To: Board of Supervisors of Sonoma County and the Board of Commissioners of the Community Development Commission
Department or Agency Name(s): Community Development Commission
Staff Name and Phone Number: Michelle Whitman, 707-565-7504
Vote Requirement: Majority
Supervisorial District(s): Countywide
Title:
Title
Update on Workplan to Develop a Local Expenditure Plan for Bay Area Housing Finance Authority (BAHFA) 2024 Regional Housing Bond and Approval to Form a Countywide Steering Committee to Inform the Local Expenditure Plan Process.
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Recommended Action:
Recommended action
A) Receive update on workplan to develop a local Expenditure Plan for Bay Area Housing Finance Authority (BAHFA) 2024 Regional Housing Bond.
B) Approve the composition and formation of a countywide Steering Committee to inform the next phases of the local Expenditure Plan process.
C) Recommend two Sonoma County Supervisors to serve on the Steering Committee.
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Executive Summary:
On December 5, 2023, your Board approved a resolution of support for the Bay Area Housing Finance Authority’s (BAHFA) proposed 2024 Regional Affordable Housing Bond. On July 16, 2024 your Board approved a resolution to submit the Bay Area Affordable Housing Bond Measure to voters on the November 5, 2024 statewide general election ballot. The item before you today presents an update on BAHFA generally and the local process to draft an Expenditure Plan, and recommends the composition and formation of a Steering Committee to inform the next phases of the local Expenditure Plan process. The information and action before you supports the collaborative countywide effort underway since March 2024 to develop a local Expenditure Plan and expand outreach and stakeholder engagement for this effort. The engagement will continue, as required by BAHFA’s enabling legislation, in consultation with our cities and towns, with focus on the needs of people most impacted by the lack of affordable housing.
Today’s item recommends formation of a Steering Committee, that could include the following members, to meet a minimum of four times before the end of the calendar year to inform the next phases of the local Expenditure Plan process:
• Two Council Members (1 large city >25,000, 1 small city <25,000), nominated by the Mayors and Council Members;
• Two City Managers, nominated by the City Managers Association;
• Two Planning Directors, nominated by the Sonoma County Transportation Authority/Regional Climate Protection Authority Housing Staff Working Group;
• Two members of the Board of Supervisors, possibly Renewal Enterprise District Board members; and
• The County Executive Officer.
Discussion:
The Need for a Regional Housing Bond
The Board of Supervisors has prioritized the need to end homelessness in Sonoma County and expand opportunities for affordable housing. Additionally, stakeholders most commonly cite homelessness and housing affordability among the Bay Area’s most pressing problems and per a recent poll conducted by EMC Research, approximately two-thirds of voters think more money is needed to address the housing crisis. Despite the priority given and sense of urgency to build and preserve affordable housing inventory, lacking financial resources to match the magnitude of the need, the County fell short of its Housing Element housing production goals for affordable housing in the 2014-2022 cycle in each of the affordable housing categories, producing 92% of its extremely low-income affordable housing goal and only 46% of its very low-income affordable housing goal. The 2023-2031 Regional Housing Needs Allocation (RHNA) to the unincorporated County alone increased 300% overall from the previous 2015-2023 RHNA cycle, increasing the production mandate from 347 affordable (<80% Area Median Income) housing units to 1,608 affordable housing units, adopted as part of the County’s 2023 Housing Element <https://sonoma-county.legistar.com/LegislationDetail.aspx?ID=6318630&GUID=F5D1AA7F-A015-4A1B-BB05-697866F7AE02&Options=&Search=>. For the unincorporated County and the eight cities/town not including Santa Rosa, the new RHNA affordable housing obligation totals 4,382 units. The County’s cities and town, and the entire Bay Area region face equally sobering RHNA requirements. The Bay Area region needs significant new resources and an accelerated time frame to achieve the 2023-2031 RHNA mandates to produce and preserve affordable homes, as well as to prevent residents from displacement and homelessness.
In 2019, the California Legislature established the Bay Area Housing Finance Authority, or “BAHFA,” via Assembly Bill 1487 (Chiu) to help meet the Bay Area’s need to produce more housing, preserve more affordable housing and protect vulnerable tenants - the “3Ps” that define BAHFA’s mission. See Attachment 1 for BAHFA explainer for Sonoma County, and Attachment 2 for Frequently Asked Questions.
The BAHFA Board (which is comprised of the same members as the Metropolitan Transportation Commission and the ABAG Executive Board) share governing responsibilities for BAHFA. Both the BAHFA Board and the ABAG Executive Board include local elected officials. For Sonoma County, Santa Rosa Councilmember Fleming is a member of the BAHFA Board, while Supervisor David Rabbitt is a member of the ABAG Executive Board. These officials participate in regional votes about the 2024 regional housing bond.
