HomeMy WebLinkAboutMINUTES - 08211990 - IO.10 I .O.-10
TO: BOARD OF SUPERVISORS `'s..r Contra
FROM: INTERNAL OPERATIONS COMMITTEECOSta
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August 13 , 1990 County�`o.-, - :sem'
DATE:
REPORT ON THE FEASIBILITY OF ESTABLISHING AN AFFORDABLE
SUBJECT: HOUSING TRUST FUND
SPECIFIC REQUEST(S)OR RECOMMENDATION(S)&BACKGROUND AND JUSTIFICATION
RECOMMENDATIONS:
1. Establish a Housing Trust Fund Task Force consisting of
representatives of the following:
A. The Building Industry Association of Northern
California.
B. The Contra Costa Board of Realtors
C. The Contra Costa Council
D. The Contra Costa County Housing Authority
E. The Contra Costa Legal Services Foundation
F. The Building and Construction Trades Council
G. Two representatives from the Contra Costa Mayors'
Conference - preferably from different areas of the
County.
H. The Bay Area Council
I . BRIDGE
J. Wells Fargo Bank
K. The League of Women Voters
L. The Coalition of Business and Labor (COLAB)
M. Local Non-Profit Developers
N. Local Housing Interest Groups
O. The State Department of Housing and Community
Development
P. The United States Department of Housing and Urban
Development
Q. The Members of the 1990 Internal Operations Committee
of the Board of Supervisors
CONTINUED ON ATTACHMENT es YES SIGNATURE:
RECOMMENDATION OF COUNTY ADMINISTRATOR -RECOMMENDATION OF BOARD CO MITTE
APPROVE OTHER
SIGNATURE(S):
// WRIGH MI T M POWERS
ACTION OF BOARD ON August 21, 1990 APPROVED AS RECOMMENDED X OTHER
VOTE OF SUPERVISORS
I HEREBY CERTIFY THAT THIS IS A TRUE
X UNANIMOUS(ABSENT III, I V i AND CORRECT COPY OF AN ACTION TAKEN
AYES: NOES: AND ENTERED ON THE MINUTES OF THE BOARD
ABSENT: ABSTAIN: OF SUPERVISORS ON THE DATE SHOWN.
CC: ATTESTED d?`% 1990
County Administrator
Community Development Director. PHIL BATYIELOR,CLERK OF THE BOARD OF
County Counsel SUPERVISORS AND COUNTY ADMINISTRATOR
Deputy Director, Redevelopment Agency
BY DEPUTY
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2 . Request the Community Development Director to return to our
Committee October 8, 1990 with nominations of specific
individuals representing these organizations for appointment
by the Board of Supervisors
3 . Request the Community Development Director to investigate
the feasibility of having redevelopment agencies impose
transfer taxes and report his conclusions to our Committee
on October 8, 1990.
4. Request the Community Development Director to determine
exactly what actions have been taken by Alameda County and
Solano County in terms of establishing a housing trust fund,
including what revenue sources each county has used and
return a report on this subject to our Committee on October
8, 1990.
5. Request the Community Development Director to return to our
Committee October 8, 1990 with a proposed charge to the
Housing Trust Fund Task Force which will focus their work in
the area of creating a trust fund to provide for affordable
housing in the County and determining the most appropriate
and feasible method of capitalizing the trust fund and
providing it with an ongoing revenue stream.
6. Request the Community Development Director to undertake a
preliminary review of potential revenue sources based on,
among other things, the criteria outlined in Section IV of
the attached report and report his conclusions and
recommendations to our Committee and the Housing Trust Fund
Task Force, including the opinion of County Counsel where
appropriate in terms of the ability of the County to use any
particular potential revenue source.
BACKGROUND:
On May 22, 1990 the Board of Supervisors referred to our
Committee a proposal that the County establish a housing trust
fund.
On August 13 , 1990 our Committee received and reviewed in some
detail the attached report from Janet Anderson, Senior Housing
Planner for the Community Development Department. We were joined
by representatives of the Building Industry Association of
Northern California, Contra Costa Board of Realtors, Contra Costa
Council, Contra Costa Housing Authority, and Legal Services
Foundation.
