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City of Mountain View Study Session on Displacement Response Strategy: Our Response

March 19, 2024

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We have had the opportunity over the last few months to encourage the City of Mountain View and other community organizations to consider non-traditional approaches to raise funding for acquisition and preservation of affordable housing. We also submitted a memo to that effect, which follows.


Dear Mayor Showalter and City Council members:

Los Altos Mountain View Community Foundation appreciates the opportunity to comment on the Study Session Memo (memo) prepared by the City staff for the City Council’s study session on displacement response strategy. The Foundation thanks the City staff and Council Members for engaging the community in advance of the Study Session and encouraging input on the questions raised in the memo.

Acquisition/Preservation Program

The Foundation concurs with the conclusion from staff that new funding sources are needed with more favorable terms. Relying on existing funding sources with short-term horizons and grants from government and philanthropies will likely not generate the needed capital in a reasonable time period. Nor would a fundraising strategy be dependent on generating donations from local residents. The current financial environment for nonprofit and government funders – sectors that now face falling revenues or deficits – does not point to an easy path to raise capital through traditional methods.

In discussion with other community partners, including local funders and residents, the Foundation believes the City should consider a pooled investment fund based on principles of impact investing in which investors, philanthropies, and corporations come together with the same goal1. Such a fund has more of an opportunity to tap into both charitable as well as investment resources. It would also have a greater chance to meet or exceed the $20 million target established by the City (thereby possibly addressing financial needs identified in Program 3.2 and Program 4.4), and should provide a revolving flow of cash as investments mature.

As the Global Impact Investment Network (GIIN) notes, impact investments offer “banks, pension funds, financial advisors and wealth managers” additional investment opportunities for 1 The Global Impact Investment Network (GIIN) defines impact investing as “investments made with the intention to generate positive, measurable social and environmental impact alongside a financial return.”

Endowment-based philanthropies (institutional, family, private, and community foundations) “can leverage significantly greater assets to advance their core social and/or environmental goals while maintaining or growing their overall endowment[s].” Corporate impact investing continues to grow as shareholders pressure companies to more effectively deploy cash reserves. GIIN estimated the worldwide impact investment market at 1.164 trillion dollars with a significant portion reflecting US investments. In recommending this funding approach, the Foundation suggests the following:

  • Create a collaborative working group composed of philanthropies, private-sector organizations, local nonprofit partners, and the City to establish the parameters of an impact investment fund, including its management structure and investment criteria. This recommendation aligns with the memo’s observation that “there must be local leadership supporting these efforts.”

    The working group would:
    • Own the responsibility of raising the needed funds so that the burden is not placed on just the City or a limited group of community organizations. It should explore partnership opportunities with one or more private capital funds, for example, like the Housing Accelerator Fund.
    • Research existing housing impact investment efforts, especially the San Diego Housing Fund, which has set a $20 million target for its first project and intends to use the revolving nature of the impact fund to develop 1,000 housing units per year.
    • Either evolve into the coalition involved in the design and implementation of the Community Ownership Action Plan or work in tandem with its leadership.
    • Establish an impact investment fund that has the opportunity to expand with housing opportunities as those are identified.
    • Construct the fund so that it not only supports affordable housing acquisition and preservation, but could also align financial resources with other types of projects including housing transition support, community-controlled housing, and the opportunity to purchase programs.
    • Provide a market rate of return to pool participants but also apply a patient capital attitude that supports investments with longer-term repayment schedules (beyond five years).

The Foundation believes such an impact investment fund can attract individual investors, donors, property owners, financial client-serving companies, other philanthropies and funders, and corporations, including real estate developers. Further, the Foundation believes and supports the memo’s conclusion that the City must catalyze the funding partnership with an initial seed investment of $4 million. Local Community Land Trust (CLT) Infrastructure Like the City, the Foundation has met with the Mountain View Solidarity Fund / Fondo de Solidaridad (Fondo) to discuss its interest in morphing into a CLT. The Foundation serves as Fondo’s fiscal sponsor – meaning it provides its nonprofit status to the project as a means for Fondo to receive both grant funding and tax-deductible donations. The Foundation has supported Fondo in the receipt and execution of two grants from the City of Mountain View, both of which were successfully implemented and completed.

As detailed below, the Foundation recommends establishing a collaborative working group that includes local leaders to advance the Community Ownership Action Plan. The Foundation anticipates that Fondo, as well as other local community organizations, would be natural partners in this working group.

At this time, In the Foundation’s opinion, were Fondo to receive funding as a CLT, it would likely need to do so as a stand-alone nonprofit or in partnership with another housing nonprofit, as such funding might impact the Foundation’s tax status as a public charity. At this point, a non-exempt determination by the Internal Revenue Service that would establish preliminary nonprofit status typically takes 12 to 18 months, which might affect a timeline to allocate a portion of the City’s $4 million investment this calendar year.

Community Ownership Action Plan

The Foundation believes that the Community Ownership Action Plan represents a unique and critical aspect of the Housing Element. The Foundation supports the Memo’s recommendation to hire a consultant to manage the process of creating the Community Ownership Action Plan. It also agrees that the Community Ownership Action Plan should evaluate OPA opportunities and processes.

However, the lead-up to the Community Ownership Action Plan deadline and its implementation should include community voices and partners. The Foundation knows that successful community building and engagement strategies depend on involving multiple partners, building cross-sector collaborations, and forming action-focused working groups with specific goals and collaborative strategies.

As such, the Foundation recommends:

  • The proposed consultant collaborates with a working group composed of philanthropies, private-sector organizations, local nonprofit partners, and the City in leading the process and development of the Community Ownership Action Plan.
  • The working group can either form now and help in the selection of the consultant or form shortly after the consultant begins to work on the project.

Collaborative community initiatives that engage multiple partners commonly operate at different levels of effectiveness. Territorial issues that lead to the balkanization of community priorities can undermine a shared impact agenda. When joined with a strong top-down governance structure, such efforts can collapse altogether.

Therefore, the Foundation recommends that the working group and consultant collaborate on exploring and adopting collaborative models in which the leadership group members act as stewards of the community interest and collective vision, not their respective organization’s self-interest. In such models, guiding principles are developed and embraced; a shared vision is defined that reflects the overarching goals such as those needed for the Community Ownership Action Plan; and an independent third party helps coordinate and convene the working group for ongoing planning, fundraising, conflict mediation, information flow, and overall capacity
building.

Other Efforts

Community-based organizations, including the Foundation, are able to lobby in support of anti-displacement measures as appropriate. The Foundation recommends that the City collaborate with members of the proposed working group and other organizations on an advocacy strategy.

Timing

The Housing Element lists deadlines for program components that appear to sequentially build off each other. However, the community’s sense of urgency is high to bring solutions online and align financial resources quickly. As such, the Foundation recommends that the City look to parallel track deadlines for the funding strategy, OPA opportunities, and alternatives to displacement.

Thank you again for providing opportunities for community organizations like the Foundation to comment on the Study Session Memo and contribute to this important dialogue. We look forward to working with the City Council members and the City staff to help make the Housing Element a reality.

Sincerely yours,

Adin Miller
Chief Executive Officer
Los Altos Mountain View Community Foundation