TO: HONORABLE MAYOR AND FROM: Jacky Morales-Ferrand CITY COUNCIL Jim Shannon
SUBJECT: ONE-TIME CHANGES TO DATE: May 12, 2023
MEASURE E REVENUE
PERCENTAGE ALLOCATIONS
Approved Date: 5/12/2023
RECOMMENDATION
A. Approve the following percentage allocations for the spending of Measure E revenues totaling $50.0 million anticipated to be received in Fiscal Year 2023-2024:
• 5% for administration with the remaining revenue allocated as follows:
• 0% for the creation of new affordable housing for extremely low-income households; • 0% for the creation of new affordable housing for low-income households; • 0% for the creation of new affordable housing for moderate-income households; • 20% for homeless prevention, gender-based violence programs, legal services and rental assistance; and
• 80% for homeless support programs including shelter construction and operations.
B. Approve the following percentage allocations for the combined spending of uncommitted Measure E revenues totaling $87.0 million, comprised of $17.1 million from Fiscal Year 2020-2021, $20.4 million from Fiscal Year 2021-2022, and $49.5 million from Fiscal Year 2022-2023:
• 22% for administration, which is inclusive of a revenue stabilization reserve to protect funding commitments from an anticipated revenue shortfall, with the remaining revenue allocated as follows:
• 21% for the creation of new affordable housing for extremely low-income households;
• 57% for the creation of new affordable housing for low-income households; • 0% for the creation of new affordable housing for moderate-income households; • 4% for homeless prevention, gender-based violence programs, legal services and rental assistance; and
• 18% for homeless support programs including shelter construction and operations.
MANAGER’S BUDGET ADDENDUM #2
HONORABLE MAYOR AND CITY COUNCIL
May 12, 2023
Subject: One-Time Changes to Measure E Revenue Percentage Allocations
SUMMARY AND OUTCOME
On March 3, 2020, San José voters approved Measure E which established a transfer tax on real estate transactions in which the purchase price exceeds $2 million. All revenues received from Measure E are deposited into the General Fund and can be used for any governmental purpose.
In June 2020, the City Council amended City Council Policy 1-18 to include a new Section 22 that specifies the spending priorities and percentage allocations for Measure E revenue, along with a process for making changes to the percentage allocations. Any modification of the percentage allocations requires:
• 60-day public notice in advance of the effective date of the proposed allocation change; • At least two public hearings prior to City Council action; and • Two-thirds vote of the City Council.
City Council’s approval of the Mayor’s March Budget Message for Fiscal Year 2023-2024 included direction to the City Manager to explore the use of uncommitted Measure E resources for reallocation to homeless prevention, support, and management to fund various initiatives identified in the March Budget Message to reduce unsheltered homelessness, including the doubling of the 2023-2024 homelessness prevention category on a one-time basis.
The 2023-2024 Proposed Operating Budget responds this direction by recommending the one- time reallocation of $38.0 million from uncommitted resources previously allocated for affordable housing production to homelessness prevention, support, and management, as well as the establishment of a $15.1 million revenue stabilization reserve to provide capacity to absorb the likely revenue shortfall in 2022-2023 so that funding commitments remain intact.
The materials included in the 2023-2024 Proposed Operating Budget and presented at the City Council Proposed Budget Study Sessions describe in detail the use of these reallocated funds, a high-level summary of the amount of uncommitted Measure E resources, and the amounts retained for affordable housing production (see Attachment D to the City Manager’s Transmittal Memorandum of the 2023-2024 Proposed Operating Budget
1). This memorandum provides
additional context and detail by displaying the prior funding allocations, and breaking out the revised spending allocations by fiscal year. The recommended actions in this memorandum, if approved by the City Council in accordance with City Council Policy 1-18, will change the percentage allocations of Measure E revenues in 2023-2024 on a one-time basis only. Table 1 below summarizes the allocation percentage changes.
1 2023-2024 Proposed Operating Budget, Attachment D to the City Manager’s Transmittal Memorandum:
https://www.sanjoseca.gov/home/showpublisheddocument/97221
HONORABLE MAYOR AND CITY COUNCIL
May 12, 2023
Subject: One-Time Changes to Measure E Revenue Percentage Allocations
Table 1: Measure E Spending Priorities and Percentage Allocations Approved April 2022 and Changes to the Percentage Allocations
2023-2024 Proposed Spending Priorities
City Council Approved
Spending Categories and
Allocation Percentages
Reallocation of Prior Year
Revenues
Allocation of 2023-2024
Revenues
Total
Proposed
Plan
Spending Category
and Proposed
Activities
Allocation
Percentages
per
Approved
Spending
Priorities
Revised
Allocation
Percentages
Allocation of
Uncommitted
Revenues
Revised
Allocation
Percentages
Allocation of
New
Revenues
Total Fund
Uses in
2023-2024
Creation of New
Affordable Housing
for Extremely Low-
Income Households
40% 21% $14,220,000 0% $0 $14,220,000
Creation of New
Affordable Housing
for Low-Income
Households
30% 57% $38,615,253 0% $0 $38,615,253
Creation of New
Affordable Housing
for Moderate-
Income Households
5% 0% $0 0% $0 $0
Homelessness
Prevention, Gender-
based Violence
Programs, Legal
Services and Rental
Assistance
10% 4% $2,712,628 20% $9,500,000 $12,212,628
Homeless Support
Programs, Shelter
Construction and
Operations
15% 18% $12,054,868 80% $38,000,000 $50,054,868
Program
Administration1 5% 22% $19,427,8972 5% $2,500,000 $21,927,897 Measure E Total
Available $87,030,646 $50,000,000 $137,030,646
1 5% of the revenue to be used for administrative purposes, which is taken before the remaining percentage allocations are applied.
