A Workbook for Creating a Housing Trust Fund
Introduction
A Housing Trust Fund represents one of the most effective and flexible mechanisms for generating dedicated resources to address critical affordable housing needs in communities across the United States.
As outlined in the comprehensive guide A Workbook for Creating a Housing Trust Fund by the Center for Community Change, these funds have evolved from experimental local initiatives into a mainstream policy tool used by cities, counties, and states. Since their emergence in the mid-1970s and subsequent growth in the late 1980s, nearly 150 housing trust funds have been established, spending approximately $1.5 billion to build or preserve nearly 200,000 units of affordable housing.
This article provides a deep-dive analysis of the workbook’s methodology, offering researchers and housing professionals a strategic roadmap for establishing a successful fund.
Understanding the Unique Value of a Housing Trust Fund
To advocate effectively, stakeholders must first understand what distinguishes a Housing Trust Fund from other housing finance mechanisms. The defining characteristic of a Housing Trust Fund is its dedicated source of ongoing revenue.
Unlike general fund appropriations, which are subject to annual political battles and budget cuts, a Housing Trust Fund is supported by revenue streams committed through legislation or ordinance. Common sources include real estate transfer taxes, interest on escrow accounts, or document recording fees.
This dedicated funding model offers several distinct advantages. First, it provides stability. A Housing Trust Fund generates a predictable, albeit sometimes fluctuating, stream of income that allows for long-term planning.
Second, it is highly efficient. The workbook notes that only two-tenths of one percent of units funded through these trusts failed to be built, a record of accomplishment that rivals any government program.
Third, a Housing Trust Fund is a powerful lever for additional investment. On average, every dollar spent by a Housing Trust Fund leverages seven dollars in additional funding from banks, federal programs, and other private sources.
The flexibility of a Housing Trust Fund is another key asset. These funds can support a wide variety of activities, including new construction, rehabilitation, rental assistance, homeless prevention, and capacity building for nonprofit developers.
Because they are locally controlled, a Housing Trust Fund can be tailored to address the specific demographic and economic realities of a community, whether it is a small town of 1,000 people or a major metropolitan state.
Developing the Housing Trust Fund Platform
Creating a successful Housing Trust Fund requires more than just identifying a revenue source; it demands a robust platform that details how the fund will operate, who it will serve, and how it will be administered. This platform serves as the blueprint for the legislation or ordinance that will establish the Housing Trust Fund.
Administration and Oversight
One of the first decisions in designing a Housing Trust Fund is determining its administrative structure. The workbook identifies three primary models: the Government Agency Model, the Independent Commission Model, and the Non-Governmental Model.
The most common approach is the Government Agency Model, where the Housing Trust Fund is housed within an existing department, such as a housing authority or community development agency.
This model leverages existing expertise and infrastructure. Alternatively, an Independent Commission may be created, particularly if the fund operates across jurisdictional boundaries. In rare cases, a nonprofit entity like a community foundation may administer the Housing Trust Fund, which can facilitate private donations.
Regardless of the model, oversight is crucial. Most housing trust funds utilize an advisory board or commission to ensure accountability and community representation.
This board typically includes housing advocates, low-income residents, developers, bankers, and public officials.
The role of this oversight body is to set policy, review funding applications, and ensure the Housing Trust Fund meets its stated objectives.
Program Design and Eligibility
The core of the Housing Trust Fund platform is its program design. Advocates must decide who is eligible to apply for funds and what types of projects will be supported.
While many funds allow both nonprofit and for-profit developers to apply, some restrict eligibility to nonprofits to ensure a focus on social mission over profit. The workbook emphasizes that a Housing Trust Fund should prioritize the most vulnerable populations, particularly those earning less than 50% of the median income.
Funding distribution methods vary. Most housing trust funds use a competitive application process, issuing Requests for Proposals (RFPs) periodically. Others may channel funds through existing programs or use an entitlement model, where local jurisdictions receive formula-based allocations.
The form of awards can include grants, loans, forgivable loans, or rental assistance. The choice between grants and loans is significant; while loans replenish the fund, grants are often necessary to make housing affordable for very low-income households who cannot sustain debt service.