Our Committee is recommending that the Board of Supervisors agree
to establish a housing trust fund task force which can explore a
variety of revenue alternatives to determine which would . be the
most feasible and available to finance affordable housing in
Contra Costa County, that the Community Development Department
staff obtain nominations from each of the organizations noted and
return to our Committee with names of individuals who are being
nominated to represent each of these organizations. In addition,
we are asking the Community Development Department staff to do
some additional background work on this subject. Following our
October 8 meeting we will return to the Board with a more
detailed composition for such a Task Force and charge for the
Task Force. We are not repeating all of the valuable background
information which is included in the staff report and are,
therefore, incorporating the staff report into this Committee
report.
CONTRA COSTA COUNTY
COMMUNITY DEVELOPMENT DEPARTMENT
DATE: August 13, 1990
TO: Internal Operations Committee
Supervisor Tom Powers
Supervisor Sunne McPeak
FROM: Janet Anderson, Senior Housing Planner
SUBJECT: Revenue Sources for Housing Trust Funds
This report responds to three referrals from the Board of Supervisors: one on April 4,
• 1989 regarding development fees for homeless services and affordable housing, a
referral on April 4, 1989 regarding a Housing Bonus Fund for the Homeless, and a
May 22, 1990 referral regarding housing trust funds.
I. Summary
Housing trust funds are a local source of revenue to finance affordable housing.
Housing trust funds are capitalized by one time contributions and by permanent,
annually renewable dedicated revenue streams. Local Housing Trust Funds have
emerged because of the declining presence of federal and state resources for
affordable housing. Housing Trust Funds can be combined with other currently
available resources (Community Development Block Grants, redevelopment funds,
foundation funds, private financing, and other federal and state funds) to address
affordable housing needs.
The following preliminary review of resources available to fund a housing trust fund
suggests that there are a limited number of funding mechanisms that should be further
evaluated. These include:
o inclusionary housing programs;
o development fees on nonresidential development;
o general obligation bonds approved by the voters;
o utility taxes;
o business taxes;
o transient occupancy taxes; and
o voluntary sources such as escrow interest funds.
The following next steps are suggested:
1) Focus analysis on the aforementioned funding mechanisms;
2) Direct the Community Development Department to evaluate potential
revenue sources. based on, among other things, criteria suggested in
Section IV of this report, and report back to the Internal Operations Committee;
3) Direct County Counsel to conduct a legal review of the identified
potential revenue sources; and,
4) If warranted by the additional analysis, consider establishment of a broad
based Housing Trust Fund Task Force to assist County Community
Development staff in ascertaining housing needs, evaluating funding
mechanisms, and recommending appropriate funding mechanisms and
administrative structures for a Housing Trust Fund.
II. Background
Housing trust funds were developed in the 1980's as local and state jurisdictions
attempted to respond to the drastically declining role of the federal government in
funding affordable housing. The original model was provided by a very successful
Interest on Lawyers Trust Account program which uses interest from attorneys' client
trust deposits to fund legal services for low income clients. Since then, many
jurisdictions throughout the country have established housing trust funds to assist
new construction, rehabilitation, and financing of affordable housing through a variety
of funding mechanisms. Over 41 local jurisdictions have housing trust funds, in
addition to at least 25 state governments.
Housing trust funds may be capitalized by a one time contribution or by permanent,
annually renewable dedicated revenue stream. A large one time contribution would
allow use of the interest earnings or short term loans from the principal amount, while
a revenue stream allows the disbursement of grants or loans from the trust principal,
as well as commitments of funds beyond a one year period. An annually renewable
revenue source relieves the local jurisdiction from the necessity for annual budget
process and debate. Typically, they are administered by a local government agency,
an Advisory Board, or a separate non-profit entity.
The benefits of a housing trust fund include:
1) providing additional resources for affordable housing,
2) filling gaps left by state and federal programs,
3) leveraging other available housing funds, including the private sector,
4) satisfying state mandates to address the housing needs of all economic
groups,
5) allowing local control over uses of funds based on local needs and market
conditions,
6) insulating housing efforts from the vagaries of annual budget battles, and
7) providing incentives for new production and rehabilitation.
