Agenda Item AGENDA STAFF REPORT ASR Control 24-000065
MEETING DATE:	03/26/24
legal entity taking action:	Board of Supervisors
board of supervisors district(s):	All Districts
SUBMITTING Agency/Department:	OC Community Resources (Approved)
Department contact person(s):	Dylan Wright (714) 480-2788
	Doug Becht (714) 834-5000

Subject: Permanent Local Housing Allocation Program

ceo CONCUR

County Counsel Review

Clerk of the Board

Concur

Approved Resolution to Form

Public Hearing

3 Votes Board Majority

Budgeted: N/A

Current Year Cost: See Financial Impact Section

Annual Cost: FY 2024-25 $3,266,614

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
Levine Act Review Completed: N/A

Prior Board Action: 10/18/2022 #43, 12/7/2021 #36, 7/14/2020 #19

RECOMMENDED ACTION(S):

Conduct a public hearing and consider public comment for the Permanent Local Housing Allocation Program Years 3 and 4 Allocation Application including the Reuse Plan, Amendment to the Permanent Local Housing Allocation Five-Year Plan and Year 1 Budget Revision Form.

Approve Permanent Local Housing Allocation Program Years 3 and 4 Allocation Application including the Reuse Plan (Attachment B), Amendment to the Permanent Local Housing Allocation Five-Year Plan (Attachment C) and Year 1 Budget Revision Form (Attachment E).

Authorize the OC Community Resources Director or designee to reallocate up to 10 percent of the funding per allocation Years 1 through 4 (upon availability) to the County Emergency Shelter Programs administered by the County Executive Office, Office of Care Coordination, and submit the Permanent Local Housing Allocation Budget Revision Form, as needed.

Adopt Resolution (Attachment D) authorizing and agreeing to the following:

a. The submittal of a Years 3 and 4 Allocation Application including the Reuse Plan to the State of California Department of Housing and Community Development for Permanent Local Housing Allocation Years 3 and 4 Funds in the amount of $2,175,998 and $1,090,616 respectively;

b. The OC Community Resources Director or designee to execute, submit the Permanent Local Housing Allocation Years 3 and 4 Application, as well as other documents related to the Permanent Local Housing Allocation Program;

c. The receipt of Permanent Local Housing Allocation funds in an amount not to exceed the five-year estimate of the Permanent Local Housing Allocation Formula Allocation of $7,632,984;

d. Adoption of the Amendment to the Five-Year Plan for the Permanent Local Housing Allocation Program removing San Juan Capistrano Allocation and Activity and using whole numbers for the Activity percentages;

e. Certification of compliance with selection process of subgrantees, avoidance of conflicts of interest, public notice, public comment and public hearing requirements in accordance with the Permanent Local Housing Allocation Program guidelines; and,

f. Agreement to use the Permanent Local Housing Allocation funds for eligible activities and comply with the program requirements, rules, guidelines, laws and agreements including sub-granting funds to other entities.

Authorize the OC Community Resources Director or designee to submit additional applications to State of California Housing and Community Development Department for up to the full amount of the Years 3 and 4 Permanent Local Housing Allocation Program funds, as well as other application related documents necessary for securing Years 3 and 4 funds.

SUMMARY:

Approval of the Permanent Local Housing Allocation Program Years 3 and 4 Allocation Application including the Reuse Plan, Amendment to the Permanent Local Housing Allocation Five-Year Plan, Year 1 Budget Revision Form and authorizing resolution will support the continued investment in housing and community development activities throughout Orange County.

BACKGROUND INFORMATION:

In 2017, the Governor of California signed a 15-bill housing package aimed at addressing the state’s housing shortage and high housing costs. Specifically, it included the Building Homes and Jobs Act (Senate Bill 2, 2017), which established a $75 recording fee on real estate documents to increase the supply of affordable homes in California.

The State of California Housing and Community Development Department (State HCD) created several new grant programs to disburse the funding collected, including the Permanent Local Housing Allocation (PLHA) Program for allocation of the funds to local governments. Of the PLHA funds, 90 percent will be distributed to entitlement jurisdictions, based on the 2017 Community Development Block Grant (CDBG) Formula Allocation, with the remaining 10 percent to be disbursed in a competitive process to non-entitlement jurisdictions. The County of Orange (County), as an Urban County, is eligible to apply for the PLHA Formula Allocation as an entitlement jurisdiction. The County will receive an allocation and administer the PLHA Program on behalf of the Urban County cities of Brea, Cypress, Dana Point, La Palma, Laguna Beach, Laguna Hills, Laguna Woods, Los Alamitos, Seal Beach, Stanton and Villa Park, as well as the unincorporated areas of the County.

