In 2008, the Congress established a National Housing Trust Fund as part of a large bill intended to address the emerging housing crisis.
The Fund was to provide grants to states, which they were to use to increase and preserve the supply of rental housing for extremely low and very low income households* and to help them become homeowners.
Ninety percent of the funds had to be used for rental housing, and at least 75% had to benefit extremely low income households. The initial goal was to fund construction and/or preservation of 1.5 million affordable rental units. The National Low Income Housing Coalition estimates the shortage at about 2.8 million units. So the Trust Fund could make quite a dent.
However, the Trust Fund was to be financed principally by a percentage of the value of new business generated by Fannie Mae and Freddie Mac. Their contributions were indefinitely suspended when they fell into financial distress. So we’ve got a partial solution to the affordable housing crisis on paper only.
President Obama’s proposed Fiscal Year 2010 budget for the Department of Housing and Urban Development included $1 billion for the Trust Fund. Now two bills have been introduced that would give the Fund working capital in different ways.
Both would use funds in the Troubled Asset Relief Program (TARP)–the program that’s been buying up mortgage-backed securities and other “troubled assets” to stabilize financial institutions.
The Main Street TARP Act (H.R. 3766), introduced by Congressman Barney Frank (D-MA), would simply transfer $1 billion from the TARP account to the Trust Fund. It would limit what families have to pay for rent on units funded with Trust Fund money to no more than 30% of their adjusted income. This would ensure that the units remain affordable for the long term.
The Preserving Homes and Community Act (S. 1731), introduced by Senator Jack Reed (D-RI), would transfer $1 billion of the revenues produced by the government’s sale of warrants, i.e., rights to purchase stock in the financial institutions it bailed out. NLICH says that sales of warrants have already brought in $2.9 million. So the funds to transfer should be available.
Neither of these bills would give the Trust Fund the long-term, assured revenue stream it will need to achieve the 1.5 million unit goal. But both could jump-start construction and renovation at a critical time.
The House bill current has twelve cosponsors. The Senate bill has seven. Both will need more to get them on the action agenda. NLICH has e-mails we can customized to help build support.
* Extremely low income households are those with incomes at or below 30% of the applicable area median income. The upper income limit for very low income households if 50% of the AMI. AMIs vary widely, both from state to state and within some states.