III. Revenue Generating Mechanisms
There are a variety of revenue sources for housing trust funds which present distinct
legal and political considerations. The discussion here is based on planning
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considerations and needs review by County Counsel for the full legal implications of
the various revenue sources. There is a critical distinction between taxes and fees.
Fees differ from taxes in that they are not compulsory, i.e. the payee has the option
of utilizing the service or undertaking the development, and they-are never assessed
for general revenue purposes.
A. Fees
Local jurisdictions have the authority to assess fees as an exercise of their police
power to further the public welfare as long as the fees are reasonable and based on
the proper nexus. Fees are collected to compensate a public entity for expenses
incurred in providing public services. Taxes differ from fees in that they generally
require voter approval, do not require a legal nexus, and may require a Gann override.
The rational nexus required between the exaction and the impact of the proposed
development was elaborated by the U.S. Supreme Court in Nollan v. California Coastal
Commission (1987) and was incorporated into state law by AB 1600, effective
January, 1989. AB 1600 required local agencies to comply with the following when
establishing or increasing a fee: 1 ) identify the purpose of the fee, 2) identify the use
to which the fee is being put, 3) show reasonable relationship between the fee's use
and the type of development on which the fee is being imposed, and 4) show
reasonable relationship between the need for the public facility or services and the
type of development on which a fee is imposed. AB 1600 also required that fees be
segregated into a separate account and generally be expended within five years. The
local jurisdiction must also establish a reasonable relationship between the amount of
the fee and the cost of the public facility and services attributed to the development
on which the fee is imposed. Local authority to assess fees based on a documented
legal nexus was upheld in Bixel Associates v. City of Los Angeles (1989) and Building
Industry Association of Southern California v. City of Oxnard (1990).
B. Taxes
Taxes are covered by a myriad of state and constitutional provisions, with the primary
distinction being special versus general taxes. Special taxes are levied for specific
purposes and kept in a separate fund. Pursuant to Proposition 13, new special taxes
require a two thirds vote of the local electorate. Proposition 62, adopted in 1986,
eliminated a county's authority to adopt special taxes without other state enabling
legislation.
General taxes, on the other hand, provide general funds for general government
purposes. Unlike cities, counties' authority to levy general taxes is limited to property
and hotel occupancy taxes. Other types of general taxes would require state
legislative authority. Proposition 136, on the November, 1990 ballot, if enacted,
could require majority voter approval of transient (hotel) occupancy taxes, business
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taxes, and utility taxes. San Diego has petitioned the courts to determine whether ;
counties have the ability to levy a general tax for a specific purpose. Proposition 62
required that all taxes, whether special or general, require voter approval. Specifically,
it regulated the enactment of general taxes by requiring a 2/3 vote of the local
legislature along with the majority approval of the local electorate. However, a Court
of Appeals case, City of Westminster v. County of Orange (1988), which challenged
a utility user tax imposed by the city, may have invalidated Proposition 62's
requirement for voter approval of general taxes. A county may also need a Gann
spending limit override. In addition, counties would need state authorization to levy
taxes within incorporated areas.
C. Other
Other mechanisms which are neither fees or taxes would require local ordinances and
possibly state authorization. If such a mechanism is voluntary, it is not considered a
tax and, therefore, is available to the County without voter approval.
IV. Criteria for Analyzing Revenue Sources
The following is a list of issues to be considered in analyzing potential revenue
sources:
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1. State legislative authority: Does authority exist or would enabling legislation by the
California Legislature be necessary in order for the County to establish the revenue
source?
2. Public vote requirement: Would a vote of the Contra Costa County electorate be
required to put the revenue source in place? If so, would a simple majority or two
thirds ratification be required?
3. Action by participating cities: What legal action, if any, would Contra Costa cities
need to take to cause the selected revenue source to be levied within their
jurisdictions and to be directed to the County Trust Fund?
4. Precedence: Do similar programs exist elsewhere that can be cited as precedence?
How successful have these programs been?