Securing Dedicated Revenue for the Housing Trust Fund
Perhaps the most challenging aspect of creating a Housing Trust Fund is securing a dedicated revenue source. The workbook stresses that without a dedicated source, the entity is not truly a Housing Trust Fund but rather a discretionary grant program. Advocates must adopt a proactive attitude, recognizing that while finding revenue is difficult, it is not impossible.
Identifying Potential Revenue Sources
The search for revenue should be creative and comprehensive. The workbook lists over 40 potential revenue sources that have been successfully used by various housing trust funds.
These generally fall into categories such as property transaction taxes (e.g., real estate transfer taxes), development charges (e.g., linkage fees), municipal taxes (e.g., hotel/motel taxes), and interest on government or market accounts (e.g., real estate escrow interest).
When evaluating potential sources, advocates should consider several criteria. The source should be reliable and robust, generating sufficient income to meet the fund’s goals. It should be administratively efficient to collect and legally permissible to dedicate.
Furthermore, the source should ideally have a nexus to housing or real estate, creating a logical connection between the revenue generator and the Housing Trust Fund’s purpose. For example, a real estate transfer tax directly links market activity to affordable housing production.
Setting a Dollar Goal
Before finalizing a revenue source, campaigns must establish a clear annual dollar goal. This goal should be based on a realistic assessment of community housing needs and the capacity of local developers to utilize the funds.
The workbook suggests estimating the cost to address identified needs and then adjusting for leverage. For instance, if $50 million is needed to solve a specific housing crisis, and the Housing Trust Fund leverages funds at a 7:1 ratio, the annual revenue goal might be set significantly lower.
Having a concrete number allows advocates to measure the adequacy of proposed revenue sources and resist compromises that would render the Housing Trust Fund ineffective.
Running a Successful Campaign for the Housing Trust Fund
Establishing a Housing Trust Fund is inherently a political process. It requires a well-organized campaign that builds broad support, navigates opposition, and persuades elected officials to enact the necessary legislation.
The workbook outlines a multi-faceted approach to campaigning, emphasizing the importance of coalition building and strategic communication.
Building a Broad Coalition
A successful Housing Trust Fund campaign relies on a diverse coalition. This includes a core group of housing advocates, hardy supporters who contribute resources, and a broad list of endorsers who lend credibility.
The workbook highlights the importance of involving not just housing nonprofits, but also banks, labor unions, churches, and business leaders.
For example, the San Diego Housing Trust Fund Coalition included over 50 organizations, ranging from the NAACP to the Chamber of Commerce. This breadth of support signals to policymakers that the Housing Trust Fund is a community-wide priority, not just a niche interest.
Advocacy and Lobbying
Advocacy for a Housing Trust Fund involves direct engagement with elected officials. Campaigns must identify champions in the legislature or city council who can sponsor the bill. It is crucial to count votes and focus efforts on undecided officials.
The workbook advises tailoring messages to different audiences: emphasizing economic benefits to fiscal conservatives, social justice arguments to progressives, and community stability to moderates.
Working with opposition is also a critical component. Opposition often comes from industries affected by the proposed revenue source, such as realtors opposing transfer taxes.
The workbook suggests several strategies, including the "Florida Model," where opponents are brought to the table early and offered concessions, such as set-asides for specific types of housing.
Alternatively, campaigns can choose to counter opposition with strong data and public pressure. The key is to remain flexible but steadfast on the core principles of the Housing Trust Fund.
Visibility and Public Engagement
Making the campaign visible is essential for maintaining momentum. Events such as rallies, press conferences, and creative demonstrations can draw media attention and public support.
The workbook cites examples like Ohio’s "Lego Day," where children from homeless shelters presented Lego homes to legislators, and San Diego’s "Phone H.O.M.E." call-a-thon. These events humanize the issue and demonstrate the widespread demand for a Housing Trust Fund.
Conclusion
The creation of a Housing Trust Fund is a complex but deeply rewarding endeavor that can transform the housing landscape of a community. By securing a dedicated revenue source, establishing clear administrative guidelines, and running a strategic advocacy campaign, communities can create a lasting resource for affordable housing.
The insights provided in A Workbook for Creating a Housing Trust Fund remain highly relevant, offering a proven framework for success.
As housing affordability challenges continue to grow, the Housing Trust Fund model stands out as a viable, efficient, and equitable solution. For policymakers and advocates alike, understanding the mechanics of a Housing Trust Fund is the first step toward building stronger, more inclusive communities.