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6.A. - Page 1 <br /> REPORT <br /> To the Honorable Mayor and City Council <br /> From the City Manager <br /> October 24, 2016 <br /> SUBJECT <br /> Affordable Housing Funds Received and Potential New Funding Sources for Affordable <br /> Housing <br /> RECOMMENDATION <br /> Adopt the attached resolution in support of San Mateo County Measure K, and by <br /> motion direct staff to move forward with potential affordable funding sources as <br /> recommended by the Council Finance and Audit Committee <br /> BACKGROUND <br /> There are a number of historical factors that have led to the current housing crisis in the <br /> Peninsula. The overarching factor is that population growth, due in part to periods of <br /> strong economic expansion, has outpaced development of housing for decades. This <br /> has caused the cost of housing to increase at a far greater pace than other regions in <br /> California and nationally. Lower income workers, who cannot afford market housing cost <br /> increases as easily as higher income workers, are often the residents who get priced <br /> out of the immediate area. <br /> Local government has two primary ways to soften the impact of market increases to the <br /> cost of housing: regulation and subsidy. Regulatory approaches are limited by other <br /> local, state and federal laws. There are also unintended consequences of regulation <br /> that need to be monitored, as they can often cause far greater issues. Funding of any <br /> type is a scarce resource, of course, and therefore affordable housing subsidies have <br /> always been limited. Furthermore, the cost of constructing each affordable unit is <br /> extremely expensive as described in more detail below. A substantial amount of subsidy <br /> is required for each affordable unit produced. <br /> Over the past decade, California cities have had their ability to regulate affordable <br /> housing reduced. Simultaneously, Federal and State affordable housing funding <br /> sources have also been reduced significantly. For example, due to a 2009 court case, <br /> cities are prohibited from requiring that a certain percentage of new rental developments <br /> be affordable. The loss of Redevelopment in 2012 was a dual hit: it not only took away <br /> the regulation requiring that 15% of all new housing produced within certain areas be <br /> affordable, but it also took away the State's top affordable housing funding tool for local <br /> communities. Redevelopment funds generated approximately $1 billion statewide for <br /> affordable housing annually, more than any other single affordable housing funding <br /> Page 11 <br />