Council favors restoring $200,000 to affordable housing fund; staff to propose deployment options

During the Feb. 4 work session, councilors discussed the proposed FY2026 budget and advocated restoring a $200,000 line item to the city’s affordable housing fund. City staff agreed to return with options for how that money could be deployed.

Several councilors said affordable housing remains the city’s top priority and objected to reducing transfers into the city’s housing trust mechanisms. “If we are really going to talk about affordable housing and be bold, [it] would be very bad looking when we reduce affordable housing,” one councilor said. Another councilor proposed restoring the $200,000 and then considering how best to use it before the start of the fiscal year.

Staff cautioned the council that a portion of the current LIHTC set-aside has been used for administrative support of the Housing Trust Fund in recent years and that shifting dollars could affect trust-fund operations; staff said it would analyze those impacts when presenting deployment options. “If you put the 200 back in, what I would suggest is that, at a future work session before the start of the fiscal year, we would bring that distribution model back to you with some thoughts on how we might deploy that a little bit differently,” the city manager said.

Councilors also discussed potential funding sources other than the general fund, including tax-increment financing (TIF) or reallocating pandemic-related funds. A staff member noted that restoring the $200,000 to the General Fund would increase the projected deficit from $2.6 million to about $2.8 million, and staff said quarterly financial reports would allow council to track the deficit across the fiscal year and consider midyear adjustments if needed.

No formal budget appropriation was made at the work session. Staff will return with a recommended distribution model for the $200,000 and next steps to use or leverage the funds for affordable housing projects.