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ADOPT A RESOLUTION TO APPLY FOR AND RECEIVE THE SAN JOAQUIN COUNCIL OF GOVERNMENTS REGIONAL EARLY ACTION PLANNING (REAP) GRANTS PROGRAM FUNDS
recommended action
RECOMMENDATION
It is recommended that the City Council adopt a Resolution authorizing the City Manager, or his designee, to apply to the San Joaquin Council of Governments (SJCOG) for Regional Early Action Planning Grant Program (REAP) funds in the amount of $621,150 and, if awarded, authorize the City Manager to execute the agreement with SJCOG.
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Summary
The San Joaquin Council of Governments (SJCOG) received Regional Early Action Planning (REAP) grant funds from the State Department of Housing and Community Development (HCD) for regional planning activities to accelerate housing production in San Joaquin County. SJCOG proposes allocating a portion of the grant funds for local County and Cities, including Stockton, to perform specified planning activities that will accelerate housing production. Based on population, the City is eligible for up to $621,150 in a non-competitive application process.
Staff has identified various planning activities that align with SJCOG’s REAP objective to accelerate housing production. The proposed planning activities would implement General Plan housing policies to increase housing capacity and production. Those activities include 1) technology upgrades to the City’s development permitting and Geographic Information Systems (GIS), and 2) neighborhood planning for up to three targeted areas within the City.
Staff recommends Council approval of an application to SJCOG for the REAP Grant Program for the proposed planning activities, and if awarded, authorizing the City Manager to execute the agreement, thereby accepting such funds. Grant funds would be applied to hire consultant team(s) to implement the proposed planning projects. The deadline for submittal of grant application letters to SJCOG is June 30, 2021 (Attachment A). REAP funds must be expended and invoiced by December 2023.
The City has already applied for Senate Bill 2 (SB2) and Local Early Action Planning (LEAP) Grant funds for other planning activities to increase housing capacity and accelerate housing production. Should the REAP funds be awarded to the City, staff would have approximately two million dollars for policy-related analysis and projects for the three State grants.
DISCUSSION
Background
In the 2019-20 Budget Act, Governor Gavin Newsom allocated $250 million for all regions, cities, and counties to do their part by prioritizing planning activities that accelerate housing production to meet identified needs of every community. With this allocation, HCD established the Regional Early Action Planning Grant Program (REAP) with $125 million to regions. REAP provides one-time grant funding to regional governments and regional entities for planning activities that will accelerate housing production and facilitate compliance in implementing the sixth cycle of the Regional Housing Needs Allocation. SJCOG has received REAP funds from HCD and has opted to sub-allocate a portion of its REAP funds to its member agencies in proportion to each member’s population.
Based on population, the City of Stockton is eligible for $621,150 in non-competitive grant funds. The purpose of REAP funds is to advance any of the four Regional Housing Priorities adopted by the SJCOG Board in September of 2020, which include:
1. Development of the COG’s regional housing trust fund;
2. Streamlining the development process;
3. Improving regional planning and coordination for a regional project pipeline;
4. Supporting local jurisdictions where Covid-19 negatively impacted the production of housing.
Similar to the Local Early Action Planning Grant (LEAP) the City applied for last summer, REAP funding is prioritized and aligned with planning activities that accelerate housing production to meet identified needs of every community. While LEAP allowed for direct fund disbursement from the State to cities and counties, REAP allows for fund disbursement through a regional government, like SJCOG. The State allocates REAP funds to the COG, which reviews City and County applications on behalf of the State for fund disbursement. Neither fund is eligible for activities that are unrelated to accelerating housing production, unrelated to preparation and adoption of planning documents and process improvements, that obstruct or hinder housing production, capital financing for individual development projects, and administrative costs. The final grant application is due June 30, 2021.
