REPORT TO THE CITY COUNCIL
FROM: JENNIFER CLARK, Director
Planning and Development Department
PHILIP SKEI, Assistant Director
Planning and Development Department
BY: JENNIFER DAVIS, Senior Management Analyst
Housing Finance Division
SUBJECT
Title
Actions pertaining to the U.S. Department of Housing and Urban Development’s FY24 Pathways to Removing obstacles to Housing (PRO Housing) grant application:
1. HEARING to obtain public comments on the City’s Draft PRO Housing application; and
2. *** RESOLUTION - Authorizing the submission of a grant application and acceptance of funds from the U.S. Department of Housing and Urban Development’s FY24 Pathways to Removing Obstacles to Housing (PRO Housing) grant to fund the development of affordable housing and authorizing the City Manager or designee to sign all necessary implementing documents (Subject to Mayor’s Veto)
Body
RECOMMENDATION
Staff recommends City Council approve a Resolution authorizing the submission of a grant application and the acceptance of funds from the U.S. Department of Housing and Urban Development’s FY24 Pathways to Removing Obstacles to Housing (PRO Housing) grant to fund the development of affordable housing and authorizing the City Manager or designee to sign all necessary implementing documents.
EXECUTIVE SUMMARY
The U.S. Department of Housing and Urban Development (HUD) issued a Notice of Funding Opportunity (NOFO) on August 13, 2024, pursuant to its Pathways to Removing Obstacles to Housing (PRO Housing) competitive grants program. HUD is authorized to provide funding to state and local governments, multijurisdictional entities, and metropolitan planning organizations under the PRO Housing Grant Program, pursuant to the Consolidated Appropriations Act 2024 (Public Law 118-12242, approved March 9, 2024) which appropriates $100 million for competitive grant funding for the identification and removal of barriers to affordable housing production and preservation.
As an eligible entity, the City intends to apply for PRO Housing grant funding for the purpose of developing new affordable rental housing units in high opportunity zones through gap funding for developers and non-profit organizations. Before submitting an application, HUD requires that applicants publish their PRO Housing draft application for public comment for 15 days, conduct a public hearing on the application, and provide ongoing public access to information about the use of grant funds.
Staff requests authorization to finalize and submit to HUD a PRO Housing application for grant funding in an amount up to $7,000,000 to increase the production and preservation of affordable housing in Downtown Fresno with a priority to serve low- to moderate-income households.
BACKGROUND
The U.S. Department of Housing and Urban Development’s (HUD) Pathways to Removing Obstacles to Housing (PRO Housing) Grant Program was established through the federal Consolidated Appropriations Act 2024 (Public Law 118-12242, approved March 9, 2024), which appropriates $100 million for competitive grant funding for the identification and removal of barriers to affordable housing production and preservation. The PRO Housing Grant Program is open to state and local governments, multijurisdictional entities, and metropolitan planning organizations, and prioritizes progress and commitment to overcoming local barriers to facilitate the increase in affordable housing production and preservation, especially in areas with an acute need for affordable housing for low- to moderate-income households.
On August 13, 2024, HUD issued a Notice of Funding Opportunity (NOFO) inviting eligible applicants to apply for funding no later than October 15, 2024. The City is an eligible entity and intends to apply for PRO Housing grant funding to facilitate affordable housing production and preservation with a priority to serve low- and moderate-income households in Downtown Fresno.
If awarded, PRO Housing grant funding will enable the City to meet affordable housing priority recommendations set forth in the “One Fresno Housing Strategy” by offsetting the costs to thoroughly address the City’s critical need for housing affordable to low- and moderate-income households in high opportunity zones. The City’s proposal is two-fold and includes grant funding that will allow the City to prioritize the use of federal funds through gap funding for development projects that create new units of affordable housing in Downtown Fresno. In addition, grant funding will provide added support to the City’s internal capacity to oversee, facilitate, and enhance the administrative management of the proposed activities and other affordable housing development activities.
Activity 1 - Increase Housing Production
North Fulton Development: In early 2024, the Housing Authority of the City of Fresno submitted a comprehensive application to the City’s Affordable Housing Development Notice of Funding Availability (NOFA), proposing the North Fulton Development. This project is strategically located on 0.66 acres of land at 1302 Fulton Street, Fresno, California 93721, represents a vital opportunity for infill new construction in an area that has long sought revitalization. The North Fulton Development is designed to provide 125 new deed-restricted units, while fostering a sense of community through thoughtfully integrated amenities such as a community room and open space for residents. The project will feature a diverse mix of housing types, including studios, one-bedroom, two-bedroom, and three-bedroom units with affordability levels up to 60% of area median income. The project aims to address the pressing need for accessible housing for low- and moderate-income families in our community while also being committed to implement energy-efficiency design strategies that comply with the City of Fresno’s Green Building requirements, ensuring that the development minimizes its environmental impact while proving long-term savings for residents. Moreover, the project will adhere to the City’s Universal Design Ordinance (2008-53), making it accessible and welcoming for individuals of all abilities, thus promoting inclusivity in our housing offerings. To enhance the infrastructure surrounding the North Fulton Development, the proposed scope of construction includes both on-site and off-site improvements, specifically the relocation of underground utilities.
