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HomeMy WebLinkAboutHousing Trust Fund StrategiesGreenstreet, Ltd. 2022 LEVERAGING HOUSING FOR ECONOMIC WELL-BEING Housing for All: HOUSING TRUST FUND JANUARY 2022 Housing for All: Leveraging Housing for Economic Well-Being WHAT IS A HOUSING TRUST FUND? A Housing Trust Fund is a distinct fund established by a city, county, or state government that receives on-going, dedicated funding streams to support the preservation, production, and access to attainable housing. The creation of an HTF shifts funding for attainable housing from a one-time or per basis allocation to annual budgets that ensure funding is available year after year. Funding comes from a variety of municipal revenue sources including linkage fees from new commercial development, permit fees, and estate or marijuana sales taxes as examples of the numerous tax-related sources that have been tapped by HTFs across the country. Most funds do not rely solely on one funding source but blend a variety of sources to ensure revenue amounts reflect the funding needs of their community. The annual allocation to each HTF varies based on the local need for attainable housing funding and the needs of the target population. Nationally, studies have indicated housing trust funds leverage $6 for every dollar invested in the fund. A housing trust fund provides a new, flexible source of funding that can be used in a variety of ways including development costs (i.e. land acquisition, construction loans, etc.) as well as programmatic costs (i.e. down-payment assistance, home repair, emergency mortgage assistance, etc.) The flexibility of the fund allows it to be used by housing developers, investors, and practitioners and gives them stable and consistent access to funds. This allows for these various groups to think ahead and plan for future developments, knowing they will have access (even if competitively) to an additional source of funding for attainable housing production and preservation. Something that ad hoc public-sector investments in attainable housing do not provide. There are 18,735 low- and moderate- income households (household income under 100% AMI) spending too much on housing each year (cost burdened.) 100% of Noblesville Housing Authority’s 194 Housing Choice Vouchers (HCV) are in use. The number of HCVs available in Hamilton County (population 338,011, 194 HCV) is considerably less than much smaller communities such as Muncie (68,750, 916); Bloomington (84,116, 1,400); and South Bend (102,037, 2,140.) The last time the wait list was open 900 applications were received for 200 spots. Between 2010 and 2020 only 468 units of subsidized housing units were built in Hamilton County compared to an increase of 2,528 households in need of subsidized housing (households earning below 80% AMI and cost burdened.) HTFs BENEFIT MUNICIPALITIES. If residents are unable to find appropriate housing in Hamilton County they may select to live in nearby communities, taking their property and income taxes with them. This has the negative impact of reducing the tax base of Hamilton County, reducing each municipalities’ ability to provide the high level of service Hamilton County communities are known for. By increasing the diversity of housing product and price points (especially if density is considered), Hamilton County has the opportunity to not only retain and attract more residents to live in the county but grow the existing tax base. HTFs BENEFIT EMPLOYERS & BUSINESSES. Housing and place are increasingly important to the workforce and employers. Without appropriate housing, workers face longer commutes, which studies indicate can lead to turnover and absenteeism. Additional studies have shown that replacing employees can cost a business as much as 1.5 times their annual salary in lost revenue and productivity. Both findings underscore the importance of co-locating housing and jobs. If employees are unable to find attainable housing, many may make the decision to take available jobs in nearby communities increasing the number of unfilled jobs and stalling economic growth. ILLUSTRATIVE EXAMPLE OF FUNDING NEED *These calculations are for illustrative purposes only to show the scale of funding needed to holistically address Hamilton County’s attainable housing shortage. Additional analysis is needed to determine specific funding needs, sources, and uses. 18,735 Low- and moderate-income households spending too much on housing each year $150,000 Estimated subsidy need to create attainable rental or ownership units $2.8b Nationally, HTFs leverage an additional $6 for every $1 invested which may decrease overall funding needed. Estimated total funding to holistically address housing need $401m Greenstreet, Ltd. 2022 HTFs BENEFIT ATTAINABLE HOUSING DEVELOPERS. Attainable housing developers in Hamilton County are at a disadvantage compared to peers in other communities across the state. The county’s low poverty rates and relatively new housing stock make it less competitive for traditional affordable housing dollars. The HTF creates a new opportunity for Hamilton County to attract additional funding from federal, state, private, and philanthropic sources by leveraging HTF funds. Additionally, the fund creates a new flexible funding source that offers flexibility in terms of what it can be used for (i.e., land acquisition, gap financing, etc.) and when and how it’s used (i.e., less stringent timelines compared to traditional funding sources like CDBG or LIHTC.) HTFs BENEFIT LOW- AND MODERATE-INCOME RESIDENTS. Living affordably in Hamilton County is difficult for many households earning below the Area Median Income ($81,600.) Over half of