City of Sacramento
City Council - 2PM Report
915 I Street Sacramento, CA 95814
www.cityofsacramento.org
File ID: 2024-01571 10/15/2024 Consent Item 3.
Authorization to Apply for and Receive State Prohousing Incentive Program Funds - Round 3 File ID: 2024-01571
Location: Citywide
Recommendation: Adopt a Resolution authorizing the City Manager or the City Manager’s designee to: 1) apply for up to $1.5 million in grant funding from the California Department of Housing and Community Development (HCD) for its Prohousing Incentive Program (PIP) - Round 3; and 2) if awarded PIP - Round 3 funding from the State: a) execute an agreement with the State of California, in the form of HCD’s “Standard Agreement,” for receipt of the PIP grant funding, and any other documents required by HCD to secure the PIP grant, if approved as to form by the City Attorney or the City Attorney’s designee, for an amount of $1.5 million and a term running through June 30, 2028; and b) increase the revenue and expenditure budget in the FY2022/23 Affordable Housing Project (I02189050) by up to $1.5 million (Operating Grants, Fund 2702).
Contact: Ya-yin Isle, City Housing Manager, (916) 808-1869, [email protected]; Axel Magallanes, Housing Analyst, (916) 808-1844, [email protected]; Office of Innovation and Economic Development
Presenter: None
Attachments:
1-Description/Analysis
2-Resolution
Description/Analysis
Issue Detail: The City’s Office of Innovation and Economic Development (OIED) in partnership with the Community Development Department (CDD), is seeking Council approval to apply for HCD’s Prohousing Incentive Program (PIP) - Round 3 funding for an amount up to $1.5 million.
The City continues to face the challenge of providing an adequate supply of affordable housing. The City has made it a priority to streamline the approval of and increase the production, accessibility, and affordability of housing citywide. On May 28, 2019, the City Council adopted Resolution No. 2019 -0206 directing staff to implement the Housing Streamlining Menu of Options, which identified more than 50 potential actions the City’s Planning Division, other City departments, and partner agencies
File ID: 2024-01571 10/15/2024 Consent Item 3.
could initiate to streamline approval and production of market-rate and affordable housing.
Building on this work, in August 2021, the City adopted an ambitious 2021-2029 Housing Element that includes implementation programs to further incentivize and support housing production at all income levels in order to meet the City’s Regional Housing Needs Allocation (“RHNA”) of 45,580 units by 2029 (Resolution No. 2021-0259). As a result of this foundational work, the City was awarded the State of California’s (State) first Prohousing Designation in February 2022 by the California Department of Housing and Community Development (HCD).
In March 2023, City staff applied for $2.5 million in Prohousing Incentive Pilot grant funds through the State’s first grant program designed to incentivize local governments to pursue Prohousing Designations, rewarding those with the Prohousing Designation with additional funding to accelerate affordable housing production and preservation (Resolution No. 2023-0065). The City was subsequently awarded $2.5 million from the State.
On March 15, 2024, City staff applied for $1.5 million in Prohousing Incentive Program - Round 2 grant funds from the State, which continued to focus on increased participation in HCD’s Prohousing Designation Program. Because HCD’s priority was to award applicants in geographic categories that have not received PIP funds in prior funding rounds, and applicants awarded in prior rounds would only be eligible to receive an award once all previously unfunded applicants receive an award, the City did not receive a funding award in Round 2.
PIP Round 3 has a total of approximately $8 million available in funding for eligible jurisdictions with a Prohousing Designation. HCD’s Notice of Funding Availability can be found here:< https://www.hcd.ca.gov/sites/default/files/docs/grants-and-funding/pip-nofa-3.pdf>. Based on the funding allocation calculations, the City can seek up to $1.5 million in funding for Round 3. The PIP applications are due December 31, 2024 and require City Council authorization. If granted Council authorization, City staff will submit an application for PIP Round 3 funding for $1.5 million. PIP funding can be directed towards a variety of City planning or implementation activities related to housing and community development. The intent of the Round 3 funds, if awarded, would be to augment the City’s Reduced Residential Development Impact Fee program budget.
While HCD’s PIP guidelines (“Guidelines”) remain unchanged from Round 2 in that it still prioritizes applicants in geographic areas who have not received prior PIP funds, staff recommends the City apply for Round 3 PIP funds given the simplicity of the application and the possibility Sacramento might receive funding. The Guidelines can be viewed here: < https://www.hcd.ca.gov/sites/default/files/docs/grants-and-funding/pip-final-guidelines.pdf>.
HCD requires that a City Council resolution be included with the City’s application package. The Sacramento area geographic category includes Amador, El Dorado, Placer, Sacramento, Sutter, Yolo and Yuba counties.
Policy Considerations: The 2021-2029 Housing Element contains policies and programs related to the Prohousing Designation and assisting affordable housing projects, including:
File ID: 2024-01571 10/15/2024 Consent Item 3.
Housing Element Policy 2.3 Assist in the Development of Affordable Housing. The City and SHRA shall assist affordable housing developments through site identification, direct funding, supporting funding applications, land donation, expedited permit review, and other incentives.
Housing Element Program 11 Prohousing Designation. The City shall strive to receive and maintain through the sunset date of January 1, 2025, the State’s Prohousing Designation by demonstrating a sufficient number of policies that significantly contribute to accelerating housing production. Jurisdictions that receive a Prohousing Designation will receive incentives in the form of additional points or preferences in the scoring of competitive State funding grant program in the areas of housing, transportation, infrastructure, and land use.
Per the City’s Fiscal Year 2024/25 Budget Resolution (Resolution No. 2024-0193), City Council approval is required for the establishment of any operating grants over $250,000.
