For Economic Development Committee November 19, 2026
TO: Honorable Economic Development Committee Members
FROM: Christina Taylor, Community Development Director
Title
Permanent Local Housing Allocation (PLHA) Program - 2023 Funding Allocation, Eligible Activities, and Direction on Proposed Uses
Body
BACKGROUND
The Permanent Local Housing Allocation (PLHA) Program was established through Senate Bill 2 (SB 2), the Building Homes and Jobs Act of 2017, which created a permanent funding source for affordable housing through recording fees on certain real estate transactions. Administered by the California Department of Housing and Community Development (HCD), the program provides funding to eligible local governments for affordable housing development, preservation, homeownership assistance, and homelessness-related activities.
In 2022, the City of Rialto adopted a Five-Year PLHA Plan and corresponding resolution; however, the City's Housing Element had not yet received HCD certification, preventing the City from meeting the program's eligibility requirements. Consequently, the City did not execute a PLHA Standard Agreement with HCD, and its 2022 allocation was forfeited.
Following certification of the City's Housing Element in 2026, HCD notified the City on June 16, 2026, that its 2023 PLHA allocation of $392,796 remained available. In response to staff's subsequent inquiry, HCD confirmed that because no Standard Agreement had been executed and the previous Five-Year Plan was invalid, the City must apply as a new applicant and submit a new Five-Year PLHA Plan and all required supporting documentation.
The City must submit its application by February 28, 2027, to secure the available 2023 funding.
ANALYSIS/DISCUSSION
Available Funding and Homeownership Requirement
The City has $392,796 available through its 2023 PLHA formula allocation. Under the current New Applicant application requirements, at least 40% of the allocation requested must be dedicated to eligible activities supporting homeownership. For Rialto, this represents a minimum of $157,118.40 that must be allocated to qualifying homeownership activities. The remaining 60%, or $235,677.60, may be allocated among other eligible PLHA activities, including additional homeownership activities, affordable rental housing, ADU development, homelessness assistance, and other qualifying uses. The program also permits up to 5% of the allocation to be used for eligible general administrative expenses, equivalent to a maximum of $19,639.80. Administrative funding would be included within the total allocation and would reduce the amount available for program activities.
The City is not required to dedicate its entire allocation to one activity. PLHA funding may be distributed among multiple eligible activities, provided the proposed allocation satisfies the 40% homeownership requirement and all other applicable program conditions. This flexibility allows the City to consider a combination of housing development, homeownership assistance, rehabilitation, and other housing-related activities based on local needs and implementation opportunities.
Eligible PLHA Activities
The PLHA Program Guidelines identify ten eligible activities that support affordable housing development, preservation, homeownership opportunities, and homelessness assistance. These activities provide jurisdictions with flexibility to address local housing needs through a variety of programs and projects.
Of the ten eligible activities, six may qualify toward the program's 40% homeownership requirement, provided the funding is used for qualifying ownership housing purposes. A complete list of eligible activities, including identification of those that may satisfy the homeownership requirement, is provided as Attachment 1 - PLHA Eligible Activities Summary.
Staff has identified three activities for further consideration: Activity 2 - Affordable Rental and Ownership Housing; Activity 7 - Accessibility Modifications to Owner-Occupied Housing; and Activity 9 - Homeownership Opportunities. These activities are discussed in greater detail below.
Activity 2 - Affordable Rental and Ownership Housing
Activity 2 permits PLHA funds to be used for the predevelopment, development, acquisition, rehabilitation, and preservation of qualifying affordable rental and ownership housing, including Accessory Dwelling Units (ADUs). Potential uses include assistance with eligible development or construction costs for affordable ownership housing, rehabilitation of existing owner-occupied homes, and predevelopment expenses associated with affordable ADUs, such as architectural, engineering, and permitting costs. These activities would be subject to applicable HCD eligibility and affordability requirements.
Activity 7 - Accessibility Modifications to Owner-Occupied Housing
Activity 7 permits the use of PLHA funds for accessibility modifications to lower-income, owner-occupied housing. Eligible improvements could include wheelchair ramps, accessible bathrooms, widened doorways, and other qualifying modifications necessary to improve accessibility for residents with mobility limitations or disabilities. This activity could complement the City’s existing owner-occupied housing rehabilitation programs, including Rialto Revive and the CDBG Mobile Home Rehabilitation assistance programs. This option could allow the City to assist existing lower-income homeowners while satisfying a portion of the required homeownership allocation.
Activity 9 - Homeownership Opportunities and Down Payment Assistance
Activity 9 permits PLHA funds to support homeownership opportunities, including down payment assistance. The City could consider providing financial assistance to income-qualified homebuyers purchasing homes within Rialto, helping eligible households overcome financial barriers associated with homeownership. This activity could complement the City's existing housing assistance initiatives and provide another opportunity to satisfy the required 40% homeownership allocation.
Additional Eligible Activities
Although staff has identified Activities 2, 7, and 9 for further consideration, these activities were highlighted because they most closely align with the program's 40% homeownership requirement and the City's existing housing initiatives. The City may also select other eligible activities based on Committee direction, including affordable multifamily rental housing development, matching contributions to qualifying housing funds, permanent supportive housing service reserves, and acquisition and rehabilitation of vacant or foreclosed properties.
The final selection of activities must account for the 40% homeownership requirement, available funding, local housing needs, program eligibility, and the ability to implement the selected activities within HCD's required timelines.
Required Five-Year PLHA Plan
Following Committee direction, staff will prepare a new Five-Year PLHA Plan identifying the proposed activities, funding allocations, anticipated households served, and implementation timelines. The Plan must demonstrate consistency with the City's adopted Housing Element and prioritize housing opportunities for households earning at or below 60% of Area Median Income. The Plan will undergo the required public participation process and City Council adoption before submission to HCD by the February 28, 2027, deadline.
RECOMMENDATION
Staff recommends that the Economic Development Committee receive and review the available PLHA funding opportunities and provide direction regarding the eligible activities to be prioritized, with consideration of the program's 40% homeownership requirement. Committee direction will guide staff in developing a proposed Five-Year PLHA Plan for subsequent City Council consideration and approval.
ATTACHMENTS
1. PLHA Funding Allocation Graph
2. PLHA Eligible Activities Summary