In a historic action, the city of Santa Barbara has created a Local Housing Trust Fund to help build affordable housing projects.

Organizations such as Habitat For Humanity, the Santa Barbara Housing Authority and People’s Self-Help Housing could apply for the funds to construct, acquire, rehabilitate or subsidize housing for very low-, low-, and moderate-income households.

“I am feeling a little bit emotional about this,” said councilwoman Meagan Harmon. “This is such a huge, transformative beginning. It is just the beginning, but it is a critical beginning.”

A year ago, the council had a $2.9 million budget surplus and set aside the money to create the program. The City Council approved the program at last Tuesday’s meeting.

Santa Barbara is wrestling with a severe housing crisis and creating new, affordable housing for residents who work locally is among the city’s top priority. The city in 2013 passed a program that allows developers bonus density if they set aside at least 10% of the units for below-market rents.

Since the program was passed, developers have built about 700 new units, issued building permits for 276 more units, and approved permits for 320 others. More are in the pipeline, including two large projects.

Although no formal applications have been submitted, the city of Santa Barbara wants to build at least 500 units at Paseo Nuevo, and the Taylor family have proposed nearly 700 in La Cumbre Plaza.

Despite all the new housing, most of it has been rented at market rates, which means out of reach for most people who work in Santa Barbara. The city has a jobs-housing imbalance, which means that it costs more to live in Santa Barbara than most employers pay.

About 15,000 people commute into the city daily from Oxnard and Ventura County and Buellton, Solvang, Lompoc and Santa Maria, according to the Santa Barbara County Association of Governments.

The city can only require developers to build 10% of their units below market-rate.

The city’s Local Housing Trust Fund will help increase the number of affordable housing units by creating a subsidy for organizations that meet requirements. Next year the city will be eligible for state funds, and can receive funds from other sources, including contributions from private individuals and entities.

“This item is one of the policy highlights of my six years on council,” Santa Barbara City Councilman Eric Friedman said.

Harmon said the initial proposal was messy, but now everyone is supportive of it.

“It has become a Santa Barbara program,” Harmon said, but “the work isn’t done here. We’ve got to get a meaningful ongoing source of funding, or this framework won’t have the transformative impact that we all believe it could have.”