CITY OF SAN MATEO
CITY OF SAN MATEO
Agenda Report
City Hall
330 W. 20th Avenue
San Mateo CA 94403
www.cityofsanmateo.org
Agenda Number: 14 Section Name: CONSENT CALENDAR Account Number: 34-3133 File ID: 26-12647 TO: City Council
FROM: Alex Khojikian, City Manager
PREPARED BY: Community Development Department
MEETING DATE: September 22, 2026
SUBJECT:
Support of Affordable Housing — Appropriation
RECOMMENDATION:
Adopt a Resolution to appropriate $1M in Low- and Moderate-Income Housing Asset Funds, $3M in Commercial Linkage Fee Funds, and $1M in General Fund Housing Set-Aside Funds into the Pro-Housing Reserve Account to support the production, preservation, and rehabilitation of affordable housing.
BACKGROUND:
This item follows the September 8, 2026, City Council meeting, at which the City Council received an update on housing funds and provided direction on a five-year funding strategy for housing programming. At this meeting, the City Council also directed staff to pursue a Prohousing Designation, a competitive program run by the California Department of Housing and Community Development (HCD), which may provide priority access to state funding opportunities, including the Prohousing Incentive Program (PIP) grant, including the Prohousing Incentive Program (PIP) grant.
To be competitive for Prohousing Designation, which uses a scoring system to award the designation, jurisdictions can earn points for “fiscal incentives” that include contributing to a local (or regional) trust fund. Contributions must occur annually, and the total must be substantial enough to accelerate the production or preservation of affordable housing.
This requirement dovetails with the City’s 2023-2031 Housing Element, which, under Policy H 1.2, calls for identifying ways to create a stand-alone Housing Fund and prioritizing local housing funds to assist in the production of affordable units.
At the September 8, 2026 meeting, Council directed staff to create a dedicated account for tracking with an initial amount of $5M. A reserve account will be established within each contributing fund to designate and track the authorized amount.
The recommended amount of $5M is based on potential requests for funding that staff anticipate in the coming years, and could support two to three affordable housing projects, depending on the size of the loans awarded.
Funds will be awarded via an over-the-counter process, meaning that developer applications will be reviewed as they are received, and projects will be awarded as funds are available, with no set deadlines. For each project that receives these loan funds, staff would work to leverage the City’s loan with County and state grant and loan resources, and potentially with federal sources, thus multiplying the impact of the City’s investments.
The City has sufficient funds in its various restricted housing funds, including the Low and Moderate Housing Asset Fund (Fund 255), Commercial Linkage Fee (Fund 270), and General Fund Housing Set- Aside (Fund 130) to support these programs.
The Proposed Resolution in Attachment 1 establishes Pro-Housing Reserve Accounts and appropriates $5M total: $1M
CITY OF SAN MATEO
from the Low and Moderate Housing Asset Fund, $3M from the Commercial Linkage Fee fund, and $1M from the General Fund Housing Set-Aside fund. Setting aside these funds in “Pro-Housing Reserve” accounts creates more transparency, facilitates clear tracking, and signals the City’s capacity and intent to fund affordable housing development activities in production, preservation, and rehabilitation.
The Prohousing Reserve accounts can also be used to hold funds appropriated to implement another action item from Housing Element Policy H 1.2: Utilize Public Funding and Properties for New Affordable Housing, which calls for the City to assess feasibility of developing the City-owned parcel at 4142 S. El Camino Real with affordable housing, with an emphasis on extremely- and very low-income units.
Next Steps
Staff will return to the City Council at a later date with a detailed implementation plan for an over-the-counter loan program, which would include adoption of loan guidelines and application form, template loan documents (the loan agreement, regulatory agreement, and ancillary documents to establish the City’s funding requirement), and a template for funding awards to eligible projects.
As potential acquisition and development plans materialize for the 4142 S. El Camino Real site, staff will return with an additional appropriation from one or more of these restricted housing funds. As recommended by Council, the City will invest approximately $5M over five years towards the development of City-owned properties. Additional funds will be appropriated as the City receives revenue in future budget cycles.
BUDGET IMPACT:
This report recommends appropriation of $1M in Low and Moderate Housing Asset Funds (Fund 255), $3M in Commercial Linkage Fee Funds (Fund 270), and $1M in General Fund Housing Set-Aside Funds (Fund 130). There are sufficient funds in each to support these activities. Balances as of July 1, 2026 are as follows: $5,381,000 in Fund 255; $3,795,000 in Fund 270; and $6,470,000 in Fund 130. Taking into account projected expenditures for FY2026-27 and subsequent years, staff estimates that a sufficient balance will remain in each of these funds after the appropriation to the Pro-Housing Reserve accounts are made.
ENVIRONMENTAL DETERMINATION:
This Resolution is not a project subject to CEQA, because it is an organizational or administrative activity that will not result in direct or indirect physical changes in the environment. (CEQA Guidelines Section 15378(b)(5)).
STRATEGIC PLAN ALIGNMENT
This staff report supports the Housing initiative.
NOTICE PROVIDED
All meeting noticing requirements were met.
ATTACHMENTS
Att 1 – Proposed Resolution
STAFF CONTACT
Van Diggans, Housing Specialist II
[email protected]
(650) 522-7229