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CC - ACTION ITEM: Discussion and Direction to the City Manager on the Creation of a Local Housing Trust Fund (LHTF).
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Meeting Date: April 28, 2025
Contact Person/Dept.: Michael Bruckner/City Manager’s Office
Tevis Barnes/Housing & Human Services
Phone Number: (310) 253-6023
Fiscal Impact: Yes [] No [X] General Fund: Yes [] No [X]
Attachments: Yes [X] No []
Public Notification: (E-Mail) Meetings and Agendas - City Council (04/23/2025)
Department Approval: John Nachbar, City Manager (04/23/2025) _____________________________________________________________________
RECOMMENDATION
Staff recommends that the City Council discuss the creation of a Local Housing Trust Fund (LHTF) and provide direction to the City Manager.
BACKGROUND
At the February 10, 2025, City Council Meeting, the City Council requested staff explore the creation of a Local Housing Trust Fund (LHTF) for the production and preservation of affordable housing in Culver City.
The California Department of Housing and Community Development (HCD) administers the Local Housing Trust Fund program, which provides matching funds to local and regional housing trust funds dedicated to the creation, rehabilitation, or preservation of affordable housing, transitional housing, and emergency shelters. While it is not a requirement for the City to participate in the Local Housing Trust Fund program, it is recommended that the City align its Trust Fund to meet the eligibility requirements and guidelines of the program (Section 102) to maximize potential matching fund opportunities available from the state (Attachment 1) for affordable housing projects.
To be eligible for the state’s program, a Local or Regional Housing Trust Fund is required to be a public, joint public and private, or charitable nonprofit organization organized under Section 501(c)(3) of the Internal Revenue Code, which is established by legislation, ordinance, resolution (including nonprofit articles of incorporation), or a public-private partnership organized to receive specific public, or public and private, revenue to address local housing needs. The key characteristic of an LHTF is that it receives ongoing revenues from dedicated sources of funding sufficient to permit the LHTF to comply with the requirements of the Program.
DISCUSSION
Since the 1980s, state and local housing trust funds have employed public funds to address critical affordable housing needs. Housing trust funds are distinct funds that receive ongoing dedicated sources of public funding to support the preservation and production of affordable housing. While housing trust funds can also be a repository for private donations, they are not public/private partnerships, nor are they endowed funds operating from interest in other earnings.
According to current best practices in the development of a LHTF, there are three key elements to the creation of the LHTF requiring further discussion and direction from the City Council.
Administration & Oversight
Most housing trust funds are administered by a public or quasi-public agency. A best practice for housing trust funds is the creation of an appointed oversight or advisory board. The City Council may appoint themselves to this capacity, or they can create a separate board, or delegate advisory authority to an existing body. The board can be strictly advisory or can have the ability to determine which projects receive funding, promote, and implement policy development, program evaluation, and reporting. Additionally, it is recommended that an individual be designated as the fund administrator to manage solicitations, awards, and annual reports to the board. This is usually assigned to a department director who will ultimately be responsible for program and fund administration.
Staff recommends that the City Council appoint themselves as the oversight board and that the Director of Housing and Human Services be designated as the fund administrator.
Funding
As previously discussed, for an LHTF to be viable for state matching funds, it must secure a dedicated revenue source. This means that a certain source, percentage, or dollar amount of public funds are automatically deposited in the LHTF each year. Some of the most common forms of dedicated revenues used for housing trust funds in California include:
• Dedicated Housing Fees. Some jurisdictions have established commercial linkage fees or housing impact fees on commercial or residential development projects that generate new jobs. The fees are used to support the development of housing affordable to employees. In addition, many jurisdictions have adopted inclusionary housing programs that require new housing developments meeting certain criteria to provide a percentage of affordable housing. These programs generally allow in-lieu fees to be paid as an alternative to direct construction of the required housing.