2 Includes $15.1 million for a Revenue Stabilization Reserve to provide capacity to absorb the likely revenue shortfall in 2022-2023 so that other funding commitments remain intact.
HONORABLE MAYOR AND CITY COUNCIL
May 12, 2023
Subject: One-Time Changes to Measure E Revenue Percentage Allocations
BACKGROUND
On March 3, 2020, San José voters approved Measure E, which established a transfer tax on real estate transactions in which the purchase price exceeds $2 million. All revenues received from Measure E are deposited into the General Fund and can be used for any governmental purpose.
In June 2020, the City Council amended City Council Policy 1-18 to include a new Section 22 that specifies the spending priorities and percentage allocations for Measure E revenue, along with a process for making changes to the percentage allocations. Any modification of the percentage allocations requires:
• 60-day public notice in advance of the effective date of the proposed allocation change; • At least two public hearings prior to City Council action; and • Two-thirds vote of the City Council.
On April 19, 2022, the City Council approved modifications to the spending priorities and the allocation percentages of Measure E revenue under Section 22 of Council Policy 1-18 as detailed in Table 2.
Table 2: Measure E Spending Priorities and Percentage Allocations Approved April 2022
Measure E Spending Priorities (Does not include 5% Administration) Spending Priority
% of
Transfer
Tax
Creation of New Affordable Housing for Extremely Low-Income Households 40% Creation of New Affordable Housing for Low-Income Households 30% Creation of New Affordable Housing for Moderate-Income Households 5% Homelessness Prevention, Gender-Based Violence Programs, Legal Services and Rental Assistance 10%
Homeless Support Programs Including Shelter Construction and Operations 15%
Measure E also allows 5% of the revenue to be used for administrative purposes. This percentage is taken before the percentage allocations are applied.
On March 21, 2023, the City Council approved the Mayor’s March Budget Message for Fiscal Year 2023-2024, which included direction to the City Manager to explore the use of uncommitted Measure E resources for reallocation to homeless prevention, support, and management to fund various programmatic initiatives in the March Budget Message to reduce unsheltered homelessness, including the doubling of the 2023-2024 homelessness prevention category on a one-time basis.
Compliant with City Council Policy 1-18, Section 22, the Housing Department posted a public notice on May 2, 2023, 60 days in advance of the proposed changes to the spending priorities becoming effective. Two public hearings have been scheduled concurrent with the 2023-2024 Proposed Budget. The first public hearing will be held at City Council on Tuesday, May 16, 2023, and the second public hearing will be held at City Council on Monday, June 12, 2023. City Council consideration of the approval of the one-time percentage changes will be heard as a
HONORABLE MAYOR AND CITY COUNCIL
May 12, 2023
Subject: One-Time Changes to Measure E Revenue Percentage Allocations
separate item from the adoption of the 2023-2024 Proposed Operating Budget, both of which will take place on June 13, 2023.
ANALYSIS
In accordance with the direction from the Mayor’s March Budget Message as approved by the City Council, staff has initiated the process of making one-time modifications to the percentage allocations outlined in Council Policy 1-18. Approximately $87 million of uncommitted funds have been identified within Measure E revenue over three fiscal year spending plans that will be reallocated to funding for affordable housing, homeless prevention, gender-based violence programs, legal services and rental assistance and funding for homeless support programs. In addition, the Administration proposes that all revenue received in 2023-2024 be spent within the following priorities: funding for homeless prevention, gender-based violence programs, legal services, and rental assistance (20%), and funding for homeless support programs including shelter construction and operations (80%).
Measure E has quickly become a critical source of funding for both the production of affordable housing, interim housing operations, and funding for homeless prevention and rental assistance programs. This memorandum describes the recommended one-time modifications to the percentage allocations for the Measure E real property tax revenue, and the resulting spending plan for FY 2023-2024. It is important to note that the recommended changes only impact revenues received through 2023-2024. If the City Council approves the recommended action, Measure E revenues received in 2024-2025 would again be allocated according to the spending percentages in Table 1 above.
