How To Use It

Since housing trust funds are designed locally, they can be tailored to address the range of housing problems specific to that jurisdiction. There are three important components to every housing trust fund:

• Administration, or the structure for managing the fund;
• Program Design, criteria for what is supported through the fund;
• Revenue Sources, or the financing of the fund

Administration

Lead Agency
Housing trust funds are typically administered by a public agency, usually the department that deals with affordable housing programs. This agency will assign or hire staff to carry out the day-to-day operations of the housing trust fund.

While not common, there are instances where nonprofit entities administer a housing trust fund. The East Tennessee Foundation, for example, administers a housing trust fund in Knoxville , Tennessee . Another approach is the creation of an independent or quasi-public corporation for the express purpose of operating a trust fund.

Oversight Board
Most housing trust funds have an oversight board. The composition of the board is governed by the ordinance or legislation establishing the housing trust fund, and board members are appointed. Board members typically represent a broad range of housing interests within the community. They are usually responsible for establishing trust fund policies; developing regulations for the operation of the fund; determining funding priorities; and monitoring and evaluation. Some oversight boards play an advisory role, while others have full power and authority to be decision-making bodies.

Well-functioning oversight boards are important for several reasons. They build public support for the trust fund and its activities. They provide guidance on the operation of the housing trust fund. They provide connection to the community, and work to ensure that the trust fund reflects and is accountable to local needs.

Program Design

The most important program design components should be contained in the ordinance or legislation to establish how dollars are spent and who benefits.

• Dissemination and types of funding
• Eligible applicants
• Eligible uses
• Requirements

Dissemination and Types of funding

Most housing trust funds award funds through requests for proposals (RFPs). The lead agency announces the availability of funds and outlines the application process.
HTFs usually provide funds in a variety of forms including: no-interest loans, forgivable loans, below-market loans and grants. In addition, funds can be used to establish a line of credit, guarantee funds or bridge loans.
Some housing trust funds coordinate their application procedures with other programs, allowing potential applicants to submit a single application to access multiple funds available within the jurisdiction. Single applications can include HOME funds, the Community Development Block Grant Program (CBDG), housing trust funds, and others. This unification enables the jurisdiction to be more strategic in implementing affordable housing.
HTFs can also establish special funds programs. Dauphin County , Pennsylvania 's Affordable Housing Fund created a First Time Homebuyers Second or Subordinated Mortgage Program that provides funds for households earning less than the median income.

Eligible Applicants

Housing trust funds can qualify a variety of eligible applicants including: nonprofit and private developers, Native American tribes, regional entities, jurisdictions, housing authorities, and other entities. Some housing trust funds restrict funding to nonprofit organizations. Other funds provide loans to private developers while making grants available to nonprofit developers. Nonprofit development organizations have probably been the most consistent users of and partners to housing trust funds.

Eligible Uses

Most HTFs provide for many, diverse uses. Funds can be used for acquisition, new construction, rehabilitation, emergency repairs, housing-related services, adaptive re-use, accessibility modifications and more. While less common, some trust funds make dollars available for rental assistance (including emergency assistance), foreclosure prevention, and other needs. Some housing trust funds focus on serving the needs of the homeless. Many encourage mixed-income and mixed-use developments, requiring that funds be used for projects (or the portion of a project) that address the needs of lower income households.

Requirements

Recipients of trust fund dollars are required to meet established criteria.   Common requirements include:

• Income guidelines. Most housing trust funds restrict the use of funds to projects that serve households who earn no more than 80% of the area median income. Many target 50% or 30% of area median income.  Trust funds may serve a mix of income levels, but often set aside a portion of the funds to serve the needs of lower income households. Most funds encourage projects that serve the lowest income households by giving priority status to these projects.
• Long-term affordability. Most HTFs encourage or require that trust fund dollars support housing with provisions for long-term affordability.   Some trust funds specify a number of years, while others for the life of the project.
• Accessibility. Housing trust funds often require that a portion of units are accessible to those with disabilities and meet the requirements of the Americans with Disabilities Act (ADA) and applicable local laws.
• Displacement. Other requirements can prevent the displacement of current residents or offer tenant protections. Some HTFs require neighborhood planning to receive trust fund dollars.
• Other preferences or priorities. Preferences may be given to projects that achieve the highest leverage of public and private funds, those serving certain neighborhoods and those serving households with special needs, among others.

Other Important Elements

Whether capitalized from less than $100,000 to over millions of dollars annually, housing trust funds can have tremendous impact in a community. The single most important factor in the success of a housing trust fund is a committed, talented, effective staff. Key elements to ensure the success of a housing trust fund include:

• Clarity. Create clearly stated objectives. A fund that is too broadly defined will have less clear impact than one whose resources are targeted to specific needs.
• Efficiency. Create a streamlined process for moving funds to needed projects.   Develop an easy-to-understand and use application process.
• Accountability. Create public accountability. Put an effective process in place for evaluating how funds are spent and ensuring they support the goals for which the trust was created.
• Public Will. Build public will by publicizing accomplishments and continuing to stress the beneficial impacts of the HTF. Never underestimate the importance of continuing to educate the public and elected officials about the vital role that decent affordable housing plays in sustaining healthy communities.