City Council votes down proposal for $1 million loan to Housing Trust Fund

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After deferring the measure four times since it was first introduced in September, Berkeley City Council voted against a proposed $1 million loan from the city’s general fund to its Housing Trust Fund at its regular Tuesday meeting.

The proposed addition of money to the Housing Trust Fund was intended to support predevelopment for five nonprofits that planned to propose 11 affordable housing projects, according to Councilmember Kriss Worthington, who drafted the provision. The measure voted down on Tuesday was a rewritten version of a similar proposal introduced in May 2015, which was voted down in June.

Additionally, City Council voted against a proposal to allocate 25 percent of revenue from the property transfer tax above $10.5 million to the Housing Trust Fund and deferred until June a measure to increase wages for city employees to $16.37 per hour.

Predevelopment is required by most grant applications and refers to the planning required before construction can begin. It includes studies and feasibility tests on sites, marketing and environmental assessments.

Councilmember Jesse Arreguin said an investment in predevelopment for grants would allow the city to bring in millions of dollars to its Housing Trust Fund in order to create affordable housing projects.

City Council transferred a total of $8.7 million from the general fund into the Housing Trust Fund from its creation in 1990 up until 2007, putting an average of about $510,000 into the fund each year. Because of the 2008 recession, however, City Council has not approved grants from the city’s general fund in the past eight years.

Berkeley is currently funding two affordable housing projects, with two more “in the pipeline,” according to City Manager Dee Williams-Ridley. The city has not received applications for additional projects.

At the meeting, Councilmember Lori Droste questioned the necessity of the loan, considering the lack of proposals, and noted that there are no laws restricting City Council from loaning money to the Housing Trust Fund for a specific project.

“Why would we take this money if we don’t have a clear idea about the amount of projects and the amount of money that we need?” Droste said during the meeting.

Worthington, however, said the lack of proposals stems from the city’s decision to temporarily halt the application process until City Council finalizes housing policies at its April 5 meeting.

The estimated cost to complete all current housing projects in Berkeley is estimated to be between $16.8 million and $36.8 million, according to a December City Council work session report.

According to a December report by the city’s Housing and Community Services Department, as of Dec. 1, the Housing Trust Fund contained approximately $3 million, and as of Tuesday, there is more than $1.1 million unallocated and available for use.

“Now that the housing crisis is the worst it’s ever been, we’re putting in less money,” Worthington said.

National funding and development fees, however, have supported the fund since 2008. According to city staff, the fund is expected to accrue $3.7 million from these sources over the next fiscal year.

Berkeley residents, such as Susan Meyer, nevertheless voiced their frustrations with City Council’s decision to reject the measure amid the affordable housing crisis.

“You can’t drag your feet anymore — people are suffering,” Meyer said during public comment.

Worthington said he plans to edit the proposal’s language and reintroduce it — with provisions creating a rolling application process for affordable housing grants — at a future meeting.

Jessica Lynn is the lead city government reporter. Contact her at [email protected] and follow her on Twitter at @jessicailynn.