HomeMy WebLinkAboutStaff Report 2312-2330CITY OF PALO ALTO
CITY COUNCIL
Special Meeting
Monday, March 18, 2024
Council Chambers & Hybrid
5:30 PM
Agenda Item
9.Adoption of a Resolution Authorizing Use of the City’s Activity (1) Permanent Local
Housing Allocation (PLHA) 2019, 2020, and 2021 Allocations for Predevelopment
Activities, Construction, and/or Permanent Financing of New Affordable Housing at the
Matadero Creek Affordable Housing Site, and Approve FY 2024 Budget Amendments in
the Permanent Local Housing Allocation Fund; CEQA Status – not a project.
City Council
Staff Report
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: Planning and Development Services
Meeting Date: March 18, 2024
Report #:2312-2330
TITLE
Adoption of a Resolution Authorizing Use of the City’s Activity (1) Permanent Local Housing
Allocation (PLHA) 2019, 2020, and 2021 Allocations for Predevelopment Activities,
Construction, and/or Permanent Financing of New Affordable Housing at the Matadero Creek
Affordable Housing Site, and Approve FY 2024 Budget Amendments in the Permanent Local
Housing Allocation Fund; CEQA Status – not a project.
RECOMMENDATION
Staff recommends that City Council take the following actions in support of the City using its
Activity (1) PLHA 2019, 2020, and 2021 Allocations:
1. Adopt the Resolution (Attachment A) authorizing use of the City’s Activity (1) PLHA
2019, 2020, and 2021 allocations for predevelopment activities, construction, and
permanent financing of new affordable housing at the Matadero Creek affordable
housing site identified in the Sobrato Development Agreement, approved on September
12, 2023; and
2. Amend the Fiscal Year 2024 Budget Appropriation Ordinance (Required 2/3 vote) for the
Permanent Local Housing Allocation (PLHA) Fund (Fund 253) by:
a. Increasing the Other Revenue estimate by $243,756; and
b. Increasing the Planning and Development Services Contract Services by $243,756.
EXECUTIVE SUMMARY
Permanent Local Housing Allocation (PLHA) Program funding is a permanent, ongoing annual
source of funding, but these funds need to be assigned to activities identified in the City’s 5-
Year PLHA plan. The City is preparing to receive approximately $243,756 in PLHA Activity (1)
funds, which were already programmed in the City’s 5-Year PLHA plan for affordable housing
activities.
Approval of the recommended actions would assign the PLHA Activity (1) funds for PLHA
Calendar Years 2019, 2020, and 2021 toward predevelopment activities, construction, and
permanent financing of new affordable housing at the Matadero Creek affordable housing site,
which is the dedicated affordable housing site identified in the approved Sobrato Development
Agreement1,2 and in the City’s Housing Element. Execution of the draft Resolution and City
submittal to HCD would allow HCD to release Calendar Year 2019 funds to the City by their
deadline of April 30, 2024.
BACKGROUND
3,4 The City’s 5-Year PLHA plan specified that the
anticipated total of $1,388,976 for the PLHA calendar years 2019 through 2023 would be used
for the following City priorities:
•Assistance to persons experiencing or at risk of homelessness (Activity (6)), including:
o Outreach and services to those experiencing homelessness,
o Operating expenses for the forthcoming Homekey shelter, and
•Affordable housing rental unit preservation, new construction, and operating subsidies
(Activity (1)).
1 City Council September 5, 2023 and September 12, 2023, City Manager Report #:2306-1633, 3200 Park
Boulevard/340 Portage [22PLN-00287 and 22PLN-00288]:
https://cityofpaloalto.primegov.com/Portal/Meeting?meetingTemplateId=13288.
2 Staff refers to the dedicated affordable housing site in the Sobrato Development Agreement at the Matadero
Creek affordable housing site as a placeholder name so that the City’s PLHA request for funds and future annual
reporting will not use the Sobrato name.
3 City Council authorized submittal of the City’s PLHA 5-Year Funding Plan at City Council Meeting October 24,
2022, Agenda Item 5, City Manager Report ID # 14715:
https://www.cityofpaloalto.org/files/assets/public/v/7/agendas-minutes-reports/agendas-minutes/city-council-
agendas-minutes/2022/20221024/20221024pccsm-amended.pdf;
4 The following activities are allowable under PLHA Section 301(a) Activity (1): The predevelopment, development,
acquisition, rehabilitation, and preservation of multifamily, residential live-work, rental housing that is Affordable
to Extremely low-, Very low-, Low-, or Moderate-income households, including necessary Operating subsidies.