Present Situation
Staff recommends using the REAP funds to address SJCOG’s second and third priorities, specifically for technology upgrades to the City’s permitting and GIS systems, and neighborhood planning for up to three targeted areas within the City. These planning activities will complement activities applied for under the LEAP and SB 2 planning grant programs to enable the City to attract housing development.
The proposed planning activities identify a strategy that combines State housing goals and objectives (i.e., pro-housing policies), General Plan consistency, and a thoughtful development approach. These activities will reduce barriers to housing development, demonstrate a nexus with increased housing production by facilitating increased infrastructure capacity, increased entitlements, and streamlining of processes.
Technology Upgrades
Proposed technology upgrades will integrate the City’s existing Accela permitting system with the City’s existing Geographic Information System (GIS) software and expand online access to customers through the implementation of “decision tree” software. These technological upgrades will create efficiencies for the public using interactive tools to facilitate self-guided answers to questions such as: which permit application is needed, how the approval process is structured, and which areas of the City are appropriate for housing development. Integration of the Accela and GIS systems will enable staff to streamline housing development inquiries and improve application response times through a more efficient system and better access to housing information in one integrated system.
Neighborhood Planning
Staff is exploring planning efforts that result in development-ready sites for housing construction. Existing and proposed SB2 and LEAP Grant activities include General Plan and Zoning amendments, Development Code Overhaul, a Strategic Housing Action Plan, Housing Element Update, and objective design standards. To increase the likelihood of development-ready sites, staff proposes analyzing at least three neighborhoods for further research and possible placemaking activities.
Proposed planning for three targeted neighborhoods will develop strategies to accommodate housing through infrastructure development and improve coordination with the development community. Neighborhood analysis would include:
• Site-specific investigation of onsite constraints. This could include specific right-of-way designs, drainage improvements, and possible site-specific analysis to determine buildable areas and allowable uses to market a site.
• Infrastructure deficiencies. This could include the identification of site-specific infrastructure deficiencies and identify feasible solutions. Could result in coordination with the City’s Capital Improvement Plan (CIP), state funding, and public-private partnerships to reduce a project’s upfront cost and prepare a site for development.
• Possible objective design standards or master plan approvals. This effort could include area-specific design standards to define future projects and expedite planning and building review. If property owners agree, this could also include City initiated entitlement review (i.e., Master Development Plans) to review potential impacts and allow future development to proceed with building permit review.
• Specific market analysis (i.e., pro formas for catalyst sites). Like the site-specific investigation, staff could review sub-market areas of the City to determine the actual cost and ways to minimize those costs through upfront (i.e., impact fees) or ongoing (i.e., taxes, fees, leasing) waivers. This analysis could include Capitalization Rate (Cap Rate) and Internal Rate of Return (IRR) analysis to determine when a project or investor could expect a Return on Investment (ROI).
• Prepare environmental clearance documents for the catalyst sites to fast track filing for building permits for construction. While the General Plan reviewed citywide programmatic impacts on the environment, staff would investigate area-specific impacts and solutions to strengthen developer confidence when applying for entitlement review. This effort could include Phase-1 (i.e., brownfields), traffic, air quality, or building safety assessments for potential housing projects.
Staff has identified the South Airport Way corridor, the Little Manilla/Gleason Park neighborhood, and the downtown Robert J. Cabral ACE Station neighborhood as three possible catalytic areas that could benefit from additional planning effort. These areas were selected for further analysis due to the following factors:
• The neighborhoods are included in the 2040 Envision Stockton General Plan Figure 2-5 “Preferred Scenario” for corridors where “exemplifying sites in need of investment to fuel positive change” includes “the eastern part of Downtown, and South Stockton.”
• In 2020, the California Strategic Growth Council (SGC) awarded a $10,834,490 Transformative Climate Communities (TCC) Grant to the City. This grant includes multiple partners and projects to reduce greenhouse gas emissions (GHG), strengthen the local economy, and improve public health for communities in the South Stockton area. A majority of the neighborhood areas fall within the Transformative Climate Communities (TCC) Grant project area.
