title
ADOPT A MOTION TO ALLOCATE GRANT FUNDING FROM THE HOMELESS HOUSING, ASSISTANCE AND PREVENTION (HHAP) PROGRAM TO PERMANENT HOUSING PROJECTS
recommended action
RECOMMENDATION
It is recommended that the City Council adopt a motion to:
1. Allocate an amount up to $1,000,000 in existing Homeless Housing, Assistance and Prevention (HHAP) Program grant funds for the Calaveras Quarters project, including:
• $600,000 of HHAP Round 3 grants funds; and
• $400,000 of HHAP Round 4 grant funds;
2. Allocate an amount up to $4,338,493.56 in existing Homeless Housing, Assistance and Prevention (HHAP) Program grant funds for the Satellite Apartments project, including:
• $3,189,359 of HHAP Round 3 grants funds; and
• $1,149,134.56 of HHAP Round 4 grant funds;
3. Approve and authorize the City Manager, or designee, to enter into a contract with Delta Community Developers Inc. for an amount up to $1,000,000 for cost overruns related to the Calaveras Quarters project;
4. Approve and authorize the City Manager, or designee, to enter into a contract with Delta Community Developers Inc. for an amount up to $4,338,493.56 for rehabilitation of the Satellite Apartments project; and
5. Authorize the City Manager, or designee, to enter into and execute any associated documents and take appropriate and necessary actions to carry out the purpose and intent of this motion.
body
Summary
The State's HHAP funds are designed to support regionally coordinated efforts between the County, Continuum of Care (CoC), and the City to expand and develop local capacity to address immediate homelessness challenges throughout the state. HHAP funds are focused on moving homeless individuals and families into permanent housing and ensuring those individuals and families maintain their permanent housing.
The City has been awarded four rounds of HHAP and is awaiting approval of its HHAP 5 application. Cal ICH specifies obligation and expenditure requirements for each Round of HHAP. The City has met HHAP Rounds 1 and 2 obligation requirements and is on target to meet Rounds 1 and 2 expenditure requirements. Round 3 funds have been contracted to provide low-barrier shelter operations, and about half of Round 3 and Round 4 funds were obligated to a Homekey Round 3 permanent housing project, Alicia’s Place, contingent upon award notification by the state. The allocation to the Alicia’s Place project would have sufficiently met the City’s HHAP 3 and HHAP 4 obligation requirements.
The City was informed by the Department of Housing and Community Development on January 4, 2024 that its Homekey Round 3 application was denied. As a result, the City is now $1,401,753.62 short of meeting the HHAP 3 May 31, 2024 obligation requirement. Further, the City has approximately 13 months to re-obligate at least $1,828,853 and the same amount of time to spend $1,549,134.56 of HHAP 4 funds.
To optimize and meet HHAP obligation and expenditure deadlines, the budgeted HHAP permanent housing funds were added to the 2024 Affordable Housing NOFA that was released on January 29, 2024 and closed on March 15, 2024.
Based upon this review, EDD recommends two projects for HHAP 3 and 4 permanent housing funding. These projects will allow the City to optimize and meet HHAP funding and expenditure obligations, including the Youth Set-Aside requirement.
DISCUSSION
Background
On June 21, 2022, City Council adopted Resolution No. 2022-06-21-1203 to apply for, accept, and appropriate grant funding from the California Interagency Council on Homelessness (Cal ICH) for Round 3 of the Homeless Housing, Assistance and Prevention (HHAP) Program. Subsequently, on November 15, 2022, City Council approved a motion authorizing the submission or a grant application to apply for, accept, and appropriate grant funding from Cal ICH for Round 4 of the HHAP Program.
The State's HHAP funds are designed to support regionally coordinated efforts between the County, Continuum of Care (CoC), and the City to expand and develop local capacity to address immediate homelessness challenges throughout the state. HHAP funds are focused on moving homeless individuals and families into permanent housing and ensuring those individuals and families maintain their permanent housing.
The City of Stockton’s current HHAP allocations total to $23,603,997:
• Round 1: $6,460,266
• Round 2: $3,053,944
• Round 3: $7,893,270
• Round 4: $6,196,518
The Regional HHAP 5 application is under review by Cal ICH. Cal ICH anticipates announcing awards and getting contract packages out to grantees in or around July of 2024. The City’s funding allocation for HHAP 5 is $7,153,178.87 and is based on HUD certification of the 2023 Point in Time Count findings for all jurisdictions.
Cal ICH specifies obligation and expenditure requirements for each Round of HHAP, as shown below.