On April 27, 2020, the State HCD released a Notice of Funding Availability (NOFA) for the PLHA Year 1 Allocation and provided the County’s five-year PLHA Formula Allocation estimate of a not to exceed amount of $7,632,984. Due to the number of real estate transactions recorded in each county varying from year to year, the revenues collected in each year will fluctuate. Consistent with the prior year’s process, Orange County Community Resources (OCCR) returns to the Board to request approval and authorizations related to each allocation year’s application, as summarized in the chart below:

PLHA Allocation	Allocation	NOFA Release Date	Board Approval Date
Year 1 Allocation	$1,272,164	April 27, 2020	July 14, 2020
Year 2 Allocation	$1,977,337	June 7, 2021	December 7, 2021
Year 3 Allocation (current request)	$2,175,998	August 17, 2022	October 18, 2022* March 26, 2024 (pending)
Year 4 Allocation (current request)	$1,090,616	December 29, 2023	March 26, 2024 (pending)
Year 5 Allocation	$1,116,869 (Estimated)	TBD	TBD
Total Five-Year PLHA Allocation:	$7,632,984

*On June 12, 2023, the County was notified by State HCD that the Year 3 Allocation Application was withdrawn because the County’s Housing Element (HE) compliance was not obtained. The County is currently addressing comments from State HCD’s HE letter and anticipates resubmitting in late Spring 2024. Although the HE compliance was not initially obtained, the County can resubmit an application for the Year 3 Allocation.

On December 29, 2023, the State HCD released a NOFA (December 2023 NOFA) (Attachment A) for the Year 4 Allocation, as well as the remaining Formula Allocations for the previous years. The County’s PLHA Formula Allocation for Year 4 is $1,090,616. Under the December 2023 NOFA, Urban Counties applying on behalf of Urban County cities may be awarded PLHA funds for use in a locality with an adopted HE, regardless of the County’s HE status at the time of application. Since the County was not awarded the Year 3 Allocation, OCCR is requesting Board approval to apply for the Years 3 and 4 Allocation.

Funding Allocation and Eligible Activity

The PLHA guidelines require Urban County entitlement jurisdictions to ensure geographic equity in the distribution of funds to the Urban County cities. The County will provide funding based on the formula allocation for each Urban County city for an eligible activity chosen by the city. The Year 3 and 4 PLHA Application (Attachment B), and Amendment to the PLHA Five-Year Plan (Attachment C) shows the jurisdiction’s allocation and the activities to be undertaken, as further summarized in PLHA Years 3 and 4 Formula Allocation Summary of Activities (Attachment F).

OCCR staff held discussions with the Urban County cities when initially developing the Five-Year Plan. Urban County cities had the choice to either select an activity and participate in the PLHA Program, or to not select an activity and have the County reallocate the funds towards another activity. While the PLHA Program allows funding for 10 eligible activities, the Urban County participating cities and the County chose two eligible activities that target households with income at or below 60 percent Area Median Income (AMI), as summarized in the chart below.

Administrator	Jurisdictions	Eligible PLHA Activities	Selected Activities
Office of Care Coordination (OCC)	Brea, Cypress, La Palma, Los Alamitos, Stanton and Villa Park	Assisting persons who are experience homelessness or at risk of homelessness (Section 301(a)(6) of the PLHA guidelines) (Activity 6)	North Services Planning Area (North SPA) Navigation Centers**
OCC	Laguna Beach	Activity 6	Homeless Support Services
OCCR/OCC	County of Orange	Activity 6	County Emergency Shelters
OCC	Dana Point	Activity 6	Homeless Support Services
OCCR	Laguna Woods	Accessibility Modification (Section 301(a)(7) of the PLHA guidelines) (Activity 7)	Accessibility Improvements
OCCR	Seal Beach	Activity 7	Accessibility Improvements

**Urban County cities in the North Service Planning Area (North SPA), including Brea, Cypress, La Palma, Los Alamitos, Stanton and Villa Park have collaborated with North SPA entitlement jurisdictions of Buena Park, Fullerton, La Habra, Orange, Placentia and Yorba Linda to provide PLHA eligible services at the Buena Park Navigation Center and the Placentia Navigation Center. The North SPA cities designated the City of La Habra to serve as the Treasurer for the jointly funded projects.

Per PLHA Guidelines, the County is allowed to use no more than five percent of its PLHA funding for costs related to the administration of activities for which the allocation was made. For Years 3 and 4 Allocation, the amount the County may use for administration is $108,799 (Five percent of the Year 3 Allocation) and $54,530 (Five percent of the Year 4 Allocation).