Measure E Reallocated Funds
Staff has identified $87.0 million of uncommitted Measure E funds available to be reallocated to align with direction from the City Council’s approval of the Mayor’s March Budget Message.
Details of specific amounts from specific fiscal year spending plans and the affected categories can be found in Attachment A. Affordable Housing Development programs comprise $70.3 million of revenue that is uncommitted and affected by this reallocation, including funding for the development of affordable housing; acquisition and rehabilitation programs, including land acquisition; and an accessory dwelling unit funding program. A description of the previously intended uses of the uncommitted funds are included in Table 3. An additional $17 million of funds previously planned for the homeless prevention and homeless support programs was also identified as uncommitted. Examples of these funds include operating funds for the Arena Hotel and the Pacific Motor Inn, both of which have not yet opened, resulting in savings in these categories. The $17 million are proposed will be reallocated to new activities within the homeless prevention and homeless support programs within the overall spending plan as shown in Attachment C.
Table 3 below outlines recommended activities included in prior years’ spending plans that will no longer be funded under the proposed revised spending plan for FY 2023-2024, which includes rollovers of unspent funds from previous years.
HONORABLE MAYOR AND CITY COUNCIL
May 12, 2023
Subject: One-Time Changes to Measure E Revenue Percentage Allocations
Table 3: Uncommitted Funding by Activity to be Reallocated
Funded Activities Under Previous Spending Plans Uncommitted Funding Acquisition and Rehabilitation $24,609,040
New Construction of Affordable Rental Housing – Extremely Low- Income Households $18,237,291
Land Acquisition $10,000,000
Accessory Dwelling Unit Program $4,903,083
Construction of Commercial Space for New Affordable Housing Developments $3,817,275
Acquisition of Hotels $3,316,187
New Construction of Affordable For-Sale Housing $3,087,500 New Construction of Affordable Rental Housing – Moderate-Income Households $2,342,833
Total $70,313,209
Measure E Spending Plan for FY 2023-2024 and Reallocated Funds
The proposed spending plan for $87,030,646 of prior year uncommitted funds and for $50,000,000 of projected revenue in FY 2023-2024 is detailed in Attachment C. The proposed spending plan continues to direct funds towards critical housing programs for the residents of San José, while following City Council direction regarding prioritizing uncommitted funds to reduce unsheltered homelessness.
I. Spending Plan for Reallocated Funds
A total of $87.0 million of revenues anticipated to be received through 2022-2023 will be reallocated into a new spending plan. The spending plan for reallocated funds includes $52.8 million for affordable housing development; $2.7 million for homelessness prevention, gender- based violence programs, legal services, and rental assistance; $12.1 million for homeless support programs; and $19.4 million for program administration, which includes $15.1 million to establish a reserve to absorb likely revenue shortfalls and to protect other funding commitments.
Affordable Housing ($52.8 million)
• New Construction – The plan sets aside $35.5 million towards the construction of new affordable housing, of which $14.2 million is for the development of housing for extremely low-income households and $21.3 million is for low-income households. An amount of $11.0 million set aside as an inflation reserve for developments under construction. There are currently four developments in the pipeline that are awardees of the Housing Department’s December 2021 Notice of Funding Availability (NOFA), which are anticipated to come before the City Council in fall 2023 and winter 2024.
These four developments represent 595 affordable homes and need an estimated $100 million of funding to be able to be competitive for State and other funding sources. City
HONORABLE MAYOR AND CITY COUNCIL
May 12, 2023
Subject: One-Time Changes to Measure E Revenue Percentage Allocations
commitments to these developments are crucial, as these projects are currently fighting inflation and rising interest rates. The $35.5 million dollars dedicated to new construction for these four projects will fill the gap from other available funding sources. The $11.0 million inflation reserve will be utilized to ensure that projects already under construction can be completed if situations arise in which a larger City commitment is necessary due to rising costs of materials or project delays that result in larger than budgeted construction interest.
• Acquisition/Rehabilitation – The plan allocates $5 .0 million for the acquisition and rehabilitation of existing market- rate apartments. This is a strategy identified in the City Council-approved Anti-Displacement Strategy to preserve existing low-cost housing. Staff has been working for the past six months to issue a NOFA. The NOFA will be issued in the coming year to begin awarding these funds. Providing preservation funding will support the City’s Anti-Displacement Strategy that seeks to keep lower -income residents in their homes, to prevent them from being priced out of their neighborhoods and losing their support networks, and to avoid them falling into homelessness. • Funding for Commercial Improvements in Affordable Housing – The plan allocates $1.3 million to help fund commercial space improvements with owners of three affordable housing developments that were previously approved by the City Council. In the Housing Department’s most recently released new construction NOFA, extra points were given to developments that proposed onsite childcare facilities as these onsite childcare facilities are an extreme benefit to the development and the overall surrounding community. Additionally, there are scenarios where a developer has elected to build commercial space for a community-based nonprofit that provides essential services to the community. Nonprofits struggle to gather the resources necessary to complete tenant improvements needed to occupy their buildings. In support of these developments’ ability to construct required commercial spaces for these priority uses, staff has allocated $1.3 million to assist in the necessary tenant improvements at 777 West San Carlos for childcare, Tamien Station Affordable for childcare, and 1860 Alum Rock for Amigos de Guadalupe.
