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POINT ARENA CITY COUNCIL
AGENDA ITEM SUMMARY
AGENDA ITEM: IX A
MEETING DATE: 10/25/2022
TITLE
Permanent Local Housing Allocation and Regional Early Action Planning Grant Opportunities
RECOMMENDED ACTION
Receive report and direct staff.
ANALYSIS
I. PERMANENT LOCAL HOUSING ALLOCATION
On September 12, 2022, the City Manager received an email from the California Department of Housing and Community Development (HCD) providing notification that the City of Point Arena is an eligible recipient of funds from the Permanent Local Housing Allocation (PLHA) Program and that the City is in jeopardy of losing its 2019 allocation in the amount of $67,404. Heretofore, City staff was unaware of the PLHA Program. The City Manager asked the Housing Update team to assist with a response.
Further investigation revealed the following:
▪ The PLHA was established by SB 2 ("Building Homes and Jobs Act") in 2017. It provides ongoing funding to local governments for housing-related projects and programs that assist in addressing unmet housing needs. The funding comes from a $75 recording fee on real estate documents that is allocated annually based on the number of countywide transactions and a formula prescribed under federal law for the Community Development Block Grant program.
▪ The City of Point Arena's allocations for 2019-2021 are as follows:
2019 - $67,404
2020 - $103,785
2021 - $114,174
The overall estimate of PLHA funds that will be allocated to Point Arena for five years from 2019-2023 is $404,425.
▪ In order to avoid losing the 2019 allocation and to receive funds for subsequent years, the City must file a PLHA application, including a 5-Year Plan for expenditure of funds from the 2019-2023 allocations by no later than November 20, 2022. - 2 -
▪ Eligible uses of the PLHA funds are as follows:
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. 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.
3. Matching portions of funds placed into Local or Regional Housing Trust Funds.
4. Matching portions of funds available through the Low- and Moderate-Income Housing Asset Fund pursuant to subdivision (d) of HSC Section 34176.
5. Capitalized Reserves for Services connected to the preservation and creation of new permanent supportive housing.
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.
a. 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.
b. 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 8225(b)(8). 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 (b).
7. Accessibility modifications in lower-income owner-occupied housing.
8. Efforts to acquire and rehabilitate foreclosed or vacant homes and apartments.
9. Homeownership opportunities, including, but not limited to, down payment assistance.
10. 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 low-interest 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.
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Recommendation: The recommendation of City staff and the Housing Update team is that the 5-Year Plan should identify the following activities for use of the approximately $400,000 of PLHA funds from the 2019 to 2023 allocations:
Predevelopment and development costs for new ADUs that are affordable to lower- and moderate-income households where either the primary residence or the ADU are owner-occupied.
Rehabilitation costs for lower- and moderate-income owner-occupied housing.
For both activities, the City would award either grants or loans to eligible homeowners for qualifying projects. The first step in establishing the programs would be to procure the services of a "Program Operator" who will assist the City in (a) developing program guidelines for the new ADU and Housing Rehabilitation loan and grant programs, (b) marketing the programs, (c) assisting applicants through the process of securing funding, and (d) ensuring that performance and reporting requirements are met. We estimate that between six and eight homeowners would be assisted by these programs between 2023 and 2028 which is the timeframe for expenditure of the funds.
Staff seeks direction from the City Council regarding the City's desired use of PLHA funds.
A City Council resolution authorizing submittal of an application and the 5-Year Plan will be brought forward for action at the November 15, 2022 City Council meeting.
II. REGIONAL EARLY ACTION PLANNING GRANT
The City is eligible to apply for grant funding to help meet its housing goals through the second round of the Regional Early Action Planning grant program (REAP 2.0). The program has a competitive application process, and the initial application window closes on December 31, 2022. The goals for REAP 2.0 are: (a) to accelerate infill housing development, (b) reduce Vehicle Miles Traveled (VMT), (c) increase housing supply at all affordability levels, (d) affirmatively further fair housing, and (e) facilitate the implementation of adopted regional and local plans to achieve these goals.
