City of Sacramento
City Council - 5PM Report
915 I Street Sacramento, CA 95814
www.cityofsacramento.org
File ID: 2025-01027 5/20/2025 Item 21.
Authorization for Joint Application for State HomeKey+ Program Funding for Mack Road Housing Project
File ID: 2025-01027
Location: 4290 Mack Road, District 5
Recommendation: Adopt a Resolution authorizing the Interim City Manager or designee to: a) submit a joint application with Gateway Development Company to the California Department of Housing and Community Development (“HCD”) for up to $35 million of State Homekey+ Program funding for the Mack Road Housing Project; and b) if awarded Homekey+ Program funds: 1) commit $1,500,000 of City Homeless Housing, Assistance and Prevention (“HHAP”) Round 5 funding towards the Mack Road Housing Project; and 2) bring back to City Council a Homekey+ Standard Agreement with the State of California for such funding and request City Council authorization to execute any documents necessary to participate in the Homekey+ Program, and any amendments thereto.
Contact: Ya-yin Isle, City Housing Manager, (916) 808-1869, [email protected], City Manager’s Office of Innovation and Economic Development; Brian Pedro, Director, (916) 808-7816, [email protected], Department of Community Response Presenter: Brian Pedro, Director, (916) 808-7816, [email protected], Department of Community Response
Attachments:
1-Description/Analysis
2-Conceptual Site Plan
3-Resolution
Description/Analysis
Issue Detail: Proposition 1, passed by California voters in March 2024, is a critical step in advancing the State’s goals to reduce homelessness and protect our most vulnerable populations through important changes to the Mental Health Services Act (MHSA). Proposition 1 includes the Behavioral Health Services Act (BHSA) and the Behavioral Health Infrastructure Bond Act (BHIBA). On November 26, 2024, and subsequently amended on January 31, 2025, the California Department of Housing and Community Development (HCD), in collaboration with the California Department of
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Veterans Affairs (CalVet), released a Notice of Funding Availability (NOFA) for approximately $2.145 billion of Homekey+ grant funding. Homekey+ is the Permanent Supportive Housing component of BHIBA and is largely derived from Proposition 1 bond funds established by BHIBA (AB 531, Chapter 789, Statutes of 2023).
The Homekey+ NOFA makes funding available for projects that will support the development of Permanent Supportive Housing for veterans and/or individuals with mental health or substance use disorder challenges who are at-risk of or experiencing homelessness. Building on the success of three prior rounds of the Homekey program, Homekey+ continues a statewide effort to sustain and rapidly expand Permanent Supportive Housing for people experiencing homelessness. The NOFA allocates the balance of the funds after specific set-asides, geographically based on each region’s proportionate share of veterans and other people experiencing homelessness, and each region’s share of severely rent-burdened households. The regional funding allocations also consist of a distribution for projects serving the general population and a distribution for veterans.
The Sacramento Geographic Region includes the following counties: El Dorado, Placer, Sacramento, Sutter, Yolo and Yuba. The Sacramento regional allocation total is $101,220,070, with $49,438,314 veteran allocation, and $51,781,757 general population allocation. The Homekey+ applications are being accepted and evaluated on a first-come, first-served basis until the final application due date of May 30, 2025, or until the available funds are exhausted, whichever occurs first.
Homelessness is an issue that impacts communities without regard to geographic or political boundaries and for which there is no single answer or approach. The City of Sacramento plays a significant role in addressing homelessness and has been working in partnership with the County of Sacramento and the Sacramento Continuum of Care to create a systemic approach to addressing homelessness. The City has made significant investments of resources to increase the access and availability of shelter beds, services, outreach and permanent housing to those experiencing homelessness.
Despite those investments, permanent housing for people experiencing homelessness continues to be in short supply, leaving many of the City’s people experiencing homelessness in a position where they are unable to move on from encampments and shelter programs to permanent housing. To address this issue and looking at creative ways to bring forward cost effective permanent supportive housing, City staff have been working with the Gateway Development Company on developing a plan and Homekey+ proposal for a 120-unit permanent supportive housing project on a privately owned site at 4290 Mack Road (called the “Mack Road Housing Project” or “Project”).
The Project would look to serve homeless households (including some families with suspected behavioral health issues) in the south area. The Project leverages HCD’s pre-approved manufactured homes (called “Boss Homes”) and proposes to use 114 Boss Homes that are 240 square foot studios and 6 Boss Homes that are approximately 700 square feet with 2 bedrooms. Such Boss Homes
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include living space, bathroom and kitchenette and are a cost-containment strategy to quickly bring housing online. The proposed Project would also include some parking, park space, community garden, community rooms, laundry facilities, storage and private office spaces.
