REPORT TO COUNCIL
SUBJECT
Title
Approve Budget Modification No. 19 in the Amount of $2,273,226 for the Permanent Local Housing Allocation Grant Program to Complete Housing Projects and Address Unmet Housing Needs in Sunnyvale
Report
GRANT SUMMARY
Approval is requested for Budget Modification No. 19 in the amount of $2,273,226 for the Permanent Local Housing Authority (PLHA) grant program. The PLHA program is administered by the State Department of Housing and Community Development (HCD). The PLHA program provides advance funding to local jurisdictions for housing-related projects and programs that address unmet housing needs in their communities.
PLHA funds are derived from a real estate recording fee and are allocated annually to jurisdictions based on population size and other demographic factors. Because real estate transfers vary every year, HCD has projected allocation amounts for calendar years 2022 and 2023; actual allocation amounts for those years may vary. HCD projects the City’s total PLHA funding allocation for the 2019-2023 five-year allocation period to be $3,198,138. $2,273,226 are final funding allocations and available for appropriation and $924,912 are estimates of future funding allocations. A summary of PLHA funding allocations for the City is shown below:
In October 2022, City Council adopted Resolution No. 1152-22 (Attachment 1), approving the City’s PLHA plan for the 2019-2023 five-year allocation period. Pursuant to the City’s PLHA plan and the executed PLHA Standard Agreement (Attachment 2), the City will use PLHA funds for the projects listed below. Allocated funds must be disbursed within fifty-eight months from the budget appropriation date of July 1 for each applicable allocation year (e.g., 2019 expenditure deadline is 4/30/24).
The current action is a budget modification that appropriates the PLHA grant funds which enables the City to accept the PLHA funds from HCD to expend on the following projects:
• Affordable Multifamily Rental Projects
PLHA funds will be used to support predevelopment and rehabilitation costs for two affordable multifamily projects, which were awarded funding in the City’s 2022 Notice of Funding Availability (NOFA). The following projects will be funded with PLHA funds:
• 1171 Sonora Court Predevelopment
The City will provide $500,000 in PLHA funds for the predevelopment of the 1171 Sonora Court affordable housing project. MidPen Housing will develop approximately 170 units of affordable housing in the Lawrence Station area. This project is currently applying for planning entitlements. PLHA funds will be used for architecture and design costs and enable the project to compete for additional financing for construction.
• Carroll Inn Redevelopment
The City will provide $500,000 in PLHA funds for rehabilitation costs for the existing Carroll Inn affordable housing project at 174 Carroll Street. Originally built in 1994, Carroll Inn is a 122-unit Single Room Occupancy development for very-low income households. PLHA funds will be used to fund the renovation of kitchens, bathrooms, and flooring.
• Bill Wilson Center Safety Net Shelter Operating Support
PLHA funds will provide operating support in the amount of $48,500 for Bill Wilson Center’s Safety Net Shelter. The Safety Net Shelter serves approximately 200 children (ages 12 to 17) each year, including children from Sunnyvale. Operating support will allow the Safety Net Shelter to maintain operations while completing necessary repairs and meeting debt obligations. PLHA funds will be used to fund Bill Wilson Center staff costs related to shelter operations.
• Rental Assistance for Unhoused Seniors
The City will use PLHA funds to provide rental assistance for Sunnyvale seniors who are at-risk of homelessness. Senior households who are unhoused or meet extremely low income certification requirements will be provided rental assistance payable to the property owner. Based on estimated PLHA funding allocations, the City is allocating $1,740,548 for this program. This amount may be adjusted pending HCD’s final allocations of PLHA funding. Note that City staff is actively researching implementation of this program including potential adjustments to support general unhoused services.
• Accessibility Modifications for Lower-Income Households
The City will use PLHA funds to complete accessibility modifications in lower-income households such as grab bars, handrails, wheelchair lifts, and ramps. Eligible households must meet low-income requirements and include a senior or person with a disability. PLHA funds will be used to expand the City’s existing Home Access Grant program to increase households served and provide greater flexibility in funding amounts. Based on estimated PLHA funding allocations, the City is allocating $249,183 for this program. This amount may be adjusted pending HCD’s final allocations of PLHA funding.
The City may modify these projects should more urgent funding needs arise, such as homeless services; the City would be required to amend the PLHA plan, subject to HCD approval (major changes would first require Council approval). The total cost for each of these projects is reimbursable by HCD through the PLHA Grant Program. In addition to these projects, up to five percent of the City’s PLHA allocation will be used for administrative costs for Housing Division staff. The Housing Division of the Community Development Department will be responsible for the management of the grant.
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 $5,000 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 California Department of Housing and Community Development (HCD) have external reporting requirements and fall under the 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 action being considered does not constitute a “project” within the meaning of the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines section 15378(a) as it is a fiscal action that has no potential for resulting in either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment. Housing development projects receiving PLHA funds will undergo the appropriate CEQA analysis and findings will be presented at the time of project approval.
FISCAL IMPACT
Granting Agency
California Department of Housing and Community Development (HCD)
Funding Source
California Department of Housing and Community Development (HCD) Permanent Local Housing Allocation (PLHA) Grant Program
Required Local Match
None
Increased Cost to City Upon Grant Termination
None, funds are expected to be ongoing. Service levels will be set to available funding. Though not expected, if the grant is terminated, new or enhanced service levels provided with PLHA funds would be eliminated or reduced if an alternative funding source is not identified.
Budget Modification No. 19 has been prepared to appropriate $2,273,226 in HCD PLHA grant funds to a new fund. A new fund is required as funding is advanced to the City and requires interest earnings to be allocated. In addition to enhancing local housing programming, 5% in administrative costs are allowable. Staff will charge their time when working on eligible activities. Allocations for years four and five (estimate of $924,912) as well as future allocations will be incorporated into the FY 2024/25 Budget.
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
Approve Budget Modification No. 19 in the amount of $2,273,226 for the Permanent Local Housing Allocation Grant Program to complete housing projects and address unmet housing needs in Sunnyvale.
Staff
Prepared by: Ryan Dyson, Housing Specialist
Reviewed by: Jenny Carloni, Housing Officer
Reviewed by: Felicia Silva, Budget Manager
Reviewed by: Trudi Ryan, Community Development Director
Reviewed by: Tim Kirby, Director of Finance
Reviewed by: Sarah Johnson-Rios, Assistant City Manager
Approved by: Kent Steffens, City Manager
ATTACHMENTS
1. Resolution No. 1152-22
2. Executed Permanent Local Housing Allocation Standard Agreement