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CITY COUNCIL AGENDA REPORT
City of Anaheim
HOUSING AND COMMUNITY DEVELOPMENT
DEPARTMENT
DATE: MAY 29, 2025
FROM: HOUSING AND COMMUNITY DEVELOPMENT DEPARTMENT
SUBJECT: APPROVE THE PROGRAM GUIDELINES AND FUNDING
ALLOCATION PLAN FOR THE ANAHEIM LOCAL HOUSING
TRUST FUND
ATTACHMENT (Y/N): YES ITEM # 22
GOVERNMENT CODE § 84308 APPLIES: NO
REQUESTED ACTION:
That the City Council, by Motion, approve the program guidelines and allocation plan for the Anaheim Local Housing Trust Fund.
DISCUSSION:
The Anaheim Local Housing Trust Fund (A-LHTF) was officially established on August 20, 2024, with the adoption of Ordinance No. 6588 (Ordinance), which added Section
1.08.100 to the Anaheim Municipal Code.
As initially contemplated by the City Council, the purpose of the A-LHTF is to advance the development of affordable housing and related programs in Anaheim. Potential activities such as gap financing and land acquisition for affordable rental housing, downpayment assistance to homebuyers, and housing stability programs such as eviction prevention assistance were all considered as part of the adoption discussion.
When the Ordinance was established, it was known that a significant initial contribution from the Walt Disney Company in the amount of $15 million would be forthcoming in the summer of 2025. Another contribution of $15 million is expected in five years. Other contributions to the fund are anticipated from grants and local housing policies.
Given the unique nature of the A-LHTF, Council directed staff to return with operating guidelines and an allocation plan for use of funds. In response, staff has actively engaged in researching best practices and innovative approaches to both housing production and homeownership programs. The research has included focused conversations with housing developers, consultants, and local real estate professionals. The sum of these efforts has shaped the proposed guidelines presented herein.
Anaheim Local Housing Trust Fund Program Guidelines and Funding Allocation Plan May 29, 2025
To complement programming, staff also gave careful consideration to an allocation plan, which will guide upcoming investment from the A-LHTF. Informed by data on housing needs and city goals, staff recommend the following funding allocation investment plan:
Program Investment Amount Percentage
Starting Balance $16,000,000* 100.00%
Build More Homes Initiative $9,500,000* 59.38%
First-Time Homeowners Programs $5,000,000 31.25%
Housing Stability Program $1,000,000 6.25%
Administration $500,000 3.12%
*Includes $1 M from a federal grant that requires use of funds for housing production.
PROGRAMS
Build More Homes Initiative
The city, through a variety of programs and incentives, has provided a broad spectrum of housing options for persons who live in our city and with the greatest need. The City’s efforts have resulted in the creation of over 5,742 affordable units. This unit count consists of new unit construction and substantial rehabilitation but does not include the city’s largest housing assistance program, the Section 8 Housing Choice Voucher Program, or down payment assistance programs.
As has been previously shared, the city’s most significant resource for affordable housing was funding from the former Anaheim Redevelopment Agency. The housing set-aside fund from Redevelopment generated, on average, $15 million to $17 million annually. These resources concluded in 2011, but a remaining fund balance and previously acquired land, coupled with other federal and state programs, have allowed for continued focus on the creation of affordable housing. Former redevelopment-related resources are now largely committed, thus creating the need for the city to explore alternatives.
Under the Build More Homes initiative, the City will continue its long history of leveraging funds to assist in the development of affordable housing by utilizing funds from the A-LHTF in concert with other funds. Examples of resources available for this purpose include the federal HOME investments partnership program and the State’s Low Income Housing Tax Credit allocation (LIHTC) and the Permanent Local Housing Allocation (PLHA) programs.
Eligible activities for affordable housing production are as follows:
Loans to fund a gap in a financing plan (based on financial analysis) Site acquisition costs for future opportunity development sites Anaheim Local Housing Trust Fund Program Guidelines and Funding Allocation Plan May 29, 2025
Site preparation costs (environmental assessments and clean-up, demolition, property maintenance/security, etc.)
