This story was originally published at on August 9, 2021.

In 2018, the city of Fresno contributed roughly $2.2 million to the development of a new mixed-use affordable housing complex on the corner of McKinley and Blackstone avenues.

The 88-unit development and its off-site improvements cost about $38 million — roughly $431,000 per unit. The $2.2 million from the council was a residual receipt loan to the developers from the Housing Successor’s Low and Moderate Income Housing Asset Fund.

Councilmember Esmeralda Soria, who spearheaded the Blackstone and McKinley Transit Oriented Development project known as The Link, said that cobbling together the financing for the District 1 project was laden with controversy and took roughly three years.

On June 29, however, the city approved the creation of a local affordable housing trust fund that could make financing for affordable housing projects easier.

Experts say the tool can potentially provide gap financing for housing developments and affordable housing projects in the future, unlike the long-term loan the city approved for The Link.

“With the need for affordable housing and the challenges that developers have in filling the financing gap for these types of housing developments, it is critical,” Soria said of the trust fund.

“This added source of funds can often be the gap financing that makes or breaks a project,” said Sophia Pagoulatos, manager of long-range planning for the city of Fresno. “It takes several layers of funding sources to make projects come to fruition, and it really seems like the cities and counties with trust funds are able to leverage much more.”

The council allocated $2.5 million to the trust fund, with $1.5 million of the money coming from real estate taxes which typically went into General Funds.

The city also applied for a dollar-for-dollar match from the state, and if the city receives the match, the fund will have $5 million to start.

Although council members, housing advocates and researchers agree that $5 million is a good start, several council members and housing organizations had called for a much larger fund.

“We’re not going to be able to get out of this housing crisis that we’re facing — and much more than a housing crisis, it’s an affordability crisis that families across the state are facing — if we don’t invest locally,” Soria said.

In the city of Fresno, homelessness increased even before the pandemic. There is a 36,000-unit shortfall of affordable housing units, less than half of the city are homeowners, rent relief has been slow to get out the door and the coronavirus eviction moratorium may expire in around two months.

Soria cited The Link in her district as a “perfect example” of how funds from the affordable housing trust fund can be used toward increasing the affordable housing stock of the city.

Councilmember Nelson Esparza said that while the city had dedicated money for various housing initiatives, it had not been able to establish an ongoing revenue source until now.

“What you’ve seen from the council this year is that we’re getting even more aggressive with our efforts to increase the housing stock here in Fresno,” Esparza said. “And affordable housing is obviously a big component of that.”

The establishment of a local affordable housing trust fund also is required of Fresno in order to comply with the Housing Element.

What is an affordable housing trust fund?

More than 40 cities in California and more than 100 across the nation have established local affordable housing trust funds, according to Community Change, a housing advocacy organization that tracks such funds.

Martha Galvez, executive director of the Housing Solutions Lab, said the funds are “intended to be locally focused and fill some gaps where other resources aren’t available.” Its uses can vary greatly, depending on the area’s needs, she and Charles McNally, the director of External Affairs at the NYU Furman Center’s Housing Solutions Lab, said.

Across the nation, affordable housing trust funds created by cities range from $100,000 to $30 million, according to the 2016 Changing Communities report.

Many local affordable housing trust funds come from fees tied to new development; however, Fresno’s will use tax revenue from real estate transfers.

What will Fresno’s affordable housing trust fund be used for?

Karla Martinez, Leadership Counsel policy advocate, said her organization has listened to community residents and looked toward the city of Oakland as a guide for a comprehensive affordable housing trust fund.

She explained that affordable housing trust funds allow for creative solutions for the city’s housing issues, including a shortage of affordable housing, a growing homeless population, unsafe buildings and mobile home parks that do not meet habitability standards and vacant lots.

“If we want to get to the root issues, we need to think about other things such as acquisition of vacant land here in Fresno to start developing, acquiring abandoned buildings,” Martinez said.

While several council members said they want to focus on affordable housing development, the council voted to widen the scope of the fund to include the potential for programs including first-time homebuyers assistance,weatherization, eviction protections and land acquisition.

Once the city receives a decision on its matching grant application, they will create a notice of funding availability to alert developers and other potential housing programs to apply for funding through the city.

Is the city’s trust fund enough?

Soria said she had hoped that the city would commit $5 million to the trust fund and get another $5 million in a matching grant from the state. Esparza had tried during budget hearings to commit an additional $3.5 million to the pot, but the motion did not pass.

Community based organizations, including Leadership Council, had also requested that the city start the trust fund with $15 million.

Martinez said the City Council is “on the right track” with the commitment of $2.5 million, but the money is not enough to singlehandedly fund projects to end Fresno’s housing crisis.

“Every million dollars will help us bring, at minimum, 80 units to this city,” Soria said. “It’s not a lot, but that’s what we have to work with. We have to also figure out other creative ways of maximizing the opportunity.”

Soria said the housing trust fund, though not as much as she had hoped for, could bring more units to the city that would not have otherwise been possible.

“(The city’s fund) is not a lot as far as other trust funds go,” Martinez said. “Housing development costs a lot of money so I think the biggest step here is that they’ve established a local housing trust fund.”

At the moment, the council has committed to dedicating $1.5 million from the Real Estate Tax annually. Members also voted July 29 to add an additional $1 million of one-time anticipated carry-over funds from the previous fiscal year.

Casey Lauderdale with the Planning and Development department, said the city can apply for state matching grants if they are available in the future, but that first-time affordable housing trust funds are typically more competitive. She also said there’s no guarantee the state will offer the grant annually.

“There’s no silver bullet, no single affordable housing solution,” McNally with the Housing Solutions Lab said. “Places need comprehensive and balanced strategies that need a range of policies, and a housing trust fund can be a really important element of that.”

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