Community and Economic Development Committee
January 14, 2025
AGENDA REPORT
TO: Jestin D. Johnson FROM: Emily Weinstein
City Administrator Housing and Community
Development Director
SUBJECT: 2025 Permanent Local Housing
Allocation Authorization
DATE: December 16, 2024
City Administrator Approval Date:
RECOMMENDATION
Adopt A Resolution (1) Accepting, Appropriating, And Authorizing Agreements For The Receipt Of Permanent Local Housing Allocation (PLHA) Funding From The County Of Alameda In An Amount Estimated To Be $21,023,384 for Fiscal Years 2023-24 Through 2028-29; (2) Allocating All PLHA Funds Received From The County Of Alameda To Operating Subsidies For The Rapid Response Homeless Housing Program (R2H2); (3) Authorizing The City Administrator To Loan Or Grant Said PLHA Funds To Affordable Housing Or Supportive Housing Developers Chosen Through The R2H2 Program, Without Returning To Council, In Accordance With Resolution 89977; And (4) Making Appropriate California Environmental Quality Act (CEQA) Findings
EXECUTIVE SUMMARY
The Permanent Local Housing Allocation (PLHA) Program is an annual source of flexible funding that the City of Oakland (City) receives from the State of California (State) to fund affordable housing and homelessness solutions. Pursuant to its 2019-2024 5-year PLHA spending plan, the City currently spends its PLHA allocation on operating subsidy for Permanent Supportive Housing for the homeless.
When the State first awarded PLHA funds in 2020, the City partnered with the County of Alameda’s (County) Housing and Community Development Department to have the County apply for, hold, and distribute PLHA funds to affordable housing projects on the City’s behalf.
The City Council authorized this partnership with Resolution No. 88211 C.M.S. 1 This resolution will have two effects: 1) correct a missing provision in Resolution No. 88211 C.M.S. to ensure the release of funds to already-identified PLHA recipient projects, and 2) authorize HCD to award PLHA operating subsidy to support homeless housing units to projects
1 https://oakland.legistar.com/LegislationDetail.aspx?ID=4589808&GUID=82A19A79- EB1F-4458-A5EC- 8280AE152D4A
Jestin Johnson (Dec 18, 2024 10:00 PST)
Dec 18, 2024
Jestin D. Johnson, City Administrator
Subject: 2025 Permanent Local Housing Allocation Authorization Date: December 16, 2024 Page 2
Community and Economic Development Committee
January 14, 2025
identified by a competitive funding process, such as the City’s Rapid Response Homeless Housing (R2H2) Program or New Construction Notice of Funding Availability (NOFA).
BACKGROUND / LEGISLATIVE HISTORY
The Permanent Local Housing Allocation (PLHA) is funded by revenue from a document recording fee established by the Building Homes and Jobs Act of 2017 , also known as SB 2.
The document recording fee is assessed when most forms of real estate documents are recorded with a county recorder’s office. The amount of fee revenue collected each year varies and depends largely on the volume of home sales in California. The Permanent Local Housing Allocation then routes the vast majority of these fees to local governments to be used on a menu of housing- and homelessness-related uses. Larger communities such as Oakland are considered entitlement jurisdictions and receive a dedicated allocation of PLHA funds each year.
The exact use of PLHA funds is at local discretion and is captured in a 5-year spending plan.
Past PLHA annual allocations to Oakland have ranged from $3.2 million to $6.3 million annually.
However, PLHA funding is of outsized value to the City because it is one of the only funding sources that HCD receives on a recurring basis that can be used for operating subsidy, as opposed to capital expenses. Many affordable housing projects, and especially projects that contain Permanent Supportive Housing for the homeless, require ongoing operating subsidies because the rents collected by the projects is less than the cost of operating and maintaining the project. Operating subsidy is therefore a key constraint in the City’s effort to expand the supply of homeless housing. For this reason, the City’s current 5-year PLHA spending plan devotes 100% of the City’s PLHA allocation to operating subsidy for homeless housing.
When the PLHA program was first launched, HCD was facing staffing-related capacity constraints that would have made it difficult for the City to deploy these funds directly. The City therefore formed a partnership with the County to have the County act as the City’s agent in collecting, holding, and distributing PLHA funds to projects. The County is separately entitled to their own PLHA allocation for the unincorporated County, so the City was able to leverage a capacity that the County was already planning to establish. As part of the agreement between the City and the County, the City retained discretion over which projects are awarded PLHA funds and how much funding is awarded to each project.
To date, the City’s PLHA funding has primarily been committed to support homeless housing via the City’s Homekey program, as previously authorized by Resolution No. 89379 C.M.S.
2. PLHA
funding was also an operating source used to support Memar Properties, Inc. and Housing Consortium of the East Bay’s operation of the 125-unit Extended Stay America site for homeless housing, pursuant to Resolution No. 90510 C.M.S.3. While PLHA funds in Oakland are typically used for supporting permanent housing, PLHA funds in the Extended Stay America project will support the operating cost of the interim housing portion of the program.