• Discretionary Local Revenues. Some local jurisdictions contribute directly to the housing trust fund from discretionary local revenues. These can include General Fund appropriations or a designated portion of existing local revenue sources, such as a share of the local sales tax, transient occupancy tax, or cell tower lease revenue, among others.
• Grant and Charitable Contribution Funds. Some funds accept grants, charitable contributions, or other non-recurring sources of funding that are dedicated to affordable housing. These can include revenues from capital campaigns organized by private sector organizations or ongoing contributions by major employers. It is important to note that one-time donations are not considered an eligible source of funding for the state’s LHTF program.
The City of Culver City has limited sources of revenue that may be dedicated for this purpose. Below are the sources that have been identified for potential use, along with estimated funding amounts and additional context for each revenue source.
1. Affordable Housing Commercial Development Impact Fee. In 2021, the City Council adopted an ordinance establishing a development impact fee known as the Affordable Housing Commercial Development Impact Fee (Linkage Fee) of $5.00 per sq. ft. on non-residential development. The fee must be used to develop and/or preserve housing affordable to moderate and lower income households. For context, the Department of Housing and Urban Development (HUD) typically defines moderate income as anywhere between 80% - 120% of the Area Median Income (AMI). Low income is defined as less than 80% of AMI.
As of June 30, 2024, the Linkage Fee has generated $878,830. In the current fiscal year, approximately $874,540 is anticipated based on current commercial developments under construction. Staff estimates that an additional $1,647,660 in revenue may be realized in future years based on commercial development projects in the pipeline. The pipeline revenue estimate is subject to commercial development trends and other economic factors.
The current Affordable Housing Commercial Development Impact Fee funds are expected to be allocated in the Fiscal Year 2025-2026 budget to the Jubilo Village project.
2. Measure A Funds. In November 2024, Los Angeles County voters adopted Measure A, a 0.50 cent sales tax that repealed and replaced the 0.25 cent sales tax adopted by voters through Measure H, for homeless services and affordable housing production. The City’s allocation of Measure A funds can be dedicated to the LHTF for the production of affordable housing if it is paired with the Los Angeles County Affordable Housing Solutions Agency (LACAHSA) funding for an aligned purpose (Attachment 4). It should be noted that Measure A funds dedicated to affordable housing projects must support people experiencing or at imminent risk of homelessness.
In March 2025, the Los Angeles County Board of Supervisors adopted an allocation methodology for the Local Solutions Fund (LSF) component of Measure A. Based on the formula allocation, it is anticipated that the City will receive approximately $324,000 per year.
3. General Fund. An allocation from the City’s General Fund can also be used as a dedicated source of funding at the City Council’s discretion. Given the current fiscal stress in the General Fund, an appropriation is not recommended at this time.
4. Funding Alternatives. As previously mentioned, other California cities have adopted inclusionary housing programs to support the production of affordable housing. These programs typically include an in-lieu component which can be dedicated to the LHTF. If implemented, the in-lieu fee could also be designated to the LHTF.
Additionally, the City is also currently evaluating its short-term rental regulations which may offer enhanced revenue streams for this purpose. Under this example, any additional Transient Occupancy Tax (TOT) increment above the current base amount the City receives as a result of any new collection agreements with short-term rental companies could be allocated to the LHTF to produce affordable housing.
Both potential revenue sources-inclusionary housing in-lieu fees or short-term rental TOT-require additional direction from the City Council.
Staff recommends that future Affordable Housing Commercial Development Impact Fee revenue be designated to the Culver City Local Housing Trust Fund. Additionally, staff recommends that the LHTF be allowed to accept funds from grants, charitable sources, and other non-recurring sources of funding. As additional sources are identified, these discretionary revenues can be designated by the City Council at a later date.