Homeless Support Programs including Shelter Construction and Operations ($12.1 million)
• Interim Shelter Operation and Maintenance Reserve – Approximately $8.6 million will be set aside within the reallocated funding to continue to support the expanding City stock of interim shelter locations, as the City needs to have a long-term funding strategy in place for their future operating and maintenance costs. In addition to continuing to pursue all available federal, state, county, philanthropic, or other external resources to support the operation and maintenance of these sites, ongoing City funding commitments will be needed. In combination with the $3.1 million allocated from the 2023-2024 revenues as described below, these funds totaling $11.7 million will be utilized for future years’ operating and maintenance needs. The level of ongoing support for interim shelter operation and maintenance within the 15% Measure allocation for homelessness support programs will be reevaluated as part of each year’s annual budget development process.
• Interim Shelter Development Staffing Resources – $2.0 million overseen by the Public Works Department will support two positions limit-dated through June 30, 2026 and two rehired retirees funded through June 30, 2026 to continue to facilitate the site identification, design, and construction/improvement of sites for Emergency Interim
HONORABLE MAYOR AND CITY COUNCIL
May 12, 2023
Subject: One-Time Changes to Measure E Revenue Percentage Allocations
Housing, safe parking, or other uses to shelter currently unsheltered homeless residents at a more rapid pace.
• Overnight Warming Locations: Support Programs– Funding in the amount of $1.5 million supports the City’s overnight warming locations (OWLs), operated by HomeFirst, at existing City facilities to provide nightly shelter for individuals experiencing homelessness during the cold weather months each year. The goal of the congregate shelter is to offer low barrier services and basic needs, including a warm space to sleep, meals, storage, and transportation. The recommended allocation will fund the operations of the OWL program, serving up to 60 individuals each night during instances of cold weather in at least two locations from November 2023 to April 2024. Previously funded by the Housing Trust Fund, funding for OWLs has been shifted to Measure E as available resources within the Housing Trust Fund continue to dwindle and are currently anticipated for use in smaller campaigns, initiatives and programs.
Homeless Prevention, Gender-Based Violence Programs, Legal Services, and Rental Assistance ($2.7 million)
• Eviction Diversion and Settlement Program – $2.7 million will be dedicated to the City’s Eviction Diversion and Settlement Program. The purpose of the Eviction Diversion and Settlement Program is to intervene in pending eviction court actions based on non-payment of rent due to lingering financial impacts of the COVID-19 pandemic experienced by tenants, in which the tenant households are able to pay rent going forward. In eligible cases, the landlord receives payment for all or part of the unpaid rent and agrees to dismiss the eviction action, and the tenant household remains stably housed. The Measure E funds would cover rental assistance for 250 San José households involved in eviction lawsuits.
Administration ($19.4 million)
• Measure E Revenue Stabilization Reserve – Falling under the category of “Administration”, the plan allocates $15.1 million into a reserve to protect against a likely revenue shortfall. The 2022-2023 budgeted estimate for Measure E Real Property Transfer Tax revenues is $65.0 million. However, due to the significant slowdown within the residential and commercial real estate market, this estimate (already lower than prior year collections of $110.0 million) is unlikely to be met. Through April 2023, $47.2 million has been collected with only two months remaining. As a result, the Administration recommends allocating $15.1 million into a reserve to provide capacity to absorb the likely revenue shortfall in 2022-2023 to ensure that funding commitments stay intact.
• Increase Housing Department Homeless Response Staff Capacity – Funding of $2.4 million is for four limit-dated positions in the Housing Department through June 30, 2026 to provide for enhanced levels of outreach, engagement, and data tracking to help meet the March Budget Message’s objective “to create new capacity to move at least 1,000 people who are currently living in the most environmentally-destructive and unsafe encampments into safer alternatives by the end of the calendar year.” • City Manager’s Office Homeless Coordination Team – An allocation of $1.9 million is for three limit-dated positions in the City Manager’s Office of Administration, Policy,
HONORABLE MAYOR AND CITY COUNCIL
May 12, 2023
Subject: One-Time Changes to Measure E Revenue Percentage Allocations
and Intergovernmental Relations through June 30, 2026. The roles will provide support to the Deputy City Manager position focused on advancing the City’s efforts on ending homelessness and improving the quality of life for both the housed and the unhoused, including overall project coordination and accountability, policy work around allowable encampment areas, data analysis, and interdepartmental and interagency coordination.
