minimum retention of five years Formatted: Font: Bold
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3.2. A PLHA Plan

3.2.1. The manner in which allocated funds will be used for eligible Activities.

3.2.1.1. A description of the way the Local government will prioritize investments that increase the supply of housing for households with incomes at or below 60 percent of AMI. Programs targeted at households at or below 60 percent of AMI will be deemed to meet this requirement.

3.2.1.1.1. A description of how the Plan is consistent with the programs set forth in the Local government’s Housing Element.

3.2.1.1.2. Evidence that the Plan was authorized and adopted by resolution by the Local government and that the public had an adequate opportunity to review and comment on its content.

3.2.1.2. The following for each proposed Activity:

3.2.1.2.1. A description of each proposed Activity, pursuant to Section 301, and the percentage of funding allocated to it. The description shall specifically include the percentage of funds, if any, directed to AOWH.

3.2.1.2.2. The projected number of households to be served at each income level and a comparison to the unmet share of the RHNA at each income level.

3.2.1.2.3. A description of major steps/actions and a proposed schedule required for the implementation and completion of the Activity.

3.2.1.2.4. The period of affordability and level of affordability for each Activity. Rental Projects are required to have affordability periods of at least 55 years.

3.2.1.3. The Plan submitted in response to the NOFA shall be for a term of five years. Local governments shall obtain approval of HCD for amendments made to the Plan in each succeeding year of the term of the Plan. Reallocations of more than 10 percent of funds among Activities require amendment of the Plan, with approval granted by the governing body at a publicly noticed public meeting.

3.2.1.4. A certification that, if funds are used for the acquisition, construction, or rehabilitation of for-sale housing projects or units within for-sale housing projects, the grantee shall record a deed restriction against the property that will ensure compliance with one of the following requirements if the property is no longer the primary residence of the homeowner due to sale, transfer or lease, unless it is in conflict with the requirements of another public funding source or law:

3.2.1.5. The PLHA loan and any interest thereon shall be repaid to the Local government’s PLHA account. The Local government shall reuse the repayments consistent with Section 301; or

3.2.1.6. The initial owner and any subsequent owner shall sell the home at an Affordable housing cost to a qualified LowerIncome or Moderate-Income household; or the homeowner and the Local government shall share the equity in the unit pursuant to an equity-sharing agreement. The grantee shall reuse the proceeds of the equitysharing agreement consistent with this section.

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3.2.1.7. A certification that, if funds are used for the development of an Affordable Rental Housing Development, the Local government shall make the PLHA assistance in the form of a low-interest, deferred loan to the Sponsor of the Project. The loan shall be evidenced through a Promissory Note secured by a Deed of Trust, and a Regulatory Agreement shall restrict occupancy and rents in accordance with the Local government-approved underwriting of the Project for a term of at least 55 years.

3.2.1.8. A Program income reuse plan describing how repaid loans will be reused for eligible activities specified in Section 301.

3.2.2. NOTE: Authority cited: HSC Section 50470, subdivision (d). Reference cited: HSC Section 50470, subdivision (b)(2)(B)(ii).

4. PLHA Administration (2019 PLHA Guideline Section 500) Section 9. Deadlines and Funding Requirements

4.1. Accounting Record

4.1.1. The grantee shall establish a separate ledger account for receipts and expenditures of grant funds and maintain expenditure details in accordance with the approved work plan, budget, and schedule.

4.1.2. The grantee shall maintain documentation of its financial records for expenditures incurred during the course of the PLHA Activity in accordance with generally accepted accounting principles. Such records shall be kept for at least five years after the close-out report is submitted to HCD.

4.1.3. NOTE: Authority cited: HSC Section 50470, subdivision (d).

Reference cited: HSC Section 50470, subdivision (b)(2)(B)(ii)(III) and subdivision (b)(2)(B)(IV) and subdivision (b)(3).

4.2. Deadlines and Funding Requirements

4.2.1. Applicants will be required to enter into a state Standard Agreement (Standard Agreement) that will set forth conditions for funding and milestones that are required to be met.

4.2.2. After the Standard Agreement and attachments have been finalized, the Local government will follow provided instructions for signing all required documents. The Local government must submit all supporting materials and a signed Standard Agreement within the timeline provided in the instructions or risk forfeiting the grant award.

4.2.3. Except for predevelopment expenses for construction projects funded by PLHA and the costs to develop and prepare the PLHA application, no costs incurred more than one year prior to commitment by the Local government may be paid from PLHA funds. Reimbursement of expenses to prepare the PLHA
application is subject to the cap on administrative fees.

4.2.4. Grant funds shall not be disbursed until:

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4.2.4.1. HCD authorizes loan closing, in the case of development projects; or

4.2.4.2. all general and special conditions have been complied with, in the case of other Activities.

4.2.4.3. If funds are used for the development of an Affordable Rental Housing Development, the Local government shall
make the PLHA assistance in the form of a low-interest, deferred loan to the Sponsor of the project. The loan shall be evidenced through a Promissory Note secured by a Deed of Trust, and a Regulatory Agreement shall restrict
occupancy and rents in accordance with the
Departmentapproved underwriting of the project for at least 55 years.

4.2.5. NOTE: Authority cited: HSC Section 50470, subdivision (d).

Reference cited: HSC Section 50470, subdivision
(b)(2)(B)(ii)(VI).

4.3. Reuse of Program Income

4.3.1. Program income means gross income received by the recipient or a subrecipient directly generated from the use of PLHA funds,

4.3.2. Substantially all program income shall be disbursed for eligible activities as defined by Section 2.5 – Eligible Activities and in compliance with the currently approved PLHA Plan filed with HCD.

4.3.3. The City is committed to following the Reuse Plan adopted by this policy and and defined in Attachment A.

4.4. Records to be maintained

4.4.1. Section 2019 PLHA Guidelines Section 501. Audits/Monitoring of Project Files

4.4.1.1. Grantee shall maintain PLHA files which, at a
minimum, should include the following information
and reports:

4.4.1.1.1. Project/Activity description

4.4.1.1.2. Land/site Information

4.4.1.1.3. Planning & zoning history (as appropriate)

4.4.1.1.4. Records of public hearings and public comments

4.4.1.1.5. Relocation needs (as appropriate)

4.4.1.1.6. Contracts, loan and grant agreements, Standard Agreement

4.4.1.1.7. Environmental records & reports/findings (as appropriate)

4.4.1.1.8. Design/engineering reports & plans (as
appropriate)

4.4.1.1.9. Description of targeted beneficiaries, services to #23..
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be provided, household incomes, special needs

4.4.1.1.10. PLHA Activity costs, invoices, purchase orders, sources and uses of funds for PLHA Activities, terms
& conditions of financings, draws and all supporting
documentation, change orders (as appropriate)

4.4.1.1.11. Activity schedule and amendments 12) History of Plan amendments

4.4.1.1.12. 13)Procurement policy used for PLHA
Activity(ies)

4.4.1.1.13. 4.4.1.1.14. The grantee shall maintain such records for possible audit for a minimum of three years after
the close-out report is submitted, unless a longer
period of records retention is stipulated in the
Standard Agreement.

