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Council hears options to bring housing asset fund into compliance; staff outlines where $246,000 could go
Summary
Staff detailed allowable uses for the city's low‑ and moderate‑income housing asset fund, including administrative caps and development priorities; they said the city currently falls short of the required 30% allocation to extremely low‑income households and must allocate an extra $246,000 to return to compliance.
Housing technician Robert Daly presented the Council with an itemized breakdown of eligible uses for Fountain Valley’s low‑ and moderate‑income housing asset fund and the constraints embedded in state law.
Daly said staff organized allowable uses into four categories for clarity: administrative and monitoring costs (capped at 5% or $200,000), homelessness prevention (capped at $500,000), housing development and preservation (the remainder of the fund, with 30% required to serve extremely low‑income households), and transfers to a regional housing trust partner (capped at $1,000,000). He explained that because the city had previously allocated only 27% to extremely low income (ELI) households in an earlier reporting period, state rules now require the city to direct 50% of funds toward ELI development until compliance is restored — a gap equivalent to $246,000.
Council members asked how the city could close the gap quickly. Vice Mayor Patrick Harper and Council Member Constantine discussed whether an immediate grant or purchase to rebate rents or fund buy‑downs could restore compliance. Daly said one practical option is an affordability buy‑down: "If there is a property owner who has a low‑income unit, we can do the affordability covenant — pay the difference to bring the rent down for 55 years," he said. Staff also described existing programs: a home‑improvement program that includes a $5,000 disability grant for qualifying low‑income homeowners and the ability to use funds for rehabilitation and preservation under state rules.
On the question of historical loans, Daly said legacy home‑loan programs from the redevelopment era still generate repayments but the city is not issuing new loans under that program. Council and staff agreed to provide an updated annual report with clearer notes about programs that are no longer active and to explore affordability buy‑down pilots if suitable inclusionary units come online.
