Title
Authorization to Apply for and Receive State Prohousing Incentive Program (PIP) Funds - Round 4
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FileID
File ID: 2026-00637
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Location
Location: Citywide
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Recommendation
Recommendation: Adopt a Resolution authorizing the City Manager or designee to: 1) apply for up to $1.5 million in grant funding from the California Department of Housing and Community Development (HCD) for its Prohousing Incentive Program (PIP) - Round 4; and 2) if awarded PIP - Round 4 funding from the State, execute an agreement with the State of California, in the form of HCD’s “Standard Agreement”, for receipt of the PIP grant funding, and any other documents required by HCD to secure the PIP grant, approved as to form by the City Attorney or designee, for a maximum amount of $1.5 million.
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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; Office of Innovation and Economic Development
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Presenter
Presenter: None
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Attachments
Attachments:
1-Description/Analysis
2-Resolution
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Description/Analysis
IssueDetail
Issue Detail: The City’s Office of Innovation and Economic Development (OIED) in partnership with the Community Development Department (CDD), is seeking Council approval to apply for HCD’s Prohousing Incentive Program (PIP) - Round 4 funding for an amount up to $1.5 million. The City continues to face the challenge of providing an adequate supply of affordable housing. The City has made it a priority to streamline the approval of and increase the production, accessibility, and affordability of housing citywide.
In August 2021, the City adopted an ambitious 2021-2029 Housing Element that includes implementation programs to further incentivize and support housing production at all income levels in order to meet the City’s Regional Housing Needs Allocation (“RHNA”) of 45,580 units by 2029 (Resolution No. 2021-0259). As a result of this foundational work, the City was awarded the State of California’s (State) first Prohousing Designation in February 2022 by the California Department of Housing and Community Development (HCD).
In March 2023, City staff applied for $2.5 million in Prohousing Incentive Pilot grant funds through the State’s first grant program designed to incentivize local governments to pursue Prohousing Designations, rewarding those with the Prohousing Designation with additional funding to accelerate affordable housing production and preservation (Resolution No. 2023-0065). The City was subsequently awarded $2.5 million from the State, which was used to provide gap financing for an affordable housing project.
On March 15, 2024, City staff applied for $1.5 million in Prohousing Incentive Program - Round 2 grant funds from the State, which continued to focus on increased participation in HCD’s Prohousing Designation Program. Because HCD’s priority was to award applicants in geographic categories that have not received PIP funds in prior funding rounds, and applicants awarded in prior rounds would only be eligible to receive an award once all previously unfunded applicants receive an award, the City did not receive a funding award in Round 2.
On March 15, 2025, City staff applied for $1.5 million in Prohousing Incentive Program - Round 3 grant funds from the State but was unsuccessful due to limited funding.
PIP Round 4 has a total of approximately $8 million available in funding for eligible jurisdictions with a Prohousing Designation. HCD’s Notice of Funding Availability can be found here: https://www.hcd.ca.gov/sites/default/files/docs/grants-and-funding/pip-round-4-nofa.pdf. Based on the funding allocation calculations, the City is again eligible for up to $1.5 million in funding for Round 4. The PIP applications are due March 31, 2026 and require City Council authorization. If granted Council authorization, City staff will submit an application for PIP Round 4 funding for $1.5 million. PIP funding can be directed towards a variety of City planning or implementation activities related to housing and community development. The intent of the Round 4 funds, if awarded, would be to assist with the local gap financing of priority affordable housing project(s). Funds will be used to leverage additional resources for development of affordable housing units, contributing towards City affordable housing production goals and RHNA requirements.
While HCD’s PIP guidelines (“Guidelines”) remain unchanged from Round 3 in that it still prioritizes applicants in geographic areas who have not received prior PIP funds, staff recommends the City apply for Round 4 PIP funds given the simplicity of the application and the possibility Sacramento might receive funding. The Guidelines can be viewed here: https://www.hcd.ca.gov/sites/default/files/docs/grants-and-funding/pip-round-4-guidelines.pdf. HCD requires that a City Council resolution be included with the City’s application package. The Sacramento area geographic category includes Amador, El Dorado, Placer, Sacramento, Sutter, Yolo and Yuba counties.
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PolicyConsiderations
Policy Considerations: The 2021-2029 Housing Element contains policies and programs related to the Prohousing Designation and assisting affordable housing projects, including:
Housing Element Policy 2.3 Assist in the Development of Affordable Housing. The City and SHRA shall assist affordable housing developments through site identification, direct funding, supporting funding applications, land donation, expedited permit review, and other incentives.
Housing Element Program 11 Prohousing Designation. The City shall strive to receive and maintain through the sunset date of January 1, 2025, the State’s Prohousing Designation by demonstrating a sufficient number of policies that significantly contribute to accelerating housing production. Jurisdictions that receive a Prohousing Designation will receive incentives in the form of additional points or preferences in the scoring of competitive State funding grant program in the areas of housing, transportation, infrastructure, and land use.
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EconomicImpacts
Economic Impacts: The City investment in affordable housing projects has the ability to infuse the economy with new jobs, with the provision of this funding and resulting housing construction. There will also be positive economic impact in stabilizing housing costs and preventing homelessness, reducing the rent burden and other community costs for persons experiencing homelessness and at-risk individuals, and providing a platform for additional income and spending capacity amongst these community residents.
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EnvironmentalConsiderations
Environmental Considerations: The proposed action is not a project under CEQA because it relates to government fiscal activities that do not involve any commitment to a specific project which may result in a potentially significant physical impact on the environment. (Cal. Code Regs., tit. 14, §§15060(c)(3), 15378(b)(4)).
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Sustainability
Sustainability: Increasing housing production and affordability will assist in creating sustainable economic growth. Increasing affordable housing in infill areas of the city near public transportation hubs will reduce dependence on the use of private automobiles, reduce vehicle miles traveled (VMT) per household, reduce the use of fossil fuels, improve energy efficiency, reduce carbon dioxide emissions, and help meet air quality standards.
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Commission/Committee Action
Commission/Committee Action: Not applicable.
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RationaleforRecommendation
Rationale for Recommendation: As a Prohousing Designated city, the City is able to apply for $1.5 million of grant funding that can be used to further local affordable housing development and preservation. These funds will be used to leverage additional resources and future development of affordable housing units, contributing towards City affordable housing production goals and RHNA requirements.
City staff is seeking Council authorization for the City Manager or City Manager’s designee to execute an agreement with the State in the form of HCD’s “Standard Agreement” pursuant to City Code section 3.04.010(A)(5). HCD’s Standard Agreement for PIP - Round 4 funding is not attached to this report because it has not been released yet. However, once PIP - Round 4 funding is awarded, the City would only have a short amount of time to execute the Standard Agreement with the State. Given these unusual circumstances, City staff is seeking Council authorization now to execute the Standard Agreement once PIP - Round 4 awards are announced and the Standard Agreement is released. For any sub-awards of the PIP - Round 4 grant funding, City staff will follow all applicable procurement policies and procedures in awarding funds and seeking Council approval of subrecipient agreements with service providers.
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FinancialConsiderations
Financial Considerations: If awarded PIP - Round 4 funding from the State, the City anticipates receiving up to $1.5 million in grant funding. There is no local match requirement.
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LocalBusinessEnterprise
Local Business Enterprise (LBE): Not applicable.
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