all families earning below the Area Median Income are spending more than 30 percent of their income on housing each year. This directly impacts their ability to pay for critical services. By increasing the number of, and access to, attainable housing, these families can increase spending on education, childcare, transportation, food, healthcare. They now have opportunities to build wealth, increasing their ability to move up the economic ladder and contribute to the local Hamilton County economy. An effective Housing Trust Fund must be flexible and nimble to allow users to respond to changing market demands, the availability of land and projects, and the ability for local organizations to execute their development plans. The majority of HTFs in the US use competitive applications to vet and select projects for funding. This makes advance budgeting difficult, but still necessary as part of the exploration phase to understand the funding and revenue needs of a potential HTF to serve the Hamilton County community. The following illustrative budget is meant to show how and what an HTF may fund on annual basis. The final projects and programs selected for funding, as well as target impact, will be highly dependent on the vision, mission, and values established for the fund. HOUSING TRUST FUNDS CAN FINANCE A VARIETY OF PROJECTS AND PROGRAMS TO SUPPORT INCREASED ATTAINABILITY. EXAMPLE ANNUAL HTF FUND ALLOCATION The following example comes from the City of Nashville Barnes Fund Spring 2021 funding round. All information comes from their 2021 Annual Report which can be found online. The funded projects “offer single-family and duplex homeownership opportunities for large and small families, as well as expansive, multi-phase rental developments that address multiple community needs, and transitional housing for women overcoming homelessness due to addiction and co-occurring mental health disorders.” In 2021, the Barnes Fund awarded $6,623,398 in support of 326 rental units. Samaritan Recovery Community 195 units $2,000,000 Mending Heart 8 units $374,398 Be A Helping Hand 2 units $249,000 Woodbine Community Organization 31 units $2,000,000 Urban Housing Solutions 90 units $2,000,000 In 2021, the Barnes Fund awarded $2,783,880 in support of 63 homeownership units. Affordable Housing Resources 31 units $784,300 Habitat for Humanity 32 units $1,999,580 Two-thirds of units in 2021 were targeted for households earning between 30% and 60% AMI. One-third of units in 2021 were targeted for households earning between 60% and 80% AMI. A small fraction of units for households earning less than 30% AMI were funded. The Barnes Fund’s $9,407,278 investment in 2021 leveraged an additional $112,925,906, representing a 12:1 match. Housing for All: Leveraging Housing for Economic Well-Being TO BE EFFECTIVE, A HOUSING TRUST FUND IN HAMILTON COUNTY NEEDS COOPERATION AND INVESTMENT FROM A NUMBER OF PARTNERS. Municipal partners will... Adopt attainable housing vision statement Agree to the need for a housing trust or similar funding vehicle Advocate for changes to State enabling legislation Agree to explore their ability to make annual investment in the HTF Advocate at County and/or State for annual allocation of dedicated revenue Provide time and expertise to select an organizational, programmatic, and governance structure Agree to an annual investment Business and Philanthropic partners will... Advocate for the need for more attainable housing in Hamilton County Advocate for changes to State enabling legislation Provide time and expertise to advocate for and establish the HTF Provide time and expertise to select an organizational, programmatic, and governance structure Agree to an annual investment Nonprofit and Housing Advocate partners will... Advocate for the need for more attainable housing in Hamilton County Advocate for changes to State enabling legislation (when applicable) Provide time and expertise to advocate for and establish a housing trust fund Provide time and expertise to select an organizational, programmatic, and governance structure Gain local buy-in and support from County and Municipal leaders. lead: HCHC Secure initial funding to staff the initiative. National best practices show that 2-2.5 FTEs are the typical staffing needs for a housing trust fund during the start-up period. lead: HCHC Conduct feasibility study to refine funding needs. lead: HTF staff POTENTIAL 18-MONTH TIMELINE Engage State Legislators on need for revisions to Indiana Code Title 36. lead: Municipal Leaders Establish interim advisory board. lead: HCHC Greenstreet, Ltd. 2022 Determine best legal structure, governance, and organizational needs. lead: Interim Board of Advisors POTENTIAL 18-MONTH TIMELINE BARNES HOUSING TRUST FUND Nashville, Tennessee The Barnes Housing Trust Fund is meant to reduce funding barriers that accompany affordable housing development in Nashville. It was established in 2013 to leverage affordable housing resources county-wide and is one tool in a larger, robust toolbox. Initially seeded by $1.5 million from the City of Nashville, the fund has grown to over $15 million with support from the City’s municipal funds and the American Rescue Plan Act. In 2019, just under $10 million was granted by the fund, impacting 425 housing units. That investment leveraged an additional $113 million in funding representing a 12 to 1 leverage. Since 2014, the fund has invested in nearly 2,500 units of affordable housing. The Barnes Fund complements existing funding and debt sources through strategic grants made to 501(c)(3) organizations or partnerships between for-profit and nonprofit developers. Since all investments are made as grants, there is no return to