City Council Agenda Report
Meeting Date: March 21, 2023
From: Carlos Fandino, City Administrator
Department: City Administration
Submitted by: Lilia Hernandez, Assistant to City Administrator Subject
Membership in the Gateway Cities Affordable Housing Trust, A Joint Powers Authority Recommendation
Adopt Resolution No. 2023-03 approving, authorizing and directing the execution of the Joint Exercise of Powers Agreement relating to membership in the Gateway Cities Affordable Housing Trust (GCAHT).
Background
The Gateway Cities region of Los Angeles County includes 27 cities located along the I-710 corridor in eastern Los Angeles County. The Gateway Cities Council of Governments (Gateway Cities COG) was formed in 1996, bringing together the 27 member cities, along with unincorporated communities in three Supervisorial Districts within Southeast Los Angeles County through a Joint Powers Agreement. The mission of the Gateway Cities COG is to improve the quality of life for the two million residents of Southeast Los Angeles County through targeted initiatives in the areas of transportation planning, affordable housing, improving air quality and economic development. Early in 2021, the Gateway Cities COG obtained State funding from the Southern California Association of Governments (SCAG) to explore the formation of an affordable housing trust within the region. On January 4, 2023, the Gateway Cities COG Board unanimously recommended the formation of the Affordable Housing Trust (GCAHT or Trust). The GCAHT’s mission is to bring new funding for affordable projects and programs for the region and help cities meet their Regional Housing Needs Allocation (RHNA) and aid staff with compliance requirements. Thus, staff recommends that the City join the GCAHT, a Joint Powers Authority formed among the cities within the Gateway Cities region, as the Trust provides funding to preserve and produce affordable housing and supports the region as a whole.
FORMATION
As part of the process of evaluating and developing the formation of the Trust, the Gateway Cities COG and their consultant conducted the following activities:
• Interviewed the Gateway Cities to determine their housing needs and priorities, explain the concept of the Trust, and investigate their interest in being a member. • Interviewed other stakeholders in the region in the same fashion, including the County of Los Angeles, affordable housing developers, financing entities, advocates, research organizations, and other related entities to gain their perspectives. • Provided an overview of best practices from other local housing trust fund studies, as well as a comparative review of the range of organizational and governance structures. • Conducted a study of the overall housing needs in the region, determined the existing sources of support to meet these needs, and estimated how much additional funding support will be needed for cities to meet these needs and satisfy their Regional Housing Needs Assessment obligations.
• Identified affordable and homeless housing developments planned within the Gateway Cities, including those in construction and those in the entitlement and pre-development phases.
• Compared the number of units to be provided and the populations to be served by these units to the housing need report.
• Formed a Steering Committee of Gateway COG City Managers and others to work with the Gateway Cities COG and the consultants to make the initial recommendations for how a trust might be formed and explore the initial sources of funding to support this effort. • Based on dialogue with the Trust Steering Committee, created and supported the negotiation of a Joint Powers Agreement for the Trust, developed an Administrative Plan, Governance Structure, and Bylaws for the Trust.
• Prepared a draft strategic plan for the new Trust, for review and acceptance by the Gateway Cities COG Board and final adoption by the new Board of Directors of the Trust when that Board is in place.
• Developed an operational plan for the first full year of operations of the Trust, proposed as fiscal year July 1st, 2023, to June 30th, 2024.
• Created a draft capital and administrative budget for the first year of Trust operations.
In late summer 2022, a Trust Steering Committee was formed including representatives from member cities, Los Angeles County, developers, and financing entities. The Trust Steering Committee met on three occasions and accomplished a variety of detailed analysis including, a review of other housing trusts best practices, examined potential funding sources for capital and administrative funding, discussed potential housing programs/projects, identified the key components to the Trust Strategic Plan, and helped draft the Joint Powers Agreement.
The Steering Committee unanimously recommended the formation of an affordable housing trust for the Gateway Cities sub-region. In addition, presentations were made to the Gateway Cities COG Committee on Homelessness, Gateway Cities City Managers and Planning Directors Committee. All groups expressed unanimous support for the formation of the Trust.