5. Legality: What other legal issues should be taken into account in instituting and
dedicating the revenue source?
6. Incidence: What group or groups would bear the impact of the revenue source?
How progressive or regressive would the funding mechanism be, i.e. how would the
burden fall relative to ability to pay? Would the proposed tax or fee adversely affect
the industry or market involved?
7. Competing Demands: Who currently controls the funds from an existing tax or fee
and how are they used? Could the fee or tax be increased? Are there competing
interests for the funds?
8. Predictability: Once levied, how predictable and reliable would the income stream
from the revenue source be? What factors might affect predictability?
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9. Yield/Productivity: How much revenue would the revenue source generate on an
annual basis?
10. Administrative cost: How much would it cost to collect and enforce payment of
the revenue stream once levied? Is there an existing collection mechanism already in
place or an administratively efficient collection mechanism possible?
11. Other considerations: What other considerations, if any, may need to be taken
into account in analyzing this particular revenue source?
V. Preliminary Review of Revenue Sources
This section reviews the potential revenue sources adopted or proposed by cities,
counties, and state governments.
A. Impact or Linkage Fees
Impact fees are levied by local governments on developers to compensate for capital
expenses or services generated by new development. Fees have the advantage of not
requiring a public vote for adoption. Local jurisdictions have established land use
regulatory powers which could be utilized through adoption of a local ordinance.
Productivity potential is dependent on market conditions.
1. Housing Impact Fees on Nonresidential Development
These fees attempt to mitigate the impact of new employment land uses by assessing
a fee to address the housing needs generated by new employment, particularly for low
and moderate income employees. Developers are given the option to construct
housing or pay a mitigation fee. Typically, such fees determine the number of
employees per square foot for a particular type of employment in different income
categories which can be attributed to new office, retail, or industrial development or
expansion.
At least 14 communities in California have such fees, including Alameda, Los Angeles,
Menlo Park, Palo Alto, Pleasanton, both Sacramento City and County, San Francisco,
both San Diego City and County, Santa Barbara County, Santa Monica, Sunnyvale,
and Walnut Creek. Other communities, Irvine, Modesto, and Napa, are considering
these fees. Most of these fees have been based on nexus studies, which can cost
$10,000-60,000, depending on the scope of the study. Fee levels have generally
been set at a fraction of the financial impact identified in the nexus studies.
The courts upheld San Francisco's authority to impose an impact fee as a condition
of project approval relative to its transit impact development fee in Russ Building
Partnership v. City and County of San Francisco (1987). There has been one legal
challenge to the city of Sacramento's housing impact fee (Commercial Builders of
Northern California v. City of Sacramento) which was upheld by the federal courts,
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but is currently being appealed. A second lawsuit against the city by a private
developer has been dropped.
It is the commercial/industrial development community which would be impacted by
these fees, which could act as a detriment to such development if fees were
excessive. Such fees may not be appropriate in redevelopment areas because the
fees make development less feasible on the margin, and because most redevelopment
projects are required to devote at least 20% of tax increments to affordable housing.
2. Housing Impact Fees on Residential Development
Housing impact fees on residential development usually are a component of an
inclusionary zoning policy, which requires all residential development of a certain
project size to include housing affordable to low and/or moderate income. Some
inclusionary housing policies provide an option in lieu of developing the housing,
which is the payment of a fee to a housing trust fund. Inclusionary programs have
been the strongest if incentives are available, such as density bonuses, fee waivers,
or bond financing. In lieu housing fees have also been assessed through housing
preservation ordinances requiring the replacement of demolished housing units, as well
as through condominium conversion ordinances to replace lost affordable rental units.
Inclusionary housing programs are in effect in at least 30 communities .statewide,
including the counties of Monterey, Sacramento, San Diego, San Francisco, Santa
Barbara, Santa Clara, and Santa Cruz and the cities of Livermore, Los Angeles, Palo
Alto, Pleasanton, Sacramento, San Diego, Santa Barbara, Santa Monica, Sunnyvale.
San Francisco has recently proposed a more stringent inclusionary housing program.
