REPORT TO COUNCIL
SUBJECT
Title
Accept Housing Incentive Pool (HIP) Program Grant Funds, Approve Budget Modification No. 12 to Appropriate $836,000 of the HIP Program Funds and $373,507 from the General Fund for the Sunnyvale Avenue at California Avenue Traffic Signal Upgrade Project, Authorize the City Manager to Execute a Grant Agreement and Related Documents, and Find that the Project is Exempt from the California Environmental Quality Act (CEQA) Pursuant to Section 15301 of the CEQA Guidelines
Report
GRANT SUMMARY
The Housing Incentive Pool (HIP) program is a federally funded transportation grant program administered by the Metropolitan Transportation Commission (MTC) that provides funding to jurisdictions demonstrating strong housing production and preservation outcomes. The program was established under the One Bay Area Grant Cycle 2 (OBAG 2) framework to align regional transportation investments with local housing production performance and is administered in accordance with OBAG 2 grant requirements and reporting obligations. The City of Sunnyvale was identified by the MTC as one of the 15 eligible jurisdictions and allocated a total of $1,836,000 in HIP funds.
At its December 3, 2024 meeting, the City Council first adopted Resolution No. 1269-24 (Attachment 1) declaring the City’s compliance with applicable State housing laws, including requirements related to surplus lands, accessory dwelling units and density bonus regulations, which is a prerequisite for eligibility to receive HIP funding. At the same meeting, the City Council adopted Resolution No. 1270-24 (Attachment 2) authorizing the filing of Letters of Interest and related grant applications to the MTC for the City’s multiple transportation projects, including the Sunnyvale Avenue/California Avenue Traffic Signal Upgrade Project.
Consistent with HIP program requirements, the City submitted multiple project recommendations totaling 200 percent of its total HIP allocation for MTC consideration. On April 23, 2025, the MTC adopted Resolution No. 4202, Revised (Attachment 3), recommending the programming of $836,000 in HIP funds for the Sunnyvale Avenue/California Avenue Traffic Signal Upgrade Project. The submitted amount of $1,336,000 is based on the project cost estimate at the time of submittal and the approved amount reflects a partial award. The current estimated total project cost is $1,366,212.
On January 31, 2026, the MTC authorized the obligation and disbursement of $836,000 in HIP funds for the Sunnyvale Avenue/California Avenue Traffic Signal Upgrade Project, to be provided on a reimbursement basis in accordance with applicable federal funding requirements. In addition, the Poplar Avenue Sidewalk Project, which was also recommended to the MTC as part of the City’s HIP submittal, was awarded and will be brought forward to City Council for consideration under a separate action at a later date.
EXISTING POLICY
Council Policy 7.1.5 Donations, Contributions and Sponsorships:
The City Manager may apply for grants of any dollar amount, but shall notify the Council when grants are being pursued. Council approval of a budget modification to appropriate grant monies is required before funds can be expended by staff. Such a budget modification shall include the use to which the grant would be placed; the objectives or goals of the City which will be achieved through use of the grant; the local match required, if any, plus the source of the local match; any increased cost to be locally funded upon termination of the grant; and the ability of the City to administer the grant. For grants under the amount of $250,000 that do not have any external reporting requirements or any local match requirement, Council approval of a budget modification is not required. The City Manager is authorized to accept and administratively appropriate the grant funds.
This grant does not meet all of the criteria to be administratively appropriated by the City Manager; therefore, a budget modification is required. Grant funds from the MTC are subject to external reporting requirements and federal single audit guidelines.
Pursuant to Sunnyvale Charter Section 1305, at any meeting after the adoption of the budget, the City Council may amend or supplement the budget by motion adopted by affirmative votes of at least four members so as to authorize the transfer of unused balances appropriated for one purpose to another, or to appropriate available revenue not included in the budget.
ENVIRONMENTAL REVIEW
The project proposed to be funded by this action will be exempt from the review under the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines Section 15301(c), which applies to minor alteration of existing facilities, mechanical equipment, highways and streets involving negligible or no expansion of use beyond that which presently exists.