The 5-Year PLHA plan contains the following funding distribution for Calendar Year amounts
known at the time of application:
5
Palo Alto is to receive $198,460 after the City submits a streamlined application in
Spring/Summer 2024. The 5-Year PLHA plan already assigns this Calendar Year 2022 funding as
follows:
•60% assigned to Activity (6) outreach and services;
•20% assigned to Activity (6) Homekey shelter operational expenses; and
•20% to Activity (1) affordable housing activities.
6 The City
Manager’s Office will request PLHA funding for Homekey shelter operating expenses later this
year. The Planning & Development Services Department submitted a request to HCD for PLHA
Activity (1) funds but needs Council budget recognition to receive and expend funds and a
resolution is the most efficient way to provide HCD with documentation confirming that
activities will be pursued.
ANALYSIS
5 HCD announces PLHA allocations each year via a Notice of Funding Availability (NOFA) for the preceding calendar
year. For Calendar Year 2022 PLHA allocations, the NOFA had a planned release of September 2023. However, the
NOFA was actually released in December 2023 with application materials following in February 2024. HCD now
reviews PLHA applications on an over-the-counter basis and staff will submit an application in Spring 2024 for the
City to receive Calendar 2022 funds.
6 City Council Meeting December 18, 2023, Agenda Item 17, City Manager Report # 2311-2216:
https://cityofpaloalto.primegov.com/Portal/Meeting?meetingTemplateId=13074.
Agreement Environmental Impact Report and has already directed for the project to occur. This
allows the Planning & Development Services Department and Real Estate to prepare for any
next steps to commence predevelopment activities, including preparation and release of a
Request for Information or a Request for Proposals for an affordable housing developer
partner.
th Cycle Housing Element period. The location and site control for
this future 100% affordable housing project has been approved by City Council through the
Sobrato Development Agreement process, which anticipates dedication of 3.25 acres of a
14.65-acre site to the City for the purposes of an affordable housing project and adjacent public
park.
•aggregating the available Activity (1) funds for one project responds to the significant
overall cost of affordable housing construction per bedroom and per unit;
•having more funds already dedicated and on hand could help expedite preconstruction
activities after an affordable housing partner is identified for the project; and
•using the funds for only one project reduces the City administrative time necessary to
prepare loan and other regulatory documents and time required for annual grant
reporting.
In the future, PLHA Activity (1) funds for Calendar Years 2022, 2023, and even future years
could be assigned to predevelopment activities, construction, and/or permanent financing for
the Matadero Creek affordable housing site, or the City could identify a different affordable
housing site.
FISCAL/RESOURCE IMPACT
Approval of the recommended actions would not have a fiscal or resource impact to the City
beyond what has already been directed by City Council for staff pursuit of new affordable
housing at the Matadero Creek affordable housing site and staff administration of PLHA grant
funding. Execution of the draft Resolution (Attachment A) is the most efficient way to provide
HCD with documentation confirming that activities will be pursued at the site so that PLHA
Activity (1) funds could be released. The PLHA Activity (1) funds will be available to cover a
portion of anticipated associated costs incurred by a future affordable housing developer
partner, such as for future architectural and engineering services. The City’s 5-Year PLHA plan
does not allocate PLHA funds toward staff administrative costs.
STAKEHOLDER ENGAGEMENT
The 5-Year PLHA plan was adopted at a City Council public hearing. The Sobrato Development
Agreement involved community meetings and multiple City Council public hearings. Staff did
not conduct any other stakeholder engagement, given that the recommended actions are
consistent with pursuing new affordable housing at the Matadero Creek affordable housing
site, consistent with PLHA grant administration duties, and involve budget recognition of
previously anticipated PLHA funds.
ENVIRONMENTAL REVIEW
Adoption of the draft Resolution and approval of budget amendments are not considered
projects under the California Environmental Quality Act (CEQA) per CEQA Guidelines
15061(b)(3). New affordable housing units at the Matadero Creek affordable housing site was
reviewed as part of the certified Environmental Impact Report for the Sobrato Development
Agreement, as documented in City of Palo Alto Resolution No. 10123.7
ATTACHMENTS
Attachment A: Resolution Directing Staff to Commence Predevelopment Activities for the
Matadero Creek Affordable Housing Site
APPROVED BY:
Jonathan Lait, Planning and Development Services Director
7 City Council September 5, 2023 and September 12, 2023, City Manager Report #:2306-1633, 3200 Park
Boulevard/340 Portage [22PLN-00287 and 22PLN-00288]:
https://cityofpaloalto.primegov.com/Portal/Meeting?meetingTemplateId=13288.