4.4.1.1.15. 4.4.1.1.16. The grantee shall be responsible for monitoring Rental Housing Developments that received PLHA
funds for the term of the loan, including, but not
limited to, the Projects’ compliance with the
occupancy and rent requirements set forth in the
Regulatory Agreement, compliance with reserve
requirements, and the compliance with habitability
standards.

4.4.1.1.17. 4.4.1.1.18. The grantee shall be responsible for monitoring AOWH loans to assure that the homes remain Owner-occupied.

4.4.1.1.19. If requested by HCD, the grantee shall obtain a report from a qualified, licensed third party that
certifies to the amounts of disbursement and
identifies the specific Activities for which the
disbursements were made. Such a report is
permitted to be a component of the A-133 audit.

4.4.2. NOTE: Authority cited: HSC Section 50470, subdivision (d).

Reference cited: HSC Section 50470, subdivision (b)(2)(B)(ii)(IV) and subdivision (b)(3).

I. The City of Modesto must submit a PLHA Plan to the Department, and the Plan must receive written approval from the Department before an award can be issued. The City may amend its Plan if the Department provides prior written approval. Any amendment that reallocates more than 10 percent of PLHA funds to Activities under Section 301 requires prior written approval from the Department and approval by the City Council at a public meeting. #23..
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II. The City must submit its initial PLHA application within 48 months of the budget appropriation for the Allocation Year. Any funds not applied for by the deadline will revert to the Housing Rehabilitation Loan Fund for the Multifamily Housing Program.

III. After finalizing the Standard Agreement and attachments, the City will follow Department instructions for signing and submitting all required documents within the provided timeline.

Once the Standard Agreement is executed, the City must submit project-specific commitment documents to the Department for prior written approval. After approval, the City may request 100% of allocated funds for eligible expenditures, subject to the Standard Agreement.

4.5. Reporting Requirements Section 10. Reporting & Monitoring

4.5.1. The Department shall provide grantees with reporting formats and instructions.

4.5.2. Annual Reports are required from all grantees pursuant to HSC Section 50470(b)(2)(B)(ii)(III) each year by July 31 for the term of the Standard Agreement. The Annual Report shall document the uses and expenditures of all awarded allocations and outcomes achieved.

This report must be signed by both the Local government’s PLHA administrator and the Local government’s City
Manager (or his/her designee), or Chief Executive Officer (or his/her designee) or Chief Financial Officer (or his/her designee). The Annual Report must describe any proposed amendment(s) to the approved Activity and schedule.

4.5.3. Upon expenditure of all allocated funds and completion of the Activities funded by PLHA, the grantee shall submit a close-out report, which will be part of the Annual Report.

4.5.4. The Department may request additional information as needed to meet other applicable reporting or audit requirements.

4.5.5. NOTE: Authority cited: HSC Section 50470, subdivision (d). Reference cited:

HSC Section
50470, subdivision
(b)(2)(B)(ii)(III) and
subdivision
(b)(2)(B)(ii)(IV).

The City will comply with Article IV, Section 401 requirements, including annual, close-out reporting, monitoring of rental and AOWH projects, and responding to audit requests.

I. Annual Reports: Submitted each year by July 31 pursuant to HSC Section 50470(b)(2)(B)(ii)(III), covering the prior July 1–June 30 period. Reports will document uses of funds, expenditures, activity outcomes, and any proposed amendments to approved activities or schedules. Annual Reports will be signed by the City’s PLHA Administrator and the Authorized Representative designated by Council resolution.

Formatted: Font: Bold
Formatted: Left, Indent: Left: 0", First line: 0", Right:
-0.01", Space After: 1.3 pt, Line spacing: Multiple 1.08 li, Tab stops: 0.69", Centered + 6.68", Right
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spacing: Multiple 1.08 li
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Centered + Not at 1.61" + 2.2" + 2.86" + 3.66" +

4.76" + 5.61"
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II. Budget Modifications: The City may submit revised budgets to HCD when adjustments occur in the total budgeted or expended amount for any eligible activity. If modifications are needed outside of regularly scheduled reporting, staff will coordinate directly with HCD.

III. Close-Out Reporting: Following full expenditure of funds and completion of PLHA-funded activities, the City will submit a close-out report (as part of the Annual Report), documenting activity outcomes such as units created and individuals served.

IV. Recordkeeping Requirements - The City will maintain PLHA records and files at a level sufficient to demonstrate compliance with all PLHA program obligations as required by Section 401 of the PLHA Guidelines. Records will be retained for a minimum of five years following submission of the close‑out report, or longer if required by the Standard Agreement.

V. Monitoring Requirements - The City is responsible for long‑term monitoring of PLHA‑funded activities, including the following if applicable:
a. Rental Housing Developments: Ensuring compliance with occupancy and rent restrictions, reserve requirements, and habitability standards for the duration of the regulatory period.
b. Assistance to Owner‑Occupied Housing (AOWH): Verifying that homes assisted with PLHA funds remain owner‑occupied.

If requested by HCD, the City will obtain a report from a qualified, licensed third party certifying disbursement amounts and identifying funded activities. Such reports may be incorporated into the City’s annual single audit (A‑133), when applicable. The City acknowledges that failure to comply with PLHA reporting or monitoring requirements may result in repayment of funds or other remedies available to HCD.

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Attachment A
Reuse Account Plan
The City of Modesto (“City”) commits to
maintaining policies and procedures that segregate
Permanent Local Housing Allocation (PLHA) for future reuse in accordance with the following policies:

1. All repayments of PLHA loan principle and interest shall be received by City and deposited into separate reuse account maintained by the City’s Finance Department. The City provides a detailed tracking system to document PLHA loans. Including borrower name and address, loan/reference number, grant year and principal and interest.

2. The reuse account shall be an interest-bearing account into which all earned interest shall be deposited. Interest earned shall be considered reuse funds and will be used in the same manner and with the same restrictions as principal and interest payments.

3. All funds deposited into the reuse account shall be the property of the City.

4. All PLHA reuse funds shall be expended in accordance with PLHA regulations. This includes, but is not limited to, income levels, homebuyer education requirements, and coordinated entry requirements.

