Housing Trust Funds

Nearly every state, including Virginia, has at least one housing trust fund. There are 471 city-based housing trust funds (2 in Virginia) and 57 county based funds (3 in Virginia). The National Housing Trust Fund, established in 2008, is still awaiting funding. The Virginia General Assembly established the Virginia Housing Trust Fund last year, allocating 7 million dollars from the the general fund to the housing trust fund. This spring, the Virginia Department of Housing and Community Development (DHCD) and the Virginia Housing Development Authority (VHDA) will accept the initial round of applications for funding through the Virginia Housing Trust Fund. They will be looking for shovel-ready demonstration projects to make the case for future contributions to the Fund. With the state’s initial funding round imminent and more Virginia municipalities considering local housing trust funds as a tool for dedicating money to affordable housing, I have been reading the scholarly analysis of housing trust fund mechanics.

Unfortunately, the scholarly analysis of housing trust funds is sparse. Since the 80’s fewer than a dozen scholars have published studies regarding the establishment, operations and outcomes of housing trust funds. Mary Brooks, director of the Housing Trust Fund Project at the Center for Community Change is certainly the leading authority. Brooks and her team keep tabs on each housing trust fund established in the US and offer a catalog of resources for communities that may want to establish their own housing trust funds. Brooks has also published general information on housing trust funds in scholarly journals (1995, Affordable Housing and Community Development), but her work does not explicitly analyze or evaluate the effectiveness of housing trust funds.

A number of authors have evaluated state housing trust funds, especially as these funds are established as part of an effort to augment decreased federal fund for affordable housing initiatives. Publications by Corianne Payton Scally, and one by Kristin Larson make up the most recent and relevant scholarly literature available. Here’s a summary of their conclusions:

  • housing trust funds, which are typically funded through real estate transaction fees, are easier to fund in places with high rates of development (Scally 2012, Housing Studies; Larson 1993 Housing Studies)
  • favorable political climate and a recognized community need for affordable housing help the process along (Scally 2012, Housing Studies; Basolo and Scally 2008, Housing Policy Debate)

So, why so little research regarding housing trust funds? A housing trust fund is not much more than an account were funds for affordable housing are protected from being reverted back to a general fund or “raided” for purposes unrelated to the development or preservation of affordable housing. The policy that raises the money that goes into the fund and the policy that governs how the money is spent is what’s interesting. The thing is, those affordable housing policies can exist and have existed without at housing trust fund. More than anything else, a housing trust fund it a formal way for a community to say they are planning to raise or dedicate money to develop and preserve affordable housing.

The most popular ways to raise money for housing trust funds seem to be developer fees, impact fees, linkage fees, and in-lieu [of developing affordable housing required by inculsionary zoning] fees.  Other ways include redevelopment taxes, transient occupancy taxes, property taxes, document recording fees, demolition taxes etc.  Many funds combine sources.

The most important consideration for any community should be to determine the most efficient and justifiable way to raise and transfer funds to affordable housing. That is, communities should raise revenues based on evidence of negative impacts on housing affordability or they are likely to encounter well reasoned political and legal opposition. Check out this example in California. Once a policy is in place to raise revenues, communities should make every effort allocate that money as efficiently as possible. Easier said than done, right?

The nuances of policy efficiency are the subject of extensive economic theorizing and testing. I’m planning to devote much of my future reading (and blogging) to the economics of affordable housings policy. Although the best solutions are likely to be unique and creatively tailored to the communities where they are adopted, I ought be be able to identify some economic mantras to keep us focused. In the mean time, the Vermont Housing and Conservation Trust Fund offers lots of food for thought.

Sequestrable Funds for Housing

My inbox is filling up with opinions about the sequester. March 1st is two days away, so everybody weigh in.

Over this morning’s reading session I have found lots of numbers: more than 100,000 individuals who were recently homeless may be removed from their current housing, 125,000 low-income families may not be able to depend on their Housing Choice Voucher and thereby may be put as risk of loosing their current housing, 21,000 less homes would receive funds for rehabilitation, 400,000 fewer households would receive aid from the Low Income Home Energy Assistance Program,  at least 1,000 fewer homes would be weatherized. Given the rhetoric, it would seem that these numbers only represent the  “tip of the ice-berg.” But NRP, one of my most trusted news sources, says “But what if the sequester, which would cut $85 billion from federal spending between March 1 and the end of September, turns out to be less of a calamity than Obama has warned?

I’m depending on my paycheck Friday, and I’m expecting another check on March 15th. With others feeling much less secure, I owe it to them to develop some perspective. My primary interest is housing, so that’s where I’ll weigh in and try to give some perspective. The rhetoric is killing my interest, so I turned to the technical documents posted on the OMB website. I’m trying to answer the question, what kinds of cuts are we experiencing right now, and how does that compare to what we would experience under 1 year of unaltered sequestration.

Looking at the FY 2012 Budget and the FY 2013 Budget, I see that spending for the Dept of Housing and Urban Development decreased by $3,139,000,000 between the end of FY 2010 and the end of FY 2011. OMB estimates another decrease ($214,000,000) between the end of FY 2011 and the end of FY 2012 (wish these numbers were available). FY 2013 Sequestrable funding for HUD totals $3,622,000,000, if nothing changes. So, in the short term, we can expect more of the same (for programs not individuals). We can expect to experience basically the same kind of cuts we experienced over the past two years (it will definitely feel like getting hit where you already have a bruise).  That’s the example, but look to USDA and the Dept of Housing and Human Services for more cuts that will directly effect housing initiatives.

Throughout the US Government Budgets, there are explanations of cuts, consolidations, additional spending etc. THE SEQUESTER, the beast that it is, does not offer or allow this reasoning. Some people think that’s the worst part. So is it not the size of the cuts, but where the cuts land that matters? Where they land certainly matters to those that are hit directly, but the Obama Administration argues that it will directly impact each of us. So who will be affected the most? Those loosing their homes? Those who can’t count on their pay check? There are infinite ways to view this situation.

When infinite perspectives present themselves, I usually meditate on the simple economics of the situation. The current politics of our government has led to uncertainty (for everybody). As long as the SEQUESTER goes forward without an accepted budget, we will experience continued uncertainty, in addition to less government spending. Less government spending (SEQUESTER) + less private investment (due to uncertainty) = slow/no economic growth.  I could add detail, but the picture does not look better close up.

About Mel & Mel Jones 0p3d

This is my personal and professional blog! I’ve begun blogging for professional reasons:

  • to provide a current, to-the-point voice for housing research in Virginia.
  • to be a resource for those who are working on housing topics in the field.
  • to offer research inspired, intellectual thoughts that will balance the politically oriented conversations about housing.

I’ve hosted this blog on my own, so it’s my personal blog. My thoughts, opinions, and editorials are posted here. They may represent some of your thoughts as well, or they may not. Please comment if you’d like to make your thoughts explicit.

Further, this is my personal blog because sometimes I am inspired to talk about topics in which I have little or no professional training! Hopefully, you will be able to tell which voice I am using when you read a post. I’ll categorize posts to make it a little easier, but if it’s not clear, please ask.

Cheers,

Mel

P.S. You can check out my professional experience/history on LinkedIn. Here’s a link to my profile.

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