II. Spending Plan for FY 2023-2024
The spending plan does not include funding for the development of new affordable housing projects beyond the $35.5 million for the four projects referenced above, as it reallocates all of the remaining funding for homeless support programs and homeless prevention, gender-based violence programs, legal services and rental assistance. This leaves $0 for the development of affordable housing in the FY 2023-2024 spending plan. As the recommended allocation change is only one-time, Measure E revenues received in 2024-2025 would be allocated in accordance with the percentage allocations in Council Policy 1-18, Section 22. Accordingly, new Measure E funds for affordable housing development would become available in 2024-2025.
The spending plan for new revenues anticipated to be received in 2023-2024 includes $38.0 million for homelessness support programs, $9.5 million for homelessness prevention and rental assistance, and $2.5 million for program administration.
Homeless Support Programs including Shelter Construction and Operations ($38.0 million)
• Interim Shelter Construction, Operations and Maintenance – $18.9 million will further support construction efforts and long-term operating and maintenance costs of interim housing communities, operating motels, safe parking sites, and similar approaches to reduce the City’s unsheltered homeless population. To align with previous and current City Council direction bring online 1,000 EIH units and sustain their operation over the long-term, total annual costs of the existing seven EIH sites (including the recently authorized Monterey/Branham site) and five other EIH/safe parking sites could reach $50 million by 2029-2030, of which a substantial portion would need to come from local City sources, such as Measure E or other General Fund sources.
Allocating additional one-time funds now both provides for near-term resources for site acquisition, design, and construction costs, and extends the amount of time when additional ongoing funding would become necessary. An updated analysis of the Fiscal Sustainability of Interim Housing Operations and Maintenance costs previously included in Manager’s Budget Addendum #3 during the 2022-2023 budget development process, will be issued later this month. However, the City will continue to aggressively pursue external resources to the maximum extent possible.
• Interim Shelter Operations and Maintenance Staffing Resources – The plan allocates $5.0 million towards the operations and maintenance of interim shelter sites in coordination with the City’s Public Works Department. Of this amount, $1.1 million is for ongoing funding of 6.0 positions in the Public Works Department, with the remaining $3.9 million available for additional temporary staffing capacity as needed ($900,000), and funds set aside for any significant maintenance or rehabilitation needs ($3.0 million).
Since the inception of Measure E, the City has increased its interim housing stock by 403 beds. These sites include the Homekey sites, the SureStay Hotel, Pacific Motor Inn,
HONORABLE MAYOR AND CITY COUNCIL
May 12, 2023
Subject: One-Time Changes to Measure E Revenue Percentage Allocations
Pavilion Inn, and Branham and Monterey. All these sites require ongoing operations and maintenance funding from the City. Further, since this is still a new line of business for the City, setting aside sufficient resources now ensures that the City can effectively respond to urgent and unforeseen maintenance needs.
• Interim Shelter Operation and Maintenance Reserve – $3.1 million will continue to support the expanding City stock of interim shelter locations. The City needs to have a long-term funding strategy in place for their future operating and maintenance costs. In addition to continuing to pursue all available federal, state, county, philanthropic, or other external resources to support the operation and maintenance of these sites, ongoing City funding commitments will be needed. In combination with the $3.1 million allocated from prior year revenues as described above, these funds totaling $11.7 million will be utilized for future years’ operating and maintenance needs. The level of ongoing support for interim shelter operation and maintenance within the 15% Measure allocation for homelessness support programs will be reevaluated as part of each year’s annual budget development process.
• San José Bridge Program – Funding in the amount of $5.0 million extends the San José Bridge Program through 2023-2024, ensuring capacity for approximately 120 participants of formerly unsheltered residents that receive employment and housing services while they help beautify the City, with the goal to transition to permanent housing and employment. Funding for San Jose Bridge has been shifted to Measure E because the previous sources were from one-time American Rescue Plan (ARP) funds. • Care Coordination Project: An additional $1 million is programed towards the Care Coordination Project, operated by the County of Santa Clara, a community-wide effort centralizing the care of the County’s most vulnerable and long-term homeless residents by bringing together all services and benefits that participants need to obtain and maintain housing. These services include drug and alcohol rehabilitation, mental health services, government benefits and housing resources. The identified Measure E funds will fund nine case managers to assist up to 180 individuals with supportive services to keep them permanently housed.
• Homeless Outreach: Another $3.7 million, anticipated to be spent over a three-year period, will be used to fund contracts with partners who work directly with unhoused individuals within encampments. Homeless outreach and engagement teams are the first responders to San José’s unsheltered homeless population. The overall goals of outreach are to: build trust between outreach workers and the homeless; meet the basic needs of clients; refer and place individuals into a variety of shelter and housing opportunities; and conduct housing assessments. The assessments are used to populate the Homeless Management Information System (HMIS) so that unsheltered individuals have access to housing programs. Outreach teams usually make the first contact with the most vulnerable people living outside; the completed assessments are then entered into HMIS.
