Title
Staff Report for Two City of San Leandro City Council Resolutions Approving the Submittal of a Response to the State of California Housing and Community Development Department Permanent Local Housing Allocation Program Notice of Funding Availability (NOFA) including the City of San Leandro Five Year “302(c)(4)” Plan and; an Update of the City’s Share of 2016 Alameda County A-1 Housing Bond Funds
Staffreport
SUMMARY AND RECOMMENDATIONS
Staff recommends that the City Council adopt two resolutions related to an ongoing funding program from the California Department of Housing and Community Development Department (CA HCD): 1) to receive, authorize and adopt the Five Year 302(c)(4) Plan (Five-Year Plan) required of the Permanent Local Housing Allocation (PLHA) Program Guidelines and 2) to authorize the submission of an application for the Permanent Local Housing Allocation Program Funding and delegating authority to the City Manager to execute all related documents and submit them to CA HCD. The due date for the City’s response to the NOFA with a program application is July 27, 2020.
The PLHA Program Five-Year Plan has been available for public comment since July 3, 2020 when a Public Notice was posted in the East Bay Daily Review and was posted on the City’s Housing Division website in addition to the new public notices portal of the City’s Library website. To date no comments have been received. Upon adoption by the City Council, the 302(c)(4) plan will be submitted along with the PLHA Program funding application to CA HCD.
In conjunction with these actions, staff will also provide an update on the City’s share of the 2016 Alameda County A-1 Housing Bond.
BACKGROUND
In September 2017, the California Legislature approved Senate Bill 2 (SB 2), known as the Building Homes and Jobs Act (Act), which established a $75 recording fee on real estate documents to increase the supply of affordable housing. The Act establishes the Permanent Local Housing Allocation (PLHA) program administered by the California Department of Housing and Community Development (HCD). The PLHA provides a permanent source of funding to cities and counties to help meet affordable housing needs by increasing the supply of affordable housing units.
Under the PLHA program, funding is provided through formula grants to entitlement jurisdictions such as San Leandro based on the formula prescribed under federal law for the Community Development Block Grant (CDBG) program over a five-year funding period. The City of San Leandro is an entitlement jurisdiction and is eligible to receive an estimated $2.1 million, or approximately $350,000 annually, over the five-year funding period. It is important to note that this is only an estimate -- annual PLHA amounts are subject to change.
Analysis
The State requires entitlement jurisdictions to use PLHA program funds to increase the supply of affordable housing. In order to receive PLHA program funds, the City is required to submit a PLHA Five-Year Plan (“Five-Year Plan”) that has been reviewed and adopted by a resolution of the City Council. Additionally, the City Council must adopt a resolution authorizing the application to the CA HCD PLHA program.
The Five-Year Plan is based on Section 302(c)(4) of the CA HCD Guidelines issued for the program in October 2019 and that are posted on the HCD website (<https://www.hcd.ca.gov/grants-funding/active-funding/docs/PLHA-Final-Guidelines-11-19.pdf>). The Five-Year Plan requires that the City provide in detail the manner in which allocated funds will be used. The Five-Year Plan is Attachment A to this Staff Report.
Summary of the Five-Year Plan (including an Update on City’s Share of Alameda County A-1 Bond Funding)
Staff recommends the City establish a five year program to use PLHA funds for the predevelopment, development, acquisition, rehabilitation, and/or preservation of multi-family, residential live-work, and rental housing that is affordable to Extremely low-, Very low-, Low-, or Moderate-income households, including the necessary operating subsidies. The City will allocate PLHA funds to multi-family rental housing either for new developments or preservation of existing ones. For preservation projects, the City will prioritize existing, unregulated affordable housing or regulated affordable housing developments with expiring regulatory agreements (i.e. properties that are at-risk of being lost from the affordable housing supply). These eligible activities advance the City’s General Plan Housing Element’s goals and objectives and the 2020-2024 Five Year Consolidated HUD Plan to increase the supply of affordable rental housing options including senior housing and supportive housing.
In Fall/Winter 2020, the Housing Division plans to solicit a Request for Qualifications (RFQ) for qualified non-profit affordable housing developers to use PLHA and other available City affordable housing funds such as the City Housing Trust Fund, federal HOME funds, and 2016 Alameda County General Obligation Bond Measure A-1 Housing bond funds allocated to the City. Selected nonprofit developer(s) will be asked to leverage PHLA and City affordable housing funds to obtain financing from other regional, State, federal and private sources. The City will reserve the right to use the 5% of its total PLHA allocation for eligible administrative costs.