The Project’s Homekey+ application requests $24,941,694 for capital costs which includes site acquisition, unit purchase and assembly, site work and infrastructure to build the Project at a per unit cost under $200,000/unit. HCD will contribute a baseline amount of up to $200,000 per unit without requiring a match for the capital costs from the Applicant. In addition, the Homekey+ NOFA allows for a maximum operating grant amount per unit not to exceed $1,400 per month for the duration of the operating award for projects that can demonstrate a commitment of three years of non-Homekey+ operating funds. For each year of demonstrated non-Homekey+ operating funds, Homekey+ will provide an operating award match, up to 5 years.
The operating grant from HCD leverages enforceable funding commitments and the City’s commitment of HHAP funds will serve as one of the enforceable funding commitments for operating funds. The proposed Project would seek $10,057,500 for the operating award for up to five years for a total request of $34,999,194, up to a maximum of $35,000,000. If HCD awards funding to the City and Gateway Development Company (Developer), the co-applicant for the Homekey+ funding, the funding would be distributed to the City, who would distribute funding at key milestones to Developer to ensure project integrity and key milestones are met.
The Developer would purchase the property and develop the Project for a developer fee. A property management company, who would be brought onboard by the Developer prior to construction completion, would operate the Project and oversee the leasing, maintenance, and operations of the Project. The Project budget includes two full-time property management staff, tenant and community functions and activities, and security. The Project would be rental units and tenants would enter into a lease and pay no more than 30% of their income, capped at 30% of the area median income (AMI) in rent. Utilities and internet access for tenants will be included and paid for by the Project. The Project would have a deed-restriction with a 55-year affordability covenant as required by the Homekey+ Program. A supportive services provider would provide four full-time case managers, at a caseload of 1:25, who would provide and coordinate services for tenants. Sacramento County Behavioral Health Services will provide behavioral health services to clients who need and request those services, and clients connected to CalAIM will continue to receive those enhanced care management supports as well.
Policy Considerations: The application for the State Homekey+ funding and provision of HHAP funding to the Project will aid in the development of additional housing in the City, which is supported by the City’s General Plan, specificallyPolicy H-36: Support Affordable Housing Development in the City of Sacramento Housing Element that speaks to providing support for funding applications and gap financing.
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In addition, the financing of permanent supportive housing projects is consistent with the Sacramento Regionally Coordinated Homelessness Action Plan (RCHAP), adopted in March 2024. The Project supports Solution 6 - Permanent Supportive Housing, which seeks to expand housing opportunities and capacity dedicated to meet the housing needs of people experiencing homelessness.
Economic Impacts: Not applicable.
Environmental Considerations: This report concerns actions supporting the submission of an application for HomeKey+ funds. The action is an administrative activity that would not result in direct or indirect physical changes in the environment and is not a project as defined in the California Environmental Quality Act (CEQA) Guidelines section 15378(b)(4) and is not subject to CEQA (CEQA Guidelines section 15060(c)(3)). In the event that the application for the State Homekey+ funding and commitment of City HHAP funding is approved, future activities and projects will be reviewed in accordance with CEQA Guidelines sections 15060 and 15061(a).
Sustainability: Not applicable.
Commission/Committee Action: Not applicable.
Rationale for Recommendation: The recommendation in this report furthers the City’s objective of providing a range of housing for community needs, including permanent supportive housing. Staff are supportive of the Project as it will assist in the timely development of housing for people experiencing homelessness.
Financial Considerations: This report carries out the necessary steps to apply for Homekey+ funding. This report also recommends commitment of permanent supportive housing (PSH) funding from the City’s HHAP-5 Operating Grant Project (G02000990) in the amount of $1.5 million to receive the maximum State funding for operating costs available through the Homekey+ Program. Sufficient funding exists in the project to support the Homekey+ project.
Local Business Enterprise (LBE): Not applicable.
GSPublisherVersion 6.73.99.67
Sheet Title:
Project:
A1
SITE PLAN
Issue Date
Job Number
Drawn
Approved
Scale
25-021
5/14/25
MACK SUPPORTIVE
HOUSING
231 D Street, Ste A
Davis , CA 95616
Revision
Project:
MACK SUPPORTIVE
HOUSING
4290 Mack Rd
Sacramento , CA 95823
4290 Mack Rd
Sacramento , CA 95823
MARK DESCRIPTION DATE
Wednesday, May 14, 2025 11:53 AM 250511 MACK HOUSING.pln 1 IN 2 IN0 IN
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City Approvals:
ADAM S.