FISCAL IMPACT
The Sunnyvale Avenue at California Avenue Traffic Signal Upgrade Project will be partially funded by $836,000 in HIP program grant funds. Under the HIP program, a local match of 11.47 percent is required. The required local match in the amount of $156,705 is budgeted in the General Fund under Project 836340 - Transportation and General Fund Grant Matching. This funding will be applied to the project to satisfy the local match requirement.
Budget Modification No. 12 has been prepared to appropriate $836,000 in HIP program grant funds and $373,507 from the General Fund Budget Stabilization Fund reserve to fully fund the remaining project costs not funded by the HIP grant or local match. With the inclusion of the local match, the total project budget is $1,366,212.
Budget Modification No. 12
FY 2025/26
|
General Fund |
Current |
Increase/ (Decrease) |
Revised |
|
Revenues |
|
|
|
|
Housing Incentive Pool (HIP) Program Grant Funds |
$0 |
$836,000 |
$836,000 |
|
Reserves |
|
|
|
|
General Fund Budget Stabilization Fund |
$88,636,936 |
($373,507) |
$88,263,429 |
|
|
|
|
|
|
Expenditures |
|
|
|
|
Project 836340 - Transportation and General Fund Grant Matching |
$3,188,314 |
($156,705) |
$3,031,609 |
|
|
|
|
|
|
Expenditures |
|
|
|
|
New Project - Sunnyvale Avenue/California Avenue Traffic Signal Upgrade |
$0 |
$1,366,212 |
$1,366,212 |
|
|
|
|
|
PUBLIC CONTACT
Public contact was made by posting the Council meeting agenda on the City's official-notice bulletin board at City Hall, at the Sunnyvale Public Library and in the Department of Public Safety Lobby. In addition, the agenda and this report are available at the City Hall reception desk located on the first floor of City Hall at 456 W. Olive Ave. (during normal business hours) and on the City's website.
RECOMMENDATION
Recommendation
Accept Housing Incentive Pool (HIP) program funds, approve Budget Modification No. 12 to appropriate $836,000 in HIP program funds and $373,507 from the General Fund for the Sunnyvale Avenue at California Avenue Traffic Signal Upgrade Project, authorize the City Manager to execute a grant agreement and any other related documents necessary to implement the grant award, and find that the project is exempt from CEQA pursuant to Section 15301 of the CEQA Guidelines.
JUSTIFICATION FOR RECOMMENDATION
The traffic signal system at the intersection of Sunnyvale Avenue and California Avenue has reached the end of its useful life and requires replacement to improve safety, accessibility, and operational efficiency. Acceptance of Housing Incentive Pool funds, together with a General Fund appropriation, will allow the City to update the final design and proceed with construction of the improvements, including ADA upgrades and enhanced signal operations.
Levine Act
LEVINE ACT
The Levine Act (Gov. Code Section 84308) prohibits city officials from participating in certain decisions regarding licenses, permits and other entitlements for use if the official has received a campaign contribution of more than $500 from a party, participant, or agent of a party or participant in the previous 12 months. The Levine Act is intended to prevent financial influence on decisions that affect specific, identifiable persons or participants. For more information see the Fair Political Practices Commission website: www.fppc.ca.gov/learn/pay-to-play-limits-and-prohibitions.html
An “X” in the checklist below indicates that the action being considered falls under a Levine Act category or exemption:
SUBJECT TO THE LEVINE ACT
___ Land development entitlements
___ Other permit, license, or entitlement for use
___ Contract or franchise
EXEMPT FROM THE LEVINE ACT
___ Competitively bid contract*
___ Labor or personal employment contract
___ Contract under $50,000 or non-fiscal
_X_ Contract between public agencies
___ General policy and legislative actions
* "Competitively bid" means a contract that must be awarded to the lowest responsive and responsible bidder.
Staff
Prepared by: Esther Jung, Traffic Engineer
Reviewed by: Angela Obeso, Transportation and Traffic Manager
Reviewed by: Chip Taylor, Director, Public Works
Reviewed by: Matthew Paulin, Director, Finance
Reviewed by: Sarah Johnson-Rios, Assistant City Manager
Approved by: Tim Kirby, City Manager
ATTACHMENTS
1. Resolution No. 1269-24
2. Resolution No. 1270-24
3. MTC Resolution No. 4202, Revised