City of Palo Alto Resolution No. 10123: https://recordsportal.paloalto.gov/Weblink/DocView.aspx?id=61965
.
NOT YET ADOPTED
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0160136_20240220_ay16
Resolution No. ______
Resolution of the Council of the City of Palo Alto Directing Staff to
Commence Predevelopment Activities for the Matadero Creek
Affordable Housing Site
R E C I T A L S
A. On October 2, 2023, the City Council of the City of Palo Alto adopted Ordinance 5595,
adopting a Development Agreement for the redevelopment of the 14.65 acre property at
200-404 Portage Avenue, 3040-3250 Park Boulevard, 3201-3225 Ash Street, and 278
Lambert Avenue (“Development Agreement Project”).
B. One of the key public benefits provided under the Development Agreement is the
dedication of 3.25 acres of land to the City, of which approximately one acre is intended
as the site of a future affordable housing project (“Matadero Creek Affordable Housing
Site” or “Site”).
C. The certified Environmental Impact Report (“EIR”) for the Development Agreement
Project included analysis of up to 75 affordable rental units on the site to be dedicated to
the City.
D. On October 2, 2023, the City Council adopted Ordinance No. 5600, rezoning the Site to
support the future development of a housing project.
E. Several aspects of site preparation for the Site are completed or underway (e.g. Phase I
reports, relocation of monitoring wells, and underground utility installation to
accommodate the future development);
F. The City has an urgent need for the development of affordable housing and has been
awarded funds under the Permanent Local Housing Allocation (“PLHA”) grant program.
G. On July 14, 2023, the Department of Housing and Community Development (“HCD”) and
the City executed a Standard Agreement 22-PLHA-17554 which establishes the
requirements and procedures for accessing the City’s entitled PLHA 2019-2023
Allocations.
H. The City desires to use the City’s Activity (1) PLHA allocations for calendar years 2019,
2020, and 2021, totaling approximately $243,756, for predevelopment activities,
construction of, and/or permanent financing for new affordable housing units at the Site,
at the affordability level of at or below 60% AMI for a minimum of 55 years.
NOT YET ADOPTED
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0160136_20240220_ay16
NOW, THEREFORE, the Council of the City of Palo Alto RESOLVES as follows:
SECTION 1. The City Manager or designee is directed to issue a Request for Information or
Request for Proposals to solicit interest in development of an affordable housing project at the
Matadero Creek Affordable Housing Site.
SECTION 2. The City Council further directs the City Manager or designee to develop a timeline
for predevelopment activities and construction of an affordable housing project at the Site that
would result in occupancy of the project no later than June 30, 2030.
SECTION 3. The City Council further directs the City Manager or designee to continue or
commence all feasible predevelopment activities on the site as soon as practical.
SECTION 4. To the extent PLHA funds are disbursed to the City to support predevelopment,
construction, and permanent financing for an affordable housing project on the Site, the City
certifies that it will use all such funds in a manner consistent and in compliance with all applicable
state and federal statutes, rules, regulations, and laws, including without limitation all rules and
laws regarding the PLHA Program, as well as any and all contracts the City may have with HCD, in
accordance with Resolution No. 10080.
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NOT YET ADOPTED
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SECTION 5. The Council finds that the adoption of this resolution does not meet the definition
of a project under Public Resources Code Section 21065, thus, no environmental assessment
under the California Environmental Quality Act is required. The environmental impacts of an
affordable housing project of up to 75 units at the Site were analyzed in the 200 Portage
Townhome Project Final EIR, which was certified by Resolution No. 10123 on September 12,
2023.
INTRODUCED AND PASSED:
AYES:
NOES:
ABSENT:
ABSTENTIONS:
ATTEST:
__________________________ _____________________________
City Clerk Mayor
APPROVED AS TO FORM: APPROVED:
__________________________ _____________________________
Assistant City Attorney City Manager
_____________________________
Director of Planning and
Development Services