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What is it?
Housing trust funds are distinct
funds established by legislation, ordinance
or resolution to receive public or private
revenues, which can only be spent on affordable
housing.
The State of Illinois and the
City of Chicago both have Housing Trust Funds.
How can it be used?
The terms of its creation will
limit how it can be used, but the common sense
bottom line is that such a fund would provide
a continuing reservoir (possibly rotating)
of funds. It might be limited to supporting
the creation, maintenance/improvement of affordable
housing; it might be made available for developers
or for current owners or residents, it might
be limited to a single ownership model (single
homes, condos, rental units).
Where does the money come
from to put into the fund?
The initial input capital could
come from existing city funds, or funds to
which it has access (such as funds from the
federal government), or funds might be raised
from new sources, including possible teardown
fees. If the fund distributes money by loan,
of course the repayment (which might include
some moderate interest) would replenish the
fund.
How is the money in the
fund distributed?
It might be by loan or by grant.
What income levels will
they serve?
Housing trust funds are usually
designed to address the housing needs of low
(below 80% AMI) and very low (below 50% AMI)
income households. Some extend this mission
to moderate (80-120% AMI) income; others focus
on the needs of the homeless or other special
groups.
What needs to be done to
establish a Housing Trust Fund?
Steps to Set Up Administration
of the Housing Trust Fund
1. Determine where the trust
fund should be housed
2. Determine who will own the
fund (city, CHDO, or a newly created entity,
one or more of whose members would represent
the city).
3. Determine who will administer
the fund (existing officer? Political or staff?
Dedicated proprietary officer? Other?)
4. Determine range of administrator's
interpretation of criteria, other rules.
5. Outline this administrative
body’s key responsibilities
6. Determine how administration
will be paid for
7. Establish (or designate
existing) board or commission to oversee the
fund’s operations
Steps to Set Up a Housing
Trust Fund’s Programs
1. What target population will
the fund support? (e.g., Below 80% AMI, also
moderate < 120% AMI?)
2. Who will be eligible to
receive funds? (e.g., for profit developers,
only non-profit developers? Rental property
owners? Tenants? Buyers?)
3. What kinds of projects or
programs should the fund support? (e.g., creation,
set-asides, rehab?) By what units?
4. How should the funds be
awarded? (i.e., requirements, priorities)
5. What funding criteria should
be incorporated in the application process?
(i.e., long-term affordability, priority of
projects, etc.)
6. Determine appropriate revenue
sources for the fund.
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