5. Reuse funds may be used for PLHA eligible in the following categories, but must be in alignment with the State approved PLHA Plan.
a. The predevelopment, development, acquisition, rehabilitation, and preservation of multifamily, residential live-work, rental housing that is affordable to extremely low- , very low-, low-, or moderate-income households, including necessary operating subsidies.
b. The predevelopment, development, acquisition, rehabilitation, and preservation of Affordable rental and ownership housing, including Accessory Dwelling Units (ADUs), that meets the needs of a growing workforce earning up to 120-percent of AMI, or 150-percent of AMI in high-cost areas. ADUs shall be available for occupancy for a term of no less than 30-days.
c. Assisting persons who are experiencing or at risk of homelessness, including, but not limited to, providing rapid rehousing, rental assistance, supportive/case management services that allow people to obtain and retain housing, operating and capital costs for navigation centers and emergency shelters, and the new construction, rehabilitation, and preservation of permanent and transitional housing. d. Accessibility modifications in lower-income owner-occupied housing. e. Efforts to acquire and rehabilitate foreclosed or vacant homes and apartments. f. Homeownership opportunities, including, but not limited to, down payment assistance.
g. Up to five percent (5%) for administration.

6. Reuse funds may be used within the boundaries of the City of Modesto.

1. The City shall allow HCD full access to the reuse account records for the purpose of determining compliance with PLHA regulations.
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Attachment A – Program Income Reuse Account Plan
The City of Modesto will manage and reuse program income generated from PLHA‑assisted activities in accordance with the requirements of the PLHA Guidelines and the City’s adopted PLHA Plan. Program income includes all repayments of PLHA loan principal and interest.

I. Repayments of PLHA loan principal and interest will be deposited into the City’s bank account and separately accounted for within the City’s financial system. The City will track program income using its internal loan‑tracking system, including borrower information, loan number, grant year, and amounts repaid. All funds deposited into the reuse account will remain the property of the City. Department responsibilities are as follows:
a. Community and Economic Development Department (CED): the loan database/subledger, including borrower information, loan terms, principal and interest activity, eligibility, and program reporting.
b. Finance Department: Maintains General Ledger, reconciliation, accounting for PLHA principal, interest, and related financial records.

II. The reuse account will be an interest‑bearing account. Any interest earned will be retained in the reuse account and treated as program income subject to the same reuse requirements.

III. Program income will be reused solely for eligible PLHA activities as defined in Section 301 of the PLHA Guidelines. Reuse funds must correspond to activities approved in the City’s PLHA Plan, unless a PLHA Plan Amendment is pursued.

IV. All PLHA reuse funds shall be expended in accordance with PLHA regulations. Program income shall be reused for eligible activities only within the boundaries of the City of Modesto.

V. The City will maintain all reuse account records and supporting documentation in accordance with PLHA requirements. The California Department of Housing and Community Development (HCD) will be provided access to reuse records upon request to determine compliance with PLHA regulations.

7. Formatted: No bullets or numbering
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CITY OF MODESTO

COUNCIL AGENDA REPORT
DATE OF MEETING:

October 13, 2026
Date: September 16, 2026
TO: Mayor and City Council
THROUGH: Joseph P. Lopez, City Manager
FROM: Jessica Hill, Director of Community and Economic Development SUBJECT: Resolution Declaring Intent to Reimburse Expenditures from Tax-Exempt Bond Proceeds (Community Facilities District No. 2024-1) CONTACT: Edgar Garcia, Community Development Manager
[email protected], 209-577-5211
DESCRIPTION:

Consider declaring intent to reimburse certain expenditures from the proceeds to taxexempt obligations expected to be issued to finance certain public facilities for Community Facilities District No. 2024-1 (Tivoli), as required by the United States Department of Treasury Regulations Section 1.150.2. (Funding Source: Community Facilities District No. 2024-1 Improvement Area No. 1 Bond Proceeds) STRATEGIC PLAN ELEMENT:

The recommended action supports the City Council’s 2025-2026 Strategic Plan, Goal D:

Provide Safe, Efficient, and Reliable Infrastructure through proactive community investment, maintenance, and sustainability efforts.

BACKGROUND:

In 1982, the Mello-Roos Community Facilities Act of 1982 (Act)1 was adopted by the State of California as a method for financing infrastructure improvements and services associated with new developments. The Act allows infrastructure improvements and services to be funded through a special tax paid by property owners.

The Tivoli Specific Plan, approved by City Council in 2008 by Ordinance No. 3479-C.S., is a 454-acre area located in an unincorporated area of Stanislaus County. The project is located within the City of Modesto’s Sphere of Influence. The site is bounded by the 1 Mello- Roos Community Facilities Act of 1982
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City Council, October 13, 2026
Tivoli Reimbursement from the Proceeds to Tax-Exempt Obligations District

planned Claratina Avenue on the north, Oakdale Road on the west, Sylvan Avenue on the south, and Roselle Avenue on the east. Tivoli Specific Plan provides for uses including commercial, school, parks, and residential development of a variety of densities as outlined by the land use diagram and development standards of the Specific Plan.

On August 13, 2024, by Resolution No. 2024-279, the Council approved the Resolution of Intention to form City of Modesto Community Facilities District (CFD) No. 2024-1 (Tivoli) to establish improvement area No. 1, designate a future annexation area and authorize the levy of a special tax within said Community Facilities District. The City Council also approved a Resolution to Incur Debt by Resolution No. 2024-280. On September 24, 2024, by Resolution No. 2024-354, Council approved the formation of City of Modesto Community Facilities District No. 2024-1 (Tivoli) (“CFD No. 2024-1”) pursuant to the Mello-Roos Community Facilities Act of 1982 and by Resolution No. 2024-355 Council declared the necessity to incur bonded indebtedness.

Community Facilities District No. 2024-1 and Improvement Area No. 1 therein are located in the Tivoli Specific Plan area. The proposed bonds will finance infrastructure improvements. Repayment of the bonds will be secured by a pledge of the Annual Facilities Special Tax levied on properties in Community Facilities District No. 2024-1 Improvement Area No. 1.

DISCUSSION:

The City anticipates incurring certain capital costs related to Community Facilities District No. 2024-1 (Tivoli) before bond issuance is finalized. These costs include, but are not limited, to the approved Agreement for the Conveyance and Purchase of Rightof-Way from the Sylvan Unified School District as well as other eligible capital expenditures anticipated in connection with the Tivoli infrastructure program prior to the bond sale.

The right-of-way purchase will accommodate completion of the roundabout at future Aria Way and Selchi Street, extension of Aria Way through Sylvan Avenue, and associated roadway improvements needed to serve the overall Tivoli development area.

These roadway connections, including the future Aria Way and Bridgewood alignments, are necessary to support traffic circulation and overall implementation of the planned neighborhood infrastructure network.

City Council approved the Sylvan Unified School District (SUSD) right-of-way acquisition on August 11, 2025, and the deposit for the transaction was made on August 20, 2025. Under Treasury Regulation Section 1.150-2, the City and the District have 60 days from the date of such expenditure to adopt a reimbursement resolution to maintain eligibility for reimbursement of that expenditure from future tax-exempt bond proceeds.