|
|
HHAP 1 |
HHAP 2 |
HHAP 3 |
HHAP 4 |
|
Obligation Deadline |
50% by 5/31/2023 |
50% by 5/31/2023 |
50% by 5/31/2024 |
75% of initial disbursement* by 5/31/2025 |
|
Rqd. Amount to Obligate |
$3,230,132.72 |
$1,526,972.00 |
$3,946,634.88 |
$2,323,701.83 |
|
Amount Obligated |
$6,249,194.72 |
$3,053,944.00 |
$2,544,880.88 |
$494,849.46 |
|
Rqd. Obligation Met |
Yes |
Yes |
No |
No |
|
Expenditure Deadline |
100% by 6/30/2025 |
100% by 6/30/2026 |
100% by 6/30/2026 |
50% of initial disbursement by 5/31/2025 100% by 6/30/2027 |
|
Rqd. Amount to Expend |
$6,460,265.43 |
$3,053,944.00 |
$7,893,269.76 |
$1,549,134.56 (50%) $4,647,383.66 (100%) |
*Initial disbursement=$3,098,269.11
**Through December 31, 2023
Rqd=Required
The City has met HHAP Rounds 1 and 2 obligation requirements and is on target to meet Rounds 1 and 2 expenditure requirements. Round 3 funds have been contracted to provide low-barrier shelter operations, and about half of Round 3 and Round 4 funds ($6,639,757 in total) were obligated to a Homekey Round 3 permanent housing project, Alicia’s Place, through City Council Resolution (Attachment B - Resolution 2023-05-02-1207), contingent upon award notification by the state. The allocation to the Alicia’s Place project would have sufficiently met the City’s HHAP 3 and HHAP 4 obligation requirements.
The remaining HHAP 3 and 4 funds will be awarded in a manner consistent with the Updated Local Action Plan and multi-year spending plan for HHAP funds approved by motion by City Council on June 21, 2022.
Present Situation
The City was informed by the Department of Housing and Community Development on January 4, 2024 that its Homekey Round 3 application was denied. As a result, the City is now $1,401,753.62 short of meeting the HHAP 3 May 31, 2024 obligation requirement. Further, the City has approximately 13 months to re-obligate at least $1,828,853 and the same amount of time to spend $1,549,134.56 of HHAP 4 funds.
To optimize and meet HHAP obligation and expenditure deadlines, the budgeted permanent housing funds in the amount of $3,789,359 for HHAP 3 and $2,850,398 for HHAP 4 ($6,639,757 in total) were added to the 2024 Affordable Housing NOFA released on January 29, 2024.
The Housing NOFA closed on March 15, 2024. A total of 11 responses were submitted. The Economic Development Department (EDD) conducted a HHAP funding eligibility review.
• First, all projects were reviewed to determine if they meet HHAP eligibility for permanent housing uses.
o Seven projects were eligible.
• Next, eligible projects were reviewed to determine if they can reasonably meet HHAP obligation and spending deadlines.
o Three projects met this threshold.
The three eligible projects that could reasonably meet HHAP obligation and spending deadlines were subsequently evaluated and scored by the Review Team. Additionally, the three eligible project applications were shared with the County’s Neighborhood Preservation Department, who serves as the Collaborative Applicant for the CoC and is also a HHAP funding recipient, to ensure the projects align from their perspective with regional housing and homeless plans.
Based upon this review, EDD recommends two projects for HHAP 3 and 4 permanent housing funding. These projects will allow the City to optimize and meet HHAP funding and expenditure obligations, including the Youth Set-Aside requirement.
It is recommended that Council allocate an amount up to, but not to exceed, $600,000 of HHAP Program Round 3 and $400,000 of HHAP Program Round 4 grant funds to Delta Community Developers Corp for the Calaveras Quarters project.
It is also recommended that Council allocate an amount up to, but not to exceed, $3,189,359 of HHAP Program Round 4 and $1,549,134.56 grant funds to Delta Community Developers Corp for the Satellite Apartments project.
Project Descriptions
1. Calaveras Quarters by Delta Community Developers Corp.
|
Project Description |
Purpose and Amount of Funding Request |
Target Population |
# of Units |
Timeline |
|
Conversion/ Adaptive Reuse of a former 121-room motel into 68 one-bedroom units of affordable, permanent, and supportive housing. |
The project has fully expended its contingency and has experienced construction cost increases, unforeseen damages, and required upgrades resulting in a gap. Requested $1,000,000. Staff recommending funding full amount. |
Families and transition-age youth experiencing or at risk of homelessness. |
68 |
Completion is on track for January 2025, barring any further PG&E delays |
City Council adopted a Resolution on December 14, 2021 to authorize and allocate $6,050,000 of American Rescue Plan Act funds (Resolution 2021-12-14-1504) to the Housing Authority of the County of San Joaquin/Delta Community Developers, Inc. These funds provided the required match to leverage a $25,000,000 Homekey Round 2 application. Despite cost overruns the project remains on track and is expected to be completed in January 2025.
2. Satellite Apartments by Delta Community Developers Corp.
|
Project Description |
Purpose and Amount of Funding Request |
Target Population |
# of Units |
Timeline |
|
Rehabilitation of a 31-unit multi-family apartment building to serve as transitional housing for the Behavioral Health Bridge Housing Program. |
The property has significant deferred maintenance that has raised to the level of significant rehabilitation for health and safety. Requested $5,501,892. This project is scalable; staff recommending funding at $4,338,493.56. |
People experiencing homelessness who have serious mental illness and/or substance use disorder and are justice involved |
31 units preserved |
12/12/2025 completion |
FINANCIAL SUMMARY
There will be no financial impact to the City’s General Fund of any other unrestricted fund as a result of this action. This allocation is payable from the Special Grant Fund, Housing Division. There is sufficient funding available in the HHAP projects, Project #EH22056 and Project #EH23054, to support this effort.
Attachment A - Resolution 2022-06-21-1203
Attachment B - Resolution 2023-05-02-1207