If the City applies, its REAP 2.0 application would be grouped with the North Coast geographic category for the Rural and Tribal Allocation. Through a competitive grant process, approximately $6.6M will be awarded to local agencies (non-tribal entities) in the North Coast (Del Norte, Humboldt, Lake, Mendocino and Trinity counties). Grants will be awarded in amounts ranging from $100k to $5M.
Eligible activities for REAP 2.0 funds that are relevant to Point Arena fall under the "Accelerating infill development that facilitates housing supply, choice, and affordability" category which includes the following:
1. Affordable Housing development programs – which may involve predevelopment costs (e.g., studies, land acquisition and entitlements), large expenditures and capital investments – are eligible uses if the programs accelerate the supply of long-term - 4 -
Affordable Housing for Lower-Income and Moderate-Income Households in Infill areas, remove barriers to encourage development and commit to development within a reasonable time frame (e.g., within 5 years of the expenditure deadline). Affordable Housing developments can include mixed-uses (e.g., a minimum of 50% total floor area is residential use), and Affordable Housing units that are part of mixed income development programs.
2. Rezoning and guiding development by updating planning documents, development standards, and zoning ordinances, including general plans, community plans, and specific plans, and local coastal programs. All uses that include the creation of planning documents must be accompanied by a commitment to adopt and implement. Completion and adoption of any planning documents or ordinances must occur by the expenditure deadline.
3. Revamping local planning processes to accelerate Infill development that facilitates Housing supply, choice, and affordability.
4. Completing environmental clearance to eliminate the need for project-specific review for Infill development that facilitates Housing supply, choice, and affordability.
5. Establishing and funding an Affordable Housing catalyst fund, Housing Trust Fund, or revolving loan fund for location efficient projects.
6. Performing infrastructure planning and investing in upgrading infrastructure, including but not limited to sewers, water systems, transit, active transportation, roads that do not induce additional vehicle demand, or other public facilities necessary to enable reduction in Per Capita VMT and accelerate Infill development that facilitates Housing supply, choice, and affordability.
Recommendation: Based on a review of the Notice of Funding Availability and Final Guidelines for the Tribal and Rural Allocation of REAP 2.0, including the scoring criteria for grant applications, City staff and the Housing Update team recommend that the City should seek funds for predevelopment costs for development of an affordable rental housing project on the City-owned property across from City Hall. We believe this would be competitive and would help get the processing moving forward for development of that important infill housing project. More work will need to be done to calibrate the amount of funds to be requested, but we anticipate that an application in the $300k- $400k range would be appropriate.
Staff seeks direction from the City Council regarding submittal of an application for REAP
2.0 funds. If so directed, a City Council resolution authorizing submittal of a grant application under REAP 2.0 will be brought forward for action at the November 15, 2022 City Council meeting.
FISCAL IMPACT
Costs incurred by the City and the Housing Update team in applying for the PLHA allocation can be reimbursed as general administrative expenses from the PLHA allocation. Costs incurred by the City and the Housing Update team in applying for the - 5 -
REAP 2.0 grant can be offset by the City's SB2 Grant that is funding the Housing Update work.
North Coast Community Planning (NCCP) has indicated that consultant costs associated with preparation of the PLHA and REAP applications can be absorbed under the "contingency" line item in their contract with the City of Point Arena.
As noted above, the City's PLHA allocation for the first five-year period (2019-2023) is estimated at $404,425. If the City applies for a REAP 2.0 grant and it is awarded, additional funds (likely in the $300k - $400k range) would be available to help Point Arena achieve its housing goals.
ATTACHMENTS
None.
CITY MANAGER SIGNATURE
Prepared by Linda Ruffing, North Coast Community Planning _________________________________
Paul Andersen, City Manager