Adopting this resolution on October 13, 2026 falls within that window and would capture eligible hard costs incurred, including the August 20 deposit and any subsequent payment related to this SUSD right-of-way transaction.
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City Council, October 13, 2026
Tivoli Reimbursement from the Proceeds to Tax-Exempt Obligations District

The adoption of the resolution declares the City’s and District’s reasonable official intent to reimburse for Reimbursable Expenditures from proceeds of tax-exempt obligations in a maximum principal amount of $23 million. This estimated amount of $23 million is based on the confirmed infrastructure costs already established for the Snow and Arcadia Phase 1 developments, which are part of Improvement Area 1 of CFD 2024-1.

Those costs were scaled up proportionally to account for the total number of homes expected across all Improvement Area No. 1. The result represents current best estimate of the total bond financing needed for the Tivoli infrastructure program, including all qualifying public improvements and the associated costs of issuing the bonds.

The City and District are taking a proactive approach to establishing its reimbursement allocation in accordance with Internal Revenue Code Section 1.150‑2 to ensure full compliance with federal tax regulations governing the use of tax‑exempt bond proceeds.

By formally documenting its intent to reimburse eligible project expenditures incurred prior to bond issuance, the City and District preserves maximum financial flexibility, safeguards the tax‑exempt status of future debt, and maintains transparency in its capital financing practices. This proactive action would support prudent fiscal management.

This resolution does not commit the City or District to issue bonds. This resolution is tax compliance measure intended to preserve the ability to reimburse eligible project costs from future Tivoli CFD bond proceeds and does not obligate the City or District to move forward with any financing action or establish any debt. Without adopting this resolution, the ability to recover eligible costs from tax-exempt bond proceeds could be lost, potentially impacting funding for authorized projects with Tivoli CFD No. 2024-1 Improvement Area No. 1.

FISCAL IMPACT:

Adoption of this resolution has no direct fiscal impact on the City. This resolution does not authorize any new expenditures, appropriations, or debt. This resolution is procedural action that is required under federal tax law to preserve the ability to be reimbursed from future tax-exempt bond proceeds for capital costs already being incurred in connection with the Tivoli CFD No. 2024-1, including Sylvan Unified School District right-of-way acquisition.

Costs related to the SUSD right-of-way acquisition, have already been approved by Resolution No. 2026-262, approved on August 11, 2026. The approval of this resolution does not modify or increase those costs. When the District issues bonds and reimburses itself for expenditures, that reimbursement would come from bond proceeds at the time of bond issuance.
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City Council, October 13, 2026
Tivoli Reimbursement from the Proceeds to Tax-Exempt Obligations District

Staff anticipate bringing forward a separate action to City Council, acting as the legislative body of the District for the issuance of Tivoli CFD No. 2024-1 Improvement Area No. 1 bonds at a future Council date.

COMMITTEE RECOMMENDATION:

Due to the urgent nature of the action needed, this item was taken directly to Council.

CEQA/NEPA REQUIREMENTS:

This item does not constitute a “project” within the meaning of California Environmental Quality Act (CEQA) Guidelines Section 15378 and requires no environmental review.

RECOMMENDED COUNCIL ACTION:

Staff Recommendations:

Resolution declaring intent to reimburse certain expenditures from the proceeds of taxexempt obligations expected to be issued to finance certain public facilities for Community Facilities District No. 2024-1 (Tivoli), as required by the United States Department of Treasury Regulations Section 1.150.2.

Approved by:

Jessica Hill, Director of Community
and Economic Development
Joseph P. Lopez, City Manager
Attachments:

1. Resolution
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10/13/2026/CED/EGarcia/Item X 1 2026-XX

MODESTO CITY COUNCIL
RESOLUTION NO. 2026-XX

RESOLUTION DECLARING INTENT TO REIMBURSE CERTAIN

EXPENDITURES FROM THE PROCEEDS OF TAX-EXEMPT OBLIGATIONS

EXPECTED TO BE ISSUED TO FINANCE CERTAIN PUBLIC FACILITIES FOR COMMUNITY FACILITIES DISTRICT NO. 2024-1 (TIVOLI), AS REQUIRED BY

THE UNITED STATES DEPARTMENT OF TREASURY REGULATIONS
SECTION 1.150.2
WHEREAS, the City Council (the “Council”) of the City of Modesto (the “City”) has conducted proceedings under and pursuant to the Mello-Roos Community Facilities Act of 1982, as amended (the “Act”), to form the City of Modesto Community Facilities District No. 2024-1 (Tivoli) (the “District”), and an initial improvement area therein designated Improvement Area No. 1, to authorize the levy of special taxes upon the land within the District, and to issue bonds secured by said special taxes, the proceeds of which are to be used to finance the purchase, construction, expansion or rehabilitation of certain real and other tangible property with an estimated useful life of five years or longer, including public infrastructure facilities and other government facilities (including related capital fees), which are necessary to meet increased demands placed upon the City as a result of development or rehabilitation occurring within the District (the “Facilities”); and
WHEREAS, the Council, acting as the legislative body of the District, expects to incur the tax-exempt bonds or other financing obligations in a principal amount of not to exceed $23 Million (collectively, the “Obligations”), to finance a portion of the costs associated with the acquisition, design, construction and installation of the Facilities; and
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10/13/2026/CED/EGarcia/Item X 2 2026-XX
WHEREAS, the City and the District expect that certain expenditures relating to the Facilities will be incurred and paid from other sources of money available to the City prior to the issuance of the Obligations (the “Reimbursable Expenditures”); and
WHEREAS, the City and the District reasonably expect that a portion of the proceeds of the Obligations will be used to reimburse all or a portion of the Reimbursable Expenditures; and
WHEREAS, Section 1.150-2 of the Treasury Regulations (the “Treasury Regulations”) promulgated under the Internal Revenue Code of 1986, as amended, requires that for an allocation of proceeds of the Obligations to a capital expenditure paid prior to the issuance of the Obligations to be respected by the Internal Revenue Service, the City and the District generally must no later than sixty (60) days following such payment have declared their reasonable official intent to reimburse itself for such payment out of proceeds of the Obligations; and
WHEREAS, the City and the District desire to facilitate the allocation of proceeds of the Obligations to the reimbursement for payment of the Reimbursable Expenditures.

NOW, THEREFORE, BE IT RESOLVED that the Council of the City of Modesto, acting as the legislative body of the City of Modesto Community Facilities District No. 2024-1 (Tivoli), hereby finds and determines as follows:

Section 1. Intention to Reimburse. The City and the District hereby declare their reasonable official intention to reimburse the applicable #24..
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10/13/2026/CED/EGarcia/Item X 3 2026-XX
Reimbursable Expenditures with respect to the Facilities from proceeds of Obligations that may hereafter be issued by the District or on behalf of the City.

