AGENDA STAFF REPORT

Agenda Item AGENDA STAFF REPORT ASR Control 19-001228
MEETING DATE:	12/17/19
legal entity taking action:	Board of Supervisors and Orange County Housing Authority
board of supervisors district(s):	All Districts
SUBMITTING Agency/Department:	OC Community Resources (Approved)
Department contact person(s):	Dylan Wright (714) 480-2788
	Richard Sanchez (714) 834-2830

Subject: Amended Supportive Housing Spending Plan and 2020 Notice of Funding Availability

ceo CONCUR

County Counsel Review

Clerk of the Board

Concur

No Legal Objection

Discussion

3 Votes Board Majority

Budgeted: Yes

Current Year Cost: $13,000,000

Annual Cost: N/A

Staffing Impact:

# of Positions:

Sole Source: N/A

Current Fiscal Year Revenue: N/A

Funding Source: See Financial Impact Section	County Audit in last 3 years: No

Prior Board Action: 12/18/2018 #24, 06/12/2018 #S2A, 04/24/2018 #38

RECOMMENDED ACTION(S):

1.	Approve the Amended Mental Health Services Act $70.5 Million Permanent Supportive Housing Spending Plan and direct staff to proceed with implementing the recommendations under the Amended Spending Plan as described below.

Acting as the Board of Supervisors, the Board of Commissioners to the Orange County Housing Authority and as the Board of Commissioners to the Orange County Housing Authority, acting in its capacity as Housing Successor Agency:

Approve the Recommended Changes in Policy and Process for the 2020 Supportive Housing Notice of Funding Availability.

Authorize the OC Community Resources Director or designee to issue the 2020 Supportive Housing Notice of Funding Availability with an emphasis on developing extremely low-income housing in a combination of up to $13 million in Orange County Housing Successor Agency funds, Federal HOME Investment Partnerships Program funds and Mental Health Services Act funds and utilize up to 200 Housing Choice Project-Based Vouchers and return to the Board of Supervisors for funding commitments to individual projects.

SUMMARY:

Approval of the Amended Mental Health Services Act $70.5 Million Permanent Supportive Housing Spending Plan will allow the County to support the continuum of care by moving forward with projects that will bring more affordable and supportive housing units online for homeless or at risk of homelessness persons with severe and persistent mental illness and approval of the 2020 Supportive Housing Notice of Funding Availability will allow continued investment to support the production of affordable and supportive housing in Orange County.

BACKGROUND INFORMATION:

The Amended Mental Health Services Act $70.5 Million Permanent Supportive Housing Spending Plan

On June 12, 2018, the Board of Supervisors (Board) approved the Mental Health Services Act (MHSA) $70.5 million Permanent Supportive Housing Spending Plan (Plan). The Plan was the result of a collaboration between the CEO’s Office, OC Community Resources (OCCR), and Health Care Agency (HCA). Under the Plan, the Board directed staff to support funding then current and new/upcoming MHSA permanent supportive housing projects through allocation of the $70.5 million to the California Housing Finance Agency’s (CalHFA) Special Needs Housing Program (SNHP or Program). This Program was created by the State as a successor to the MHSA program that concluded in 2016 to allow local jurisdictions the ability to continue allocating local MHSA dollars to CalHFA for use in development of MHSA eligible housing. In September 2018, CalHFA issued an initial notice to jurisdictions that they would discontinue the Program considering the passage of Proposition 2 and the creation of the No Place Like Home (NPLH) program. On November 29, 2018, CalHFA provided a final notice to counties that the SNHP would be discontinued and no longer accept additional applications for eligible projects after January 3, 2020. To date, $40 of the $70.5 million has been allocated to SNHP, which has provided funding for the development of 296 units of MHSA eligible housing throughout Orange County. As such, $30.5 million of the original $70.5 million is available to support other housing initiatives. Staff makes the following recommendations for spending the remaining $30.5 million:

Recommendation 1. Allocate up to $10 million to the 2020 Supportive Housing Notice of Funding Availability.

Recommendation 2. Allocate up to $20.5 million to the Orange County Housing Finance Trust (Trust).

County Counsel has advised that in order to avoid any risk of reversion of the $20.5 million, an agreement between the Trust and the County must be in place before any money is transferred to the Trust. Staff will work with County Counsel on developing the agreement and return to your Board for approval.

