The Local Solutions in Action series highlights strategies for expanding housing options and increasing housing affordability. The focus is on land use, zoning, financial and other regulatory tools that are available to cities, counties and towns that can be used to meet the housing needs of their residents and workforce.
Local Housing Trust Funds
Housing trust funds are distinct funds established by a city, county, or state government that generally receive ongoing dedicated sources of public funding to support the preservation and production of housing affordable to lower-income households. Revenue for local housing trust funds is generated from a variety of sources, including real estate transfer taxes or recordation fees, litigation settlements, inclusionary in-lieu fees and, in some cases, an appropriation from a jurisdiction’s general revenue. There is wide variation in the amounts local jurisdictions commit to housing trust funds, and the amounts can vary from year to year. Trust fund dollars can also be combined with other local funding to support affordable and workforce housing programs and services. While there may be limits on uses of local trust fund dollars imposed by the state, generally there is a lot of flexibility in how these resources may be used.
In the most effective local housing trust funds, public dollars are used to leverage a range of additional funding sources, which expands the impact the fund can have. Trust fund dollars can be used to fund a wide variety of housing production and preservation activities, depending on the goals of the community. Funds can be allocated as grants or as loans for predevelopment activities, construction, rehabilitation, or resident services. Loan repayments accounting for a share of the trust funds revenue.
Common sources of funding for local housing trust funds include proceeds from real estate transfer taxes and fees, a small portion of real estate property taxes, commercial linkage fees, and inclusionary housing in-lieu fees (developer contributions). Some jurisdictions appropriate money to a local trust fund annually during the regular budget cycle.