The maximum principal amount of Obligations expected to be issued for the Facilities is $23 Million. All of the Reimbursable Expenditures covered by this Resolution were or are to be made not earlier than sixty (60) days prior to the adoption hereof, other than certain de minimis amounts and preliminary expenditures as described in Section 1.150-2(f)(2) of the Treasury Regulations that are exempt from the sixty-day requirement pursuant to Section 1.150-2 of the Treasury Regulations. The non-exempt Reimbursable Expenditures covered by this Resolution are eligible for reimbursement provided the reimbursement occurs not later than eighteen (18) months after the later of the date the original expenditure is made or the date the property is placed in service; but in no event more than three (3) years after the original expenditure is made.

This Resolution is adopted for purposes of establishing compliance with the requirements of Section 1.150-2 of the Treasury Regulations. This Resolution does not obligate either the City or the District to make any expenditure or proceed with the Facilities or obligate the District to cause the issuance of the Obligations until and unless all other necessary actions and approvals are taken or received in accordance with all applicable laws.

Section 2. Ratification of Prior Actions. All actions heretofore taken by the officers, or their respective designees, and the employees and agents of the City, on behalf of the District, in connection with the financing of the Facilities are hereby ratified and confirmed. The officers and their designees, the employees #24..
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10/13/2026/CED/EGarcia/Item X 4 2026-XX
and agents of the City, acting on behalf of the District, are hereby authorized to take any and all actions in connection with the financing of the Facilities and as may be necessary and consistent with the purposes of this resolution.

Section 3. Effective Date. This Resolution shall take effect upon its adoption.

The foregoing resolution was introduced at a regular meeting of the Council of the City of Modesto, acting as the legislative body of the City of Modesto Community Facilities District No. 2024-1 (Tivoli), held on the 13th day of October, 2026, by Councilmember _________, who moved its adoption, which motion being duly seconded by Councilmember _________, was upon roll call carried and the resolution adopted by the following vote:

AYES: Councilmembers:

NOES: Councilmembers:

ABSENT: Councilmembers:

ATTEST:

DIANE NAYARES-PEREZ,
CMC,
City Clerk
(SEAL)
APPROVED AS TO FORM:

By:

JOSE M. SANCHEZ, City Attorney
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CITY OF MODESTO

COUNCIL AGENDA REPORT
DATE OF MEETING:

October 13, 2026
Date: October 2, 2026
TO: Mayor and City Council
THROUGH: Joseph P. Lopez, City Manager
FROM: Brandon Gillespie, Chief of Police
Jose M. Sanchez, City Attorney
SUBJECT: Bicycle, E-Conveyance, and Electric Bicycle Ordinance Amendments CONTACT: Brandon Gillespie, Chief of Police, [email protected], 209-572-9501
DESCRIPTION:

Consider an Ordinance Repealing and Replacing Title 3, “Public Safety”, Chapter 3, “Bicycles,” of the Modesto Municipal Code establishing comprehensive operating requirements for bicycles, e-conveyances, electric bicycles, and off-highway electric motorcycles. (Funding Source: Not Applicable)
STRATEGIC PLAN ELEMENT:

This item is related to the 2025-2026 Strategic Plan goal of improving community safety and quality of life through a combination of prevention and intervention efforts that address safety and its underlying issues.

BACKGROUND:

Over the past several years, Modesto and communities across the country have experienced organized and loosely organized group bicycle activity commonly referred to as bicycle takeovers. Locally, Modesto Police Department (MPD) has encountered groups ranging from three to five riders to more than 100. During some of these events, riders travel recklessly in traffic lanes, disregard traffic controls, perform dangerous stunts, intentionally impede traffic, swerve toward moving or parked vehicles, pedestrians, and fixed objects, and in some cases make contact or come within inches of people or property. Participants frequently record and post the conduct to social media, which can encourage repetition and escalation.
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City Council, October 13, 2026
Bicycle, E-Conveyance, and Electric Bicycle Ordinance Amendments

These incidents create significant safety concerns for riders, motorists, pedestrians, and officers, and can require substantial police resources to manage. MPD has consistently used education and enforcement as an effort to change behavior. Existing state and local laws address many individual violations, but current enforcement tools have had limited deterrent value for coordinated takeover activity and repeated high-risk conduct.

Even where a bicycle can be impounded for up to 30 days, there has been a need for clearer local operating standards and more meaningful, graduated consequences for repeat violations.

At the same time, electric bicycles and other electrically powered conveyances are becoming increasingly common and are capable of traveling at significant speeds.

These devices are also being used more frequently in City parks and on recreational trails that are shared with pedestrians, families, bicyclists, and other users. MPD has seen collisions and other incidents involving speeding e-bikes, including citizens who have been injured after being struck. As these devices continue to increase in popularity, staff believes the City should establish clearer and more comprehensive rules for where and how they may be safely operated. Other jurisdictions throughout California are experiencing similar challenges and are adopting ordinances to address these public safety concerns accordingly.

DISCUSSION:

The proposed ordinance omits outdated licensing requirements, expands, and reorganizes the City's bicycle regulations into a comprehensive chapter covering bicycles, e-conveyances, electric bicycles, and off-highway electric motorcycles. The ordinance is intended to address specific dangerous behaviors while preserving lawful group riding, ordinary transportation, and recreational use.

Key provisions of the proposed ordinance include:
• Updated definitions for bicycles, e-conveyances, electric bicycles, electrically motorized skateboards, off-highway electric motorcycles, and dangerous stunt or trick maneuvers.
• Prohibitions on dangerous stunt or trick maneuvers and swerving toward people, vehicles, fixed objects, structures, or other property. • A general 15 mph maximum speed for bicycles, e-conveyances, and electric bicycles in City parks or on City trails unless otherwise posted, together with a 5 mph passing speed and a requirement to yield when approaching or passing pedestrians and other trail users.
• Restrictions on unsafe passenger carrying, riding within parade routes when not part of the parade, and operating within City property that has been closed or restricted for a special or permitted event when reasonable notice is provided. • Sidewalk and park/trail operating restrictions for e-conveyances and electric bicycles, a prohibition on off-highway electric motorcycles in City parks and on recreational trails, and authority for the Director of Parks, Recreation and #25..
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City Council, October 13, 2026
Bicycle, E-Conveyance, and Electric Bicycle Ordinance Amendments

Neighborhoods to restrict specified devices in posted areas when reasonably necessary for public safety or safe recreational use.
• A specific street takeover provision prohibiting a coordinated activity involving two or more riders that interferes with, impedes, or obstructs normal vehicular or pedestrian traffic, creates a public safety hazard, or causes a public nuisance. The ordinance expressly excludes lawful group travel that complies with applicable traffic laws.
• An impound process that allows MPD to impound a bicycle or covered electric device when necessary to terminate a violation, prevent its immediate continuation, protect public safety, or preserve evidence. Continued retention may not exceed 30 days and is subject to written notice and an administrative appeal process. • Parental responsibility provisions when a parent or legal guardian assists, authorizes, or permits a minor to violate the chapter, along with graduated administrative penalties of $500 for a first violation, $2,500 for a second violation, and $5,000 for a third or subsequent violation. A separate $2,000 administrative penalty is provided for a parental responsibility violation. • Authority for the Chief of Police or designee to require a minor violator to attend an operator education course addressing safe operation and applicable law. • An exemption for organized events, parades, races, charitable rides, or other activities conducted pursuant to a valid permit or written authorization from the City or another governmental agency with jurisdiction.