For the most part, the proposed use of funds from the A-LHTF align with the parameters set forth for the use of former redevelopment funds. These guidelines have served the city well and allowed for a structure that provides funds to recycle back to the city at a future date.
Since A-LHTF will be used in combination with other funds, it is expected that eligibility and income guidelines will conform to and/or complement the parameters set forth by other matching resources. As such, it is anticipated that units built with the support of A-LHTF will generally be restricted to households earning less than 80% of the area median income for Orange County, with the most common product serving households earning at or below 60% of the area median income. However, the A-LHTF aspires to help address a multitude of needs and as such will allow for assistance to be provided to developers of multifamily projects seeking to address the needs of the “missing middle/workforce housing” defined for this purpose as households with an income up to 120% of AMI. In all cases, assistance will be provided in the form of a loan, and associated units must be restricted for a period of 55 years.
The proposed allocation aims to support the production of 250 to 300 affordable housing rental units. Staff estimates that the portion of the full $30 million contribution from Disney allocated to the Build More Homes Initiative could facilitate the development of 500 units.
First-Time Homeowners Programs
The city has offered prescribed first-time homeownership assistance programs for households connected to Anaheim for decades. The limitation of these programs is that they have been paired with specific product types (new construction) and often with other city revitalization efforts (Colony Park for example). The city will continue to offer programs as described below.
Density Bonus – the density bonus homeownership program is a type of inclusionary zoning policy that allows developers to increase the number of housing units (and sometimes modify code requirements like building height or size) in exchange for providing a certain percentage of units as affordable housing, often for low-to-moderate income households. In essence, it's a tool to incentivize developers to contribute to affordable housing goals by granting them more flexibility in development. Recent examples of the use of this program include new developments by Toll Brothers (100 West) and Melia Homes (Townes at Orange)
The Building Equity and Growth in Neighborhoods (BEGIN) Program is a California state-funded program offering down payment assistance to low- to moderate-income first-time homebuyers, particularly for newly constructed housing, including some manufactured homes. The program provides a deferred second mortgage loan to help make homeownership affordable. The program has Anaheim Local Housing Trust Fund Program Guidelines and Funding Allocation Plan May 29, 2025
been paired with units produced through the density bonus program, allowing for households at the lower income threshold to purchase a home. Homeownership Incentive Program for Police Officers – Provides Anaheim Police Officers a one time, no interest, forgivable loan to be used toward the purchase of a principal residence within the City of Anaheim. The amount authorized at this time is $10,000. The loan is reduced each year and forgiven at the ten-year anniversary so long as the officer (i) owns and maintains the Property as their principal residence, (ii) remains an active full-time employee with the City of Anaheim, and (iii) complies with all terms of the loan agreement. The City uses general funds for this incentive program.
Anaheim Downpayment Assistance Program
Based on direction provided by the Anaheim City Council, staff set forth to develop a new downpayment assistance program intended to be offered citywide.
This new City program is proposed as a downpayment assistance program open to households who live and/or work in Anaheim and are seeking to purchase their first home. Eligible properties include single family homes (detached or attached).
Assistance will be available in the form of a silent second mortgage, also known as a subordinate loan, in the amount of $50,000. A silent second is a type of loan that allows borrowers to defer payments on the second mortgage until they sell, refinance or pay off their property. This allows for lower monthly mortgage payments on the first mortgage, potentially making homeownership more affordable.
For the new Anaheim program, household income may not exceed 150% of the area median income for Orange County. Current city programs limit eligibility to households whose income is at 80% to 120% of the area median income. However, the Permanent Local Housing Allocation (PLHA) program, the newest source of state housing funds available to the city to advance affordable housing goals, directs jurisdictions to utilize a percentage of PLHA funds towards homeownership assistance and sets the income limits for the program at 150% of AMI. As a result, staff recommends adopting income limits that align with PLHA policies to allow for the ability to leverage funds.
Other program guidelines include:
1. Homebuyers must demonstrate that they can contribute a minimum of 3% but not more than 20% of the purchase price toward the down payment plus closing costs. Gifts from family members may not exceed 5% of the purchase price.
