There are currently more than 350 housing trust funds in cities, counties, and states across the country, which provide in excess of $750 million every year to address the housing needs of their communities. Together, these housing trust funds have created affordable housing for more than 65,000 families.

Housing trust funds are not typically endowed funds which operate on interest. Rather, they use an automatically replenishing, dedicated revenue source, such as a real estate transfer tax or document recording fee, to address housing needs. A dedicated revenue source provides a steady stream of resources for housing and identifies it as a priority that must be supported year in and year out.

Most trust funds are administered by a public agency and provide loans and grants to community development corporations and others. To ensure community accountability, they typically have oversight boards that set trust fund priorities and monitor funding awards.

Trust fund programs vary widely, since housing trust funds are designed to meet the housing needs of a specific community. Most designate the majority of funds to serve households earning less than 80 percent of area median income (AMI), although some serve households earning up to 120 percent of AMI. Many have more detailed income targeting within these broad parameters. For example, San Diego targets 10 percent of its Housing Trust Fund resources for transitional housing, 60 percent to very low income households (those with incomes below 50 percent of area median), 20 percent for households between 50 percent and 80 percent AMI, and 10 percent for median-income first-time homebuyers. In most cases, housing trust fund dollars can be used to support rehabilitation, new construction, and acquisition; less commonly, dollars are used for housing preservation, home repair, pre-development, transitional housing, and first-time homebuyer assistance. Several housing trust funds have set-asides to support non-profit capacity-building.

Pennsylvania is a national leader in establishing housing trust funds. A 1992 state law, the Optional County Affordable Housing Trust Funds Act (also known as Act 137), allows counties to set up their own housing trust funds through a small surcharge on deed and mortgage recording fees. Fifty of the 67 counties in the Commonwealth have created housing trust funds since Act 137 was passed, generating about $8 million in annual revenue (see map). A survey done in 2001 revealed that 95 percent of counties with housing trust funds strongly agreed that their fund was a valuable tool for promoting affordable housing in their county. Unfortunately, counties of the first class (i.e. Philadelphia) are not currently included in the Act 137 enabling legislation. Philadelphia is the only county in Pennsylvania that is not currently allowed to establish an Act 137 Housing Trust Fund.

Housing Trust Fund Examples

There are currently housing trust funds in Chicago, Los Angeles, Sacramento, San Diego, Seattle, St. Louis, St. Paul, and Washington, D.C. In addition to these cities, housing trust funds also exist in Austin, Boston, Denver, Indianapolis, Nashville, Portland, Oregon, San Antonio, San Francisco, and Toledo, as well as in numerous other cities across the country. This extensive track record provides a broad range of experience that can direct Philadelphia as we consider ways to meet our housing needs.

Allegheny County, which includes the City of Pittsburgh, generated $2.1 million for its Housing Trust Fund in 2002 through document recording fees. The County has a set formula for distributing its Housing Trust Fund revenue, with 20 percent going to the Department of Human Services to assist with homeless needs and 75 percent to the Department of Economic Development to match HOME funding and for other programs, including down payment assistance.

Forty-nine other Pennsylvania counties, including all of those neighboring Philadelphia, also participate in Pennsylvania's Optional County Affordable Housing Trust Fund Program.

Chicago's Low Income Housing Trust Fund supports the largest locally funded rent subsidy program in the country and has provided access to more than 11,400 affordable apartments. The Fund has leveraged more than $37 million since its inception in 1989.

The Low Income Housing Trust Fund ordinance requires that its independent Oversight Board be appointed by the mayor with the advice and approval of City Council. The Board must be composed of 15 public, private and nonprofit sector executives who equally represent three groups: low income housing residents and community based organizations; business and philanthropic organizations; and representatives at large, including community leaders, religious leaders, and public officials.

Los Angeles's Housing Trust Fund, established in 2002, is already the largest Housing Trust Fund in the country, and after 2004 will have a dedicated revenue of $100 million annually. The Fund was established to address a housing crisis in Los Angeles. Unattainably high real estate prices meant the city had a homeownership rate of only 39 percent, while one in seven apartments was substandard and a third of all apartments were overcrowded.

The Fund supports expanding and preserving the supply of affordable rental housing in Los Angeles County (serving households at incomes up to 60 percent of area median), supporting first-time homeownership for low and middle-income families, with incomes up to 120 percent of area median, and preventing homelessness by providing one-time grants to tenants facing eviction. In its first year, the Fund built 700 low-cost homes and apartments.

Washington, D.C.'s Housing Production Trust Fund was established in 2002, and in the first year of its existence, created or renovated 2,055 affordable homes. It is projected to create 700 new jobs each year and will generate an extra $1 million a year in new property taxes for the District. The Fund has leveraged about $145 million in investments, with every local dollar leveraging an additional $6-$7 in outside funding. The Fund dedicates 15 percent of the District of Columbia's real estate transfer tax and deed recordation revenue to "facilitate the creation of affordable housing and related activities."

While Baltimore, which is often compared to Philadelphia, does not yet have a Housing Trust Fund, the Baltimore Affordable Housing Trust Fund Task Force has been advocating for the establishment of a fund that would address persistent problems with vacant housing and access to affordable housing. The proposed Trust Fund would support affordable units in market-rate housing developments, create affordable rental housing, fund housing equity partnerships to make homeownership more accessible, and would fill gaps in projects that are already leveraging funds from other sources. The Task Force has suggested small recordation and transfer tax increases to generate revenue, and is currently in discussions with the City administration around their proposal.