The proposed framework is behavior-based. It does not prohibit people from riding together or participating in lawful bicycle activities. Instead, it provides officers with clearer tools to address dangerous conduct, repeated violations, and coordinated activity that creates a safety hazard or substantially disrupts normal use of streets, sidewalks, parks, and trails.

FISCAL IMPACT:

Adoption of the proposed ordinance does not require a new appropriation. Any penalties or impound fees collected would be incidental to the public-safety purpose of the ordinance and administrative costs for impoundment and are not intended as a revenue source. Any implementation costs will be incurred within the existing General Fund operating budget.

COMMITTEE RECOMMENDATION:

This item was presented to the Safety and Communities Committee meeting on September 21, 2026, and the Committee recommended forwarding the item to Council for approval.

CEQA/NEPA REQUIREMENTS:

This item does not constitute a “project” within the meaning of California Environmental Quality Act (CEQA) Guidelines Section 15378 and requires no environmental review. #25..
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City Council, October 13, 2026
Bicycle, E-Conveyance, and Electric Bicycle Ordinance Amendments

RECOMMENDED COUNCIL ACTION:

Staff Recommendations:

Motion introducing and waiving the first reading of an Ordinance Repealing and Replacing Chapter 3, “Bicycles” of Title 3, “Public Safety” of the Modesto Municipal code to impose regulations, penalties, and impound authority for bicycles, econveyances, electric bicycles, and off-highway electric motorcycles.

Approved by:

Brandon Gillespie, Chief of Police
Jose M. Sanchez, City Attorney
Joseph P. Lopez, City Manager
Attachments:

1. Ordinance
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ORDINANCE NO. _____
AN ORDINANCE REPEALING AND REPLACING CHAPTER 3, “BICYCLES” OF TITLE 3, “PUBLIC SAFETY” OF THE MODESTO MUNICIPAL CODE TO IMPOSE REGULATIONS, PENALTIES, AND IMPOUND AUTHORITY FOR BICYCLES, ECONVEYANCES, ELECTRIC BICYCLES, AND OFF-HIGHWAY ELECTRIC

MOTORCYCLES
WHEREAS, pursuant to Article XI, Section 5 and Section 7 of the California Constitution, a charter city has broad authority to govern municipal affairs and to make and enforce local, police, sanitary, and other ordinances and regulations not in conflict with general laws; and
WHEREAS, the protection of public health, safety and welfare, the regulation of the use of public streets, rights-of-way, and public places, the preservation of public order, and the prevention and abatement of nuisances are within the City of Modesto’s police powers; and
WHEREAS, Vehicle Code Section 21100, subsection (a), authorizes a City to adopt an ordinance regulating or prohibiting a procession or assemblage on the highways; and
WHEREAS, Vehicle Code Section 21206 authorizes a City to adopt an ordinance regulating the operation of bicycles on pedestrian or bicycle facilities; and WHEREAS, Government Code Section 38771 authorizes cities to declare by ordinance what constitutes a nuisance, and Civil Code Section 3479 provides that anything which unlawfully obstructs the free passage or use, in the customary manner, of any public park, square, street, or highway, is a nuisance; and WHEREAS, local jurisdictions throughout California, including the City of Modesto, are experiencing a surge of organized street takeover events, which involve #25..
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groups of bicyclists intentionally occupying, impeding, and obstructing public streets and roadways in a manner that interferes with the safe and lawful movement of traffic and the use of public rights-of-way; and
WHEREAS, the City Council finds that these street takeovers cause substantial public safety hazards for bicyclists, pedestrians, and motorists by obstructing travel lanes and intersections, restricting visibility, and creating conditions likely to result in collisions, injuries, or property damage; and
WHEREAS, the City Council finds that these street takeovers substantially interfere with the public's right to safely and freely use public streets and rights-of-way, and therefore constitute a public nuisance subject to regulation under the City's police powers; and
WHEREAS, in addition to street takeovers, like other jurisdictions throughout California, the City of Modesto is experiencing increasing use of electric bicycles, motorized scooters, and other electrically powered personal mobility devices, in a manner or in locations where pedestrians and other users are present that create significant safety hazards; and
WHEREAS, jurisdictions throughout California are adopting similar local ordinances to address these increasing safety concerns; and WHEREAS, the Modesto Police Department (MPD) and City staff have received ongoing complaints regarding stunt riding and unsafe operation of traditional bicycles, electric bicycles, and e-conveyances on public sidewalks, trails, parks, and other public facilities within the City; and
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WHEREAS, operating these devices in this manner, or in locations that interfere with safe pedestrian use, can create significant safety hazards and increase the risk of collisions, injuries, and property damage; and
WHEREAS, the City Council finds that the regulation of the operation of bicycles, electric bicycles, and e-conveyances on City streets, sidewalks, bicycle facilities, parks, trails, and other public property is necessary to protect the public health, safety, and welfare and to ensure the safe and orderly use of public facilities; and WHEREAS, MPD has consistently used education and current enforcement authority as an effort to change behavior, but current enforcement tools have had limited deterrent value for this activity and repeated high-risk conduct; and WHEREAS, these circumstances have created a need for clearer local operating standards and more meaningful, graduated consequences for repeat violations; and WHEREAS, the City Council finds that adoption of this ordinance is necessary to protect the public health, safety, and welfare, preserve the safe and orderly use of public streets and rights-of-way, and to prevent public nuisance activities occurring within the City; and
NOW, THEREFORE, the City Council of the City of Modesto does ordain as follows:

SECTION 1. REPEAL AND REPLACEMENT
Chapter 3 “Bicycles” of Title 3 “Public Safety” of the Modesto Municipal Code, is hereby repealed and replaced with the following:

Chapter 3 BICYCLES, E-CONVEYANCES, ELECTRIC BICYCLES, AND OFF

HIGHWAY ELECTRIC MOTORCYCLES
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3-3.01 Definitions.
"Bicycle" has the same meaning as defined in California Vehicle Code section 231, as it may be amended from time to time.
“E-conveyance” means any electric bicycle or e-bike, electric scooter, electronically motorized skateboard, or other device that is designed to convey one or more people and is capable of being powered by human propulsion or electronic motor propulsion.
“Electric bicycle” or “e-bike” has the same meaning as defined in California Vehicle Code section 312.5, as it may be amended from time to time. “Electrically motorized skateboard” has the same meaning as defined in California Vehicle Code section 313.5, as it may be amended from time to time. “Off Highway Electric Motorcycle” has the same meaning as defined in California Vehicle Code section 436.1, as it may be amended from time to time.

