REPORT TO CITY COUNCIL
SUBJECT
Title
Adopt a Resolution Authorizing the City to Apply to and Participate in the State of California’s Prohousing Designation Program
Report
BACKGROUND
In 2019, AB 101 established the Prohousing Designation Program (PDP) to provide an incentive for jurisdictions that have adopted policies that facilitate housing production and are compliant with State housing element requirements. The program, which is administered by the California Department of Housing and Community Development (HCD), created a special “Prohousing Designation” for qualifying jurisdictions that have adopted a compliant housing element.
In order to participate in the PDP, jurisdictions must submit an application to HCD that demonstrates that their local policies go beyond existing State law to increase housing production. HCD awards points for each policy included in the application. A minimum of 30 points is needed to secure Prohousing Designation. The application must be accompanied by an authorizing resolution adopted by the jurisdiction’s governing body, in this case the City Council (Attachment 1)t.
Jurisdictions that are awarded Prohousing Designation may participate in HCD’s Prohousing Incentive Program, which provides grant funding for affordable housing-related projects and programs. Prohousing jurisdictions also receive a competitive advantage in the form of additional points when applying for specific State affordable housing and infrastructure grant programs, including the Affordable Housing and Sustainable Communities, Infill Infrastructure Grant, Transformative Climate Communities, and Transit and Intercity Rail Capital programs. As HCD continues to develop the PDP, other grant programs may be added to this list.
On November 29, 2022, City Council adopted an authorizing resolution to apply to the PDP. Staff submitted two applications that received positive comments from HCD review staff. However, since the City’s 2023-2031 Housing Element had not yet been certified by HCD, the City was unable to satisfy the minimum threshold requirements for the PDP.
On January 31, 2024, HCD adopted a revised, permanent set of PDP regulations. Although most of the PDP guidelines and application materials were not substantially modified, the permanent PDP regulations require a new authorizing resolution with some modifications from the prior resolution. On March 3, 2024, HCD certified the City’s 2023-2031 Housing Element, enabling the City to meet the threshold requirements for the PDP and submit a new application under the permanent regulations.
EXISTING POLICY
2023-2031 Housing Element
Goal H-2: Assist in the provision of affordable housing to meet the diverse needs of Sunnyvale’s lower- and moderate-income households.
Policy H-2.1: Leverage local financial assistance with other sources of funding and identify new funding sources for affordable housing to maximize the number of affordable units and to reach the deepest level of affordability.
ENVIRONMENTAL REVIEW
The applying for and receiving of the Prohousing Designation does not constitute a “project” within the meaning of the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines sections 15060(c)(2), 15060(c)(3), or 15378 because there is no potential that it will result in a direct or reasonably foreseeable indirect physical change in the environment. Projects that utilize Prohousing Designation when applying for State grant funding will undergo a separate CEQA review.
DISCUSSION
Staff has conducted a thorough assessment of the City’s adopted and proposed policies that are relevant to the PDP application. With recent planning initiatives and existing affordable housing programs, the City has been proactive in adopting many zoning, land use, and housing policies and programs that exceed State law in increasing housing production. The City’s completed Prohousing Programs (referred to as policies by the Department of Housing and Community Development - HCD) include the following:
• Lawrence Station Area Plan Development Incentives
• Moffett Park Specific Plan parking maximums and unbundled parking
• 15% Below Market Rate inclusionary housing
• Affordable Housing Development Technical Assistance
• Objective Design Standards
• Housing Mitigation Fund for 100% affordable housing developments
In addition to these existing Programs, the City has numerous not yet implemented Programs that are considered Prohousing. Each of these Programs are included in the adopted 2023-2031 Housing Element, which includes planned implementation timelines and a separate Program to pursue Prohousing Designation. PDP regulations require that all Programs are implemented within two years of application submittal. The City’s Prohousing Programs which have not yet been implemented include the following:
• Missing Middle Housing
• Reduced Park Dedication Fees for Multifamily, Missing Middle, and Special Needs Housing Types
• Accessory Dwelling Unit Program
Based on this policy assessment and a review of the new PDP regulations, staff has updated the draft application (Attachement 2) to submit to HCD under the permanent PDP regulations. Staff calculates that the City could receive up to 57 points, which is well above the 30 point threshold needed for Prohousing Designation. t.
If awarded, the benefits of Prohousing Designation could be realized soon. Staff intends to apply for the Prohousing Incentive Program, which would provide grant funding for affordable housing development projects and supplement the City’s Housing Mitigation Funds. Additionally, for affordable housing projects seeking State funding, Prohousing Designation could provide a key competitive edge that will help secure funding and bring the projects closer to construction. City staff has applied to the State for a Transit and Intercity Rail Capital grant for a Citywide shuttle; the City could receive additional points on this application by having a Prohousing Designation.
FISCAL IMPACT
Applying for and receiving of the Prohousing Designation has no fiscal impact. The Prohousing Designation will allow the City to be eligible for Prohousing Incentive Program funds and increase the competitiveness of affordable housing and infrastructure projects in certain State grant programs.
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 NOVA Workforce Services reception desk located on the first floor of City Hall at 456 W. Olive Avenue (during normal business hours), and on the City's website.
STAFF RECOMMENDATION
Recommendation
Adopt a Resolution authorizing the City to apply to and participate in the State of California’s Prohousing Designation Program.
JUSTIFICATION FOR RECOMMENDATION
The City of Sunnyvale has adopted many policies that increase housing production and continues to incentivize housing production with Policies and Programs included in the adopted and certified 2023-2031 Housing Element. The Prohousing Designation Program provides an incentive for these proactive policies and programs. If awarded, the City would benefit by being eligible for Prohousing Incentive Program grant funding, which can be used for affordable housing projects. Additionally, affordable housing and infrastructure projects would receive a competitive advantage in several State grant programs.
Staff
Prepared by: Ryan Dyson, Housing Specialist
Reviewed by: Jenny Carloni, Housing Officer
Reviewed by: Trudi Ryan, Director, Community Development
Reviewed by: Connie Verceles, Deputy City Manager
Approved by: Tim Kirby, Interim City Manager
ATTACHMENTS
1. Draft Prohousing Resolution
2. Draft Prohousing Application Scoring Sheet