A number of inclusionary housing programs are also in effect in cities throughout the
country.
California communities have taken the lead on inclusionary housing programs because
of the state mandate that local jurisdictions provide for their fair share of affordable
housing. The state Department of Housing &Community Development has developed
a model inclusionary housing ordinance to encourage adoption of such programs.
Inclusionary housing programs have been the primary mechanism by which affordable
housing has been produced throughout the state. None of these programs have been
legally challenged, but they have been upheld in other states.
The impact of such fees in inclusionary programs is determined by the ability of the
developer to pass the fee on to the homebuyer or renter. If a developer cannot pass
costs on, the impact is in the form of decreased profits. Otherwise, there is some
potential to generally increase housing prices. The fee could be structured so that
projects priced below a specified level are exempt. While market rate units would
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have to subsidize the below market rate units, in effect, the result would be a range
of housing opportunities, including housing affordable to low and moderate income
households. Per unit costs of such fees have not been substantial relative to overall
housing prices. However, cumulative development fees could be.
The nexus between impacts of market rate housing and inclusionary requirements has
been based on a number of arguments: 1) given that residential land is a limited
resource, development of residential land exclusively for market rate housing would
erode the potential for affordable housing development adequate to meet local housing
needs; 2) new development generates affordable housing demand by bringing in new
residents which then require new services provided by low and moderate income
wage earners in need of housing; and 3) market rate development can increase
property values which can lead to displacement of existing low and moderate income
households or escalate land prices to levels which are prohibitive for affordable
housing development.
3. Homeless Fees on Residential Development
The Board of Supervisors has proposed a fee on higher priced new residential
development to be used for the homeless. The County would need to show a rational
nexus between higher priced development and the housing needs of homeless. A
stronger case could be made between new development and the need for affordable
housing in general (as described in the inclusionary housing section) which could
include housing for the homeless. The most logical nexus for homeless fees is Single
Room Occupancy (SRO) hotel preservation ordinances, since conversion of affordable
transient hotels to tourism or other uses has directly displaced many homeless people
in other areas. However, there is little information at this point to substantiate such
a relationship in Contra Costa. An inventory of SRO's in Contra Costa County would
be useful for this purpose.
B. Taxes
For a county, any tax other than property taxes and hotel occupancy taxes would
require state authorizing legislation. Much of the potential for revenue generated by
taxes depends on future annexations or incorporations of unincorporated areas with
existing development or development potential.
1. Property taxes
Proposition 13 has severely limited local jurisdictions' ability to levy property taxes;
only debt service coverage for general obligation bonds is allowed, which require a 2/3
vote of the electorate. A recent Office on Aging forum on housing suggested that the
County evaluate the feasibility of seeking voter approval (2/3) for general obligation
bonds for senior housing. The County's property tax revenue goes to schools, water,
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sewer, and other assessment districts and the General Fund, with a prorated share to
the cities for properties in incorporated areas.
2. Parcel taxes
Parcel taxes are levied on a characteristic of property. However, such a tax based on
parcel size imposed by City of Oakland was overturned by the Court of Appeals in
1988, based on the determination that the tax was actually a property tax, which is
assessed on property values, and would require a 2/3 vote of the electorate. The
Board of Supervisors is currently considering this source to fund drug abuse
prevention programs.
3. Residential occupancy tax
This is a regressive tax in that it would tax all County households equally regardless
of income. It is a predictable source of revenue, but costly to administer, since no
mechanism is currently in place.
4. Utility tax
This taxes .utility services which could include gas, electric, water, sewer, cable
television, telephone, and telegraph service provided to residences and businesses.
This is very commonly used. The cities of San Pablo and Richmond have such a tax.
Although some consider this a regressive tax, two thirds of all utility service is
provided to businesses. Low income residents could be excluded. This is a
predictable income source with easy administration. SB 2557, adopted in July of
1990, provided state enabling legislation for counties to levy such taxes. However,
if Proposition 136 is approved by the voters in November, 1990, it would require
voter approval.
