SUBJECT
Title
ADOPT A RESOLUTION OF THE SAN DIEGO COUNTY BOARD OF SUPERVISORS AUTHORIZING THE APPLICATION AND AMENDMENT OF THE PERMANENT LOCAL HOUSING ALLOCATION (PLHA) PLAN FOR THE PLHA PROGRAM; AND AUTHORIZE DIRECTOR OF HOUSING AND COMMUNITY DEVELOPMENT SERVICES TO ISSUE NOTICES OF FUNDING AVAILABILITY FOR DEVELOPMENT OF MULTIFAMILY RENTAL HOUSING (DISTRICTS: ALL)
Body
OVERVIEW
In 2017, the California State Legislature passed Senate Bill (SB) 2, the Building Homes and Jobs Act. The Building Homes and Jobs Act created a dedicated, ongoing funding source for the State of California Building Homes and Jobs Trust Fund (BHJ Fund) by implementing a $75 recording fee on certain real estate documents. Revenue from the BHJ Fund is used, in part, to fund the Statewide Permanent Local Housing Allocation (PLHA). Established in 2019, the goal of PLHA is to make funding available to eligible local governments in California for housing-related projects and programs that address the unmet housing needs of their local communities. Thus far, the total PLHA allocation for the County is estimated to be approximately $11.8 million, of which the County has been awarded $8.4 million, leaving an estimated $3.4 million to be awarded over the remaining two years. On July 7, 2020 (6), the San Diego County Board of Supervisors (Board) authorized the receipt of PLHA Program funding and approved the PLHA Five-Year Plan. Today’s action requests the Board approve an amended PLHA Five-Year Plan and an accompanying updated resolution for the PLHA Program, authorize execution of the State Standard Agreement for acceptance of grant funds, and authorize Notices of Funding Availability for development of multifamily rental housing.
Today’s action supports the County vision of a just, sustainable, and resilient future for all, specifically those communities and populations that have been historically left behind, as well as our ongoing commitment to the regional Live Well San Diego vision of healthy, safe, and thriving communities. This will be accomplished by ensuring low- and moderate-income residents have access to suitable living environments by encouraging the development of affordable housing.
RECOMMENDATION(S)
CHIEF ADMINISTRATIVE OFFICER
1. Find that the proposed actions are not subject to review under California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines Section 15060(c)(3) because the action is not a project as defined in Section 15378 of CEQA Guidelines.
2. Adopt a Resolution entitled AUTHORIZING RESOLUTION OF SAN DIEGO COUNTY BOARD OF SUPERVISORS AUTHORIZING THE APPLICATION AND AMENDING THE PLHA PLAN FOR THE PERMANENT LOCAL HOUSING ALLOCATION PROGRAM.
3. Authorize the Chief Operations Officer, Health and Human Services Agency, and Executive Finance Director, Health and Human Services Agency, or designee to execute the State’s Standard Agreement for acceptance of the grant funds, any amendments thereto, and any related documents necessary for the County of San Diego’s continued participation in the Permanent Local Housing Allocation Program.
4. Authorize the Director of Housing and Community Development Services, or designee to issue Notices of Funding Availability for development of multifamily rental housing, publish notices, award funding, and execute agreements, as needed, execute certification forms, prepare and execute all necessary documents for regulatory processing and implementation, and take any other actions necessary as required by the State of California Department of Housing and Community Development in order to administer the Permanent Local Housing Allocation Program, as applicable.
EQUITY IMPACT STATEMENT
Rents and home prices continue to increase throughout San Diego County with incomes not keeping pace. A February 29, 2024 Zillow article noted that the household income needed to afford a mortgage for a typical home in the City of San Diego reached nearly $275,000. In addition, the 6th Cycle Regional Housing Needs Assessment, a planning process that identifies existing and future housing needs through 2029, indicates that 68,959 units are needed regionally for very low- and low-income households. Since its inception, the Permanent Local Housing Allocation (PLHA) Program has aimed to address housing challenges through various strategies, mainly through funding two program components: affordable housing development and first-time homebuyer downpayment assistance. All affordable housing funded by the PLHA Program serves low- and moderate-income households. Low-income households are defined as those earning at or below 60 percent of the Area Median Income, currently $57,900 for a one-person household and $82,680 for a four-person household. Moderate-income households are defined as those earning at or below 120 percent of the Area Median Income, currently $98,100 for a one-person household and $140,150 for a four-person household. The down payment assistance component of the program supports moderate- income households by reducing housing costs to help them qualify for a mortgage they can afford.
