L.A. city officials likely will face a budget crunch in the coming months, but that hasn't stopped them from releasing a plan to fill a $100 million fund for affordable housing.

"This is a crucial step in getting the leverage that non-profit and other builders need," said L.A. City Councilman Eric Garcetti.

City Councilwoman Janice Hahn said that putting this $100 million fund together could help spur the local economy by creating hundreds of construction jobs. Backers of the trust fund, which draws upon a number of local and federal funding sources, say there are at least a dozen affordable housing projects that have gone through the approval process but lack funds to proceed.

The new plan, which will go before an L.A. City Council committee next week, already has drawn some concern from business and developer groups. They object to a funding component that requires residential developers to set aside a certain percentage of their projects or pay a fee to the city.

"You need some carrots to go along with the stick," said Carol Schatz, president and chief executive of the Central City Association, which represents downtown business interests.

The question is whether in a time of shrinking budgets the council will allocate money to the trust fund. Doing so might take away dollars needed for public safety and other measures to deal with the aftermath of the Sept. 11 terrorist attacks.

Los Angeles has one of the most acute shortages of affordable housing in the nation; a recent report said the city has four low-income households for every available low-rent unit, one of the widest such gaps in the country. Yet L.A. is one of only a handful of cities not to have a substantial trust fund to address the problem. L.A. has a fund that was created last year, but that contains only $5 million.

"This crisis has been building for at least 20 years," said Sally Richman, manager of policy and planning for the L.A. city housing department.

Jan Breidenbach, executive director of the Southern California Association of Non-Profit Housing, said that too often in the past affordable housing has been a low priority for the city.

The new plan calls for a broad mixture of funding sources. Among them: increased federal Community Development Block Grant dollars, money from the city's Community Redevelopment Agency, a portion of the L.A. Department of Water & Power's annual 5 percent revenue transfer to the general fund, and even additional business tax receipts.

The most controversial proposal is likely to be an expansion of current requirements for affordable housing components to residential developments. If a developer fails to comply with the set-aside, they would be required to pay an "in-lieu" fee. Some $14 million to $20 million in such fees are expected to flow into the trust fund each year.

Provisions similar to this proposed "inclusionary zoning" ordinance can be found in other local cities, including Santa Monica, West Hollywood and Pasadena.

Yet business groups and developers are opposed to the "inclusionary zoning" concept. Earlier, these same groups opposed a similar plan aimed at commercial development, where developers would have been required to pay an "in-lieu" fee of $7 per square foot. That plan, while not totally dead, has been relegated to the back burner.

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