Housing Trust Fund
In July 2008, the Housing Trust Fund (HTF, often referred to as the National Housing Trust Fund) was signed into law, the first new federal rental housing production program targeted to low-income households since 1974. It was created to preserve and expand the availability of affordable homes for low- and very-low-income households. It has a strong focus on rental housing: at least 80 percent of HTF dollars are reserved for the development of rental housing, while up to 10 percent will be used to support first-time homebuyer activities. The remaining 10 percent of the funds are reserved for administrative and planning costs.
Three-quarters of all funds must serve extremely low-income households. HTF dollars are administered by the U.S. Department of Housing and Urban Development (HUD) and disbursed to states through block grants, which can be distributed to qualifying public, private and nonprofit entities.
In January of 2015, HUD published an interim rule to give guidance to states on implementing the HTF. States included their HTF Allocation Plans with their 2016 Annual Action Plans, and HUD anticipates granting the first HTF funds in the summer of 2016. The total funding available for 2016 is just under $174 million. Three million dollars of funding is guaranteed to each state and the District of Columbia, with some receiving more according to differing levels of need and construction costs. HUD plans to publish a final rule incorporating public comments after a year of HTF operation.
Low Income Housing Trust Fund (Chicago, Ill.)
Chicago focuses a majority of its Low Income Housing Trust Fund resources on the Rental Subsidy Program—a nationally recognized model for assisting very-low-income individuals. The trust fund is used to subsidize rent for extremely low-income households (earning less than 30 percent of area median income) through quarterly payments made directly to landlords.
Discretionary funds from the City of Chicago’s corporate fund (the city’s general operating fund), as well as HUD grants and other federal assistance, have been used to support the trust fund since its inception. In 2005, the City of Chicago made a five-year commitment totaling $5 million from proceeds from the privatization of the Skyway (a 7.8-mile toll road connecting to the Indiana Tollway). The commitment was renewed in 2010 with a $1.3 million allocation of proceeds from the sale of parking meters.
The trust fund was also designated by the Chicago City Council to receive 40 percent of the fees developers pay for zoning and/or administrative relief, which allows them to build at a higher density than normally allowed. Funding from the trust fund is used to support long-term investments with forgivable loans and grants.
In addition to the Chicago’s Low Income Housing Trust Fund, the State of Illinois passed the Rental Housing Support Act in 2005, establishing a statewide rental assistance program for extremely and severely low-income households. The program is administered by the Illinois Housing Development Authority and funded through a $10 document recording fee, which is assessed on all real estate documents in communities across the state. Ninety percent of funds collected are returned to the local entity to support permanent affordable housing.
ARCH Housing Trust Fund (King County, Wash.)
Recognizing that affordable housing was a regional problem requiring a regional solution, municipalities in King County, Wash., formed ARCH, A Regional Coalition for Housing, in 1992. In 1993, ARCH established a Housing Trust Fund with some unique features. The ARCH Housing Trust Fund enables municipalities in east King County to pool their resources, which can be spent in any of the municipalities to create or preserve housing for low- and moderate-income individuals.
Currently, 15 municipalities in east King County contribute to the fund annually according to an informal “parity policy.” Funds are made available through loans and grants and are offered through an annual application round. Municipalities are able to contribute funds in a variety of ways, including offering fee waivers or land donations to developers. Common revenue sources for municipal contributions include general fund allocations, Community Development Block Grant funds, developer payments, loan repayments and interest earnings.
Funds collected from member jurisdictions are then distributed regionally based on the needs in the county. Applications can be submitted by nonprofit organizations, private organizations, public housing authorities and public development authorities. From there, ARCH’s citizen advisory board makes project recommendations, which are confirmed by the executive board and approved by individual city councils.
The fund has a minimum goal of $1 million of new local funds annually, but when accounting for all sources (e.g., land donations, fee waivers, loan repayments), the fund has averaged approximately $2 million annually.
As of 2015, member jurisdictions had contributed $45 million to the ARCH Housing Trust Fund. Housing Trust Fund resources have been used toward new housing development, preservation and rehabilitation. Since its inception in 1993, the fund has helped finance the creation of over 3,100 new housing units in east King County. ARCH credits its success to its ability to engage key stakeholders in a regionally collaborative process, the willingness of development partners to undertake creative partnerships and its ability to remain responsive and flexible to community, developer and other funders’ needs.
Housing Production Trust Fund (Washington, D.C.)
The District of Columbia’s Housing Production Trust Fund was created in 1988 with no dedicated source of funding, but with the hopes that the city would find funding in coming years. In 2001, the fund received a one-time contribution of $25 million from the sale of city-owned property, and in 2002 the city dedicated 15 percent of the DC Real Estate Recordation and Transfer Tax to support the Trust Fund. The city also added a one-time contribution of $25 million from selling city-owned property. Due to a fluctuating real estate market, these funds have been unreliable throughout the years, and the city has grown accustomed to allocating revenue from the general fund into the trust fund on an annual basis.
In 2013 and 2014 combined, the fund received approximately $193 million from the city, according to a report by the DC Fiscal Policy Institute. For fiscal year 2016, the city allocated a total of $213 million in funding for affordable housing programs in the city ($100 million of which will go directly into the housing production fund, the remainder to rental assistance and other housing programs). The fund will also receive $50 million from dedicated revenue sources. The 2016 appropriation from the city is the highest funding levels that affordable housing programs have ever received in D.C. The Housing Production Trust Fund allocation is projected to renovate or create up to 1,000 new homes in the city. As of 2012, the trust fund has contributed to the creation of over 8,500 affordable homes, invested $320 million in D.C. neighborhoods and leveraged an additional $794 million from outside sources.
San Francisco Housing Trust Fund (San Francisco, Calif.)
The San Francisco Housing Trust Fund was established under the 2012 voter-approved Proposition C as a response to the 2012 dissolution of redevelopment agencies in the state. The fund receives an annual allocation from the city, which started at $20 million. The city’s contribution to the 30-year fund will continue to grow annually until it reaches a cap of $50 million in annual revenue. The set-aside amount will total $1.2 billion over the fund’s 30-year lifespan.
Allocations come directly from the city’s general fund, but will draw primarily on resources that were already devoted to affordable housing, including a portion of hotel tax revenue and new revenues from a 2012 business tax reform measure.
Funding will be used to support affordable housing development, private market incentives for affordable housing and down payment assistance. The trust fund revenue is projected to support nearly 9,000 units affordable to households earning 60 percent of median family income and will invest at least $15 million over the first five years in the city’s down payment assistance program.
Neighborhood Housing Trust (Boston, Mass.)
In 1986, the city of Boston created the Neighborhood Housing Trust with a dedicated funding source from a linkage fee on commercial developments. The fee applies to all new or expanding office, retail, hotel and institutional developments exceeding 100,000 square feet that are requesting zoning relief. As of 2015, the fee was $8.34 per square foot.
Annual revenue from the linkage fee has averaged $6.5 million a year and has been very stable over time. Through 2014, the Neighborhood Housing Trust has invested nearly $150 million, helping to create or preserve 10,725 affordable units in 206 developments.
Developers in the downtown area are granted a seven-year pay schedule, while developers in neighborhood districts are given 12 years to pay the linkage fees. Developers may also fulfill their linkage obligation by creating or directly assisting in the creation of affordable housing units. Under municipal law, revenue from these fees can only be used to create or preserve housing that is affordable to low- and moderate-income households in the city.