Housing Trust Funds

Housing trust funds (HTFs) are funds established by cities, counties, and states to provide dedicated, ongoing public revenue to support affordable housing. HTFs provide an important source of financing for affordable housing preservation and development, which may not otherwise be reliably funded by a jurisdiction’s budget. Safe and habitable affordable housing is essential to family well-being and community stability — yet most city neighborhoods remain deeply segregated, while Black and Brown people, disabled people, and other marginalized communities face significant barriers to securing safe, quality, affordable homes due to housing discrimination and systematic disinvestment in those same communities. 

The goal of safe and affordable homes for all is a complex challenge requiring a range of different approaches and policy tools. HTFs play an important role in comprehensive equitable housing solutions by providing resources to projects that support long-term affordability and serve very low-income households, people of color, and other historically disadvantaged communities, including those in danger of displacement. The National Housing Trust Fund (NHTF) was a growing source of funding for state and local housing trust funds — allocating $739.6 million to states in 2022 after allocating $689.7 million to states in 2021. However, recent increases in interest rates have resulted in a decline in single-family mortgage loans and refinancing acquisitions by the Government Sponsored Entities (GSEs). Consequently, the NHTF's 2023 allocation has been reduced by over 50 percent. This substantial reduction in the 2023 allocation significantly falls short of the existing housing needs, making additional financing mechanisms critical to deliver on housing goals. The American Rescue Plan Act of 2021 is one important (though short-term) current source of funding for local housing trust funds (states, counties, and cities have until December 2024 to obligate their funds).

HTFs can be leveraged in a variety of contexts, including, empowering local jurisdictions to optimize the efficacy of other housing development funds, fostering the creation of new employment opportunities, or acting as a buffer against displacement stemming from housing development activities. Moreover, they facilitate the allocation of novel revenue streams from burgeoning industries to bolster housing outcomes. Beyond this, HTFs can serve as catalysts for generating localized economic advantages by leading to increased sales taxes, income taxes, and property taxes. In addition to the PolicyLink resources listed on the right, see the Housing Trust Fund Project at Community Change and the Housing Development Consortium for more resources on housing trust funds.

• Community leaders usually spark the creation of HTFs by demanding that local or state governments address critical housing needs. Successful public campaigns often engage a wide range of community members and organizations, including faith-based groups, developers, banks, service providers, unions, and others with an interest in securing more affordable housing.
   
• Elected and appointed officials can help develop the framework for a HTF and champion the implementation of local and regional HTFs. These funds are typically administered by a public agency.
   
• Community-based organizations and other advocates can organize to advocate for the creation and funding of a HTF in their communities, educate public officials on the structure and benefits of HTF, can help provide critical oversight and set accountability standards for a HTF, and can even serve on the boards to approve funded projects.

A HTF should have clearly stated objectives, a straightforward application process, committed and effective staff, and meaningful public accountability processes.

• Community priorities: Because HTFs are created using public funds, they should address priority issues for the community, which may change over time. For example, a fund might initially focus on fixing up vacant homes for homeownership opportunities, and later shift to supporting the development of social housing or equitable acquisition projects.
   
• Revenue sources: A HTF plan should identify a specific amount of annual dedicated revenue, based on measurable criteria including existing housing needs. Trust funds are often financed by taxes and/or fee increases, and sometimes reduce budget flexibility for elected officials. While HTFs are usually created by legislation or ordinance, some funding sources require a public ballot. Advocates must present a strong case and consider a range of potential funding sources. The most well-resourced HTFs receive dedicated funds that do not require an annual appropriation process, and that are delivered through multiple passive sources of income such as taxes or fees. The American Rescue Plan Act of 2021 provided $350 billion in flexible funding for states and localities (to be allocated by December 31, 2024), representing an important new source of funding for housing trust funds.
   
• Target populations: Affordable housing development efforts can be targeted to a number of different groups - for example, low- or very-low-income households, families at risk of homelessness, or moderate-income families with children. Many HTFs encourage mixed-income and mixed-use developments.
   