Economic Impacts: The City investment in affordable housing projects has the ability to infuse the economy with new jobs, with the provision of this funding and resulting housing construction. There will also be positive economic impact in stabilizing housing costs and preventing homelessness, reducing the rent burden and other community costs for persons experiencing homelessness and at risk individuals, and providing a platform for additional income and spending capacity amongst these community residents.
Environmental Considerations: The proposed action is not a project under CEQA because it relates to government fiscal activities that do not involve any commitment to a specific project which may result in a potentially significant physical impact on the environment. (Cal. Code Regs., tit. 14, §§15060(c)(3), 15378(b)(4)).
Sustainability: Increasing housing production and affordability will assist in creating sustainable economic growth. Increasing affordable housing in infill areas of the city near public transportation hubs will reduce dependence on the use of private automobiles, reduce vehicle miles traveled (VMT) per household, reduce the use of fossil fuels, improve energy efficiency, reduce carbon dioxide emissions, and help meet air quality standards.
Commission/Committee Action: Not applicable.
Rationale for Recommendation: As a Prohousing Designated city, the City is able to pursue $1.5 million of grant funding that can be used to further local affordable housing development and preservation. These funds will be used to leverage additional resources and future development of affordable housing units, contributing towards City affordable housing production goals and RHNA requirements.
File ID: 2024-01571 10/15/2024 Consent Item 3.
City staff is seeking Council authorization for the City Manager or City Manager’s designee to execute an agreement with the State in the form of HCD’s “Standard Agreement” pursuant to City Code section 3.04.010(A)(5). HCD’s Standard Agreement for PIP - Round 3 funding is not attached to this report because it has not been released yet. However, once PIP - Round 3 funding is awarded, the City would only have a short amount of time to execute the Standard Agreement with the State. Given these unusual circumstances, City staff is seeking Council authorization now to execute the Standard Agreement once PIP - Round 3 awards are announced and the Standard Agreement is released. For any sub-awards of the PIP - Round 3 grant funding, City staff will follow all applicable procurement policies and procedures in awarding funds and seeking Council approval of subrecipient agreements with service providers.
Financial Considerations: If awarded PIP - Round 3 funding from the State, the City anticipates receiving up to $1.5 million in grant funding and there would be no local match requirement. Funds received under the PIP - Round 3 grant application will be budgeted into the FY2022/23 Affordable Housing Project (I02189050) (Operating Grants, Fund 2702).
Local Business Enterprise (LBE): Not applicable.
RESOLUTION NO. 2024-
Adopted by the Sacramento City Council
October 15, 2024
Authorization to Apply for and Receive State Prohousing Incentive Program Funds – Round 3
BACKGROUND
A. Pursuant to California Health and Safety Code section 50470(b)(2)(C), a portion of the State of California’s (“State”) Building Homes and Jobs Trust Fund is allocated towards incentive programs, including those promoting affordable housing. The California Department of Housing and Community Development (“HCD”) administers the Prohousing Incentive Program (“PIP”), which is funded by the Building Homes and Jobs Trust Fund. The PIP is designed to create and conserve affordable housing by awarding PIP funds to eligible jurisdictions with a “Prohousing Designation.”
B. A jurisdiction can be given the “Prohousing Designation” by HCD if the jurisdiction implements certain local policies that remove obstacles to new housing to increase housing affordability. The City was given the “Prohousing Designation” by HCD in 2022 due to its advancement of policy actions to remove barriers for affordable housing production and promoting infill development that reduces negative climate change impacts.
C. HCD released a Notice of Funding Availability (“NOFA”) on August 15, 2024 for PIP Round 3, which will award approximately $8 million to jurisdictions with a Prohousing Designation. HCD also released “Guidelines” in August 2024 for implementing the PIP.
D. The City’s Housing Manager desires to submit a PIP grant application package (“Application”) to HCD seeking $1.5 million in State funding, on the forms provided by HCD, for PIP Round 3 grant funding based on eligible planning and implementation activities of the City related to housing and community development. HCD requires that a City Council resolution be included in the City’s application package.
BASED ON THE FACTS SET FORTH IN THE BACKGROUND, THE CITY COUNCIL RESOLVES AS FOLLOWS:
Section 1. The City Manager or the City Manager’s designee is hereby authorized to submit an Application to HCD in response to the NOFA for PIP Round 3, seeking grant funding in the amount of $1.5 million.
Section 2. If the City’s PIP Round 3 Application is approved by HCD, the City Manager or the City Manager’s designee is authorized to enter into an agreement with the State (pursuant to City Code section 3.04.010(A)(5)), in the form of HCD’s “Standard Agreement,” for receipt of the PIP grant funding, and any other documents required by HCD to secure the PIP grant, if approved as to form by the City Attorney or the City Attorney’s designee, for an amount of $1.5 million and a term running through June 30, 2026.
Section 3. The City shall be subject to the terms and conditions specified in HCD’s Guidelines, and the Standard Agreement provided by HCD. The Application and any and all accompanying documents are incorporated in full as part of the Standard Agreement. Any and all activities funded, information provided, and timelines represented in the Application will be enforceable through the fully executed Standard Agreement. Pursuant to the Guidelines and in conjunction with the terms of the Standard Agreement, the City agrees to use the PIP Round 3 funds for eligible uses and allowable expenditures in the manner presented and specifically identified in the approved Application.
Section 4. The City Manager or the City Manager’s designee is authorized to receive the PIP Round 3 grant funding and increase the revenue and expenditure budgets in the FY2022/23 Affordable Housing Project (I02189050) by up to $1.5 million (Operating Grants, Fund 2702), if awarded.