5. Utility deposits tax
This is a tax on the interest earned on deposits required by utility companies as
security for service connections. Funds garnered from this source could target energy
conservation measures.
6. Sales tax
Authority to increase sales taxes rests with the state. This is a predictable source.
This is generally considered a regressive tax, although certain sales which would
impact lower income households the most could be exempt, such as food. This was
used recently for transportation improvements and earthquake relief.
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7. Employment privilege tax
This is a tax levied on employees or employers based on the number of employees.
This is considered a regressive tax if levied on employees, rather than employers.
Unlike some sources, this source would not increase with inflation, but could be
predicted based on job growth projections. This would be very costly to administer.
Walnut Creek and Concord have a business tax based on dross sales and number of
employees. SB 2557, adopted in July, 1990, provided state enabling legislation for
counties to levy business taxes. Again, Proposition 136, if passed in November of
1990, could require voter approval. It should be noted that many of the major
employers from whom the majority of this revenue would accrue are in geographic
areas subject to annexation or incorporation.
An alternative could be voluntary donations by labor unions. Legislation was adopted
recently to allow unions to tax their membership to contribute funds to a housing trust
fund in Boston.
8. Business license tax
This tax, essentially a fee for the privilege of doing business in the County, would be
very predictable and would be easy to collect. Most cities already have such taxes
but they are not particularly productive. SB 2557, adopted in July, 1990, provided
state enabling legislation for counties to levy business taxes. Proposition 136, if
passed in November, 1990, could require voter approval.
9. Business gross receipts tax
This is a tax on a business's gross receipts or payroll, which is more progressive than
the business license tax, which would tax small businesses at the same rate as large
businesses.
10. Commercial-office use tax
This is a tax on commercial-office use, which spreads the burden to all businesses,
not just new development as in housing impact fees on commercial development.
Small businesses or businesses in certain areas could be exempt. This would be
costly to administer.
11. Real estate transfer tax
This is a title or conveyance tax based on a percentage of the sales price of real
property levied on property when it is sold. The transfer tax includes a county's
documentary transfer tax which is uniformly imposed in all counties. A special real
estate transfer tax is not legal under Proposition 13. The legal status of such a tax
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as a general tax established after Proposition 13 is unclear but may be resolved by the
Cohen v. City of Oakland case. The County currently collects such a tax, which goes
into the General Fund. It is not clear whether an increase would require state
legislation and possibly a majority vote of the County electorate.I San Francisco has
proposed to double its transfer tax. At least a dozen cities in California have imposed
additional transfer taxes.
The impact of such a tax would be felt by either property sellers or buyers, depending
on the real estate market. In a tight real estate market, the purchasers would be
compelled to. bear the tax, although the sellers could be required to pay. In
appreciating housing markets, the transfer tax would be insignificant compared to the
appreciated value accrued to the seller. Lower priced units could be exempt from the
tax. Revenue generation would depend on the level of the tax, the rate of property
appreciation, and the rate of property turnover in the housing market. A real estate
transfer tax is collected by the County as part of the recording process for both
unincorporated and incorporated areas and, therefore, would not require any additional
administration.
12. Real estate syndication and partnership fees
New York taxes the real estate syndication and partnership fees on limited
partnerships registration and incorporation.
13. Anti-speculation tax
Vermont has an anti-speculation tax on the rapid turnover of real estate. This is
prohibited in California by Proposition 13.
14. Mortgage or deed recordation tax
Most communities charge fees for recording deeds, mortgages, and other real estate
documents. The state of New York levies a tax on mortgage recordation. First time
homebuyers or mortgages under a certain value could be exempt.
15. Mortgage origination tax
Local taxes cannot be levied on state or federal banks. Such taxes may be prohibited
as a real estate transfer tax under Proposition 13.
16. Transient occupancy tax (TOT)
This is a tax on the occupancy of hotel rooms. The amount of the TOT is set locally
and varies from jurisdiction to jurisdiction. There is a basis for a nexus between
tourism and the number of lower income employees in tourist industries in need of
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housing. Contra Costa does have a transient occupancy tax in the unincorporated
area as do most cities. Revenues generated go to the County General Fund. The
Board is considering a proposal to increase the TOT level, and dedicate the
incremental amount to a child care affordability fund. The revenue generating
capacity would depend on the tax level and the number and occupancy level of
existing or proposed hotels in the unincorporated areas. A vote of the electorate may
be necessary to approve a general hotel tax increase if Proposition 136 is approved
in November. The County of Monterey's hotel tax funds homeless facilities.
