Legislation Details

File #: 2026-01204    Version: 1
Type: Discussion Item Status: Agenda Ready
File created: 6/2/2026 In control: City Council - 2PM
On agenda: 9/29/2026 Final action:
Title: Authorization to Receive State Homekey+ Program Funding for Rio Linda Senior Housing Project
Attachments: 1. 2026-01204 STAFF REPORT
Date Ver.Action ByActionResultAction DetailsMeeting DetailsVideo
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Title

Authorization to Receive State Homekey+ Program Funding for Rio Linda Senior Housing Project

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FileID

File ID: 2026-01204

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Location

Location: 2809-2821 Rio Linda Boulevard, District 2

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Recommendation

Recommendation: Adopt a Resolution authorizing the City Manager or designee to: 1) accept $31,866,126 million of California State Department of Housing and Community Development (HCD) Homekey+ funding; 2) execute the attached Homekey+ Standard Agreement with HCD and any related documents required by HCD to secure Homekey+ funding; 3) establish the Rio Linda Homekey+ Project (G02610620); and 4) establish the revenue and expenditure budget in amount of $31,866,126 (Operating Grants, Fund 2702) in the Rio Linda Homekey+ Project (G02610620).

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Contact

Contact: Ya-yin Isle, City Housing Manager, (916) 808-1869, yisle@cityofsacramento.org; Axel Magallanes, Housing Analyst, (916) 808-1844, amagallanes@cityofsacramento.org; Economic Development Department

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Presenter

Presenter: Ya-yin Isle, City Housing Manager, (916) 808-1869, yisle@cityofsacramento.org

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Attachments

Attachments:

1-Description/Analysis

2-Resolution

3-Exhibit A - HCD Standard Agreement for Homekey+ Funding

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Description/Analysis

IssueDetail

Issue Detail: Proposition 1, passed by California voters in March 2024, is a critical step in advancing the State’s goals to reduce homelessness and protect our most vulnerable populations through important changes to the Mental Health Services Act (MHSA). Proposition 1 includes the Behavioral Health Services Act (BHSA) and the Behavioral Health Infrastructure Bond Act (BHIBA). On November 26, 2024, and subsequently amended on January 31, 2025, August 7, 2025, and March 27, 2026, the California Department of Housing and Community Development (HCD), in collaboration with the California Department of Veterans Affairs (CalVet), released a Notice of Funding Availability (NOFA) for approximately $2.145 billion of Homekey+ grant funding. Homekey+ is the Permanent Supportive Housing component of BHIBA and is largely derived from Proposition 1 bond funds established by BHIBA (AB 531, Chapter 789, Statutes of 2023).

 

The Homekey+ NOFA makes funding available for projects that will support the development of Permanent Supportive Housing (PSH) for veterans and/or individuals with mental health or substance use disorder challenges who are at-risk of or experiencing homelessness. Building on the success of three prior rounds of the Homekey program, Homekey+ continues a statewide effort to sustain and rapidly expand Permanent Supportive Housing for people experiencing homelessness. The NOFA allocates the balance of the funds after specific set-asides, geographically based on each region’s proportionate share of veterans and other people experiencing homelessness, and each region’s share of severely rent-burdened households. The regional funding allocations also consist of a distribution for projects serving the general population and a distribution for Veterans.

 

On May 13, 2025, the Sacramento City Council adopted Resolution No. 2025-0120, authorizing the City to jointly apply for State Homekey+ grant funds for the Rio Linda Senior Housing Project (Project) on behalf of the City of Sacramento and Urban Capital LLC, the developer and co-applicant for a 100-unit permanent supportive housing project on privately owned properties at 2809, 2811, and 2821 Rio Linda Boulevard. The Project is intended to serve homeless seniors and senior veterans and proposes using 240 square foot Boss Homes that include living space, bathroom and kitchenette, as a cost-containment strategy and a way to quickly bring housing online. The Project would also include some parking, park space, community garden, community rooms, laundry facilities, storage and private office spaces.