An Off Highway Electric Motorcycle is not an electric bicycle unless it satisfies the definition under Vehicle Code section 312.5.
“Stunt or trick” means, but is not limited to, performing a wheelie, jump, spin, skid, loss of traction, riding while one or more wheels are elevated from the riding surface, or another acrobatic riding maneuver.
3-3.02 Bicycle Operation Requirements.

It shall be unlawful and a violation of this section for any person to operate a bicycle as follows:
(a) Performing stunts or tricks on a public street, sidewalk, pathway, or parking lot.
(b) Swerving into or towards pedestrians, vehicles, or other objects, including, but not limited to, other bicycles, an e-conveyance, electric bicycle, off highway electric motorcycle, animal, fixed object, structure, or other person or property.
(c) Operating at a speed greater than 15 mph in any City park or trail, unless posted otherwise by the Director of Parks, or his or her designee. The maximum posted speed shall not exceed 20 mph.
(d) Riding at a speed in excess of 5 mph and not yielding to the right of way when approaching and passing any pedestrian, bicyclist, person riding a horse, or any person operating or riding another device or conveyance in a City park or trail.
(e) Transporting another person upon the frame, handlebars, floorboard, or other area not designed for passenger riding, or transporting any other person on a device designed for a single rider.
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(f) Riding within a designated parade route, when not a part of the parade. (g) On any City property, or within any area of City property, that is closed or restricted due to a special event, permitted event, or other event where signs are posted prohibiting bicycles.
3-3.03 Prohibited Areas for Operation of Bicycles.

No person shall operate or ride a bicycle upon any sidewalk within the downtown area as defined in Section 10-2.121 of this Code.
3-3.04 E-conveyances, Electric Bicycles, and Off Highway Electric Motorcycle Operation Requirements.

It shall be unlawful and a violation of this section for any person to operate an econveyance, electric bicycle, or off highway electric motorcycle as follows:
a) Engaging in racing.
b) Performing stunts or tricks on a public street, sidewalk, pathway, or parking lot.
c) Swerving towards or into pedestrians, vehicles, or other objects, including, but not limited to, bicycles, another e-conveyance, electric bicycle, or off highway electric motorcycle, an animal, fixed object, structure, or other person or property.
d) Notwithstanding Section 3-3.05, operating at a speed greater than 15 mph in any City park or trail, unless posted otherwise by the Director of Parks, or his or her designee. The maximum posted speed shall not exceed 20 mph.
e) Riding at a speed in excess of 5 mph and not yielding to the right of way when approaching and passing any pedestrian, bicyclist, person riding a horse, or any person operating or riding another device or conveyance in a City park or trail.
f) Transporting another person upon the frame, handlebars, floorboard, or other area not designed for passenger riding, or transporting any other person on a device designed for a single rider.
g) It shall be unlawful to ride an off highway electric motorcycle in any City park.
h) Riding within a designated parade route, when not a part of the parade. i) On any City property, or within any area of City property, that is closed or restricted due to a special event, permitted event, or other event where signs are posted prohibiting e-conveyances, electric bicycles, or off highway electric motorcycles.
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3-3.05 Prohibited Areas for Operation of E-Conveyances, Electric Bicycles, and Off Highway Electric Motorcycles.

No person shall operate an e-conveyance, electric bicycle, or off highway electric motorcycle upon any
a) Sidewalk; or
b) On or within any City park or trail when posted, as determined by the Director of Parks, or his or designee.

This section shall not apply to the use or operation of a motorized wheelchair, mobility scooter, or other mobility device by a person with a disability. 3-3.06 Street Takeovers.

It is unlawful for any person to participate in, conduct, carry on, organize, or host a street takeover. For purposes of this section, “street takeover” means a coordinated activity involving two or more persons operating or riding bicycles, econveyances, electric bicycles, or off highway electric motorcycles, and congregating together, which interferes with, impedes, or obstructs the normal flow of vehicular or pedestrian traffic, creates a public safety hazard, or causes a public nuisance. A street takeover does not include mere group travel that complies with applicable traffic laws.
3-3.07 Impound.

Any individual who rides or operates a bicycle, e-conveyance, electric bicycle, or off highway electric motorcycle in violation of this Chapter may be subject to the following:
(a) In the event an adult violates this Chapter, the Police Department may impound the bicycle, e-conveyance, electric bicycle, or off highway electric motorcycle to terminate the violation and prevent its immediate continuation, protect public safety, or to preserve as evidence. The bicycle shall be transported to a facility designated by the Police Department and will be released to its owner or another person legally entitled to possession upon presentation of reasonable proof of ownership or entitlement to possession, and after payment of the applicable impound fee established by the Police Department’s impound fee schedule. (b) In the event a minor violates this Chapter, the Police Department may impound the bicycle, e-conveyance, electric bicycle, or off highway electric motorcycle as specified in subsection (a). The bicycle, e-conveyance, electric bicycle, or off highway electric motorcycle shall be released to the owner or, to the minor’s parent or legal guardian, and after payment of the applicable impound fee established by the Modesto Police Department’s impound fee schedule.
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(c) A bicycle, e-conveyance, electric bicycle, or off highway electric motorcycle, impounded under this section may be retained for a period not exceeding thirty (30) days when continued retention is reasonably necessary to prevent an imminent recurrence of the prohibited conduct, protect public safety, or to preserve as evidence. The Police Department shall release the bicycle, e-conveyance, electric bicycle, or off highway electric motorcycle before expiration of that period if:

1. The owner establishes that the bicycle was stolen; or

2. The Hearing Officer for an appeal hearing orders release before expiration of this period.
(d) Notice of Impound.

At the time of impound, or as soon thereafter as reasonably practicable, the Police Department shall provide written notice to the operator of the bicycle, e-conveyance, electric bicycle, or off highway electric motorcycle and to any reasonably identifiable owner. The notice shall contain:

1. The date, time, location, and grounds for the impound;

2. The location at which the bicycle, e-conveyance, electric bicycle, or off highway electric motorcycle will be held, and period of retention;

3. The procedure and requirements for retrieving the bicycle, e-conveyance, electric bicycle, or off highway electric motorcycle;

4. The amount of the applicable impound fee;

5. The right to request an appeal hearing, and the deadline and procedure for requesting the hearing; and

6. The date after which the bicycle, e-conveyance, electric bicycle, or off highway electric motorcycle may be deemed unclaimed and disposed of.
(e) Unclaimed bicycle, e-conveyance, electric bicycle, or off highway electric motorcycle.