• The three neighborhoods are within the South Stockton Promise Zone (SSPZ), where federal and local partners collaborate to boost economic activity, improve educational opportunities, reduce crime, and leverage private investment to improve the quality of life in these areas.
• The three neighborhoods are part of a Stockton Opportunity Zone (SOZ), a program that offers tax incentives programs for investment in low-income communities through a Qualified Opportunity Fund.
• HCD Opportunity Maps display all three neighborhoods as low resource areas. Resources can include access to adequate infrastructure, employment, and housing.
• The Cabral Station neighborhood is within the San Joaquin Regional Rail Commission (SJRRC) planning area. This planning area encourages future transit-oriented housing to complement the expansion of SJRRC’s rail services.
As discussed above, existing SB2 and LEAP Grant efforts will integrate strategies to promote development-ready housing sites by removing governmental constraints, policy implementation, and research into funding and partnerships. REAP activities will further those efforts, improve technological tools used in development review, and investigate catalytic areas. Staff anticipates REAP projects could result in specific constraints analysis (i.e., CEQA special studies), area plans or approvals (i.e., Master Development Plans), or project-level fiscal analysis (i.e., Pro-Formas) to encourage public-private partnerships and funding.
REAP planning grant funds will provide an opportunity to strategically leverage housing tools to make a greater impact in neighborhoods that have traditionally lacked resources. For instance, the resulting planning documents will eliminate much of the up-front process work that is typically the obligation of the developer and may be used as a springboard to apply for future federal and State grants for construction of infrastructure. Efforts that lead to decreasing overall development costs will enable developers to increase housing supply and play an important role in moderating price and rent appreciation in the broader housing market by alleviating demand.
With respect to the first SJCOG priority, the agency is preserving nearly $240,000 of its REAP funds to develop the framework for a Housing Trust Fund. Housing trust funds are special funds established by city, county, or state governments that receive ongoing dedicated sources of public funding to support the preservation and production of affordable housing. These fees are collected by the administering jurisdiction or agency and placed into a local or regional housing trust to be administered to select projects. Housing trust funds can come from development impact fees, in-lieu fees, or other taxes or fees dedicated to affordable housing. Fees are be based on need for new affordable housing and the amount needed to make an affordable project viable for the developer.
With SJCOG exploring a new regional housing trust fund, staff does not recommend using REAP funds to establish a new local housing trust and fees. Even with REAP funding, the resources to create and administer a City housing trust would not be cost-effective. In addition, the City is already in the process of conducting a linkage fee analysis to determine the extent, if any, to which new development products could potentially support new housing fee.
With respect to priority number four, staff does not recommend applying for COVID-19 grant funding, as the City does not appear to qualify in this area. Even if funds were awarded, it would not be enough to offset the additional staff work required. Furthermore, the City has already addressed development impacts of COVID-19 by adding staff to CDD and EDD with a focus on supporting increased housing production and administration of increased grant funding sources.
Environmental
The recommendation in this report is not a project under the California Environmental Quality Act (CEQA) because it does not involve any commitment to a specific project which may result in a potentially significant physical impact on the environment, as contemplated by Title 14, California Code of Regulations, Sections 15378(b)(2) and 15378(b)(4) and is, therefore, not subject to CEQA pursuant to CEQA Guidelines Section 15060(c)(3).
FINANCIAL SUMMARY
The City is eligible to receive up to $621,150 in reimbursements for eligible expenditures with no local fund match requirements. The proposed projects meet the goals of SJCOG’s adopted Regional Housing Priorities and are non-competitive based on population. Once approved, the City’s Special Grant Fund’s budget will be amended in the amount of $621,150 for reimbursable expenditures related to the above projects. The estimated reimbursement revenue will likewise be increased in the amount of $621,150. There is no impact to the General Fund, or any other restricted fund, from this action.
Attachment A - REAP Grant Application