NATIONAL HOUSING TRUST FUND No. 155
The crisis of low income housing supply is a shadow on the nation's prosperity and a major factor in the rich-poor gap in the United States, the widest of the industrialized world.
"Worst case" needs have risen during the past decade to a record high of 7.5 million renter households experiencing severe housing stress. They are unassisted families who pay over half their income for rent and/or endure inadequate conditions.
A wide range of market forces and other factors have contributed to the decline in affordable housing. Especially due to the recent housing boom, rents are rising faster than the incomes of the poorest families. Further, for most of the past decade, the federal government has failed to invest money in low-income housing. The result is a shortage of 1.6 million units of affordable housing.
The meager wages of the low skilled in the current economy, looming welfare time limits, and the housing supply crisis converge in the plight of the stranded poor. Since its founding, ADA has sought redress for poverty, economic dislocation, and inequality.
The nationwide housing shortage, threatening the stability of 8 million households, must be included on the political agenda at the federal level, the only source with adequate resources.
To that end, ADA supports and will participate actively in the National Housing Trust Fund Campaign and the policy proposals of this campaign which have been endorsed by over 5,500 national, state, and local organizations.
Goals and Objectives: A National Housing Trust Fund should be established to serve as a source of revenue for the production of new housing, and the preservation or rehabilitation of existing housing that is affordable for low-income people. The initial goal of the National Housing Trust Fund should be to produce, rehabilitate and preserve 1,500,000 units of housing by 2010.
Source of capital: The Trust Fund should be capitalized with ongoing, permanent, dedicated and sufficient sources of revenue to meet the goal of 1,500,000 housing units by 2010. The initial sources should be excess FHA and GNMA (Ginnie Mae) revenue, above what is necessary to maintain the soundness of the FHA and Ginnie Mae programs. At a minimum, revenue produced by federal housing programs should be used to solve housing problems. Other sources of funding should be identified and dedicated to the Trust Fund and, if necessary, additional appropriations should be made to meet the goal.
Eligible activities: The Trust Fund should be used for the production of new housing, preservation of existing federally assisted housing, and rehabilitation of existing private market affordable housing. The Trust Fund should be used primarily for rental housing. We support allowing between 15 and 25% of funds to be used for homeownership activities, so long as low-income people are served.
Income targeting: At least 75% of the Trust Fund dollars should be used for housing that is affordable for extremely low-income households, that is, those with incomes under 30% of the area median. Within that, 30% of total Trust Fund dollars should be used for housing that is affordable to households with income at the equivalent of full-time minimum-wage earnings ($10,700 annually) or less. The rest of the funds can be used for low-income households with incomes up to 80% of the area median, provided these funds are restricted to housing production, preservation, or rehabilitation in low-income neighborhoods. In all cases, no one should pay more than 30% of their income for housing.
Terms of affordability: Housing funded through the Trust Fund should be required to remain affordable for the useful life of the property.
Operating subsidy: Projects funded through the Trust Fund should assure that any operating subsidy needed to make the housing affordable for a range of extremely low-income people is provided. That could be by using Trust Fund assistance to underwrite the operating subsidy for new or rehabilitated units for one year, after which the operating subsidy will be funded from the Housing Certificate Fund and renewed through the Section 8 program thereafter, or the applicant could devise another operating subsidy mechanism (which may be able to be applied to the match requirement).
Distribution: Ninety percent of Trust Fund assistance should be allocated by formula. The formula should be developed by HUD, using criteria that assure distribution in proportion to the need for eligible housing. The distribution of funds should ensure that every type of community has access to funds, and should encourage regional consortia. If an eligible grantee declines to apply for Trust Fund assistance, an alternative application process should be established so that other entities in the jurisdiction can receive and distribute the Trust Fund dollars. Grantees will distribute the funds to eligible entities prepared to conduct activities that are eligible for Trust Fund support. The remaining 10% of Trust Fund assistance should be distributed through a national competition that supports eligible entities that are pursuing innovative approaches to production, preservation, and rehabilitation of affordable housing.
Match: States, localities, or non-profit organization receiving Trust Fund assistance should match the federal funds in the following manner. If the entity uses state, local, or private revenue for the match, they will receive two federal Trust Fund dollars for every dollar they provide. If an entity uses locally controlled federal dollars (HOME, CDBG, LIHTC, private activity bonds, TANF funds, project based assistance) for the match, they will receive one Trust Fund dollar for every dollar of match they provide.
Mixed Income: New housing production and financing should be done in a way that assures that extremely low-income households are not segregated from other income groups. Thus, Trust Fund dollars should be utilized in conjunction with other funds to complete the financing for a new multifamily housing development, with the Trust Fund dollars supporting the construction of housing for extremely low-income households. Trust Fund applicants that propose small projects in low-poverty neighborhoods, with rural communities, or that serve special populations may be able to assure economic integration with Trust Fund dollars alone.
Compatibility with other housing programs: The use of Trust Fund funds should be flexible to ensure its compatibility with Low Income Housing Tax Credits, private activity bonds, CDBG, HOME, Section 8, public housing, USDA rural housing programs, and other forms of assistance.
Tenant Protections: Existing federal tenant protections and rights to participate in decision making about their homes should be extended to tenants in homes funded by Trust Fund dollars.
Other housing funds: In addition to establishing a National Housing Trust Fund, we recommend additional investment in affordable housing with substantial increases in HOME, CDBG and USDA Rural Housing programs, as well as an examination of ways to reform the Low Income Housing Tax Credit program to improve access to the program by a wider range of non-profit, community-based housing developers. Substantial increases in the housing voucher program will also be necessary to assure affordability for the lowest income households.
Fortunately, Congressional action has begun. The Federal Housing Finance Reform Act of 2005, HR 1461, would establish funds acquired from after-profit taxation of Fannie Mae and Freddie Mac. The purpose of the funds is to increase homeownership for extremely low- and very low-income families, to increase investment in housing in low-income areas and areas designated as qualified census tracts or areas of chronic economic distress, to increase and preserve the supply of renal and owner-occupied housing for extremely low- and very low-income families and to increase investment in economic and community development in underserved areas.
The nation cannot ignore the housing deficit. The Trust Fund restores the indispensable federal commitment and provides straightforward resources for low-income housing construction now. Adequate safeguards also need to be instituted to monitor potential corruption and ensure energy efficiency and adequate maintenance.
Note: the Campaign was initiated by the National Low Income Housing Coalition and its leadership included, in addition to the Coalition, the Center for Community Change, the Corporation for Supportive Housing, National Alliance to End Homelessness, National Coalition for the Homeless, and a range of national organizations listed on the Campaign web site (www.nhtf.org).
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