Programs
At the February 10, 2025, City Council Meeting, the City Council requested that an LHTF be created for the production and preservation of affordable housing in Culver City. From a programmatic view in support of this goal, LHTF funds can be used as follows:
• New construction of affordable rental and homeownership units
• Preservation/rehabilitation of rental and homeownership units
• Acquisition of vacant land or dilapidated properties
• Emergency repairs on homeownership properties (Code Violations)
Staff recommends that the program areas listed be the designated uses of LHTF funds. It is further recommended that that Fund Administrator develop program eligibility criteria that aligns with Affordable Housing Commercial Development Impact Fee and the stated policy goal of production and preservation of affordable housing.
It should also be noted that the City Council may further refine eligibility criteria based on current housing status, veterans’ preference, Culver City workers, or other qualifying demographics like persons experiencing or at risk of homelessness, at its discretion.
Upon City Council direction, staff will develop the appropriate enabling documents for the creation of the LHTF and will return to the City Council at a later date for consideration and adoption.
Regional Housing Trust Fund - Westside Cities Council of Governments
The Westside Cities Council of Governments (WSCCOG or COG) has been actively working to establish a Regional Housing Trust Fund (RHTF) as part of a comprehensive strategy to address housing affordability challenges across its member jurisdictions. This initiative represents a significant step toward creating a sustainable funding mechanism to support affordable housing development in one of Southern California's most expensive housing markets. The COG’s efforts have gained momentum through strategic planning, securing funding for implementation, and establishing a clear timeline for trust formation.
Similar to an LHTF, a Regional Housing Trust Fund serves as specialized financial mechanism designed to pool and leverage resources for affordable housing development from participating regional jurisdictions. The COG’s efforts to develop an RHTF were formally advanced through a project titled “WSCCOG Regional Housing Trust Implementation Plan”, which received funding from the Southern California Association of Governments (SCAG). This initiative is explicitly designed to support cities in the Westside subregion in meeting their ambitious goal of producing 9,621 units of affordable housing by 2031. The implementation plan aims to result in the formal establishment of the trust and the recruitment of member jurisdictions by December 2025.
Currently, the COG efforts are focused on developing a comprehensive implementation plan that will guide the formation of the RHTF. This planning process includes exploring potential funding mechanisms, governance structures, and operational frameworks that will ensure the trust's effectiveness and sustainability. In the broader regional context, the COG’s efforts align with similar initiatives by other councils of governments, including the San Gabriel Valley Regional Housing Trust's revolving loan fund, the Gateway Cities Affordable Housing Trust Fund, and recent explorations of housing trust formation in Western Riverside County.
Local vs. Regional Comparative Analysis
Housing affordability remains a pressing challenge for many communities, prompting the development of housing trust funds at both local and regional levels. A Local Housing Trust Fund offers flexibility and targeted support, allowing jurisdictions to address specific community needs with a high degree of local control. In contrast, a Regional Housing Trust Funds leverages pooled resources and broader planning to achieve greater funding potential and administrative efficiency. However, these approaches come with trade-offs-local funds may struggle with limited resources and administrative burdens, while regional funds require shared decision-making and equitable distribution of resources. The table below provides a side-by-side comparison of the key advantages and limitations of local and regional housing trust funds, highlighting the strategic considerations involved in selecting the most effective approach.
Staff recommends that the City Council consider investigating whether the WSCCOG Regional Housing Trust Fund is a viable alternative to a local fund.
FISCAL ANALYSIS
There is no fiscal impact associated with the discussion of the creation of a Local Housing Trust Fund. Future impacts may occur as a result of City Council direction.
ATTACHMENTS
1. 2025-04-28_ATT 1_LHTF Program Final Guidelines (2020)
2. 2025-04-28_ATT 2_WSCCOG Agenda February 2025
3. 2025-04-28_ATT 3_SCAG Regional Early Action Plan March 2025
4. 2025-04-28_ATT 4_Measure A Local Solutions Fund Eligible Uses (March 2025)
MOTIONS
That the City Council:
Discuss the creation of a Local Housing Trust Fund (LHTF) and provide direction to the City Manager.