CITY OF POMONA
COUNCIL REPORT
February 28, 2022
To: Honorable Mayor and Members of the City Council
From: James Makshanoff, City Manager
Submitted By: Benita DeFrank, Neighborhood Services Director SUBJECT: AMENDING THE FISCAL YEAR (FY) 2021-22 CITY OPERATING BUDGET TO INCREASE REVENUE ESTIMATES AND APPROPRIATIONS FOR YEAR 2 OF THE PERMANENT LOCAL HOUSING ALLOCATION PROGRAM (PLHA) RECOMMENDATION:
It is recommended that the City Council adopt the following resolution:
RESOLUTION NO. 2022-24 - A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF POMONA, CALIFORNIA, Amending the Fiscal year (FY) 2021-2022 City Operating Budget to increase revenue estimates and appropriations in the amount of $1,660,695 for year 2 of the permanent local housing allocation program (PLHA) EXECUTIVE SUMMARY:
On November 18, 2021, the City of Pomona received $1,660,695 from the California Department of Housing and Community Development to fund and administer affordable housing programs through the Permanent Local Housing Allocation (PLHA) Program. The funding is for Year 2 of the Five-Year PLHA Plan involving the following:
Development of rental housing through the construction or conversion of accessory dwelling units; Providing match funding to the San Gabriel Valley Regional Housing Trust for housing development projects; and, Homebuyer Assistance
These activities target families earning no more than 120% of the area median income (AMI), with priority according to those earning no more than 60% of AMI. The estimated PLHA funding for five-years is $6,410,670.
FISCAL IMPACT: The adoption of Resolution No. 2022-24 (Attachment No. 1) will amend the Fiscal Year 2021-22 Operating Budget by $1,660,695. Revenue will increase by $1,660,695 and appropriations by an equal amount.
PROGRAM
REVENUE ACCOUNT #
REVENUE ESTIMATES
EXPENDITURE ACCOUNT #
APPROPRIATE ($)
Permanent Local Housing Allocation
(143-1702-40873-00000)
$83,034
Salaries & Benefits
(143-1702-51012-00000)
$83,034
(143-1791-40873-00000)
$1,262,128
Controllable Contract Services
(143-1791-52285-00000)
$1,262,128
$315,533
First-Time Homebuyer
(143-1791-52980-00000)
$315,533
PREVIOUS RELATED ACTION: On June 21, 2021, the City Council approved an amendment to the FY 2021-22 City Operating Budget to receive and appropriate Year 1 of PLHA funding amounting to $1,068,445. The FY 2021-22 City Operating Budget was adopted on June 7, 2021.
DISCUSSION:
PLHA Program Appropriation
The PLHA Program was established by Senate Bill 2 (SB2), known as the Building Homes and Jobs Act, which established a $75 recording fee on real estate transactions. Its goal is to provide a permanent source of funding to cities and counties to help meet the unmet need for affordable housing and increase the supply of affordable housing units. As an Entitlement fund for jurisdictions such as the City of Pomona, the amount of PLHA funding is based on the formula funding for the Community Development Block Grant (CDBG) over a 5-year period. In this regard, the City is eligible to receive $6,410,670 over 5 years.
PLHA Program – Year 2
The City’s PLHA Program Award for Year 2 is $1,660,695. Activities approved for funding are as follows:
Program Administration
Up to 5% of the award or $83,034 will be used for the administration of activities to include general program management, oversight, coordination and monitoring.
ADU/JADU Loan Program
A portion of 40% of the balance or $631,064 will provide financial assistance to low income homeowners earning no more than 80% of AMI, to create additional units within existing owner-occupied single family homes, or to convert existing structures that are accessory to owner occupied single family homes, into accessory dwelling units. The assistance will be in the form of a loan of up to $80,000 with a 2% annual interest. The interest will be 20% forgiven each year the homeowner rents the ADU/JADU to a low-income tenant earning 80% of AMI at affordable rents. The loanable amount will increase to $90,000 if the owner rents the unit to a tenant whose incomes does not exceed 30% of AMI. The owner must repay the principal upon sale, transfer title, refinance with cash out, or when there is default on the loan. The owner must continue to reside in the property throughout the term of the loan or 30 years.
Providing Match Funds to the San Gabriel Valley Regional Housing Trust Another 40% or $631,064 will be provided as match fund to the San Gabriel Valley Regional Housing Trust (SGVRHT) for the Prisma Affordable Artist Loft Apartments. The project involves the construction of 75 residential apartment units and a community space that can accommodate supportive services, classes, programs and a community artist gallery. This project will benefit families earning no more than 60% of AMI, with 8 units reserved as permanent supportive housing, and 10 units for developmentally disabled individuals. Bringing the funds to SGVRHT expands its leveraging capacity and provides additional dollars for the project.
Homebuyer Assistance Program
The remaining $315,533 will provide down payment assistance of up to $100,000 for first time homebuyers earning up to 120% of AMI. The loan and the City’s share of equity realized will be due and payable when the property is sold, transferred, refinanced with cash out, a change in title occurs, there is default on the loan, or at the end of 20 years. At the end of 20 years, any equity realized is forgiven and only the principal is repayable to the City. This program will benefit three (3) first time homebuyers.
COUNCIL PRIORITIES & GOALS: This item supports 2021 City Council Priority #3 – Increased Opportunity and Housing Stability; and Goal J – Encourage the development and maintenance of quality housing opportunities for all.
Prepared By:
Maria A. Siacunco, Housing Grants Supervisor
ATTACHMENT:
Attachment No. 1 – Resolution No. 2022-24
Amending the Fiscal Year (FY) 2021-22 City Operating Budget to Receive and Appropriate Year 2 PLHA Funds