A bicycle, e-conveyance, electric bicycle, or off highway electric motorcycle impounded under this section that has not been retrieved within ninety (90) days after notice of the impound may be deemed unclaimed and may be disposed of in accordance with applicable law, subject to the following:
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1. The ninety (90) day period shall be tolled while a timely administrative appeal is pending;

2. A bicycle, e-conveyance, electric bicycle, or off highway electric motorcycle shall not be disposed of until the
Hearing Officer has issued a final decision on any timely appeal;

3. At least fifteen (15) days before disposal, the City shall mail a final notice of disposition to the last known address of the owner, or the parent or legal guardian of an owner that is a minor; and

4. A bicycle, e-conveyance, electric bicycle, or off highway electric motorcycle being lawfully retained as evidence shall be handled and disposed of in accordance with the laws applicable to property held as evidence.
(f) Appeal of Impound.

The owner of a bicycle, e-conveyance, electric bicycle, or off highway electric motorcycle that has been impounded subject to this section may appeal that action by filing a written appeal with the City Clerk’s Office within ten (10) calendar days after the date notice of the impound is personally delivered or mailed. The written appeal must contain the following:

1. A brief, clear statement, including material facts, to support the appellant’s position, and a signature of the appellant; and

2. The appellant’s proof of ownership of the bicycle.
(g) Appeal Hearing Procedure.

1. Upon receipt of a timely and complete written appeal, the City Manager, or his or her designee, shall schedule an appeal hearing to occur within fifteen (15) calendar days after receipt of the appeal, unless the appellant requests or agrees to a later hearing date.

2. A Hearing Officer, appointed by the City Manager, or his or her designee, will conduct the appeal hearing. The issues at the hearing shall be limited to whether the impound was authorized and reasonable under this section, the appellant owns the bicycle, e-conveyance, electric bicycle, or off highway electric motorcycle or is otherwise legally entitled #25..
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to its possession, and the City complied with the notice and procedural requirements of this section. The formal rules of evidence shall not apply to the hearing.

3. The appellant will be given the opportunity to testify and present witnesses and evidence concerning the action.

The City shall bear the burden of establishing by a
preponderance of the evidence that the impound was
authorized under this section. A City representative need not personally appear if the City submits sufficient
documentary or other evidence, unless the Hearing Officer determines that an appearance is necessary to provide a fair hearing.

4. The Hearing Officer may continue the hearing for good cause or request additional information from either party.

Any continuance shall be limited to the period reasonably necessary to obtain the requested information or otherwise complete the hearing.

5. After considering the testimony and evidence, the Hearing Officer shall issue a decision at the time of the hearing, affirming or rescinding the impound. The decision of the Hearing Officer shall be final.

6. If the Hearing Officer rescinds the impound, the City shall release the bicycle, e-conveyance, electric bicycle, or off highway electric motorcycle within 48 hours and without requiring payment of an impound fee, if the bicycle, econveyance, electric bicycle, or off highway electric motorcycle has not already been retrieved, or refund the impound fee to the person who paid it, if the bicycle, econveyance, electric bicycle, or off highway electric motorcycle has already been retrieved.
3-3.08 Parental Responsibility.

It is unlawful for a parent or legal guardian having custody or control of a minor to assist, authorize, or permit the minor to violate any provision of this Chapter. A violation of this section may be prosecuted as a misdemeanor, or by any other administrative remedy as specified in this Code. An administrative penalty #25..
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imposed for a violation of this section shall be $2,000.00 per minor they have custody or control of.
3-3.09 Penalties.
(a) Any violation of this Chapter may be prosecuted as a misdemeanor, or by any other administrative remedy as specified in this Code. (b) Unless specified otherwise in this Chapter, any violation of this Chapter may be subject to the following penalty amounts:

1. $500 for the first violation;

2. $2,500 for the second violation; and

3. $5,000 for the third violation, or any offense thereafter. (c) In addition to any other penalties provided by this Code, the Chief of Police, or their designee, is hereby authorized to require any minor seventeen (17) years of age or younger, who operates a bicycle, econveyance, electric bicycle, or off highway electric motorcycle in violation of this Chapter to attend an operator's course to be conducted under the supervision of the Chief of Police, or their designee. Such course shall be for the purpose of educating the violator regarding proper operation and the provisions of law applicable to a bicycle, econveyance, electric bicycle, or off highway electric motorcycle. (d) The provisions of this Chapter shall not apply to any organized event, parade, race, charitable ride, or other activity conducted pursuant to a valid permit or written authorization issued by the City or other governmental agency having jurisdiction.
(e) Any administrative citation or penalty imposed under this Chapter may be appealed according to the provisions of Chapter 6 of Title 1 of this Code.

SECTION 2. SEVERABILITY
If any provision of this Ordinance or the application thereof to any person or circumstance is held invalid, such invalidity shall not affect other provisions or applications of this Ordinance which can be given effect without the invalid provision or application, and to this end the provisions of this Ordinance are severable. This City Council declares that it would have adopted this ordinance irrespective of the invalidity of any particular portion thereof and intends that the invalid portions should be severed and the balance of the Ordinance be enforced.

SECTION 3. CALIFORNIA ENVIRONMENTAL QUALITY ACT.
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The proposed Ordinance is exempt from CEQA under the general rule in CEQA Guidelines section 15061(b)(3), that CEQA only applies to projects that have the potential for causing a significant effect on the environment.

SECTION 4. EFFECTIVE DATE
This Ordinance shall go into effect and be in full force and operation from and after thirty (30) days after its final passage and adoption.

SECTION 5. PUBLICATION
At least two (2) days prior to its final adoption, copies of this Ordinance shall be posted in at least three (3) prominent and distinct locations in the City; and a notice shall be published once in The Modesto Bee, the official newspaper of the City of Modesto, setting forth the title of this ordinance, the date of its introduction and the places where this Ordinance is posted.

The foregoing Ordinance was introduced at a regular meeting of the Council of the City of Modesto held on the __ day of ____________, 2026, by Councilmember ____________, who moved its introduction and passage to print which motion being duly seconded by Councilmember ____________, was upon roll call carried and ordered printed and published by the following vote:

AYES:

Councilmembers:

NOES:

Councilmembers:

ABSENT:

APPROVED: __________________________
SUE ZWAHLEN, Mayor
ATTEST:

By: _________________________________
DIANE NAYARES-PEREZ, City Clerk
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(SEAL)

APPROVED AS TO FORM
By: _________________________________
JOSE M. SANCHEZ, City Attorney

FINAL ADOPTION CLAUSE
The foregoing ordinance, having been published as required by the Charter of the City of Modesto, and coming on for final consideration at the regular meeting of the Council of the City of Modesto held on the ____ day of ____, 2026, _____________ moved its final adoption, which motion being duly seconded by Councilmember ____________, was upon roll call carried and the ordinance adopted by the following vote:

AYES: Councilmembers: Name, Name, Name, Name, Name, Name, Mayor Name
NOES: Councilmembers: None
ABSENT: Councilmembers: None
APPROVED:_________________________
SUE ZWAHLEN, Mayor
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ATTEST: _____________________________
DIANE NAYARES-PEREZ, City Clerk
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