Outreach teams have previously been funded by one-time sources including the ARP Fund and State Homeless Housing Assistance and Prevention funds. • Therapeutic Specialist – As directed in the Mayor’s March Budget Message for Fiscal Year 2023-2024, as approved by the City Council, funding of $827,520 within the Housing Department will fund two Therapeutic Specialist positions limit-dated through June 30, 2026, who will serve as a trauma-informed team to work in close concert with the BeautifySJ Team and the Police Department to advance abatement operations in a safe and humane way.
HONORABLE MAYOR AND CITY COUNCIL
May 12, 2023
Subject: One-Time Changes to Measure E Revenue Percentage Allocations
Homeless Prevention and Rental Assistance ($9.5 million)
• Homeless Prevention – The plan dedicates $9.5 million towards homeless prevention activities. Programs supported by this category include but are not limited to rental assistance to prevent people from being evicted. There is a network of agencies working together to prevent homelessness for households across Santa Clara County. The goal of the programs are too expand the ability of families with children to become quickly connected to prevention services with multiple points of entry to keep them housed.
Administration ($2.5 million)
• Program Administration – The plan allocates $2.5 million (or 5% of the $50.0 million Measure E revenue estimate for 2023-2024) for ongoing staffing in the Housing Department, the Finance Department, and the City Attorney’s Office that provides overall support for the implementation of Measure E spending plan initiatives.
In summary, the two proposed spending plans include one plan for the $87.0 million of reallocated revenue from prior years and one plan for $50.0 million in expected FY 2023-2024 Measure E revenue and. In combination, the proposed uses of these funds include $52.8 million of revenue for the funding of the development of affordable housing for extremely low- and low- income households; $50.0 million for homeless support programs, shelter construction and operations; $22.0 million for program administration and a revenue stabilization reserve; and $12.2 million for homelessness prevention and rental assistance.
COORDINATION
This memorandum has been coordinated with the City Attorney’s Office.
/s/
JACKY MORALES-FERAND JIM SHANNON
Director, Housing Department Budget Director
ATTACHMENTS:
Attachment A: Spending Plans by Fiscal Year through 2022-2023 with Identified Reallocation Amounts
Attachment B: Proposed FY 2023-2024 Spending Plan
Attachment C: Total Proposed Fund Use
1 ATTACHMENT A: SPENDING PLANS BY FISCAL YEAR THROUGH 2022-2023
WITH IDENTIFIED REALLOCATION AMOUNTS
FY 2020-2021
Spending Category Items Allocations 2020-2021
Budget
Expended /
Committed
Balance to be
Reallocated
New
Percentages
After
Reallocation
Permanent supportive and
affordable rental housing for
extremely low-income
households
45% $21,948,872 $21,948,872 $0 69%
Funding for New Construction
of Affordable Rental Housing $21,948,872 $21,948,872
Affordable rental housing for
low-income households 35% $17,160,790 $4,975,000 $12,185,790 16% Funding for New Construction
of Affordable Rental Housing $4,975,000 $4,975,000
Acquisition and rehabilitation of
existing buildings for low-
income housing
$12,185,790 $12,185,790
Below market-rate for-sale
housing and rental housing for
moderate income households
10% $4,903,083 $4,903,083 0%
Accessory Dwelling Unit
Program $4,903,083 $4,903,083
Homelessness Prevention &
Rental Solutions 10% $5,018,083 $5,018,083 $0 16%
Homelessness Prevention $2,735,000 $2,735,000
Student Housing - FY 2020-
2021 $55,000 $55,000
Student Housing - FY 2021-
2022 $60,000 $60,000
Homelessness Prevention FY -
22-23 $2,168,083 $2,168,083
Administration Fee 5% $1,500,000 $1,500,000 $0 4%
Measure E Total Available $50,530,828 $33,441,955 $17,088,873
2 FY 2021-2022
Spending Category Items Allocations 2021-2022
Budget
Expended /
Committed
Balance to be
Reallocated
New
Percentages
After
Reallocation
Creation of New Affordable
Housing for Extremely
Low-Income Households
40% $43,206,156 $38,668,865 $4,537,291 36%
Funding for New
Construction and Land
Acquisition for Affordable
Rental Housing
$20,200,000 $15,662,709 $4,537,291
Acquisition of Hotels $22,506,156 $22,506,156
Measure E - Non-Profit
Agency Refunds
$500,000 $500,000
Creation of New Affordable
Housing for Low-Income
Households
30% $32,404,617 $23,599,842 $8,804,775 22%
Funding for New
Construction, Land
Acquisition for Affordable
Rental Housing
$20,092,117 $20,092,117
Funding for the Construction
of Commercial Space for New
Affordable Housing
Developments
$6,825,000 $3,007,725 $3,817,275
Funding for Acquisition and
Rehabilitation*
$4,987,500 $0 $4,987,500
Measure E - Non-Profit
Agency Refunds
$500,000 $500,000
Creation of New Affordable
Housing for Moderate-
Income Households
5% $5,400,770 $3,057,937 $2,342,833 3%
Funding for New
Construction of Affordable
Rental Housing.