 

Subsequently, on October 1, 2025, an updated Homekey+ application was submitted to increase the number of veteran units from 10 units to 50 units to reflect the urgency and opportunity that exists for supporting unhoused veterans within the Sacramento community. In addition, Alta California Regional Center, an organization serving individuals with specific developmental disabilities and their families in accessing appropriate services, was brought in as a partner organization into the project for 15 units. Alta Regional will fund and provide supportive services for their clients at risk of or experiencing homelessness.

 

In November 2025, HCD provided the City of Sacramento and Urban Capital LLC with a Threshold Clarification Letter detailing additional feedback, requirements, and points of clarification on the Project Application. With this feedback, on December 2, 2025, the City Council approved Resolution No. 2025-0318 authorizing the City of Sacramento re-submit a joint application with Urban Capital LLC to HCD with an increased award amount of up to $40 million and formally committing $3 million of City HHAP funds to the Project for operational costs as a necessary match to maximize the State operational funding award. The $3 million commitment for this project will be coming from the HHAP-4 Grant Project (G02000980) and the HHAP-5 Grant Project (G02000990).

 

On July 23, 2026, the Governor announced the City’s conditional Homekey+ award for the Project, totaling $31.8M in Homekey+ funds to support the Project. This award includes funding for capital costs and operating funds for both the veteran and non-veteran units as follows:

 

Program

Award Amount

Capital Award

$20,750,000

Operating Award

$9,646,126

Veteran Units Additional Operating Award

$1,470,000

Homekey+ Award Total

$31,866,126

 

The City has completed a solicitation for a Lead Service Provider for the project as required as a condition of the funding award and continues to work with HCD on documents and forms required for the Homekey+ funding. This staff report seeks City Council authority to accept Homekey+ funding and enter into a Standard Agreement with the State.

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PolicyConsiderations

Policy Considerations: The State Homekey+ funding will aid in the development of additional housing in the City, which is supported by the City’s General Plan, specifically Policy H-36: Support Affordable Housing Development in the City of Sacramento Housing Element that speaks to providing support for funding applications and gap financing.

 

This Project advances the Council-adopted priorities of Economic Development and Homelessness identified at the September 30, 2025, Priority and Goal Setting Workshop and adopted on November 18, 2025. Specifically, this Project implements the following Strategic Initiatives in the City of Sacramento One City, One Future Priorities Strategic Workplan:

•                     Economic Development, Neighborhood and Commercial Development: Strategic Initiative 7: Activate Vacant and Underutilized Public and Private Properties

•                     Homelessness, Long-Term Housing Stability, Strategic Initiative 24: Compete for Homekey+ Permanent Supportive Housing Opportunities

 

In addition, the financing of PSH projects is consistent with the Sacramento Regionally Coordinated Homelessness Action Plan (RCHAP), adopted in March 2024 and updated in August 2025. The Project supports Solution 6 - Permanent Supportive Housing, which seeks to expand housing opportunities and capacity dedicated to meet the housing needs of people experiencing homelessness.

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EconomicImpacts

Economic Impacts: Not applicable.

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EnvironmentalConsiderations

Environmental Considerations: This report concerns actions supporting the acceptance of an award for Homekey+ funds. The action is an administrative activity that would not result in direct or indirect physical changes in the environment and is not a project as defined in the California Environmental Quality Act (CEQA) Guidelines section 15378(b)(4) and is not subject to CEQA (CEQA Guidelines section 15060(c)(3)). In the event that the application for the State Homekey+ funding and commitment of City HHAP funding is approved, future activities and projects will be reviewed in accordance with CEQA Guidelines sections 15060 and 15061(a).

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Sustainability

Sustainability: Not applicable.

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Commission/Committee Action

Commission/Committee Action: Not applicable.

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RationaleforRecommendation

Rationale for Recommendation: The recommendation in this report furthers the City’s objective of providing a range of housing for community needs, including PSH. Staff are supportive of the Project as it will assist in the timely development of housing for people experiencing homelessness.

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FinancialConsiderations

Financial Considerations: This report recommends establishing the Rio Linda Homekey+ Operating Grant Fund Project (G02610620) and establishing revenue and expenditure budgets in the Project for the total award amount of $31,866,126.

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LocalBusinessEnterprise

Local Business Enterprise (LBE): Not applicable.

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