The essential upgrades will facilitate the smooth integration of the new multi-family housing project into the existing urban landscape. Off-site improvements will encompass the installation of streetlights, sidewalks, and designated ingress and egress routes, all designed to enhance safety and accessibility for residents and visitors.
The vital infrastructure projects will be funded through the California Department of Housing and Community Development (HCD) Infill Infrastructure Grant Program - Catalytic Qualifying Infill Area (IIGC). Through the IIGC Program, HCD awarded the City $43,733,136 in August 2023 for the completion of critical capital improvement projects in the Downtown area. While the IIGC grant funds cannot be utilized for the direct construction or development of housing units, they are instrumental in creating a robust infrastructure framework that supports the future development of affordable housing in Downtown Fresno. In addition, the completion of these infrastructure projects directly supports the activities outlined in the City’s PRO Housing grant application, further ensuring that the North Fulton Development is not only a housing initiative but a catalyst of community revitalization. Investing in these improvements will further the City’s commitment to create a safe and accessible environment that supports the diverse needs of our residents, while enhancing the overall quality of life in Downtown Fresno.
Activity 2 - Increase Staffing Capacity
The City has made significant progress in recent years to maximize the use of limited resources available to protect, preserve, and promote affordable housing development. The City’s increased efforts to address the acute need for affordable housing has exceeded its internal capacity to administer such efforts. The City’s application, therefore, includes the addition of a Management Analyst II. This position will allow the City to increase its capacity, thereby growing its ability to support affordable housing related activities. Furthermore, given the complexity of this grant, including its substantial requirements for compliance and performance metrics, specialized skills and focused attention is necessary. The proposed Management Analyst II will play a pivotal role in the day-to-day administration of the grant, significantly enhancing the City’s capacity to meet federal regulations, optimize resource allocation, effectively achieve the objectives outlined in our grant application, and manage documentation and reporting.
The timeline for the proposed activities is designed to be completed within the five-year grant period, spanning from February 2025 through September 2030. The estimated timeline includes the following milestones:
Activity 1: Increase Housing Production
• Within 12 months of award, appropriate environmental review will be completed to ensure compliance with all regulations.
• Within 14 months of award, the City will enter into a funding agreement with the selected developer.
• Within 18 months of award, initial funding disbursements will be released.
• Within 36 months of award, all project funds will be secured.
Activity 2: Increase Staffing Capacity
• Within 3 months of award, the City will initiate the hiring process for the new staff position.
• Within 6 months of award, the City will successfully fill the Management Analyst II position to enhance project oversight and implementation.
• The new staff position will be retained through September 2030, ensuring continuity and support throughout the project duration.
In order to apply for PRO Housing Program funding, the City was required to publish its draft application for a 15 day public comment period. The draft application was, therefore, published from September 25, 2024, to October 10, 2024. Additionally, the draft application must be heard at a public hearing with a minimum of 15 days’ notice. Staff noticed this public hearing on September 25, 2024. If awarded funds, City staff will also provide ongoing public access to information about the use of grant funds, as required.
Providing authorization to finalize and submit a PRO Housing application for grant funding in an amount up to $7,000,000 will support the production and preservation of affordable housing specifically in Downtown Fresno. The activities included in the City’s PRO Housing grant application will assist in bringing the City closer to meeting the housing goals and objectives as outlined in the “One Fresno Housing Strategy” by addressing high-priority local housing needs, supporting economic development through the creation of new affordable housing units, and promoting infill development and infrastructure improvements within the City’s high opportunity zones.
Securing a PRO Housing Grant will provide essential gap funding for housing development and increased internal capacity, enabling the City to make significant strides in addressing the affordable housing crisis. The grant funding will allow the City to implement these activities between February 2025 and September 2030, delivering immediate and long-term relief to the community through the creation of 125 affordable housing units in a high priority area. The funds will not only assist in creating and preserving affordable housing units but will also support the broader goal of fostering inclusive and equitable growth in Downtown Fresno.
ENVIRONMENTAL FINDINGS
By the definition provided in the California Environmental Quality Act Guidelines Section 15378(b)(4)-(5) this item does not qualify as a “project” and is therefore exempt from the California Environmental Quality Act requirements. The proposed action to apply for, accept, and administer grants are the “creation of government funding mechanisms or other government fiscal activities which do not involve any commitment to any specific project which may result in a potentially significant physical impact on the environment” as well as “organizational or administrative activities of government which will not result in direct or indirect physical changes to the environment.”
In addition, as the application, grant award acceptance, and administration are related to “information and financial services” and “administrative and management activities” the proposed action is exempt from NEPA in accordance with 24 C.F.R. §§ 58.34 (a)(2)-(3).
Appropriate CEQA and NEPA environmental documents will be prepared for the individual activities implemented during the City’s administration of any awarded PRO Housing grant.
LOCAL PREFERENCE
Local preference is not applicable because this item does not involve public contracting or bidding.
FISCAL IMPACT
There is no impact on the City’s General Fund as a result of this action.
Attachment:
1. Resolution to Apply for FY24 PRO Housing NOFO