The Santa Monica City Council on Tuesday postponed a decision on whether to join a proposed regional affordable housing trust, sending city staff back to the negotiating table over concerns that the agreement could expose the city to future costs and let unelected board members steer financing decisions.
Staff had recommended the council approve membership last week but the council voted unanimously to continue the item to its Sept. 8 meeting, directing staff to renegotiate terms of the Joint Powers Agreement that would establish the Westside Cities Affordable Housing Trust. Mayor Pro Tem Jesse Zwick recused himself from the item.
The trust, developed over roughly three years by the Westside Cities Council of Governments, would pool resources among Santa Monica, West Hollywood, Culver City and Beverly Hills to finance affordable housing across the Westside. It would operate as a separate public agency with authority to make grants and loans, provide technical assistance and pursue outside funding on behalf of member cities.
Councilmember Dan Hall, who represents Santa Monica on the council of governments and voted to advance the trust at that level, led the push to delay. "I generally support what the [council of governments] is trying to do here," Hall said, pointing to the trust's ability to access philanthropic dollars and to make loans rather than grants. "However, I would like to continue this item ... because I want staff to go back to renegotiate some points."
Hall's central objection concerned money. Under the written agreement, member cities could be assessed contributions through a formula set later by the trust's board if funding from Measure A, a half-cent countywide sales tax, runs short. "I don't want to abdicate that authority to a board that has yet to be created," Hall said, arguing the formula should be determined "now, before we agree to joining."
He also questioned how the agreement defines a quorum, warning that financing decisions could be made without a majority of elected officials at the table. "You could, in theory, have public financing decisions being made by a majority of unelected technical advisors instead of elected representatives of member cities," Hall said.
The proposed seven-member board would include one elected director from each of the four cities and three housing experts. Senate Bill 20 requires such trusts to seat at least two non-elected members with expertise in housing or homelessness policy, said Dima Galkin, a consultant with Harris & Associates who presented the plan. The technical members would have full voting rights.
Hall also faulted the compressed timeline, noting the council received the draft agreement July 22 for the July 28 meeting.
Cecilia Estolano, executive director of the Council of Governments, sought to reassure the council that the trust intended to spend only what Measure A provides. Administrative costs would be covered for at least the first year by Measure A, she said. "We want to make sure that we only spend what is in Measure A," Estolano said. "We are very cognizant of the tight budgets that our members have."
Estolano said the trust would let the cities better leverage funds and issue loans to help assemble the financing, or "capital stack," for affordable projects. If fewer than three cities join, she said, the trust would not form; the money would still flow to the council of governments, which would have to allocate it through grant programs rather than the loan format trusts typically use.
Galkin said the trust could release about $8 million in funding later this year through a notice of funding availability, assuming all four cities join. The figure combines unspent money from the last fiscal year and the current one.
Staff emphasized that membership would not obligate Santa Monica to approve, fund or site any specific development, and would not affect the city's land-use authority. Mayor Caroline Torosis confirmed that point "on the record" before signaling her own support. "I see this as low risk and high upside," she said.
Councilmember Ellis Raskin seconded the motion to delay but praised the effort behind the proposal. "There's been a tremendous network that's gone into this, and I think we're all looking forward to seeing this happen," he said.
Staff said returning Sept. 8 would still leave time for the other three councils, which are expected to vote in August or September. Activities funded by the grant that paid for the trust's formation must be concluded by Dec. 31.