State Housing Trust Funds and the National Housing Trust Fund Housing Trust Fund Project Center for Community Change Southern Housing Trust Fund Convening October 26-27, 2010 Sponsored by: the Mary Reynolds Babcock Foundation

The National Housing Trust Fund After years of hard work, advocates across the country celebrated the creation of a National Housing Trust Fund in July of 2008 as a provision of the Housing and Economic Recovery Act of The passage of NHTF legislation is a major victory for working families and individuals, seniors, people with disabilities and others who cannot afford a safe, stable place to call home

The National Housing Trust Fund All funds go to States. The Governor is to identify an entity to receive funds from the National Housing Trust Fund. Eligible state designees are: ◦ The state housing authority or state housing finance agency. ◦ Housing or community development entities. ◦ Tribally designated housing entities. ◦ Any other qualified state entity. Funds will be allocated by formula. Minimum $3 million. Alabama: $9,600,000 Arkansas: $6,500,000 Louisiana: $12,100,000 Mississippi: $5,900,000

Formula for NHTFund Dollars HUD has responsibility for developing a formula for distribution of NHTFund dollars to the states. Five factors must be included:  The shortage of rental units affordable and available to very low income renter households,  The shortage of rental units affordable and available to extremely low income renter households,  Substandard housing,  Households paying more than 50% of their income for housing, and  The cost of construction. The first factor is to be weighted more heavily in the formula and the sum of the first four factors is to be multiplied by the fifth factor. HUD published proposed regulations for a distribution formula on Dec 4, To view go to:

How NHTF Funds Can Be Spent 90% of the funds must be used for the production, preservation, rehabilitation, or operation of rental housing. Up to 10% can be used for homeownership activities for first time homebuyers. No less than 75% must benefit extremely low income households or households with incomes below the poverty line. No more than 25% may benefit very low income households.

Criteria for Use of Funds  The funds must be committed or spent within two years.  10% of the funds may be spent to administer the program.  Eligible recipients within the state are organizations and agencies with demonstrated experience and capacity to conduct eligible activities, the ability and financial capacity to do so, and familiarity with housing programs and their requirements.

State Allocation Plans  Set forth a plan for the distribution of funds.  Plan is to be based on priority housing needs, using six factors:  Geographic diversity,  Ability to obligate funds and undertake activities in a timely manner,  Extent to which rents are affordable,  Duration for which rents will remain affordable,  Extent to which other funding sources will be used,  Merits of the proposal.  Must support activities that are eligible under the Act.  Must include performance goals.  The plan must be made public and seek public comments.

Funding for the NHTFund  HR3221 established that the NHTFund was to be funded through Government Sponsored Enterprises (GTEs): Freddie Mac and Fannie Mae. Subsequently both were taken over by the new federal regulator, the Federal Housing Finance Administration and this funding option suspended.  Initial capitalization for the NHTFund of $1 billion (with an added $65 million for project-based vouchers) passed the House in May The Senate has not passed an equivalent, but could consider S3793 (a tax extender bill) by year’s end. It would then need to return to the House.  Permanent ongoing funding is also being discussed: ongoing funding from the Federal Housing Finance Administration or GSE replacements; adjustments to the mortgage interest deduction; among others.

Factors to Weigh in Selecting the State Entity A Department or Agency that can expend funds in keeping with the goals of the National Housing Trust Fund—at a minimum the ability to make grants and provide rental housing. A Department or Agency that can coordinate funds with other available housing dollars. A Department or Agency that can meet the public comment requirements. A Department or Agency comfortable with setting performance goals, benchmarks, and timetables.. There is no requirement that National Housing Trust Fund dollars go to existing state housing trust funds.

Advantages Relating to State HTFunds Get the money out, quickly! Every state housing trust fund has a system in place to distribute funds. Meet the requirements, easily! Most state housing trust funds have oversight boards and engage in public comment and notification. Address the goals, fully! Virtually all state housing trust funds work with a network of housing developers and providers; provide funds throughout the state; target to serve those most in need; and promote other objectives.

Pitfalls to Relating to State HTFunds  The temptation to replace funds. There is no matching fund requirement to receive dollars from the National Housing Trust Fund.  Housing trust fund revenues generally decline as the economy entrenches.  Revenues are also reduced by the addition of programs to the trust fund or the pilfering of revenues.  Program changes. Reduce the flexibility and innovation currently enjoyed by state housing trust funds.

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