2. Must occupy the property as a primary residence; non-occupant co-borrowers are not allowed.
3. Household must have secured pre-approval from an established financial or lending institution or demonstrate that the provision of the City’s assistance will result in the ability to secure a pre-approval.
4. Homebuyer education and counseling are required.
5. Other forms of first-time buyers’ assistance may be combined with the City’s program.
Anaheim Local Housing Trust Fund Program Guidelines and Funding Allocation Plan May 29, 2025
The proposed allocation of $5 million for downpayment assistance is estimated to assist 100 households to become new homeowners.
Housing Stability Program
Beyond downpayment and production, the third area of investment recommended by staff is a housing stability program. Staff recommends a set-aside of $1 million over 5 years for this purpose.
Since the beginning of the COVID-19 pandemic, the city has increasingly been involved in helping to keep Anaheim households in their homes through eviction prevention rental and utility assistance programs. The largest program of this type was the COVID- 19 Emergency Rental Assistance Program (ERAP) funded by the United States Department of Treasury, which provided over $47 million in funding beginning in December 2020. The ERAP program will sunset in September 2025 and the city has already stopped accepting new applications.
Other locally developed housing stability programs include the One Time Rental Assistance Program (OTRAP), which has been offered under limited circumstances and Senior Safety Net, a program dedicated specifically for seniors, defined as persons 55 years of age and older. OTRAP has been funded with Emergency Solutions Grant program resources (ESG). However, ESG is the smallest of our federal entitlement grant ($376K) programs and funds are currently earmarked for emergency shelters serving specific subpopulations such as families with minor children and individuals fleeing domestic violence. The Senior Safety Net program benefited from an infusion of funds from housing set aside and voluntary developer funds provided from 2021 through 2023.
No additional contributions have been received since 2023. As a result, there is a need to identify other funding sources for this program if the city desires to continue to provide such assistance.
Eviction Intervention/Prevention
The parameters for the housing stabilization programs being proposed are as follows:
1. Emergency assistance provided in the form of a grant, as a one-time rental assistance, in an amount not to exceed $5,000.
2. Documentation of a pending eviction required for emergency assistance – must be for nonpayment of rent and may not exceed two months of rental arrears or $5,000.
3. Household income must be at or below 50% of the Orange County Area Median Income.
4. Rental unit must be located within city boundaries and residents must be connected to Anaheim for at least one year prior to solicitation of assistance (live/work). Units located in unincorporated areas do not qualify.
5. Consideration of the ability to maintain rental unit beyond assistance period.
6. Assistance paid directly to landlord only.
7. For the Senior Safety Net program – Head of household must be 55 years of age or older.
Anaheim Local Housing Trust Fund Program Guidelines and Funding Allocation Plan May 29, 2025
8. Emergency Assistance may be granted as security deposit assistance in the event the household has suffered a recent destabilization event (examples - fire, fleeing domestic violence, illness, loss of job).
Staff proposes that the investment pool for housing stabilization be focused on a family program at this time as there are remaining funds for the Senior Safety Net Program for at least the next fiscal year. However, the program is included as part of the guidelines as it may be necessary to allocate funds for this population in upcoming years.
It is anticipated that the $1M investment will assist approximately 200 households.
On May 7, 2025, the Housing and Community Development Commission unanimously recommended approval to the City Council of the draft guidelines and allocation plan.
The activities proposed in the operating guidelines for the Anaheim Local Housing Trust Fund aligns with Anaheim’s Strategic Plan Goal B – Enhance Livability by fostering inclusive communities, expanding housing opportunities for all income levels, supporting economic stability, and promoting long-term sustainable growth.
IMPACT ON BUDGET:
The Anaheim Local Housing Trust Fund is the funding source for activities herein proposed. Program expenditures will be subject to council approval of budget appropriations.
Respectfully submitted,
Grace Ruiz-Stepter
Housing and Community Development Director
Attachment:
1. Anaheim Local Housing Trust Fund Program Guidelines & Funding Allocation Plan