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ADOPT A RESOLUTION APPROVING A GRANT TO STAND AND/OR OTHER ELIGIBLE ORGANIZATION FOR PROPERTY ACQUISITION AND DEVELOPMENT OF A MINIMUM OF ONE AFFORDABLE HOUSING UNIT
recommended action
RECOMMENDATION
It is recommended that the City Council adopt a resolution:
1. Approving up to $800,000 Community Development Block Grant (CDBG) grant to Stocktonians Taking Action to Neutralize Drugs (STAND) and/or other eligible organization for the purpose of acquiring property under a scattered site housing acquisition program to serve justice-involved persons;
2. Approving up to $40,000 in HHAP Round 4 funding for furnishings and equipment for any property acquired;
3. Approving the allocation of one unit of affordable housing for the scattered site project pursuant to Article XXXIV of the California Constitution; and
4. Authorizing the City Manager or designee to defund and reallocate awarded funding if the project is unable to meet the underwriting and general City affordable housing requirements. If defunded, the funding is to be reallocated to eligible projects that can meet the funding source agency timelines and general requirements.
5. Authorizing the City Manager, or designee, to execute all documents and take all necessary and appropriate actions to carry out the purpose and intent of the resolution.
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Summary
Stocktonian’s Taking Action to Neutralize Drugs (STAND) is proposing acquisition of one house under its scattered site housing program to serve low-income, justice-involved persons, in partnership with local service providers. Any property acquired will be used for the purpose of providing affordable housing opportunities to persons with justice-involved backgrounds, including but not limited to those being released from law enforcement facilities.
In addition, due to the proposed public financing, the development of the project must be approved pursuant to Article XXXIV (34) of the California Constitution, which requires a local election to approve affordable housing projects. In 2010, local voters gave the City Council the authority to approve up to 500 units per year. The proposed units are within this limit.
DISCUSSION
Background
The City receives annual allocations of Community Development Block Grant (CDBG) funds from the U.S. Department of Housing and Urban Development (HUD) for the purpose of providing assistance to low-income residents. CDBG funds are used for a wide variety of activities that benefit low-income residents, including but not limited to the provision of public services, property acquisition for affordable housing purposes, and economic development activities.
In July of this year, the City of Stockton Economic Development Department (EDD) released a Notice of Funding Availability (NOFA) announcing the availability of approximately $4,551,524 in funding from CDBG and other funds for the purpose of property acquisition leading to the development of affordable housing.
EDD received several property acquisition proposals and funded all eligible projects through Council action on October 1, 2024 (Attachment A - Resolution 2024-10-01-1209). There are remaining CDBG funds that need to be spent to meet the CDBG expenditure threshold by the April 2025 deadline, and staff recommends proceeding with funding a minimum of one unit under STAND’s scattered site housing program and/or any other eligible organization that meets the CDBG program’s capacity requirements, as determined by EDD.
Housing for justice-involved individuals can be difficult to produce. A scattered site approach allows compatible individuals to be housed together, in some cases offering additional peer support benefits. A high percentage of the City’s homeless population face barriers to housing, which often include those with justice-involved backgrounds.
Many individuals reentering the community after incarceration struggle to secure housing. Landlords often reject justice-involved applicants due to their lack of credit history, rental history, and the stigma of incarceration. STAND will seek to provide safe and secure housing as well as a stable rental history that formerly incarcerated individuals may build upon in the years following their reentry. Suitable and stable housing for those returning home is often the most critical factor in an individual’s successful reentry. STAND understands that reentry is a lifelong process and that early planning, coupled with intensive case management and stable housing, lead to better outcomes, deceased recidivism, and safer communities.
Present Situation
EDD has remaining CDBG funds that need to be spent to meet its timeliness expenditure threshold and has identified a partnership opportunity with STAND to serve an underserved population - justice-involved individuals - through an affordable housing project.
This project would enable the City to use CDBG resources to meet the expenditure threshold by the April 2025 deadline without facing HUD ramifications if not met.
STAND is a grassroots organization, founded in the late 1980s, dedicated to the elimination of drug abuse in the community through various means, including the provision of affordable housing. STAND provides many other services to Southeast Stockton, such as: after school tutoring, youth basketball, and hosting events like National Night Out and holiday events.
STAND has experience providing affordable housing opportunities on a scattered site basis in partnership with local service providers to deliver supportive services to its target population, which often includes homeless individuals. To date, STAND has acquired, rehabilitated, and sold over 365 houses throughout Stockton and San Joaquin County to low-income households. STAND has also since purchased and rehabilitated four apartment buildings that are now available to low and very low-income families.
STAND will purchase an existing single-family home in the City of Stockton and fully furnish the house with appliances, furniture, and living essentials. STAND has identified several potential properties and has the necessary partnerships in place to deliver on this project by the City’s deadlines.
The City’s CDBG investment for the acquisition of property will be secured via a deed of trust and affordable regulatory agreement requirements to ensure the property serves income-eligible individuals at or below 80% of the area median income, as required by HUD.
Compliance with Article XXXIV
Article XXXIV of the California Constitution requires a local election to approve affordable housing projects when the majority of the units are financed in whole or in part by the local government. In November 2010, local voters gave the City Council the authority to approve the development of up to 500 publicly assisted low-income housing units each year for a ten-year period. The Council is being asked to allocate one of the authorized units to this project. The units being proposed by STAND are within the limit approved by the voters.
FINANCIAL SUMMARY
The proposed resolution will have no financial impact on the General Fund or any other unrestricted fund. There is sufficient budget available to support this recommendation. The $800,000 of CDBG funding will be payable from fund 230, sub-fund 231. The $40,000 of HHAP Round 4 funding will be payable from special grant fund 280, sub-fund 282.
Attachment A - Resolution 2024-10-01-1209