Additionally, the State HCD requires the County to submit a Reuse Plan (Attachment B) describing how repaid loans and/or accrued interest will be reused for eligible activities. The County is accruing interest (i.e., reuse funds) in Fund 15G from receiving upfront payments for the Years 1 and 2 PLHA Allocations. At the end of each fiscal year, if accrued interest is equal to or less than $25,000, OCCR is proposing to allocate 95 percent of the reuse funds to Activity 6, the County Emergency Shelter Programs administered by the OCC. If accrued interest is more than $25,000, OCCR is proposing to split 95 percent of the reuse funds based on the 2017 CDBG Formula Allocation. Five (5) percent will go towards administration.

Budget Revision

If the County reallocates less than 10 percent of it funds among activities, the County will need to submit a Budget Revision Form, but an amendment to the Five-Year Plan is not needed. At this time, OCCR is seeking Board approval as follow:

Reallocate $32,942 of the City of Laguna Woods’ Year 1 Allocation from Activity 7 to Activity 6, County Emergency Shelter Programs (Yale Navigation Center) to meet the expenditure deadline of April 30, 2024. The City of Laguna Woods confirmed they were not able to spend their Year 1 funding. Since the $32,942 amount is less than the 10 percent threshold for a Five-Year Plan amendment, only a Budget Revision Form is needed for this reallocation of funds. The City of Laguna Woods will continue to receive PLHA funding under Years 2 through 5 for Activity 7.

Authorize OCCR to reallocate up to 10 percent of funding per allocation Years 1 through 4 (upon availability) to Activity 6, the County Emergency Shelter Programs administered by the OCC. This will increase flexibility for staff to streamline the funding process and meet expenditure deadlines.

PLHA Five-Year Plan

If at any time over the five-year period the County reallocates more than 10 percent of its funds among activities, an amendment to the Five-Year Plan would need approval from the Board at a publicly noticed public meeting and from the State HCD. At this time, OCCR is seeking Board approval to amend the Plan as follows:

Round allocation percentages to whole numbers, per State HCD guidance. The County may keep the allocation percentages in decimals for Years 1 and 2, but the allocation percentages under the Plan needs to be corrected to whole numbers in Years 3 through 5 (Attachment C).

Remove the City of San Juan Capistrano’s Section 301(a)(10) (Activity 10) from the Five-Year Plan. Under the Year 2 Application, the City of San Juan Capistrano joined the County as an Urban County city and the County applied for PLHA funds on their behalf. However, the City of San Juan Capistrano’s activity and funding was not approved by the State HCD because they had not applied on their own to select the County as their administrator. Subsequently, the City of San Juan Capistrano submitted a PLHA Allocation Application and Five-Year Plan directly to the State HCD. Therefore, the County will need to submit a Five-Year Plan amendment to remove the activity designated by the City of San Juan Capistrano.

Public Notice

On March 5, 2024, OCCR released a 15-day Public Notice and comment period advising the public of the opportunity to review the proposed PLHA Years 3 and 4 Application including the Reuse Plan, the proposed Amendment to the Five-Year Plan, and Year 1 Budget Revision Form. The Notice was published in the Orange County Register, La Opinion and Nguoi Viet: electronic versions were available at the OC Housing and Community Development website. No comments have been received to date.

Compliance with CEQA: This action is not a project within the meaning of CEQA Guidelines Section 15378 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 in regard to a project since the PLHA Years 3 and 4 Allocation Application, Amendment to the PLHA Five-Year Plan, Year 1 Budget Revision Form and authorizing resolution supports the continued investment in housing and community development activities throughout the 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.

FINANCIAL IMPACT:

Appropriations and revenue for the Years 3 and 4 PLHA Program allocations have been included in Fund 15G FY 2023-24 Budget.

The County will receive a Year 3 Allocation of $2,175,998 and Year 4 Allocation of $1,090,616, for a total amount of $3,266,614. Of each year’s allocation, five percent will be set aside for administrative costs. The total administrative budget for Years 3 and 4 is $163,329 ($108,799 from the Year 3’s Allocation and $54,530 from the Year 4’s Allocation).

STAFFING IMPACT:

N/A

REVIEWING AGENCIES:

Office of Care Coordination

ATTACHMENT(S):

Attachment A – 2023 Permanent Local Housing Allocation Formula Component Notice of Funding Availability
Attachment B – PLHA Years 3 and 4 Allocation Application including Reuse Plan
Attachment C – Five-Year Plan Amendment Form
Attachment D – Resolution
Attachment E – Year 1 Allocation Budget Revision Form
Attachment F – PLHA Years 3 and 4 Formula Allocation Summary of Activities
Attachment G – Affidavit of Publication, Notice of Public Hearing