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FINANCIAL STATEMENT Most of the original cost of the two professional services agreements was paid by approved State LEAP and REAP grant funding with the remaining (up to) $283,416 to be paid by the Lower Income Housing Fund. These amendments result in an additional $53,710 to be appropriated from available funding in the Lower Income Housing Fund. BACKGROUND Adoption of an updated Housing Element is required for the City to remain compliant with State law requiring periodic update of the Housing Element and is a City Council priority. The Housing Element update, for the 6th Cycle of such updates, will address the planning period from 2023-2032. The City formally initiated the Housing Element update process in March 2021 with the first public meetings and hearings beginning in May 2021. The Housing Element is anticipated to be adopted no later than January 31, 2023. In March 2021, the City Council authorized the City Manager to enter into two professional services agreements to support the update: 1) a professional Services Agreement with Lisa Wise Consulting (LWC) in the amount of $302,001 to prepare an update the Housing Element Update and 2) a professional services agreement with First Carbon Solutions (FCS) for a total of $343,170 to prepare the required Environmental Impact Report (EIR) for the Housing Element Update. DISCUSSION Significant work has been completed to date on the Housing Element Update, including extensive public outreach comprising over 40 public meetings, workshops, public hearings, and outreach events. Pursuant to State Law, exhaustive analysis has been completed documenting the city's affordable housing needs, existing constraints and opportunities for housing production, identification of potential sites for re-zoning to accommodate the Regional Housing Needs Allocation (RHNA), and evaluation and update of existing housing policies and programs. Concurrently, the City has prepared a Program Environmental Impact Report, in accordance with the requirements of the California Environmental Quality Act (CEQA), which analyzes the potential environmental effects of the Housing Element Update, particularly focused on the land use changes associated with potential re-zoning of the various housing sites needed to meet the RHNA. A draft Housing Element was submitted to the State Department of Housing and Community Development (HCD) in August 2022, and a Draft Program Environmental Impact Report was released in October 2022. Comments from HCD are expected in mid-November 2022, and public comments on the Draft EIR by December 5, 2022. During the course of that work, staff and the professional service teams identified the need for additional work to be completed in two key areas: Page 2 of 3