Funding from the first three years of PLHA has supported three developments that when completed, will include 189 affordable apartment homes for very low- and low-income households within the communities of Imperial Beach, Fallbrook, and Vista. In addition, funds provided first-time homebuyer down payment assistance to support 14 households in achieving homeownership throughout the region. Today’s actions will advance the County of San Diego efforts to address local housing shortages and increase access to quality affordable housing by increasing funding for down payment assistance for low- and moderate-income families. The proposed amendment to the PLHA Five-Year Plan will support an additional 25 families to have the opportunity to purchase their first home in San Diego County and build generational wealth.
SUSTAINABILITY IMPACT STATEMENT
Today’s proposed actions support the County of San Diego Sustainability Goal #2 to provide just and equitable access to services in support of sustainable communities. This will be accomplished by ensuring equitable access to affordable housing for low- and moderate-income households and by cultivating strong relationships with community partners. Building strong relationships with the community creates a mutually beneficial relationship that has at its core, a mission-driven goal to serve communities that have been disproportionately impacted by poverty.
FISCAL IMPACT
Funds for this request are included in the Fiscal Year (FY) 2023-24 Operational Plan and FY 2024-26 CAO Recommended Operational Plan in the Health and Human Services Agency. If awarded and approved, this will result in estimated total costs and revenue of up to $10.2 million for FY 2023-24 through FY 2025-26 to invest in multi-family rental housing and first-time homebuyer down payment assistance. Out of the $11.8 million funding for PLHA, a total of $1.6 million was already expended in FY 2022-23. The funding source is State of California Building Homes and Jobs Trust Fund. There will be no change in net General Fund cost and no additional staff years.
BUSINESS IMPACT STATEMENT
Today’s actions will promote sustainable economic development and regional economic competition by advancing housing solutions that increase the availability of affordable and attainable housing and stimulate local economic activity.
Details
ADVISORY BOARD STATEMENT
N/A
BACKGROUND
In September 2017, the California State Legislature passed a package of 15 housing bills referred to as "California's 2017 Housing Package". This package of bills was enacted to combat the housing affordability crisis affecting California, provide a stream of new regulatory and financial resources, and enhance the way the State delivers housing options. Included in the “California's 2017 Housing Package” was Senate Bill 2, also known as the Building Homes and Jobs Act.
The Building Homes and Jobs Act implemented a $75 recording fee on certain real estate documents, thereby creating an ongoing dedicated source of revenue that is deposited into the State Building Homes and Jobs Trust Fund (BHJ Fund). Since 2019, a portion of the BHJ Fund has been supporting the Permanent Local Housing Allocation (PLHA), which aims to make funding available to eligible local governments in California for housing-related projects and programs that assist with addressing the unmet housing needs of their local communities. The County of San Diego (County), as an Entitlement Local Government agency (urban county with a population of more than 200,000 persons) receives funds from the BHJ Fund to administer the PLHA Program in San Diego County. The PLHA Program jurisdiction includes the unincorporated area and the “Urban County” which includes cities of Coronado, Del Mar, Imperial Beach, Lemon Grove, Poway, and Solana Beach.
Local jurisdictions are required to use a five-year cycle to plan for the use of PLHA funds. The County PLHA Plan was created to prioritize investments that increase the supply of housing to households that are at or below 60 percent of Area Median Income (AMI) and Affordable Owner-Occupied Workforce Housing (e.g. the County downpayment assistance program). On July 7, 2020 (7), the San Diego County Board of Supervisors approved the County PLHA Plan, that guides the program activities that will be funded during the five-year cycle. In addition, the Board adopted a resolution to apply for and accept PLHA funds during the five-year PLHA Plan cycle. Thus far, the total PLHA allocation for the County is estimated to be approximately $11.8 million, of which the County has been awarded $8.4 million, leaving an estimated $3.4 million to be awarded over the remaining two years. Five percent of the total awarded funds are dedicated to offset program administration costs.
The current PLHA Plan invests in multi-family rental housing restricted to households at or below 60 percent of the Area Median Income (AMI) and first-time homebuyer downpayment assistance activities for moderate-income households at or below 120 percent of AMI. Funding from the first three years of PLHA has supported three developments that will include 189 affordable apartment homes for very low- and low-income households within the communities of Imperial Beach, Fallbrook, and Vista. In addition, funds were used to provide first-time homebuyer down payment assistance and support 14 households achieve homeownership throughout the region.
