Report Prepared by: Leah Brown, Management Analyst, Development Services Department
Title
SUBJECT: Approval to Execute Regional Early Action Planning (REAP) 2.0 Grant Agreements with the Merced County Association of Governments (MCAG) and to Accept and Appropriate the Local Suballocation Grant Funding of $195,493 for the General Plan Update and the Regional Competitive Grant Funding of $2,497,538 for the I Street Project for Linc Housing
REPORT IN BRIEF
Considers approving the execution of the REAP 2.0 Grant Agreements with MCAG and accept and appropriate the Local Suballocation Grant funding of $195,493 for the General Plan Update and the Regional Competitive Grant funding of $2,497,538 for the I Street Project for Linc Housing.
RECOMMENDATION
City Council - Adopt a motion:
A. Accepting $195,493 from the REAP 2.0 - Local Suballocation Grant funds, increasing revenue in Fund 3000-Development Services Planning Division and appropriating the same for the General Plan Update; and,
B. Accepting $2,497,538 from the REAP 2.0 - Regional Competitive Grant funds, increasing revenue in Fund 2014-Early Action Planning and appropriating the same for I Street Project for Linc Housing; and,
C. Authorizing the use of pooled cash to cover the appropriation until grant funds are reimbursed; and,
D. Authorizing the City Manager to execute the necessary documents; and,
Body
ALTERNATIVES
1. Approve, as recommended by staff; or,
2. Approve, with modifications; or,
3. Deny the request completely; or,
4. Refer to staff for reconsideration of specific items as requested by Council; or,
5. Continue to a future City Council meeting (date and time to be specified in the motion).
AUTHORITY
Charter of the City of Merced, Section 200.
CITY COUNCIL PRIORITIES
As provided for in the 2024-2025 Adopted Budget and the City Council’s Pro-Housing Policies.
DISCUSSION
The Merced County Association of Government’s (MCAG) Regional Early Action Planning 2021 (REAP 2.0) Program was developed to align with MCAG’s adopted REAP 2.0 Program Framework and the state’s final REAP 2.0 Program Guidelines. The state REAP 2.0 grant supports accelerating housing production, reducing vehicle miles traveled (VMT), and Affirmatively Furthering Fair Housing (AFFH).
REAP 2.0 was established through AB 140 (July 2021) as part of the mid-year budget revision for the State’s FY 21-22 budget for transformative and innovative projects that implement a region’s Sustainable Communities Strategy (SCS) and help achieve the objectives of more housing and transportation options that reduce reliance on cars. REAP 2.0 builds on actions completed through the 2019 REAP grant program but expands the focus on integrating housing and climate goals, and by allowing the broader planning and implementation investments, including infrastructure investments supporting housing development.
The REAP 2.0 Program is funded with $600 million from the State General Fund. MCAG’s share of this funding is $3,912,152. The REAP 2.0 Program is administered by the California Department of Housing and Community Development (HCD) (Department), in collaboration with the Governor’s Office of Planning and Research (OPR), the Strategic Growth Council (SGC), and the California Air Resources
Board (CARB). The REAP 2.0 Program provides funds to regional governments to achieve the three core REAP 2.0 objectives listed below. This includes accelerating housing production and facilitating compliance with 6th Cycle housing elements, including regional housing need allocations. REAP 2.0 is specifically designed to provide Metropolitan Planning Organizations (MPO) and other Eligible Entities with tools and resources to help implement and advance plans, primarily including Sustainable Communities Strategies (SCS) as part of Regional Transportation Plans to pursue greenhouse gas emission reduction targets through land use and transportation changes.
MCAG submitted an Advanced Application to the State in July 2022 for $290,607 to conduct the required outreach for the development and submission of the full application, as well as to administer and manage the REAP 2.0 programs through the June 2026 expenditure deadline. After the Advanced Allocation, MCAG had $3,621,545 remaining to go towards two grant programs.
In December 2022, the MCAG Governing Board adopted the REAP 2.0 Program Framework, which consists of two major components:
1. Regional Competitive Grant Program (75%, $2,716,159) developed and administered by MCAG that supports all REAP 2.0 objectives.
• Proposed primary applicants to include local jurisdictions and transit agencies.
• Priority focus on implementation projects.
• The City of Merced submitted 4 applications in support of our affordable housing partners including the projects at Park Avenue - Mercy Village, 1213 V Street, Gateway Terrace II, and the I Street Project by Linc Housing.
• MCAG’s board reviewed the applications and unanimously chose the I Street Project by Linc Housing.
• This project was approved by Council in 2024, they are currently in escrow for the land owned by the Housing Successor Agency. They intend to develop a 54 unit, three story apartment complex on I Street between 18th and 19th. The project will be 100% affordable with 55-year covenants.
• Following state budget cuts, the final awarded amount for the competitive grant is $2,497,538.
2. Local Suballocation Grant Program (25%, $905,386) to cities and the County to implement sixth cycle housing elements with an emphasis on supporting activities that meet all the REAP 2.0 objectives.
• Rezoning and updating planning documents, development standards, and zoning
ordinances, including general plans, community plans, and specific plans.
• Performing infrastructure planning and upgrades, including for sewers, water systems, transit, active transportation, or other public facilities necessary to enable reduction in Per Capita VMT and accelerate infill development.
• Revamping local planning processes to accelerate infill development.
• Completing environmental clearance to eliminate the need for project-specific review for infill development.
• The City applied for the funds in support of the Comprehensive General Plan Update.
• Following the state budget cuts and division between the other eligible communities, the City’s awarded amount is $195,493. These funds will be used towards the Comprehensive General Plan Update.
IMPACT ON CITY RESOURCES
No city funds are needed. The $195,493 will help fund the Comprehensive General Plan update once it is executed, and the $2,497,538 is a pass-through award for the Linc Housing’s I Street Project. The grant agreement with Linc Housing to facilitate the pass-through of funds for the I Street Project is still pending.
This will require an affirmative vote of five Council Members for adoption.
ATTACHMENTS
1. MCAG REAP 2.0 Draft Guidelines
2. REAP 2.0 Local Suballocation Grant Agreement between MCAG and the City for the General Plan Update
3. Exhibit A of the Local Suballocation Grant - Application
4. REAP 2.0 Regional Competitive Grant Agreement between MCAG and the City for Linc’s “I Street Project.”
5. Exhibit A of the Regional Competitive Grant - Application