Financing

Revenue Sources

Revenue sources vary depending on whether the trust fund is established by a city, county, or state government. Securing these dollars is the most political and difficult part of establishing a housing trust fund.

Public Dollars

Sources include:

• Real estate taxes or fees (e.g., real estate transfer tax, document recording fee, excise tax);
• Developer fees (e.g., fees on new commercial development that contribute to housing funds, inclusionary zoning in-lieu fees, impact fees);
• Other taxes (e.g., property taxes, sales taxes, hotel/motel taxes);
• Other fees (e.g., application fees for municipal programs, permit fees, demolition and conversion fees);
• Tax increment funds from redevelopment districts;
• Repayments on various loan programs and other kinds of program income; and
• Interest from government-held and market-based accounts (e.g., rainy day funds, escheat funds, real estate escrow accounts or tenant security deposits).

Most revenue dedicated to housing trust funds is new income to a jurisdiction, based on increased taxes and fees and does not take dollars away from other programs. As with any tax or fee, the amount of revenue coming into a fund fluctuates from year to year. The funds generated by trust funds cannot be diverted to other uses. And all interest and earnings must remain in the trust fund, as well as any unused dollars at the year's end.
It is not always possible to win an increase in a tax or fee, particularly in states that have enacted "anti-tax" legislation. In these instances, it may be possible to divert a portion of existing revenues from the general fund to the trust fund.
Housing trust funds can also receive appropriations and/or special allocations of funds to augment existing dollars. This might include surplus budget funds, excess TANF funds, and funds available from the sale of public property, among others.

Non-Public Dollars and "Hybrid" Funds

A special note should be made regarding non-public funding sources. By definition, housing trust funds are not comprised of corporate contributions, foundation grants, or bank commitments. These funds are more typical of housing partnerships-a different and useful tool.
A few housing trust funds are exploring combinations of public funds with private contributions. It may prove useful for such combined funds to define a special role for private contributions, such as land acquisition and predevelopment activities.