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ADOPT A RESOLUTION AUTHORIZING THE CITY MANAGER, OR HIS DESIGNEE, TO APPLY TO THE SAN JOAQUIN COUNCIL OF GOVERNMENTS FOR REGIONAL EARLY ACTION PLANNING 2.0 GRANT PROGRAM (REAP 2.0) FUNDS IN THE AMOUNT OF $969,000 AND, IF AWARDED, AUTHORIZE THE CITY MANAGER TO EXECUTE THE AGREEMENT WITH THE SAN JOAQUIN COUNCIL OF GOVERNMENTS
recommended action
RECOMMENDATION
It is recommended that the City Council:
1. 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 2.0 Grant Program (REAP 2.0) funds for an amount estimated to be $969,000; and
2. If awarded, authorize the City Manager to execute the agreement with SJCOG and take whatever actions are necessary and appropriate to carry out the purpose and intent of the resolution.
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Summary
REAP 2.0 is a State program intended to accelerate infill housing development, reduce Vehicle Miles Traveled (VMT), increase housing supply at all affordability levels, affirmatively further fair housing, and facilitate the implementation of adopted regional and local plans to achieve these goals. In 2023, the State originally allocated approximately $10.6 million in one-time REAP 2.0 funds to SJCOG for regional and local housing planning activities to accelerate housing production and facilitate compliance in implementing the sixth cycle of the Regional Housing Needs Allocation (RHNA). However, due to the recent State budget deficit, SJCOG anticipates only half of the allocation to be available. SJCOG is releasing these funds to member agencies by means of a self-scoring pass-through grant application process, with applications due by the end of April 2024.
Staff has identified various capital projects and planning activities for the Downtown area that align with SJCOG’s REAP 2.0 program objectives. These projects will implement General Plan housing policies to increase housing capacity and production while reducing VMTs by utilizing infill locations and coordinating housing projects with active transportation and transit networks.
Staff recommends Council approval of an application to SJCOG for the REAP 2.0 Grant Program for eligible REAP 2.0 capital projects and/or planning activities, and if awarded, authorization for the City Manager to execute the agreement, thereby accepting such funds. REAP funds must be encumbered by September 2025.
DISCUSSION
Background
In 2021, the City was awarded $621,150 in funding under the 2019 Regional Early Action Program (REAP 1.0). In addition to Permit Center software upgrades, this funding was allocated to planning activities supporting the acceleration of housing production in three Neighborhood Areas: South Airport Corridor, Little Manila/Gleason Park, and Cabral/East Cabral.
Building upon REAP 1.0’s efforts to accelerate housing production, REAP 2.0 was introduced to expand the program focus by integrating housing and climate goals and allowing for broader planning and implementation investments, including infrastructure. REAP 2.0 seeks to accelerate infill housing development, reduce Vehicle Miles Traveled (VMT), increase housing supply at all affordability levels, affirmatively further fair housing, and facilitate the implementation of adopted regional and local plans to achieve these goals.
Initially, REAP 2.0 was funded statewide in the amount of $600 million from the State General Fund. SJCOG was identified for receiving an allocation of approximately $10.6 million for the region in one-time grant funding for regional and local housing planning activities to accelerate housing production. It was anticipated that Stockton’s share of the REAP 2.0 allocation was approximately $1.93 million.
Present Situation
During recent 2024 State budget discussions, the State’s Legislative Analyst’s Office revealed they are projecting a budget shortfall of approximately $73 billion. To compensate for this shortfall, State representatives are looking to reduce spending on non-essential programs to reduce the deficit. This means programs like REAP 2.0 will likely experience funding cuts that may be reduced by half or more for the amount of money SJCOG, and the City may receive.
While the final reduction amount will not be finalized until the State budget is complete, SJCOG staff now anticipates Stockton will receive somewhere between $484,644 and $969,000 in REAP 2.0 funding which is almost half of the original $1.93 million anticipated. While SJCOG staff is assuring that a minimum $484,644 in funding will be available for Stockton, SJCOG staff advises that any proposed project be broken into phases, should the State decide to cut funding further and not award the full $969,000. Based on this information, Staff proposes dividing the project scope of work into two phases for reimbursement, with the first phase consisting of work effort totaling $484,644 and the second phase including any remaining balance.
