By Jorge Casuso

March 20, 2026 -- The City Council on Tuesday will discuss a groundbreaking proposal to create a "City-aligned nonprofit" that would build, own and operate affordable housing in Santa Monica.

The proposal -- which calls for "exploring new housing and homeless response strategies" -- is part of a 38-page staff report from the City Manager's office that updates the "Realignment Plan" approved by the Council last October.

The proposal calls for the Council to direct staff to study the creation of a City-aligned nonprofit housing development entity that would free up "the City’s ability to directly produce housing at the pace and scale needed."

"Santa Monica needs to expand the production of affordable and mixed-income housing units, and we need to fundamentally redesign how we deliver homeless services so that our investments produce lasting housing outcomes rather than temporary shelter placements," the report to the Council stated.

According to the plan, the entity "could secure land, finance and construct housing, and own and operate permanent housing assets -- providing the City with direct control over the development pipeline.

"Also, by accessing tax-exempt financing and traditional bank lending based on rent rolls and income projections, the entity could achieve faster development timelines than tax-credit-only projects."

In addition, the nonprofit model would protect the General Fund by separating the development risk from City operations" and "provide the City with flexibility that the traditional tax credit model does not offer," the report said.

"Rather than being limited to the income bands prescribed by federal programs, the entity could develop mixed-income housing serving a range of needs -- from very low income through moderate and workforce levels -- with custom income targeting aligned to City priorities."

The municipal development model, which is more prevalent "in international settings" has been successfully tried in the U.S. with the Housing Opportunities Commission of Montgomery County, Maryland, and the Atlanta Urban Development Corporation.

Both "have demonstrated that municipal-aligned nonprofit entities can effectively develop and manage mixed-income housing portfolios at scale," the staff report said.

The report from City Manager Oliver Chi's office -- which ranges from fighting crime to improving streets -- also includes a new approach to interim housing that "provides stabilization" and care for the homeless who live on Santa Monica streets.

The plan approved by the Council calls for relocating the City's homeless shelter from Downtown and transitioning to "a City-controlled, housing-first system of care" ("Council Approves Ambitious Plan to Revitalize City," October 30, 2025).

"The current model, while it has served the community well for many years, provides the City with access to shelter capacity only, without City-controlled interim housing or permanent housing pathways.

"In practical terms, this means the City funds the impacts of homelessness without controlling the outcomes," the report stated.

"The system of care being developed by staff envisions a fundamentally different approach, one where the City has access to and control over infrastructure at each step of a housing-first continuum."

The City Manager's office called the proposal "a significant undertaking that will affect neighborhoods, service providers, and the individuals and families the system is designed to serve."

As a result, the report notes that "before finalizing any agreements or operational changes, staff recommends launching a comprehensive community engagement process."

The process includes "internal staff and commission engagement, coordination with homeless service providers, input from public safety departments, town hall meetings, and targeted outreach to neighborhoods located adjacent to proposed service sites."

The process would take place from March through May with a report back to City Council in June "that incorporates community feedback and presents refined proposals for formal Council consideration."