17. Escheated and abandoned funds
Escheated funds, including securities, other financial assets, or real or personal
property, accrues to the state when unclaimed by survivors of the deceased owners
of the property and when no will assigns the estate's assets. Abandoned funds also
accrue to the state. This would require state enabling authorization.
C. Other Potential Sources
1. Escrow deposits
There are several kinds of escrow accounts involved in the sale of real estate,
including escrow closing accounts for deposits, downpayments, and other closing
costs. Lenders also have mortgage escrow accounts for prepayments of property
taxes, and hazard and fire insurance. The nominal interest generated by individual
accounts generally may be less than the cost of distributing these funds to the
property owner. However, collectively these funds are substantial. It is unclear
whether federally registered lenders or mortgage servicers can be regulated by states
or local jurisdictions. Existing escrow interest taxes (Maryland, for example) exempt
out-of-state lenders and are voluntary. If the funds were collected voluntarily, this
would not be considered a tax and therefore would not require state enabling authority
or voter approval.
Interest on tenant security deposits could also fund a housing trust fund. However,
this could cause landlords to raise the amount of security deposits, leading to
affordability problems.
2. Linked deposits
A number of public entities have secured social investment commitments from
financial institutions in exchange for deposits of public funds, which are typically quite
large. Financial institutions have an incentive to provide funds for affordable housing
to meet requirements of the Community Reinvestment Act.
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3. Sale/lease of public property `
The County generates revenue through the sale of public equipment and real estate.
To the extent the revenue is not already dedicated (i.e. road fund, state park funds,
etc.), the County could use the proceeds from the sale or lease of one or more
properties for capitalizing a housing trust fund. The County is pursuing this for
general fund revenue enhancement, however.
D. Available Local Resources
A limited amount of funding resources are available to the County and the cities which
could be used to supplement funds in a Housing Trust Fund, such as available
redeVelopmenttax increment funds for housing, Community Development Block Grant
funds, excess administrative proceeds from mortgage revenue bond issues, and
outside funding captured from federal, state, and private funding sources.
VI. Strategy
Of the revenue sources listed above, only a few are available to the County without
state authorizing legislation or voter approval. These include development fees, such
as in lieu fees as a component of an inclusionary housing program or nonresidential
fees to mitigate housing impacts; taxes, such as utility, business, and transient
occupancy taxes (depending on Proposition 136); and other voluntary sources, such .
as escrow interest funds. A trust fund proposal would need to be developed which
includes the type of housing to be funded, the disbursement process and criteria, and
the administration of the fund.
A mid range strategy would involve voter approval of general obligation bonds and
possibly voter approval of taxes, such as utility, business, or transient occupancy
taxes, if required by Proposition 136.
A longer term strategy could include obtaining state authorization for other general tax
and special tax sources, as well as voter approval.
VII. Next Steps
1 . Focus analysis of housing trust fund revenue sources on the following:
o inclusionary housing programs,
o development fees on nonresidential development,
o general obligation bonds approved by the voters,
o utility taxes,
o business taxes,
o transient occupancy taxes, and
0 other voluntary sources, such as escrow interest funds.
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2. Direct Community Development Department to evaluate potential revenue sources
based on, among other things, the criteria in Section IV of this report, and report back
to the Internal Operations Committee.
3. Direct County Counsel to conduct a legal review of the identified potential revenue
sources.
4. Establish a broad based Housing Trust Fund Task Force to assist County
Community Development staff in evaluating available funding mechanisms, and
recommending appropriate funding mechanisms and administrative structures for a
Housing Trust Fund.
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cc: County Administrator
County Counsel
Housing Authority
Social Services Department
Community Services Department
Health Services Department
Veterans' Resources Center
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