HCA and OCCR, or in the alternative, the Orange County Housing Authority will also utilize a Memorandum of Understanding to facilitate the use of the $10 million in the 2020 Supportive Housing Notice of Funding Availability.

Upon approval of the Amended Plan, as recommended above, staff will begin work immediately to implement and include updates to the Board through the recurring housing funding strategy/supportive housing Board memo.

The 2020 Supportive Housing Notice of Funding Availability

On November 10, 2015, the Board of Supervisors (Board) approved issuance of the 2016 Permanent Supportive Housing Notice of Funding Availability (2016 PSH NOFA). The objective of the 2016 PSH NOFA was to provide up to $8 million in HOME Investment Partnership Act (HOME) funds and/or Orange County Housing Successor Agency (HSA) funds and up to 100 Project-Based Vouchers (PBV) for the acquisition, new construction and acquisition/rehabilitation of supportive housing for extremely low-income households who are experiencing homelessness in Orange County. The 2016 PSH NOFA is one of the strategies implemented by the County of Orange (County) to align resources to end homelessness through the development of supportive housing. On April 24, 2018, the Board approved the issuance of Addendum 1 to this 2016 PSH NOFA, which increased the amount of funding by $4 million, to a total of $12 million, under this NOFA. Addendum 1 also increased the number of Veterans Affairs Supportive Housing (VASH) and/or Housing Choice Vouchers (HCV) by 100, to a total of 200 vouchers, and approved modifications including, but not limited to, increases to the per unit subsidy limits for projects located in participating cities. On December 18, 2018, the Board approved an additional increase in funding by $2 million, to a new combined total of $14 million in HOME and/or HSA funds and the utilization of up to 50 additional VASH vouchers.

Since issuance of the 2016 PSH NOFA, the County has financially assisted and restricted over 200 units of housing for extremely low-income households experiencing homelessness. In addition, the County’s capital funds and voucher commitments to these developments helped leverage additional funding for the development of more than 500 units of affordable housing. The County has exhausted the 2016 PSH NOFA funds and vouchers and is taking the opportunity to update existing policies. Staff drafted recommended policy and process changes to the current 2016 PSH NOFA and held an input and feedback session on October 23, 2019.

The final recommended changes in policy and process for the 2020 Supportive Housing Notice of Funding Availability are included in Attachment B. The recommended changes are updates that reflect industry standards and prioritize funding and vouchers for County Special Needs Housing Program and No Place Like Home developments.

The recommendations for issuance of the 2020 Supportive Housing Notice of Funding Availability will continue to place an emphasis on developing extremely low-income housing as part of a comprehensive approach to support the County’s Housing Funding Strategy to develop 2,700 supportive housing units.

The Project Advisory Committee of the Housing & Community Development Commission concurred with staff recommendations at their November 12, 2019, meeting.

Compliance with CEQA: This recommended action is not a project within the meaning of CEQA Guidelines Section 15378(b)(4) and is therefore not subject to CEQA, since it does not have the potential for resulting in either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment. The approval of this agenda item does not commit the County to a definite course of action regarding a project since it is for approval of funding and vouchers to allow the continued support of the production of supportive housing in Orange County. This proposed activity is therefore not subject to CEQA. Any future action connected to this approval that constitutes a project will be reviewed for compliance with CEQA.

Compliance with NEPA: The proposed activity is Exempt under Section 24 CFR 58.34(a)(3).

FINANCIAL IMPACT:

Funding sources include up to $3 million in Housing Successor Agency (State) funds and HOME (Federal) funds, up to $10 million in Mental Health Services Act (State) funds and project-based vouchers funded through the OC Housing Authority Fund (Federal) for a maximum combined total of $13 million. Appropriations for these actions are included in FY 2019-20 Budgets.

STAFFING IMPACT:

N/A

REVIEWING AGENCIES:

Health Care Agency

ATTACHMENT(S):

Attachment A – Amended Proposed Mental Health Services Act $70.5 Million Permanent Supportive Housing Spending Plan
Attachment B – Recommended Changes in Policy and Process for the 2020 Supportive Housing Notice of Funding Availability (NOFA)