Housing Trust Fund
The Housing Trust Fund (HTF) Ordinance (Chapter 17.188 of the City of Sacramento Zoning Code) was enacted by the City Council in 1989 to raise local financing for the construction of affordable housing near new employment centers. The ordinance established square footage fees based on non-residential development, based on an economic nexus analysis that determined that the construction of such commercial projects as offices, business parks, hotels, warehouses and shopping centers played a major role in attracting new very low- and low-income wage earners to Sacramento. Because low-wage workers are often unable to afford housing close to their work sites, the fee-generated revenue is used to increase the supply of housing affordable to these income groups, creating the nexus or linkage between jobs and housing.
The City Council approved an 81.3 percent increase to the Housing Trust Fund fee on October 12, 2004. In addition to the fee increase, Council approved automatic annual adjustments based on the San Francisco Construction Cost Index (the standard construction cost index used by several City departments) to ensure that the fee kept up with rising housing construction costs on an annual basis. The ordinance approved by Council on October 12, 2004 also permitted future discretionary changes to the Housing Trust Fund to be made by resolution rather than ordinance. On this same date, Council adopted a resolution calling on staff to prepare a new nexus study on the Housing Trust Fund fee to be presented to Council in six months and encouraged other jurisdictions in the region to increase their fees or adopt a similar Housing Trust Fund fee.
However, due to concerns regarding adequate noticing about the fee increase, Council received additional public testimony on the increase at the November 30, 2004 Council meeting. Based on this public testimony regarding the potential impact on infill and economic development, Council adopted a resolution on December 7, 2004 reducing the fee increase from 81.3 percent to 44 percent effective December 11, 2004 and allowed for the full 81.3 percent increase, as identified in Ordinance 2004-057 to take effect on July 1, 2005 unless this is superseded by Council action following the results of the nexus study.
In March 2005, the City selected Keyser Marston Associates, Inc. (KMA) to prepare the new nexus study. KMA had prepared the original nexus analysis for the housing trust funds for the City and County of Sacramento back in 1989. The new nexus study, which was completed in February 2006, quantifies the linkage between the construction of new commercial buildings and the demand for affordable housing. The new study analyzes a variety of different fee options that could be utilized to lessen the impact on redevelopment, infill, and smaller scale projects, where development is a challenge. The new nexus study will serve as the foundation for the City to consider any future adjustments to its Housing Trust Fund fee levels. However, no change to the fee levels has been proposed at this time.