City Council
Report
City Council Meeting: February 27, 2024
Agenda Item: 5.E
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To: Mayor and City Council
From: David Martin, Director, City Planning
Subject: Adoption of Resolution Authorizing the City Manager to Submit an Application for the California Department of Housing and Community Development's Prohousing Incentive Program (PIP) Grant and to Execute All Necessary Documents to Accept Grant If Awarded
Recommended Action
Staff recommends that the City Council:
1. Adopt a finding of no possibility of significant effect pursuant to Section 15061(b)(3) (Common Sense Exemption) of the California Environmental Quality Act (CEQA) Guidelines and find that uses of grant funding for short term housing assistance are consistent with the certified 6
th Cycle Housing Element
Environmental Impact Report;
2. Adopt the attached resolution authorizing the City manager to submit an application for grant funds in the amount of $1,000,000 from the California Department of Housing and Community Development’s Prohousing Incentive Program (PIP) and to authorize the City Manager to execute all necessary documents to apply for the grant, accept the grant, if awarded, and accept all grant renewals and modifications, if awarded; and
3. Authorize budget changes as outlined in the Financial Impacts and Budget Actions section of this report, in the event the grant is awarded.
Summary
Staff seeks authorization to apply for $1,000,000 in Round 2 grant funding through the state of California’s Housing and Community Development’s (HCD) Prohousing Incentive (PIP) Program. Award grant funding for PIP is available to jurisdictions that are compliant with Housing Element requirements and have received the Prohousing Designation. The Prohousing Designation recognizes local governments that promote the production of housing and allows local governments with the designation to apply for and receive priority funding under programs that support housing, transportation, 2 of 7
infrastructure, land use, and related objectives. On January 31, 2024, Governor Newsom announced that the City of Santa Monica had officially received its Prohousing Designation, making the City eligible for PIP grant funding.
Discussion
On October 14, 2022, HCD certified the City’s 6th Cycle 2021-2029 Housing Element. A key focus of the certified Housing Element is housing production, with substantial emphasis on affordable housing production, to meet Santa Monica’s Regional Housing Needs Allocation (RHNA) as mandated by Government Code Section 65584.05.
The City’s 6th Cycle RHNA for the next 8 years is 8,895 units, of which 6,168 or 69% are to be affordable units.
Income Category RHNA Target
(# units) % of RHNA
Very Low 2,794 31%
Low 1,672 19%
Moderate 1,702 19%
Above Moderate 2,727 31%
Total 8,895 100%
The certified 6th Cycle Housing Element is a State-mandated plan for meeting the City’s share of regional housing needs. State law requires that the Housing Element include an inventory of land that demonstrates the City’s capacity to realistically accommodate its RHNA of 8,895 units, of which 69% must be affordable to moderate and lower income households.
Government Code section 65589.9 established HCD’s Prohousing Designation Program, which recognizes cities and counties that adopt and implement policies that facilitate the planning, approval, or construction of housing. Jurisdictions that receive the Prohousing designation are incentivized with additional points or other preference in the scoring of competitive housing, community development, and infrastructure programs.
The Prohousing Incentive Program (PIP) is a state investment from the Building Homes and Jobs Trust Fund, established by Chapter 364, Statutes of 2017 (SB 2, Atkins) to 3 of 7
create and conserve affordable housing. PIP awards funds to encourage cities and counties to obtain the Prohousing Designation. PIP provides grant funding for eligible Prohousing designated jurisdictions to use towards planning and implementation activities related to housing and community development. Award amounts are based on population estimates. With a population of approximately 93,000, the City is eligible for a base of $500,000 in award funding. Additionally, bonus award funding is available based on a jurisdiction’s prohousing score with a maximum bonus award of $500,000.
In early March 2023, the City applied for the Prohousing Designation program concurrently with PIP program grant award Round 1. The award of the PIP program grant Round 1 was contingent on the City receiving its Prohousing Designation by March 30, 2023. The City did not receive the designation prior to the March 30 deadline as its application was still pending review by HCD, and as such, the City was determined to be ineligible for Round 1 PIP grant funding.
On January 23, 2024, HCD announced the release of a Notice of Funding Availability (NOFA) for Round 2 grant funding of the PIP. This second round of PIP funding makes in total an estimated $9.5 million available for eligible jurisdictions, with funds available to Prohousing Designated jurisdictions on a competitive basis. On January 31, 2024, it was officially announced that the City was awarded the Prohousing Designation with a score of 75 points, the highest awarded to any jurisdiction in California. With this designation and score, the City is eligible for PIP program grant Round 2 for a total eligible award amount of $1,000,000 (base award $500,000 + bonus award $500,000).