BAHFA has the power to place ballot measures before Bay Area voters to raise revenue to build and preserve more housing and to protect tenants. On June 26, 2024, the BAHFA Board voted unanimously to place a $20 billion regional affordable housing general obligation bond before Bay Area voters. If the regional housing bond passes, eighty percent (80%) of the net revenue will be returned to counties on a "return to source" basis as determined by each county's share of assessed property values. Cities that have been assigned more than 30% of their county's low-income RHNA obligation, including Santa Rosa, receive a direct allocation. The remaining twenty percent (20%) of the net revenue, referred to as Regional Housing Revenue, will be available to BAHFA for distribution anywhere in the region, including in Sonoma County.
If the $20 billion bond wins approval, it is expected that approximately $552,600,000 (calculated by BAHFA based on 2023/24 assessed value) would be raised for unincorporated Sonoma County and its cities/town (excluding Santa Rosa, which would receive a direct allocation estimated at $242,000,000). Assuming $552.6 million raised, 52% of revenues ($273 million) are targeted for production, 15% of revenues ($79 million) towards preservation, 5% of revenues ($26 million) towards protection, and 28% ($147 million) towards flexible uses based on locally identified affordable housing priorities; all these values are net of 5% designated for administrative costs.
Note that current State law does not allow bond proceeds to be spent on non-capital costs (i.e., services), and absent a change in State law, funds assigned to Protections will need to be reassigned. As noted, BAHFA retains 20% of funds raised for distribution anywhere in the region, with a commitment to support at least one project in each county or city receiving a direct allocation. See Attachment 3 for Sonoma County sample allocations by jurisdiction and corresponding criteria.
Sonoma County Expenditure Plan Process, Progress, and Next Steps
In March 2024 the County of Sonoma, consulting with the cities of Petaluma, Cotati, Rohnert Park, Sonoma, Sebastopol, Healdsburg, Cloverdale, and Town of Windsor, kicked off a collaborative, consultant-facilitated six phase scope of work to draft the first Expenditure Plan. The RED Housing Fund, a non-profit created to accelerate Sonoma County infill housing production post disasters, agreed in January 2024 to jumpstart the Expenditure Plan process by committing to funding to amend its consultancy contract with Forsyth Street Advisors so that the work could begin sooner than it might have otherwise. In addition to advising the RED Housing Fund, Forsyth Street Advisors was selected to develop ’BAHFAs Business Plan <https://mtc.ca.gov/sites/default/files/documents/2024-05/BAHFA_Business_Plan_04-08-2024.pdf>, which has since been adopted by BAHFA’s Board of Directors.
Sonoma County’s first Expenditure Plan is expected to cover a period of five years (e.g., 2025-2030), and will be updated annually. Per BAHFA legislation, the first Expenditure Plan must include: the proposed dollar amount to be drawn initially, the proposed dollar amount allocated to each of the 3 Ps (Production, Preservation, Protection), the estimated number of units produced and preserved, and the households served categorized by Area Median Income (AMI) level (see Attachment 4 for sample Expenditure Plan template). Bond proceeds may be drawn over multiple issuances and Expenditure Plans based on how quickly funds can be deployed. Note that the earliest BAHFA funds would likely be available is the third quarter of 2025.
Expenditure Plans are framed by these general rules:
• All housing must be deed-restricted, and can include rental and/or ownership housing.
• All housing must be affordable, for households up to 120% AMI.
• Rental, ownership, and interim housing are all eligible.
• At least 47% of Production funds must be spent on Extremely Low Income (ELI) & Very Low Income (VLI) housing (≤50% AMI), and 27% on Low Income (LI) housing (≤ 80%) AMI to match RHNA obligations.
• 28% Flexible Funds can be for housing and “affordable housing-related uses,” such as offsite infrastructure and neighborhood amenities, including but not limited to water, sewer, or other utility service improvements; sidewalk or streetscape improvements; or the creation, development, or rehabilitation of parks or open space, among other uses supportive of affordable housing.
Phase 1 of this work included an initial March 2024 kick off with the eight cities/town (excluding Santa Rosa, which receives a direct allocation), and development of a preliminary data collection tool. Phase 2 included one-on-one jurisdiction work sessions, developer meetings, and data collection in advance of each work session. Phase 3 is in process and centers on project pipeline analysis, and sample funding allocations (see Attachment 3).