The current PLHA Plan also includes a component to utilize funds to support an Accessory Dwelling Unit (ADU) subsidy program. At the time that this plan was developed, research of ADU subsidy program design options was incomplete. However, the program was included in the PLHA Plan as a proactive step intended to prepare a pathway for implementation of an ADU subsidy program. Following the PLHA Plan submission and initial award of PLHA funds, the County Health and Human Services Agency, Housing and Community Development Services (HCDS) staff continued to analyze the ADU subsidy program. It was determined that PLHA funds are more suitable to expand on the County efforts in stimulating the regional supply of affordable multifamily rental housing and the downpayment assistance program. In addition, further analysis determined that PLHA funds are not suitable to support an ADU subsidy program as the PLHA program requirements would be burdensome for homeowner participants. In order to qualify for the ADU subsidy program, homeowner participants would be required to comply with all PLHA program regulations, and monitor and report on various metrics over the affordability period as required by PLHA program guidelines. In addition, homeowner participants would have to:
• Determine tenant eligibility at initial move in;
• Oversee a residential lease as a landlord and manage potential disputes with tenants;
• Review complex financial information on an annual basis;
• Accept a deed restriction on the entire property, which includes the homeowner’s primary residence; and
• Accept risk of foreclosure of the property in the event of default or non-compliance.
As a result of these findings, staff seek to amend to remove the ADU subsidy program from the PLHA Plan to further support the success of the downpayment assistance program while retaining the current level of funding for multifamily affordable rental housing. A summary of the amended PLHA Plan is included as Attachment C and outlines the recommended activities to be funded by PLHA going forward. As indicated in Attachment D, PLHA funds originally allocated for the ADU subsidy program would instead be added to the first-time homebuyer downpayment assistance program, which serves moderate-income households earning up to 120 percent of AMI. This change increases the percentage of PLHA funds used for Affordable Owner-Occupied Workforce Housing in years two through five of the program. The proposed change will impact an estimated $2.8 million in PLHA funding: $1.7 million in already awarded funding (years two and three) and an estimated $1.1 million in yet-to-be-awarded funding (years four and five). Amending the PLHA Plan as proposed will provide an opportunity to support generational wealth building through home ownership downpayment assistance for an additional 25 families. Additionally, at the request of the State, the amended PLHA Plan will reclassify the first-time homebuyer downpayment assistance program from PLHA Activity 2 (The predevelopment, development, acquisition, rehabilitation, and preservation of Affordable rental and ownership housing, including ADUs, that meets the growing workforce earning up to 120% of AMI) to Activity 9 (Homeownership opportunities, including, but not limited to down payment assistance). This will have no impact on the local administration of the program.
Today’s action requests the Board approve an amended PLHA Five-Year Plan and an accompanying updated resolution for the PLHA program, authorize execution of the State Standard Agreement for acceptance of grant funds, and authorize Notices of Funding Availability for development of multifamily rental housing. Upon Board approval, HCDS will submit to the State the amended PLHA Five-Year Plan, the updated PLHA resolution, and the County application for year-four PLHA funds. If approved by the State, HCDS will administer all non-expended PLHA funds in accordance with the amended PLHA Plan.
LINKAGE TO THE COUNTY OF SAN DIEGO STRATEGIC PLAN
Today’s actions support the County of San Diego (County) 2024-2029 Strategic Plan Initiatives of Sustainability (Economy and Resiliency), Equity (Housing and Economic Opportunity), and Community (Engagement, Quality of Life, and Partnership), the Framework for Ending Homelessness permanent housing strategic domain, in addition to potentially aligning with the Housing Blueprint efforts, by supporting community development and housing that reflect value areas identified by the San Diego County Board of Supervisors. These value areas include developing safe and affordable housing for low- and moderate-income households; providing community infrastructure in historically underserved communities and for individuals with limited mobility; and improving the housing and service delivery system for individuals at-risk of homelessness through community engagement and collaborative solutions. The Permanent Local Housing Allocation program will advance the County effort to provide affordable and workforce housing.
Respectfully submitted,
SARAH E. AGHASSI
Interim Chief Administrative Officer
ATTACHMENTS
Attachment A - AUTHORIZING RESOLUTION OF THE SAN DIEGO COUNTY BOARD OF SUPERVISORS AUTHORIZING THE APPLICATION AND AMENDING THE PLHA PLAN FOR THE PERMANENT LOCAL HOUSING ALLOCATION PROGRAM
Attachment B - Current Permanent Local Housing Allocation (PLHA) Program Five-Year Plan Summary
Attachment C - Proposed, Amended PLHA Program Five-Year Plan Summary
Attachment D - Current and Proposed PLHA Funding by Year and Activity