the fund. Grants are meant to complement existing funding sources like HOME and other federal programs. Access to zero- and low- interest debt options exist within the broader Nashville market. Grants require a 30-year compliance period enforced through a restrictive covenant filed with the deed to the property. Grants are capped at $2 million per development and are primarily invested in new multi-family rental housing, new construction for ownership, and homeowner repair in neighborhoods experiencing gentrifying conditions. The fund is housed within the Mayor’s Office, which provides high levels of political support that aids in fundraising efforts. However, there are limited operational efficiencies given the lack of expertise and skill sets related to affordable housing and investment within the Mayor’s Office. The fund is currently exploring alternative options to increase efficiency. The Barnes Fund is governed by a commission made up of end users, community development practitioners, and government representatives. Establish separate HTF organization or create department within municipal entity to staff and distribute future funding. lead: Interim Board of Advisors Engage the community (neighbors, employers, employees, municipalities, housing advocates, developers/investors) to define the vision, values, and priorities of a Hamilton County Housing Trust Fund. Emphasis should be on those groups that will benefit from the Housing Trust Fund – low- and moderate residents, lower wage employees, housing advocates, and attainable housing investors. lead: HTF Staff Identify potential on-going revenue streams which may include state, county, local sources as well as private and philanthropic sources. Revenue sources should not be limited to private and/or philanthropic sources of funds only or one-time public investments. lead: HTF Staff and Consultants TULSA AFFORDABLE HOUSING TRUST FUND Tulsa, OK The City of Tulsa realized their housing problems were systemic. An Affordable Housing Trust Fund was selected as one tool to solve some of the city’s housing issues. To help understand the needs and desires of the people most likely to benefit from this type of investment, the City undertook a robust community engagement process. The AHTF ultimately became part of the Tulsa Authority for Economic Opportunity, which carries out community and economic development for the City of Tulsa. The AHTF’s vision is to ensure “the City of Tulsa will be an economically thriving, inclusive community with quality housing opportunities for all its residents.” It focuses on the production and preservation of affordable housing through housing development, homebuyer assistance, landlord incentives, and other rental assistance programs. With rental occupancy rates at 96 percent (as of 2020) and facing an overall shortage of housing, like Hamilton County, the AHTF estimated the need for an additional 4,000 affordable units. To assist in increasing the production of units, the AHTF provides gap financing through zero interest loans for terms up to 10 years. Developers must commit to a minimum 15-year affordability period. The AHTF also created landlord incentives to increase housing stability among vulnerable populations. The AHTF is still actively working to secure a dedicated revenue source and is actively pursuing funds from the City’s allocation of American Rescue Plan Act. It is currently funded by a $4 million seed investment from the City’s Downtown Revolving Loan Fund and philanthropic funds totaling over $5 million. The fund is governed by a committee of 8 to 12 community members appointed by the TAEO Board of Trustees. Housing for All: Leveraging Housing for Economic Well-Being We believe that housing should be attainable for those who desire to call Hamilton County home – during every stage of their lives. We will prioritize diversity in product types and housing prices to uphold the economic well- being of Hamilton County. To ensure housing for all, we will... • work collaboratively with leadership to prioritize diversity in housing product types and prices (prioritizing households earning up to 120% AMI); • encourage and regulate for lower cost housing options near jobs and services; • explore public-private-philanthropic partnerships to expand resources and dollars aimed at removing barriers to attainable housing; and • communicate the importance of attainable housing the County’s economy today and in the future. #HOUSING4ALL VISION: The Hamilton County Housing Collaborative is a group of individuals and organizations committed to improving the inventory of housing in every category along the continuum of housing options. This collective impact initiative is staffed by HAND, Inc. Aspire, Family Promise of Hamilton County, Noblesville Housing Authority, and Westfield Washington Township are the other founding organizations. CREATE STRONG COMMUNITIES WITH #HOUSING4ALL. • Visit www.handincorporated.org to learn more and get digital copies of the 2022 Hamilton County Housing Report. • Be a knowledgeable YIMBY – “Yes in My Backyard” by advocating with your elected officials and following local zoning meetings. Support good projects that provide more workforce housing. Learn more at https://yimbyaction.org/2021/ • Volunteer with a nonprofit working in housing. Contact Kelley Romweber (kelley@handincorporated.org) to explore which nonprofit in Hamilton County would be a good fit for you. • Use your social media presence to advocate for #Housing4All. • Donate funds, land, or expertise for housing initiatives focused on low-income households. Kelley Romweber (kelley@handincorporated.org) can give you the latest information. TAKE ONE ACTION TODAY: