Fund Affordable Housing
Funding is the critical component in both preserving and creating affordable housing. Publicly managed housing requires both upfront funding for construction, as well as ongoing support for operations and maintenance. Even private projects usually require a public contribution in the construction or rehabilitation phases, and may also need operating support, particularly for supportive housing. While funding is available from a myriad of sources - including local, state and federal, as well as private and philanthropic sources - is generally insufficient, and it is important to supplement it through other mechanisms.
Local governments should create a dedicated trust fund for the preservation and creation of affordable housing, and identify a reliable source of funding to capitalize and replenish the fund. Uses of the fund should match up with the goals of the local government housing plan. When structured correctly and connected with dedicated funding, trusts funds can provide dependable funding for the preservation and creation of affordable housing. Because housing trust funds are funded and governed locally, they can be more flexible than federal or state funds and can be used to leverage other sources of capital.
A possible source for affordable housing funding are special levies or bond issuances. Special levies and bonds may be tied to specific projects identified in advance, or may be held and allocated to projects over time. Other dedicated sources can include air rights, proceeds from sales of municipal property, demolition tax or permit fee, real-estate transfer taxes and more. Local governments should pass an ordinance dedicating all or part of the proceeds to affordable housing via a housing trust fund, otherwise funds are likely to be used to plug the budget holes.
Best Practices for Affordable Housing, Prepared by the City of Asheville, NC, November 1st, 2015. Read more.
Housing Trust Funds In the United States, Center for Community Change , January 1st, 2015. Download a PDF of this article.
Affordable Housing Funding Landscape & Local Best Practices, Raania Mohsen, Kevin Zwick, and Shannon McDonald, Cities Association of Santa Clara County and Housing Trust Silicon Valley, December 2nd, 2013. Read more.
Affordable Housing Best Practices and Funding Study, Bay Area Economics, November 1st, 2010. Read more.
Home Grown: Local Housing Strategies in Action, Metropolitan Planning Council, January 1st, 2010. Read more.
Tax Increment Financing (TIF) Funding and Affordable Housing, Sweet Home Chicago Coalition, June 1st, 2009. Read more.
A Guide to Federal and State Affordable Housing Programs, U.S. Senator Kirsten E. Gillibrand. Read more.
HUD Allocates $174 Million Through New Housing Trust Fund, U.S. Department of Housing and Urban Development. Read more.
Housing Trust Fund, U.S. Department of Housing and Urban Development. Read more.
HOME Investment Partnerships Program, U.S. Department of Housing and Urban Development. Read more.
Community Development Block Grant Program - CDBG, U.S. Department of Housing and Urban Development. Read more.
On July 2010, Portland, OR, created the Portland Housing Bureau (PHB), which became responsible for developing programs and projects for the City's Tax Increment Financing (TIF). Set-Aside Policy for Affordable Housing directs a minimum 30% of the TIF proceeds from all districts for affordable housing. On June 2016, the city council voted unanimously to send a $258.4 million bond measure to the November 2016 ballot. The measure will fund the construction or acquisition of up to 1,300 rental units for low-income residents.
Denver, CO, created in 2009 a Transit-Oriented Development (TOD) fund to enable to acquisition of property near existing or planned light rail stations and high frequency bus stops. Between 2009 and 2014 the city has leveraged the fund’s $15 million to draw investment of nearly $200 million from development partners, while funding the preservation or creation of 626 affordable units.
In 2006 Fairfax County, VA, established “The Penny for Affordable Housing Fund”. The fund provides a readily available, flexible local funding source for preserving and promoting affordable housing. In 2016, the fund’s resources amount to $16 million, composed of $11.3 million in Real Estate Tax Revenue, $4.3 million in operating revenue and $415,500 in loan repayments. Over the past years, the fund has helped preserve 2,701 affordable units for both homeownership and rental purposes. It was also instrumental in preserving two large complexes, and addressing emerging affordable housing opportunities and needs other than preservation.
In 1989 Chicago, IL, created a Low-Income Housing Trust Fund, which is primarily focused on providing rental subsidies for very-low-income tenants. The fund is capitalized by one-time payments from large transactions such as the long-term lease of the Skyway Bridge or the city’s parking meters. It also receives a portion of some development fees.
Seattle, WA, has had a housing levy since 1981. Since its inception the program has funded more than 12,500 affordable homes, issued loans to over 900 households purchasing their first home, and provided emergency rental assistance to 6,500 households at risk of eviction and homelessness. On August 2016 Seattle voters approved the levy for the fifth time. The tax is projected to raise a $290 million in the next seven years – twice the amount approved in 2009.
The housing trust of San Antonio, TX, was established in 1988 with a corpus of $10 million, capitalized by a one-time payment from the sale of a cable-television franchise. The fund is operated by a nonprofit foundation whose board is appointed by the city council. The foundation also manages San Antonio Housing Trust Finance Corporation (SAHTFC), which was formed by the Housing Trust in 1997 for the purpose of issuing bonds to finance affordable housing.
Austin, TX, dedicates 40% of its property tax revenues from developments on City-owned land towards a Housing Fund Trust that supports the development and rehabilitation of owner occupied homes, rental housing development, and acquisition of property for use as affordable housing. On November 2013, voters approved $65 million in general obligation bonds for affordable housing. The funds will be used for constructing, renovating, improving, and equipping affordable housing facilities for low income persons and families, funding affordable housing programs and more.
The NYC Acquisition Fund in New York City, NY, operates as a partnership between the City of New York, major foundations and commercial lending institutions. Established in 2006, the fund controls over $200 million in collaborative funds, which provide early stage capital for the acquisition of privately owned land and buildings to create or preserve affordable housing. The fund is managed by a group of private and public investment firms.
|Read more about funding affordable housing in your city in our report Cities at Work: Progressive Local Policies to Rebuild the Middle Class.|