TRUST MEMBERSHIP
As outlined in the JPA, the GCAHT does not build, own, or manage housing projects. The Trust cannot require that housing projects be located in specific cities, require member cities to take an allocation of supportive housing units, or require that cities provide a local funding match. The Trust Board of Directors determines whether a funding application meets the Notice of Funding Availability criteria. Each local jurisdiction maintains land use control and processes the entitlement consistent with its zoning and municipal code requirements.
The JPA contains a provision that requires members to contribute towards administrative expenses of the Trust. Member cities are not required to contribute funding until July 1, 2024.
Prior to this period the Gateway Cities Council of Governments has secured administrative formation funding for the Trust. The annual membership fees are based upon city population as follows:
• Up to 30,000 = $7,500
• 30,001 to 60,000 = $15,000
• 60,001 to 100,000 = $32,500
• Greater than 100,000 = $47,500
This amount will increase annually in an amount equal to the U.S. Bureau of Labor Statistics consumer price index for Los Angeles-Long Beach-Anaheim area for the 12-month period preceding the year the fees are assessed.
The City would maintain the right to withdraw from the JPA subject to an approved resolution and by providing a six-month notice.
GOVERNANCE
The GCAHT will be a public government entity established by joint powers authority and in accordance with the Joint Exercise of Powers Act, as codified in California Government Code section 6500 et seq. The Trust will be organized to receive public and private capital and administrative funds to address local housing needs. The Trust will have an ongoing administrative revenue source from city membership fees as specified in the Trust Joint Powers Agreement (JPA) to be signed by each city that is a member of the Trust.
The Trust is governed by a nine-member Board of Directors (Board). Pursuant to the JPA Bylaws (Attachment 2), the Board is comprised of seven elected officials whose governing body is a member of the Trust and appointed by the Gateway Cities COG Board. A Trust member city will be represented on the Board by each population category specified in the Trust Membership fee calculation. Two additional Board members are experts in homelessness or housing policy and approved by the Gateway Cities COG City Managers Committee.
PAST AND PIPELINE OF AFFORDABLE HOUSING PROJECTS
The GCAHT will help cities in the Trust subregion address their RHNA which is mandated by State Housing Law as part of the periodic process of updating local housing elements of the General Plan for each city. RHNA quantifies the need for housing within each jurisdiction during specified planning periods.
In the past eight-year planning period, from 2013 through 2021, the Gateway Cities COG subregion received tax credit funding for 58 projects totaling nearly 6,000 housing units.
A 2022 survey of Gateway cities revealed that there are 38 affordable housing projects currently in the pipeline that have not yet started construction. Most of these projects need critical gap subsidy funding to start construction. These 38 pipeline projects would benefit from additional funding provided by the Trust which could accelerate and facilitate the creation of an additional 4,000 affordable housing units in the Gateway Cities COG subregion.
CONCLUSION
Joining the GCAHT would support regional goals of encouraging more affordable housing, as well as the objective to secure state, federal, and local affordable housing funds and to assist developers in finding funding sources. The Trust provides funding to preserve and produce affordable housing. These funds improve the financial viability of individual housing projects and programs. This funding can also increase each project’s competitiveness for additional state and federal funding sources. Additionally, the Trust works with a variety of government and philanthropy groups to attract more housing funds to the Gateway Cities region. Joining the GCAHT could support the City to achieve the stated goals and objectives of the 6th Cycle Housing Element and support the region as a whole to bring new dollars to help fund more affordable housing development. Staff recommends that the City Council adopt Resolution 2023-03 to join the Gateway Cities Affordable Housing Trust and authorizing the Mayor to execute the related JPA.
The Gateway Cities Affordable Housing Trust Joint Powers Agreement was reviewed and approved as-to-form by the City Attorney.
Fiscal Impact
No financial impact is expected until July 1, 2024. Beginning July 1, 2024, financial impact is estimated at $7,500 annually with increases determined by the CPI for the Los Angeles-Long Beach-Anaheim area. Sufficient funds will be budgeted accordingly for Fiscal Year 2024-25 in the General Fund, Public Works Department, Membership Dues Account No. 011-040-400- 529550.
Attachments
1. Resolution No. 2023-03
2. GCAHT Bylaws