MAYBERRY, AIA
LICENSED ARCHITECT
STATE OF CALIFORNIA
C-38161
REN 03.31.2 7
23,468.2 sq ft
12,423.3 sq ft
58,351.2 sq ft
FUTURE
PUBLIC DOG PARK
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2B
2B
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12x12 BATHROOM
12x12 LAUNDRY
12x12 OFFICE
10x24 STORAGE
16X32 COMMON
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6 - 2 BEDROOM
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91 PARKING SPACES
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SCALE: 1" = 50'1 OVERALL SITE PLAN
AUTHORIZING RESOLUTION
RESOLUTION NO. 2025-
Mack Road Housing Project
Adopted by the City Council of the City of Sacramento
May 20, 2025
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SACRAMENTO AUTHORIZING JOINT APPLICATION TO AND PARTICIPATION IN THE STATE OF CALIFORNIA’S HOMEKEY+ PROGRAM FOR THE MACK ROAD HOUSING PROJECT
BACKGROUND
A. The State of California’s Department of Housing and Community Development (“HCD”) has issued a Notice of Funding Availability, dated November 26, 2024 (“NOFA”), for the Homekey+ Program (“Homekey+” or “Program”). HCD has issued the NOFA for Homekey+ grant funds pursuant to Health and Safety Code Section 50675.1.3 (Assem.
Bill No. 140 (2021-2022 Reg. Sess.), § 20.); Health and Safety Code Section 50675.1.5 (Assem. Bill No. 531 (2023-2024 Reg. Sess.); Section 14184.402 of the Welfare and Institutions Code; Section 5891.5 of the Welfare and Institutions Code; and Round 5 and 6 of the Homeless Housing, Assistance and Prevention (“HHAP”) grant program. (Assem. Bill No. 129 (Chapter 40, Statutes 2023) and Assem. Bill No. 166 (Chapter 48, Statutes 2024), respectively.
B. The City of Sacramento (Applicant) desires to jointly apply for Homekey+ grant funds with Gateway Development Company (Co-Applicant), who is the developer for the Mack Road Housing Project located at 4290 Mack Road. Therefore, Applicant is joining Co- Applicant in the submittal of an application for Homekey+ funds (Application) to HCD for review and consideration.
C. HCD is authorized to administer Homekey+ pursuant to the Multifamily Housing Program (Chapter 6.7 (commencing with Section 50675) of Part 2 of Division 31 of the Health and Safety Code). Homekey+ funding allocations are subject to the terms and conditions of the NOFA, the Application, the HCD-approved STD 213, Homekey+ Standard Agreement (“Standard Agreement”), and all other legal requirements of the Homekey+ Program.
BASED ON THE FACTS SET FORTH IN THE BACKGROUND, THE CITY COUNCIL RESOLVES AS FOLLOWS:
Section 1. The City Council is hereby authorized and directed to submit a joint Application to HCD in response to the NOFA, and to jointly apply for Homekey+ grant funds in a total amount not to exceed $35,000,000.
Section 2. If the Application is approved, the Standard Agreement in a total amount not to exceed $35,000,000will be brought back to the City Council for approval and Council authorization will be sought to enter into, execute, and deliver the Standard Agreement and any and all other documents required or deemed necessary or appropriate to secure the Homekey+ funds from HCD and to participate in the Homekey+ Program, and all amendments thereto (collectively, the “Homekey+ Documents”).
Section 3. Applicant acknowledges and agrees that it shall be subject to the terms and conditions specified in the Standard Agreement, and that the NOFA and Application will be incorporated in the Standard Agreement by reference and made a part thereof. Any and all activities, expenditures, information, and timelines represented in the Application are enforceable through the Standard Agreement. Funds are to be used for the allowable expenditures and activities identified in the Standard Agreement.
Section 4. The City Manager or the City Manager’s designee is authorized to execute the Application on behalf of the Applicant for participation in the Homekey+ Program.
Section 5. If the Application for funding is approved, the City Manager or the City Manager’s designee is authorized to commit $1,500,000 of City HHAP permanent supportive housing funding towards the Mack Road Housing Project, with the $1,500,000 coming from HHAP-5 (G02000990). Agreements $250,000 or more involving expenditure of the $1,500,000 HHAP funding will be brought to City Council for approval.
PASSED AND ADOPTED by the City of Sacramento City Council on _______, 2025, by the following vote:
Ayes:
Noes:
Abstain:
Absent:
The undersigned, [NAME, TITLE of ATTESTOR] of the City of Sacramento does hereby attest and certify that the foregoing is a true and full copy of a resolution of the governing body adopted at a duly convened meeting on the date above-mentioned, and that the resolution has not been altered, amended, or repealed.
Signature:_________________________ Date:___________________________
Name:____________________________ Title:____________________________