Grant guidelines and application have been released, with the submittal deadline of expected late April of 2024, for SJCOG to have encumbered the funds starting in September of 2025.
Community Development, Economic Development, Public Works and Municipal Utilities Department staff collaborated to determine the most effective project that could result in increased housing opportunities and generate the most development momentum. Upon review and discussion, it was determined that this should occur in downtown Stockton. The proposed project consists of the preparation of a city-initiated Master Plan to facilitate the development of new housing and linkages to public transit. The Master Plan is not intended to be a new policy document, but rather the first steps in establishing new capital improvement projects, partnerships, and funded mechanisms to ensure completion of said projects within a reasonable timeframe. The Master Plan would include:
• Use of consultants for design and opportunities/strategies for financing. This would establish a design concept for future CIP and funding mechanisms.
• Outreach to establish interested owners, businesses, developers, consultants, officials, regional partners, and others with interest in the downtown area.
• Hiring a consultant to explore funding mechanisms to achieve the design concept to further leverage future investment dollars. This can include the creation of an Enhanced Infrastructure Financing District (EIFD), special tax districts, bonds, grants, new market tax credits, private investment, and other options to achieve development of the downtown in a timely manner.
While the City has programs to assist the downtown area, it mostly relies on private investment for the improvements. The Master Plan would provide for a more proactive approach in establishing design, improvements, and how the city and private assistance could fund the work. The Master Plan is to be more construction-oriented and explore funding options that would expedite the improvements by providing financial assistance to both the public and private parties tasked with its success.
The Master Plan Area would be bounded by Flora Street to the North, Union Street to the East, Main Street to the South and the Mormon Slough to the West. The area was chosen due to the high density of leverageable dollars and potential projects located within the boundaries. Those include:
1. Robert J. Cabral Station
2. Downtown Transit Center
3. Possible workforce development centers
4. Current affordable housing projects and others in the pipeline
5. Several Brownfield sites.
6. Vacant/underutilized parcels
The project area also links to key Neighborhood Action Plans and investment in this area is supported by the Housing Action Plan, the Economic Development Strategic Action Plan. There is also overlap with the upcoming Caltrans Transportation Planning grant with SJCOG that will analyze the Downtown transportation network and identify programming recommendations to improve mobility and advance Transit Oriented Development (TOD) opportunities.
To submit a REAP 2.0 application to SJCOG, staff recommends authorizing the City Manager, or his designee, to apply for REAP 2.0 to fund efforts to establish a Downtown Master Plan. By supporting capital projects proposed by the Downtown Master Plan, the City can build upon the groundwork laid out for housing production while addressing neighborhood issues and supporting resident and employment priorities.
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 current allotted to receive between $484,644 and $969,000 in reimbursements for eligible expenditures with no local fund match requirements. If awarded, the City’s Special Grant Fund’s budget will be amended in the amount of between $484,644 and $969,000 for reimbursable expenditures related to eligible REAP 2.0 projects.
During 2024 State budget discussions, the State’s Legislative Analyst’s Office revealed they are projecting a budget shortfall of approximately $73 billion. To compensate for this shortfall, State representatives are looking to reduce spending on non-essential programs to reduce the deficit. This means programs like REAP 2.0 will see funding cuts that will reduce the amount of money SJCOG, and the City will receive. While the City is currently allotted to receive between $484,644 and $969,000, SJCOG staff has cautioned potential applicants that the State’s current budget deficit could impact future disbursement of the REAP 2.0 funds as the State looks to reducing spending for designated programs.
While the SJCOG staff has assured the City, at minimum $484,644 in funds will be available and likely a maximum of $969,000 in funding could be available, SJCOG staff recommends the reimbursement amount be broken into phases should the State decide to cut funding further and not award the full $969,000. City Staff proposed to divide the work scope into two Phases for reimbursement, with the first phase consisting of work effort totaling $484,644 and second phase including the remaining balance of $969,000. In the event the State withdraws payment of the entire $969,000, the City could either halt the remaining work items to avoid General Fund expenditures or move forward at a cost to the City.