$4,900,770 $2,557,937 $2,342,833
Measure E - Non-Profit
Agency Refunds
$500,000 $500,000
Homelessness Prevention,
Gender-based Violence
Programs, Legal Services
and Rental Assistance
10%
$10,801,539 $10,801,539 10%
3 Spending Category Items Allocations 2021-2022
Budget
Expended /
Committed
Balance to be
Reallocated
New
Percentages
After
Reallocation
Homeless Prevention and
Rental Assistance
$3,200,000 $3,200,000
: Homeless Prevention and
Rental Assistance Serving
Victims of Domestic
Violence
$600,000 $600,000
Rental Assistance, Supportive
Services, Deposits and Move-
in Support for targeted
encampments
$3,149,974 $3,149,974
Eviction Diversion and
Settlement Program
$1,851,565 $1,851,565
Guadalupe River Housing
Support (10% HRPA)
$2,000,000 $2,000,000
Homeless Support
Programs, Shelter
Construction and
Operations
15% $16,202,309 $11,460,000 $4,742,309 11%
Operation and Construction of
Interim Housing
$15,345,309 $6,500,000 $8,845,309
Outreach Contracts $857,000 $4,960,000 ($4,103,000)
Administration Fee 5% $2,000,000 $2,000,000 $0 2%
Measure E Total Available $110,015,391 $89,588,183 $20,427,208
4 FY 2022-2023
Spending Category
Items Allocations 2022-2023
Budget
Expended /
Committed
Balance to be
Reallocated
New Percentages
After Reallocation
Creation of New
Affordable Housing for
Extremely Low-Income
Households
40% $24,700,000 $4,683,813 $20,016,187 8%
Funding for New
Construction of Affordable
Rental Housing
$13,700,000 $13,700,000
Funding for Acquisition
and Rehabilitation
$3,000,000 $3,000,000
Acquisition of Hotels $8,000,000 $4,683,813 $3,316,187 Creation of New
Affordable Housing for
Low-Income Households
30% $18,525,000 $4,089,250 $14,435,750 7%
Funding for New
Construction of Affordable
Rental Housing
$3,525,000 $4,089,250 ($564,250)
Funding for Acquisition
and Rehabilitation
$5,000,000 $5,000,000
Funding for Land
Acquisition
$10,000,000 $10,000,000
Creation of New
Affordable Housing for
Moderate-Income
Households
5% $3,087,500 $3,087,500 0%
Funding for Affordable
For-Sale Housing
$3,087,500 $3,087,500
Homelessness Prevention,
Gender-based Violence
Programs, Legal Services
and Rental Assistance
10% $6,175,000 $3,462,372 $2,712,628 6%
Destination Home:
Homeless Prevention and
Rental Assistance
$3,460,000 $2,466,917 $993,083
Homeless Prevention and
Rental Assistance Serving
Victims of Domestic
Violence
$600,000 $600,000
Student Housing $60,000 $60,000
5 Spending Category Items Allocations 2022-2023
Budget
Expended /
Committed
Balance to be
Reallocated
New
Percentages
After
Reallocation
Rental Assistance, Supportive
Services, Deposits and Move-
in Support for targeted
encampments
$2,055,000 $935,455 $1,119,545
Homeless Support
Programs, Shelter
Construction and
Operations
15% $9,262,500 $9,262,500 0%
HomeFirst: Arena Hotel
Operations
$3,000,000 $3,000,000
PATH: Pacific Motor Inn
Operations
$3,000,000 $3,000,000
Emergency Interim Housing
Maintenance and Operations
$1,800,000 $1,800,000
Guadalupe River Park
Housing Support
$580,000 $580,000
Reserve for Emergency
Interim Housing Operations
$882,500 $882,500
Program Administration 5% $3,250,000 $3,250,000 $0 21% Measure E Total Available $65,000,000 $15,485,435 $49,514,565
1 ATTACHMENT B: PROPOSED FY 2023-2024 SPENDING PLAN
City Council Approved
Allocation Percentages and
Spending Plan
Proposed FY2023-2024 Spending
Plan with Modifications to
Allocation Percentages
Spending Category Items
Allocation
Percentages
per Current
Council Policy
2023-2024
Allocation per
Current
Council Policy
Allocation
Percentages per
Proposed Plan
Proposed 2023-
2024 Plan
Creation of New Affordable
Housing for Extremely Low-
Income Households
40% $19,000,000 0% $0
Creation of New Affordable
Housing for Low-Income
Households
30% $14,250,000 0% $0
Creation of New Affordable
Housing for Moderate-Income
Households
5% $2,375,000 0% $0
Homelessness Prevention,
Gender-based Violence
Programs, Legal Services and
Rental Assistance
10% $4,750,000 20% $9,500,000
Homeless Prevention and Rental
Assistance
$9,500,000
Homeless Support Programs,
Shelter Construction and
Operations
15% $7,125,000 80% $38,000,000
Interim Housing Operation and