Phase 3 continues with further pipeline analysis and sample funding allocations. Phase 4 includes reporting back, one by one, with each jurisdiction, and briefing notes consolidating feedback from consultant meetings with jurisdictions. Phase 5 will focus on final recommendations and consensus building among jurisdictions. Phase 6 will deliver the final proposed Expenditure Plan, developed in consultation with the cities/town, to the County at the end of 2024. Per BAHFA guidance, in early 2025 the County will present the Expenditure Plan at a publicly noticed meeting with opportunity for public comment, to then be adopted by the County no earlier than February 2025. Thereafter, at a date to be provided by BAHFA, the Expenditure Plan will be submitted to BAHFA for their board approvals as required by the enabling legislation.
It is timely that Phases 3-6 of our local Expenditure Plan work should advance in earnest, and with more public engagement, now that the size of the proposed bond has been established, and that both BAHFA and your Board have taken formal steps to place the $20 billion Regional Housing Bond on the ballot in November 2024.
To inform the second half of the Expenditure Plan process, today’s item recommends formation of a Steering Committee that could include the following members, who will meet a minimum of four times before the end of the calendar year to represent each member’s unique stakeholders’ perspective in the local Expenditure Plan process:
• Two Council Members (1 large city >25,000, 1 small city <25,000), nominated by the Mayors and Council Members;
• Two City Managers, nominated by the City Managers Association;
• Two Planning Directors, nominated by the Sonoma County Transportation Authority/Regional Climate Protection Authority Housing Staff Working Group;
• Two members of the Board of Supervisors, possibly Renewal Enterprise District Board members; and
• The County Executive Officer.
Note: To include a range of perspectives, it is recommended that no city or town have more than one representative on the Steering Committee.
If there is direction to form the Steering Committee, staff will present the expectations and schedule for this work at the City Manager Association, Mayors and Council Members Association, and SCTA’s Housing Staff Discussion Group. Each group will be asked to nominate two representatives each for the Steering Committee. A first task for the Steering Committee could include drafting general goals for the local Expenditure Plan and public outreach (see Attachment 5: Draft Outreach Plan). Staff and consultants will seek guidance from Steering Committee members on community engagement expectations for each member’s constituents. To advance Sonoma County’s Expenditure Plan process, staff and consultants will continue with robust stakeholder engagement and outreach to solicit input from its cities and town. With the benefit of preliminary data assessment and prerequisite analysis, there is now enough information to engage a wider range of stakeholders in a focused dialog. The BAHFA Expenditure Plan is being developed through a countywide effort involving all cities/town and unincorporated areas of Sonoma County. The CDC serves a countywide role in the area of housing funding and is shepherding the facilitated, collaborative development of Sonoma County’s Expenditure Plan in consultation with its cities/town. The CDC looks forward to working with our eight partner cities/town to add the public-informed component to what is expected to be an extremely robust and well-funded political campaign outside of the County’s or cities’/town’s direct role.
Finally, staff requests that the Board act today to appoint two Sonoma County Supervisors to serve on the Steering Committee, possibly Renewal Enterprise District Board members.
Strategic Plan:
This item directly supports the County’s Five-year Strategic Plan and is aligned with the following pillar, goal, and objective.
Pillar: Healthy and Safe Communities
Goal: Goal 4: Reduce the County’s overall homeless population by 10% each year by enhancing services through improved coordination and collaboration.
Objective: Objective 3: Increase investment in programs that treat underlying causes of homelessness, including substance abuse, mental illness, poverty, and lack of affordable housing.
Racial Equity:
Was this item identified as an opportunity to apply the Racial Equity Toolkit?
No
Prior Board Actions:
July 16, 2024: Approved Resolution calling a special election on behalf of BAHFA for the 2024 Bay Area Affordable Housing Bond, consolidating with the November 5, 2024 general statewide election, and directing the Registrar to conduct the election.
December 5, 2023: Approved Resolution supporting the Bay Area Housing Finance Agency's (BAHFA) proposal to place a general obligation bond on the November 2024 ballot to finance the production, protection and preservation of affordable housing in Sonoma County and throughout the Bay Area.
Fiscal Summary
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Narrative Explanation of Fiscal Impacts:
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Narrative Explanation of Staffing Impacts (If Required):
None at this time
Attachments:
Attachment 1: BAHFA Explainer for Sonoma County
Attachment 2: BAHFA Frequently Asked Questions
Attachment 3: Sample Allocations and Criteria
Attachment 4: Sample Initial Local Expenditure Plan
Attachment 5: Draft Outreach Plan
Related Items “On File” with the Clerk of the Board:
None.