• Building a strong coalition: Advocates should create broad-based coalitions that bring together residents and community-based organizations, policymakers, developers, and other stakeholders to design an HTF plan customized to the opportunities and needs in their city.
   
• Administration and oversight: HTFs are usually administered by a lead government agency, with an oversight board that represents a broad range of housing interests within the community. The board should reflect community priorities in establishing trust fund policies, regulations, and funding goals, as well as monitoring and evaluation. An oversight board should also be composed of community members and community leaders who were involved in advocating for a HTF or are familiar with housing issues in their community.
   
• Determining eligible uses: Most HTFs provide for a range of uses, such as the acquisition of existing housing stock, new construction, rehabilitation, emergency repairs, housing-related services, adaptive reuse, accessibility modifications, and more. In some cases, they may also make dollars available for rental assistance (including emergency assistance), foreclosure prevention, and other pressing needs.

According to the Housing Trust Fund Project, there are 47 states with housing trust funds, as well as the District of Columbia, Guam, and Puerto Rico, and more than 750 city and county housing trust funds in operation. Combined, these HTFs provide more than $2.5 billion a year to help address critical housing needs throughout the country.

• Several localities have invested their American Rescue Plan Act Local Fiscal Recovery Fund resources into housing trust funds to produce rental housing for low-income residents. Kansas City put $12.5 million toward a new housing trust fund to produce rental housing for at least 150 extremely low-income households. Savannah invested $7 million into its affordable housing fund to implement the Housing Savannah Action Plan to build or retain at least 15,000 homes for 21,000 low-income Savannahians by 2032. Cincinnati allocated $5 million in ARPA fiscal recovery funds to the housing trust fund it established in 2018 to provide crucial gap financing for affordable housing development projects.
   
• With a population of just 30,000, the city of Juneau, Alaska has created one of the nation’s model housing trust funds. When the city determined that nearly 1,200 households were rent-burdened in 2010, they launched a housing trust fund to expand the development of housing units, the number of rental units for low-income residents, and long-term housing affordability. The trust began in 2010 with $400,000 while voters approved an additional $2 million in funding in 2017. In 2018 the trust began to build the city’s first major subdivision in the past 20 years, with help from local students who provided most of the labor.
   
• In King County, Washington, the county government collaborated with Bellevue, Kirkland, Redmond, and other cities in King County to create a regional HTF to address a growing housing affordability crisis driven by strong regional economic growth and widening wealth and income gaps. Each participating jurisdiction contributes funds to the HTF and all members receive an equitable distribution of HTF resources. The partnership draws on a range of financing mechanisms and revenue sources, including general funds, federal Community Development Block Grant funds, payments by developers, loan repayments, earned interest, fee waivers, infrastructure improvements, and contributions of land. Since 1993, member cities have committed more than $42 million to the creation or maintenance of 5,000 units of affordable housing.
   
• In 2007, Workforce Housing Trust Funds were established in Albuquerque, New Mexico to provide dedicated funds for the preservation and production of affordable housing. Eligible developments must set aside 30 percent of units for low-income households. The Workforce Housing Trust Fund is funded by bonds approved by Albuquerque voters. As of 2020, the fund has committed more than $40 million in funds to support the development or preservation of 1,364 affordable homes, with the majority of these homes affordable to very low-income households earning less than 50 percent of the area median income. 
   
• In Boston, Massachusetts the Neighborhood Housing Trust Fund (NHT) has been in operation since 1986, established three years after the inception of housing linkage funds aimed at overseeing "needed residential construction" within commercial developments. This policy requires developers of large-scale non-residential developments to make a cash payment to the NHT, or create an additional housing and job support program. As of 2021, developers who choose to provide payments pay $15.39 ($13 to affordable housing and $2.39 to workforce training programs) per square foot of gross floor space for developments that exceed 100,000 square feet. Overall, the city has seen that this funding mechanism, just in 2020, was able to acquire $15.4 million in funds for the NHT.