This round of program funding provides awards for eligible jurisdictions to use towards planning and implementation activities related to housing and community development.
Per HCD’s Notice of Funding Guidelines, eligible activities for grant funding include:
• The predevelopment, development, acquisition, rehabilitation, and preservation of multifamily, residential live-work, rental housing that is affordable to extremely low-, very low-, low-, and moderate-income households, including necessary operating subsidies.
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• Affordable rental and ownership housing that meets the needs of a growing workforce earning up to 120 percent of area median income, or 150 percent of area median income in high-cost areas.
• Matching portions of funds placed into local or regional housing trust funds. • Matching portions of funds available through the Low- and Moderate-Income • Housing Asset Fund pursuant to subdivision (d) of Section 34176 of the Health and Safety Code.
• Capitalized reserves for services connected to the creation of new permanent supportive housing, including, but not limited to, developments funded through the Veterans Housing and Homelessness Prevention Bond Act of 2014. • Assisting persons who are experiencing or at risk of homelessness, including providing rapid rehousing, rental assistance, navigation centers, emergency shelters, and the new construction, rehabilitation, and preservation of permanent and transitional housing.
• Accessibility modifications.
• Efforts to acquire and rehabilitate foreclosed or vacant homes. • Homeownership opportunities, including, but not limited to, down payment assistance.
• Fiscal incentives or matching funds to local agencies that approve new housing for extremely low, very low, low-, and moderate-income households Funds are available for encumbrance in June 2024 and must be expended by June 2026. To support implementation of the certified Housing Element and consistent with the City Council’s adopted priority to prevent homelessness, grant funds would be used in the category of assisting persons who are experiencing or at risk of homelessness, including providing rapid rehousing, rental assistance, navigation centers, emergency shelters, and the new construction, rehabilitation, and preservation of permanent and transitional housing.
Specifically, grant funds would be used towards programs that aim to prevent homelessness through short-term rental assistance for the full allocation amount of one 5 of 7
million dollars, to be allocated to administration and disbursement of funds. These funds will be used to provide assistance to eligible Santa Monica renters that are at risk of losing their housing due to rent increases or eviction for non-payment of rent. Funds will be prioritized for the most vulnerable tenants and follow the recommendations requested in the 16 Item passed at the City Council meeting on August 22, 2023. City Council requested an estimate of the funding required to provide flexible financial assistance to eligible renters facing rent increases or eviction for non-payment of rent in an effort to provide rapid problem-solving assistance to vulnerable renters to keep them housed. These recommendations will be presented to City Council in Fall 2024 after the consultant completes its study. The targeted allocation of these funds is an important step towards combating homelessness in the City.
Funding these programs would further the City’s commitment to Housing Element Program 6.B:
Program 6.B - Seek Funding Sources To Support Rental Assistance For Vulnerable Individuals And Households At-Risk Of
Displacement
The City shall continue to pursue and identify new funding sources that support rental assistance programs, including emergency rental assistance for individuals and households at risk of displacement throughout the City with a goal to provide emergency rental assistance to at least 100 households throughout the city over the Housing Element cycle.
Environmental Review
Application and acceptance of the Prohousing Implementation Program grant is exempt from the California Environmental Quality Act (CEQA) pursuant to Section 15061(b)(3) (Common Sense Exemption) in that participation in the programs and acceptance the grant would have no possibility of significant effects. Furthermore, the proposed uses of grant funding for short-term rental assistance are consistent with the goals, programs and policies set forth in the adopted and certified 6th Cycle Housing Element EIR, 6 of 7
including Program 6.B, which commits the City to seek funding sources to support households at risk of experiencing homelessness.
Past Council Actions
Meeting Date Description
10/14/22 City Council adopts the 6th Cycle 2021-2029 Housing Element
2/28/23 City Council authorizes staff to apply for Prohousing Designation and Round 1 PIP Grant program funding
Financial Impacts and Budget Actions
Staff seeks authority to apply for a grant from the Department of Housing and Community Development’s Prohousing Incentive Program. If awarded, staff recommends the following budget changes establishing the awarded revenue budget and appropriate the corresponding expenditure budget to the Housing and Human Services Department in the Miscellaneous Grant Fund. If renewals are awarded, budget changes will be included in subsequent year budgets, contingent on Council budget approval.
FY 2023-2024 Grant Budget Changes
Establish Revenue Budget Appropriate Funds
Account Number(s) Amount Account Number(s) Amount
TBD 1,000,000 TBD 1,000,000
Total 1,000,000 Total 1,000,000
Prepared By: Rachel Kwok, Environmental Planner
Approved Forwarded to Council
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Attachments:
A. Reso-CDD-PIP Round 2 Application