Alameda County A-1 Bond Funding
In November 2016, Alameda County residents passed the $580 million County A-1 Bond Measure to increase affordable housing county-wide. The County allocated pro-rated portions or “Base City Allocations” of the bond to local jurisdictions. Eligible affordable rental housing activities include new construction, acquisition, and acquisition/rehabilitation for a wide range of target populations including seniors, homeless person, persons with disabilities and families. Emergency and transitional housing is also an eligible activity, but County A-1 may not be used to fund related supportive services. The City was allocated $11.9 million in County A-1 Housing Bond proceeds. In March 2017, the City awarded $1.7 million to BRIDGE Housing Corporation for the 85-unit La Vereda senior affordable rental housing adjacent to the 115-unit Marea Alta to fill an emergency funding gap. In 2018, the City awarded to Eden Housing, Inc., $4 million of its County A-1 bond proceeds for the Parrott Street Apartments, which will primarily serve lower income veterans and persons with disabilities. The County also received approximately $1.2 million from the City’s share for pro rata County bond issuance fees. The City’s remaining County A-1 allocation balance is approximately $5 million. Alameda County cities such as San Leandro need to commit their shares of A-1 funds by December 31, 2021.
The draft Five-Year Plan has been available for public comment since July 3, 2020 when the City published a Public Notice in the East Bay Daily Review seeking public comment on the draft document. Staff notified the Housing Division’s interested parties email list. Additionally, the draft Five-Year Plan has been available for public review on the City's website and a new portal on the City’s library website for public review documents. As of the publishing of this staff report, there have been no public comments received on either of these documents.
Staff recommends that the City Council adopt a resolution acknowledging the review and approving the contents of the Five-Year Plan because it is a required element of the application for the allocation the CA HCD funds.
Current Agency Policies
Current City Council Policy is defined by the FY 2020-2024 Consolidated Plan, adopted by Resolution No. 2020-056 at the June 15, 2020 City Council meeting. Specifically, identifying Affordable Housing as a Priority Need in the City of San Leandro.
Applicable General Plan Policies
The Five-Year Plan addresses the following sections of the City of San Leandro's General Plan Housing Element and is consistent with the overall goals to increase the number and quality of affordable housing in San Leandro: Action 53.03 - City will actively pursue and leverage public funds to facilitate the development of housing affordable to lower and moderate income households in Sal Leandro; Action 53.03-A - Applications for Grant Funding--City will pursue funding sources for affordable housing construction; Action 53.03-B - Support for Non-Profit and For-Profit Affordable Housing Developers--City will provide support and information to non-profit and for-profit developers seeking to create affordable housing in San Leandro.
Environmental Review
As applicable, National Environmental Protection Act (NEPA) and California Environmental Quality Act (CEQA) reviews will be conducted for any affordable housing development approved by the City Council. The Five-Year Plan and the application to CA HCD in response to the NOFA for the PLHA program are exempt from CEQA because neither of these documents cause an environmental impact under CEQA guidelines, 14 CCR Section 15061(b)(3): The activity is covered by the common sense exemption that CEQA applies only to projects which have the potential for causing a significant effect on the environment. Where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment, the activity is not subject to CEQA.
Summary of Public Outreach Efforts
A Public Hearing Notice and the Public Comment Period were published in the East Bay Daily Review on July 3, 2020. Due to COVID-19, the Alameda County Shelter-In-Place order and Community Development Staff quarantine, notice of this Public Hearing was sent only by email to a list of those who have expressed interest in the City’s Housing Division programs and funded activities. Due to the Alameda County Shelter In Place Order, the draft Five-Year Plan was available for review on the City’s website (<http://www.sanleandro.org/depts/cd/housing/plans.asp>) and the Library website (<https://www.sanleandro.org/depts/library/default.asp>).
Fiscal Impacts
The City of San Leandro is a PLHA entitlement jurisdiction and is eligible to receive an estimated $2.1 million total over a five-year period, or approximately $350,000 annually. It is important to note that this is only an estimate -- annual PLHA amounts are subject to change. CA HCD will likely enter into a Standard Agreement or similar with the City for the PLHA grant funding.
Budget Authority
The PLHA grant funding program was established under Chapter 364, Statutes of 2017 (SB 2, Atkins) that was part of a 15-bill housing package aimed at addressing the state’s housing shortage and high housing costs. Specifically, it establishes a permanent source of funding intended to increase the affordable housing stock in California. The revenue from SB 2 will vary from year to year, as revenue is dependent on real estate transactions with fluctuating activity.
ATTACHMENTS
Attachment to Staff Report
None
Attachment to Related Legislative Files
Permanent Local Housing Allocation Five-Year Plan for the City of San Leandro
PREPARED BY: Maryann Sargent, Senior Housing Specialist, Community Development Department