Maintenance Reserve
$4,750,000
Homeless Outreach $3,700,000
SJ Bridge $3,500,000
CMO Homelessness
Coordination Team
$1,852,470
Interim Shelter Site Identification
and Development Staffing
$2,006,789
Interim Shelter Site Identification
and Development
$18,890,750
Homeless Response Staffing $3,299,991
Total Funds Allocated $47,500,000 $47,500,000
2 City Council Approved
Allocation Percentages and
Spending Plan
Proposed FY2023-2024 Spending
Plan with Modifications to
Allocation Percentages
Spending Category Items
Allocation
Percentages
per Current
Council Policy
2023-2024
Allocation per
Current
Council Policy
Spending
Category Items
Allocation
Percentages per
Current Council
Policy
Program Administration 5% $2,500,000 5% $2,500,000
Administrative Costs $2,500,000
Measure E Total Available $50,000,000 $50,000,000
1 ATTACHMENT C: TOTAL PROPOSED FUND USE
2023-2024 Proposed Spending Priorities
City Council Approved Spending
Categories and Allocation
Percentages
Reallocation of Prior
Year Revenues
FY 2023-2024 Proposed
Plan
Total
Proposed
Plan
Spending Category and
Proposed Activities
Allocation
Percentages
per Approved
Spending
Priorities
Revised
Allocation
Percentages
Allocation of
Uncommitted
Revenues
Revised
Allocation
Changes
Allocation of
New Revenues
Total Fund
Uses in
FY 2023-2024
Creation of New
Affordable Housing for
Extremely Low-Income
Households
40% 21% $14,220,000 0% $0 $14,220,000
Funding for New
Construction of
Affordable Rental
Housing
$14,220,000
Creation of New
Affordable Housing for
Low-Income Households
30% 57% $38,615,253 0% $0 $38,615,253
Funding for New
Construction of
Affordable Rental
Housing
$21,280,000
Funding for Commercial
Space in Affordable
Housing
$1,335,253
Funding for Inflation
Reserve for Affordable
Developments Under
Construction
$11,000,000
Funding for Land
Acquisition &
Acquisition/ Preservation
$5,000,000
Creation of New
Affordable Housing for
Moderate-Income
Households
5% 0% $0 0% $0 $0
2 2023-2024 Proposed Spending Priorities
City Council Approved Spending
Categories and Allocation
Percentages
Reallocation of Prior
Year Revenues
Allocation of 2023-2024
Revenues
Total
Proposed
Plan
Spending Category and
Proposed Activities
Allocation
Percentages
per Approved
Spending
Priorities
Revised
Allocation
Percentages
Allocation of
Uncommitted
Revenues
Revised
Allocation
Percentages
Allocation of
New
Revenues
Total fund Uses
in
FY 2023-2024
Homelessness
Prevention, Gender-
based Violence
Programs, Legal
Services and Rental
Assistance
10% 4% $2,712,628 20% $9,500,000 $12,212,628
Eviction Prevention
and Diversion $2,712,628
Homeless Prevention
and Rental
Assistance
$9,500,000
Homeless Support
Programs, Shelter
Construction and
Operations
15% 18% $12,054,868 80% $38,000,000 $50,054,868
OWLs $1,500,000
Interim Shelter Site
Identification and
Development Public
Works Staffing
$2,006,789
Interim Housing
Operation and
Maintenance Reserve
$8,548,079 $3,081,730
Interim Shelter Site
Identification and
Development
$18,890,750
Interim Shelter
Staffing Public
Works staffing
$2,000,000
Interim Shelter
Maintenance Public
Works
$3,000,000
SJ Bridge $5,000,000
Homeless Outreach
Contracts $3,700,000
3 2023-2024 Proposed Spending Priorities
City Council Approved Spending
Categories and Allocation
Percentages
Reallocation of Prior
Year Revenues
Allocation of 2023-2024
Revenues
Total Proposed
Plan
Spending Category and
Proposed Activities
Allocation
Percentages per
Approved
Spending
Priorities
Revised
Allocation
Percentages
Allocation of
Uncommitted
Revenues
Revised
Allocation
Changes
Allocation of
New Revenues
Total fund Uses in
FY 2023-2024
CARE
Coordination
Program
$1,000,000
SureStay Operations $500,000
Housing Homeless
Response Staffing
(Trauma-Informed
Specialists)
$827,520
Total Funds
Allocated $67,602,749 $47,500,000 $115,102,749
Program
Administration 5% 22% $19,427,897 5% $2,500,000 $21,927,897 Housing Homeless
Response Staff $2,472,471
City Manager's
Office Homelessness
Coordination Team
$1,852,470
Measure E Revenue
Stabilization Reserve $15,102,956
Administrative Costs $2,500,000
Measure E Total
Available $87,030,646 $50,000,000 $137,030,646