2 https://oakland.legistar.com/View.ashx?M=F&ID=11101602&GUID=1192DEB6- 404C-4C8C-A14F- F18446786773
3 https://oakland.legistar.com/View.ashx?M=F&ID=13572768&GUID=057D855C-24DC-4129-AD06- A704BB7421E7
Jestin D. Johnson, City Administrator
Subject: 2025 Permanent Local Housing Allocation Authorization Date: December 16, 2024 Page 3
Community and Economic Development Committee
January 14, 2025
The City’s Rapid Response Homeless Housing (R2H2) program is a local replica of the State’s Homekey program and also identified projects to apply for the State’s ongoing Homekey+ funding round. It expands homeless housing opportunities by funding the conversion of hotels and other existing buildings and potentially quick-build construction projects, pursuant to Resolution No. 89977 C.M.S.4.
ANALYSIS AND POLICY ALTERNATIVES
This proposed resolution will correct a minor omission in Resolution No. 88211 C.M.S., which did not contain authorization for the City Administrator to appropriate funds. This authorization is necessary for PLHA funds to be distributed to operating reserve accounts for previously Council-approved Homekey projects.
This resolution will enable staff to make PLHA operating funding commitments to current and future applicants to the R2H2 program and the New Construction NOFA program. While units in R2H2 projects have to date been exclusively reserved for the homeless, many units in the tax- credit financed multifamily projects that seek New Construction NOFA funding are also targeted for the homeless. By enabling staff to make complementary operating subsidy commitments to projects with City capital funding commitments, the Council can reduce the time project sponsors must spend aggregating different funding sources prior to beginning project construction. This will in turn accelerate the delivery of Permanent Supportive Housing for the homeless.
While staff anticipates that most or all PLHA funds will be distributed via the R2H2 and New Construction NOFA programs, this resolution will also authorize staff to make PLHA operating funding commitments via other competitive funding processes. This flexibility will be useful in case of a limited-time State funding opportunity, such as the recent Behavioral Health Continuum Infrastructure Program, that the City may wish to pursue. Any such PLHA funding commitments would still need to adhere to the existing PLHA authorized use of operating subsidy for homeless housing opportunities.
FISCAL IMPACT
This resolution has no net fiscal impact, as PLHA expenditures were already authorized by Resolution No. 88211 C.M.S. Staff estimate that the City will distribute $21,023,384 in PLHA funding 2023-24 through 2028-29. The City’s PLHA funds will be deposited in California Housing and Community Development Fund (2144), PLHA Project (1006475), Housing Development Organization (89929).
4 https://oakland.legistar.com/LegislationDetail.aspx?ID=6371996&GUID=C5650ADD -AFBE-44B1-A7C3- C732FCC28A2F&Options=ID|Text|&Search=89977
Jestin D. Johnson, City Administrator
Subject: 2025 Permanent Local Housing Allocation Authorization Date: December 16, 2024 Page 4
Community and Economic Development Committee
January 14, 2025
PUBLIC OUTREACH / INTEREST
No outreach was conducted beyond normal Council noticing procedures as any funds distributed via the PLHA program will be distributed via competitive notices of funding availability such as the R2H2 program. These competitive funding programs have conducted extensive past public engagement.
COORDINATION
This report was reviewed by the Budget Bureau and Office of the City Attorney.
SUSTAINABLE OPPORTUNITIES
Economic: This resolution will make a technical correction and funding streamlining necessary to unlock an estimated $21,023,384 in State resources for homeless housing opportunities. This will expand the supply of homeless housing and thereby reduce the cost of homelessness on other public services.
Environmental: This item has no significant environmental impacts.
Race and Equity: According to the racial equity analysis of homelessness conducted by Oakland’s Department of Race and Equity
5, African American Oaklanders experience
disproportionate rates of homelessness compared to their percentage of the general population.
By providing more homeless housing placements, PLHA funds will reduce the effect of this disparity.
CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA)
The actions authorized by this resolution are not subject to CEQA because this resolution is not committing the City to any specific projects, and the City Administrator will make the appropriate CEQA determinations before specific projects are authorized for funding.
ACTION REQUESTED OF THE CITY COUNCIL
Staff Recommends That The city Council Adopt A Resolution (1) Accepting, Appropriating, And Authorizing Agreements For The Receipt Of Permanent Local Housing Allocation (PLHA) Funding From The County Of Alameda In An Amount Estimated To Be $21,023,384 for Fiscal Years 2023-24 Through 2028-29; (2) Allocating All PLHA Funds Received From The County Of Alameda To Operating Subsidies For The Rapid Response Homeless Housing Program (R2H2); (3) Authorizing The City Administrator To Loan Or Grant Said PLHA Funds To Affordable Housing Or Supportive Housing Developers Chosen Through The R2H2 Program,
5 https://everyonehome.org/wp-content/uploads/2021/02/2021-Centering-Racial-Equity-in-Homeless- System-Design-Full-Report-FINAL.pdf
Jestin D. Johnson, City Administrator
Subject: 2025 Permanent Local Housing Allocation Authorization Date: December 16, 2024 Page 5
Community and Economic Development Committee
January 14, 2025
Without Returning To Council, In Accordance With Resolution 89977; And (4) Making Appropriate California Environmental Quality Act (CEQA) Findings
For questions regarding this report, please contact Caleb Smith, Senior Policy Analyst, at (510) 590-6275.
Respectfully submitted,
Emily Weinstein
Emily Weinstein (Dec 17, 2024 10:27 PST)
Emily Weinstein, Housing and Community
Development Director
Reviewed by:
Alicia Gaylord, Deputy Director for Housing
Development, Housing and Community
Development
Shalawn Garica, Homeless Housing Program
Manager
Prepared by:
Caleb Smith, Senior Policy Analyst, Housing
and Community Development