Gateway cities band together to bridge housing funding gaps
Jackie Krentzman is a Bay Area-based writer/editor with experience creating compelling content in multiple sectors, including DEI, affordable housing, nonprofits, and education.
With interest rates at a historic high, many developers are having trouble finding the money to finish or even start housing construction. The Gateway Cities Council of Governments — the umbrella organization for the 27 cities in Southeast Los Angeles County — hopes its new affordable housing trust can help bridge those funding gaps and move it closer to fulfilling its state-mandated housing planning goals.
A housing trust can apply for funding that cities might not be eligible for or may not have the resources to pursue individually. A trust also allows cities to pool financial resources and share technical expertise. California has several dozen affordable housing trusts, including in nearby San Gabriel Valley, Orange County, and Ventura County.
A positive signal for developers
The sprawling Gateway region, home to over two million residents, is one of the most densely populated regions in the nation. A large percentage of its residents rent. Half of all households are low- or extremely low-income, and nearly 11,000 residents are unhoused.
“We’re a sub-region that has had a disproportionate … challenges around providing sufficient housing,” said Melani Smith, Gateway COG director of regional development. “But we don’t have a disproportionate amount of funding that flows into our sub-region. We realized that through a trust we best leverage funding and resources to make a real impact.”
A recent survey of local jurisdictions found that the region has approximately 4,000 affordable housing units in the pipeline. However, many face financing shortfalls. Many Gateway cities are small and do not have the staff, expertise, or resources to offer technical assistance to developers or pursue gap funding.
One significant advantage of a trust is its ability to attract developers. The fight for funding dollars is so fierce that cities must prove to potential developers they are worthy of their investment. The trust can leverage its collective power to aggressively pursue funding and access new types of funding, such as the state’s Local Housing Trust Fund Program.
“We have come to learn over years, that affordable housing developers gravitate to cities with the least risk and the greatest chance of approval,” said Adam Eliason, principal of CivicHome, an affordable housing development consultancy that manages the trust. “Our cities are competing with other cities across the state. This trust can demonstrate to developers that we can ease the way through the entitlement process and provide consistent and reliable funding.”
For overburdened cities, the trust can apply economies of scale so that cities don’t have to bear the burden alone. Seventeen cities — including the region’s largest city, Long Beach — signed on immediately.
A regional approach to a regional problem
The Gateway region’s acute housing shortage stretches back decades. The population has grown dramatically over the last 50 years. But housing didn’t keep pace with the job expansion. And like elsewhere, redlining and discriminatory practices limited the development of affordable and low-income housing. The effects of those policies still linger.
As housing prices ballooned in Southern California — especially along the coast — there was a sharp uptick in demand for more affordable housing in the Gateway cities. More recently, the spike in interest rates led to homeowners staying in their current homes, further reducing housing inventory.
As cities scrambled to try to add housing, they ran into roadblocks — especially smaller cities that don’t have the budget to hire housing experts who can work with developers to get housing built. They didn’t have the staff to identify and obtain funding from a myriad of sources, each with its own complex and varied requirements. Opportunities were slipping between the cracks.
For years, the Gateway COG wrestled with how best to support its cities. It realized that a coordinated regional approach was the answer and began by reaching out to leaders at other nearby housing trusts. It studied the San Gabriel Valley Regional Housing Trust, the Orange County Housing Finance Trust, and the Housing Trust Fund Ventura County.
The Gateway COG then mapped out a plan that meets the needs of different populations. This includes supportive housing for people experiencing homelessness, housing affordability preservation, provisions to build affordable rental housing, first-time homebuyer programs for low- and moderate-income families, and transit-oriented developments. The Gateway COG board approved the trust in January 2023.
Los Angeles County Homeless Initiative granted the trust over $4 million in funding for capital projects. The housing trust also won a $5 million grant from the Southern California Association of Governments to establish a predevelopment loan fund to help get affordable housing projects started. The trust will work with nonprofit partners to turn this into a $10 million investment pool to help cities and developers boost housing development.
The trust also expands smaller cities’ capabilities to address their housing shortage. While larger cities such as Long Beach have the resources to staff a housing department, many cities in the region do not. The trust can provide them with technical assistance and funding they might otherwise lack.
“We have so many disadvantaged communities in our region that don’t have the money to hire talent to shepherd projects through,” said Fernando Dutra, Whittier City council member and housing trust board chair. “They have desire and vision but can’t afford it.”
One such city is Maywood. The largely low-income city of 25,000 is squeezed into a single square mile. As there is virtually no available undeveloped land for creating new housing, Maywood is focusing on adding accessory dwelling units (ADU) and redeveloping existing properties. Approximately 40% of its parcels have ADU potential. City Manager Jennifer Vasquez says the trust will provide Maywood with sorely needed access to funding and expertise.
“We joined the trust because the demand for housing is so great here, and we want to have access to any possible opportunities in the coming years,” she said. “Right now, kids who grew up here and went to college and would like to come back can’t and we want to do everything we can to address that.”
Although the Gateway Housing Trust is in its infancy, member cities are optimistic about its potential to reverse years of underproduction.
“Long Beach was happy to join because housing is a regional issue,” said Long Beach Council Member Megan Kerr. “We did not necessarily join because it would lead to more funding for us, but we know other cities around us would get funding. When people lose housing, if there is not an opportunity to find affordable housing in their own community, it will impact us all.”