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Housing Fund Mostly Off Limits to Budget Cuts, City Official Say
 

Bob Kronovetrealty
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By Jorge Casuso

May 5, 2020 -- The City of Monica has enough money available in its Housing Trust Fund to avert many of the budget cuts the City Council is expected to make Tuesday.

But it would have to sacrifice one of its top funding priorities -- the creation of affordable housing -- to help bridge the massive budget gap caused by the coronavirus shutdown.

Under a proposal hammered out by staff over the past two weeks, only $5.6 million of the nearly $58 million available in the Housing Fund would be used to help fill a $150 million budget gap by next July.

The staff proposal calls for making deep cuts to staffing, programs and services and halting much-needed capital projects ("City Plan Eliminates Nearly 500 Jobs, Scraps Programs, Shutters Facilities," May 1, 2020).

The plan, however, taps none of the $25,771,100 currently available in the housing fund to help fill a $48 million budget gap through June.

And of the $25,964,493 available in the upcoming fiscal year, a total of $5.6 million would be used to help bridge a looming $102 million shortfall.

Asked why more of the Housing Trust Fund money was not being used to help avoid some of the deep cuts being proposed, City officials said that building new affordable housing remains a top priority.

"The City of Santa Monica has long been a champion of affordable housing and we remain committed to its production even in this new environment," said Andy Agle, who heads the City's Department of Housing and Economic Development.

"We were in an acute affordability and housing crisis before the pandemic, and now more than ever housing will be fragile for many," Agle said.

The Housing Trust Fund is largely used to bankroll affordable housing projects undertaken by Community Corporation, which uses the money to build new developments or purchase and rehab existing buildings.

But most of the money can be used to fund services and programs citywide and bankroll capital improvement projects within Santa Monica's Earthquake Redevelopment District, which includes two-thirds of the city.

The housing fund receives approximately $15 million a year from loans repaid by the former redevelopment agency and $8 million a year from revenues from Measures GS and GSH.

While 20 percent of the redevelopment money is mandated for affordable housing by the State, the rest of the money can be used for other projects, including refurbishing the long outdated City Yards.

GS and GSH -- twin ballot measures approved by Santa Monica voters in 2016 -- increase the City's transactions and use tax by 0.5 cent.

Although the measures have been relied on to help bankroll affordable housing, the intent of GSH, which advised the City how to use the money, was "to maintain and improve Santa Monica community services," according to the ballot language.

The "Impartial Analysis" of the measure by former City Attorney Marsha Moutrie lists "the services and programs that potentially could receive funding."

These include "but are not limited to: education, afterschool programs, affordable housing, police, fire, paramedic and emergency 911 response, public transit, environmental and library services."

Between January 2014 and June 2019, the City committed a total of $83,681,447 from the housing fund, resulting in 387 new affordable housing units -- or an average of $216,231 per unit.

But the costs for new construction can be more than $750,000 per unit, which is the cost of a 55-unit low-income housing project Community Corp is building in the Pico Neighborhood.

The City's Housing Trust Fund contributed $14,831,767 to help bankroll the nearly $42 million project -- with the City's share covering the equivalent of between 19 and 20 units.

Long-term resident Mathew Millen, who helped draft the opposing argument to GS, thinks the housing fund money should be used to restore services and programs that are on the cutting block.

"The City Council should be using GS sales tax revenue to maintain city services and not following the Santa Monicans for Renters' Rights (SMRR) agenda of funding regional social services and building low income housing for non residents," Millen said.

"The millions in sales tax revenue in the Housing Trust Fund to build homeless housing should be repurposed to the General Fund to maintain police, fire, libraries, the community swimming pool and maintain our infrastructure," Millen said.


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