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Council authorizes broader uses for state PLHA funds to keep Housing Instability Prevention program fully funded
Summary
To allow the council-approved $5.2 million Housing Instability Prevention (HIP) program to operate under state PLHA rules, the council removed a local prohibition on using PLHA for shelter capital and operations, enabling a funding swap so HIP can draw PLHA for eligible households and general fund for the remainder; the measure passed 7-1 with Councilmember Moreno opposed.
The City Council on Nov. 19 approved a resolution to allow all eligible uses of the State of California's Permanent Local Housing Allocation (PLHA) funding, including capital and operating costs for navigation centers and emergency shelters. The action creates flexibility to implement the council-approved $5.2 million allocation for the Housing Instability Prevention (HIP) program in fiscal year 2025.
What prompted the change: Economic Development staff and the Independent Budget Analyst explained a technical mismatch between PLHA rules and HIP operations. State guidance limits PLHA-funded rental assistance to households at or below 30% of area median income (AMI) and disallows certain arrears payments. HIP serves households up to 80% AMI and allows arrears payments; absent a workaround, staff said HIP could not draw all expected PLHA funding.
The swap: To bridge the gap, staff proposed removing the local restriction that had barred PLHA spending on shelter capital and operations; that change permits a partial funding swap in which PLHA would cover eligible HIP households and city general fund or other sources would cover the remaining participants. IBA analysis flagged both benefits (flexibility to meet urgent needs) and trade-offs (PLHA historically funds new affordable housing projects).
Council action and amendments: Councilmember Kent Lee moved, and the council adopted, an amendment requiring that any future appropriation of PLHA funds come to council before expenditure and that Economic Development provide an annual PLHA expenditures report to the Land Use & Housing Committee, starting March 2025 (to inform FY26 budget development). The motion passed 7-1 (Councilmember Moreno recorded a no vote).
Why it matters: The action allows the city to deploy the HIP program as budgeted while preserving council oversight of future PLHA appropriations. Staff and the IBA emphasized the change is intended to be flexible, not a commitment to shift all PLHA away from housing construction in future years; councilmembers asked staff for reporting and continued prioritization of affordable-housing development when possible.
Next steps: EDD and the Housing Commission will implement the funding swap and continue bringing required items to council for specific allocations. EDD will provide the annual PLHA report requested by council.
