Why IE cities are building their own affordable-housing funds — and why they can't copy Texas
Citrus Belt Review: Bisnow reported in May that localities across the country are stepping up subsidies, incentives, and tax abatements to push affordable projects over the finish line. The trend is real in the IE. The form is different.
The discretionary property-tax abatement that closes deals in Texas or Ohio — a city or county forgiving taxes to make a project pencil — basically doesn't exist in California. The nearest equivalent is the statewide Welfare Exemption, on the books since 1944, which exempts qualifying low-income housing owned by nonprofits or nonprofit-managed partnerships. It's strong money: close to $500K a year on a single property. But the state grants it, not the city, and a project generally has to carry low-income housing tax credits or government financing to qualify. A mayor in Fontana can't offer it the way a mayor in Fort Worth can.
So IE jurisdictions reach for what California law does allow: local trust funds and revolving loan pools, usually seeded by state dollars. Riverside has one running. San Bernardino is still standing one up.
Riverside's City Council approved its Local Affordable Housing Trust Fund 6-1 in March 2024 — the 42nd such fund in California. It's capitalized by half the future proceeds from selling City-owned land originally bought with General Fund money, and setting it up made Riverside eligible for up to $1.5M in matching state and federal money reserved for "pro-housing" cities. The mechanism is gap financing: the fund lends to developers, repayments cycle back in, and even market-rate builders can tap it if they set aside 10% of units as affordable rentals and 5% for ownership.
The cleaner in-corridor example sits in Murrieta, where the Housing Authority built a $4.1M revolving loan program expected to fully fund six to eight affordable projects in Western Riverside County. The money came from SCAG's Lasting Affordability Program under the state's REAP 2.0 grant — state seed capital running through a locally administered fund. That hybrid, not homegrown city revenue, is what the national thesis actually looks like on the ground here.
San Bernardino is moving slower and bigger. SBCOG authorized staff to begin forming the San Bernardino Regional Housing Trust in April 2023, including a new Joint Powers Authority. As of 2026 it's still in build-out, with funding-strategy documents posted in February. The capitalization figure — how much money the trust will actually command — lives in those documents and hasn't surfaced publicly yet.
Two caveats keep this honest. The dominant funding layer in the IE is still federal pass-through money, HOME and CDBG, not local revenue; the homegrown story is newer and thinner here than on the coast. And the whole pipeline faces a squeeze — Riverside notes that once development costs clear roughly $350K a door, smaller infill sites stop penciling, which is why the city leans on non-cash tools like project aggregation as hard as it leans on the fund. State lawmakers are weighing a record $10 billion housing bond for the 2026 ballot. The local funds are partly a hedge against not knowing whether that money, or the federal money, will be there.