What Is a Housing Trust Fund (HTF)?

A housing trust fund (HTF) is a publicly financed program specifically designed to increase affordable housing. Operated by cities, counties, and states, HTFs give out regular funding for projects connected to affordable housing. A federal program, discussed below, has existed since 2008 to provide financing for these programs.

Understanding HTFs

HTFs are devoted to encouraging low-income housing. The practice started in the second half of the 20th century, with California becoming one of the first states to enact one in 1985. California’s fund initially used offshore oil drilling revenues to finance the program, but when the program only led to a fraction of the allocations legislators had expected, the state approved a one-off $2.1 billion bond in 2002.

The money distributed by these programs is used to pay for affordable housing programs. States can receive some federal funds through the National Housing Trust Fund to pay for a range of costs incurred by affordable housing programs.

The U.S. Department of Housing and Urban Development (HUD), which administers the federal housing trust program, says that the funding can be used for acquiring housing, building new affordable housing, reconstructing or rehabilitating non-luxury housing, grant programs, and other related costs.

The housing is usually reserved for the low-income category (those who earn less than 50% of HUD’s area median family income figure) and the extremely low-income category (less than 30%). The financing may come with requirements that the housing remains low-income for a fixed number of years. Federal financing, for example, comes with the requirement that the housing stays affordable for at least 30 years.

Forty-seven states, as well as Guam, Puerto Rico, and Washington, D.C., administer HTF programs, according to Community Change’s Housing Trust Fund Project. The project also estimates that there are a total of 605 city-run HTFs and 157 county-run HTFs in the United States.

The National Housing Trust Fund

The National Housing Trust Fund, the United State’s federal housing trust, was set up to boost recovery after the Great Recession. It was authorized under the Housing and Economic Recovery Act of 2008, and it falls under the administration of HUD.

By Congressional standards, the fund is poorly financed. It doesn’t get annual appropriations money from the U.S. Congress. Instead, Fannie Mae and Freddie Mac, the federally backed home mortgage companies, set aside a small portion of new business to bankroll the program.

In March of 2021, Fannie Mae and Freddie Mac put $711 million into the fund, which was more than double the $326.4 million put in for the year 2020. The program is expected to grow in the coming years.

While it is federally funded, states are responsible for distributing the money. According to HUD, the funds have to be disbursed annually. States must use at least 80% of housing trust grants for building, maintaining, or operating rental housing, another 10% for home ownership, with the remaining 10% being eligible to go to administrative costs. In total, an estimated $2 billion has been given to states through the NHTF program since 2016, when the program started disbursing money.

As of 2022, according to the HTF National Production Report, 2,303 rental homes have been acquired, constructed, or rehabilitated using federal HTF money. Of those, 1,010 were designated for single people, while 156 were for families who would otherwise be homeless. Another 11 of those places were set aside for teenagers who have grown too old for the foster care system.

The NCSHA has argued that Congress should set up sustainable funding for state programs as well as work to eliminate federal intrusion into them to offer as much flexibility as possible.