What is a housing trust fund?
A housing trust fund is a program or independent organization that raises funding to dedicate to housing construction, preservation, and rehabilitation, often concentrated on affordable housing, homeless housing services, down payment assistance, gap financing, supporting housing trusts, and related activities. The goals of a housing trust are to create affordable housing and/or homelessness solutions by leveraging new funding sources.
How are housing trusts funded?
Housing trusts receive financial support from a variety of sources. Some of the most common categories of funding include dedicated funding from local jurisdictions, State and federal grants, bonds, and private donations. Importantly, there are significant funding sources that are only accessible to housing trusts.
What are the benefits of an affordable housing trust fund? There are a variety of benefits of affordable housing trust funds. In general, they provide a variety of quality housing types and options for those who might otherwise struggle to afford it.
This includes support for lower and middle-income earners such as teachers, service workers, warehouse and logistics personnel, and other essential workers. Depending on how they are administered, benefits can also include: providing housing and supportive services for individuals and families experiencing homelessness; bringing outside money to the region, not otherwise accessible; and improving the quality of existing affordable housing to improve quality of life for residents and neighbors. Effective housing trusts achieve these outputs by leveraging new funding sources, rather than redirecting existing funding sources.
FREQUENTLY ASKED QUESTIONS
FAQ
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How would administration of a housing trust fund work?
To maximize stability and access to funding sources, the housing trust fund would most likely be structured as a hybrid nonprofit-Joint Powers Authority (JPA). The housing trust could potentially leverage the administrative support and executive leadership of SBCOG to achieve efficiencies and would have oversight from its governing board. The trust would establish a JPA with those that choose to participate. SBCOG could administer the trust and the costs to the agency would be offset by the housing trust fund’s resources.
What agency is the best fit to administer a housing trust fund in the region? SBCOG’s existing staffing infrastructure is skilled in all requisite administrative areas including executive leadership, financial accounting, and administration, making SBCOG an ideal candidate for housing trust fund administration. The agency consists of representatives from 24 cities and towns, and the San Bernardino County Board of Supervisors. SBCOG focuses on regional matters and has a track record of achieving meaningful results. SBCOG’s experience as a convening agency leaves them well-positioned to support the administration of a housing trust that works in close collaboration with other agencies to ensure that it complements existing efforts.
How does a housing trust fund enhance existing local and County affordable housing efforts?
A key differentiation is access to funding. Affordable housing trust funds are able to compete for additional funding local and county housing authorities are ineligible for. A primary function of the program will be to raise funds from new sources and operate programs that complement—and do not compete with—the work of existing agencies in the subregion. Furthermore, the flexibility and creativity granted to housing trusts using a nonprofit-JPA model increases program efficacy and opportunity while ensuring the trust is stable and resilient. Some of the key strategies that Housing Trusts can leverage include: Flexible sources of gap financing such as revolving loan funds; Ability to Compete for State funds such as the Local Housing Trust Program; Tailored solutions to address regional needs related to homelessness; ability to pool resources to help funds go further
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Are there other housing trust funds in California?
Yes. There are at least 48 affordable housing trusts in California, whose members include more than 60 local jurisdictions. Housing trusts in Southern California include the West Hollywood Affordable Housing Trust Fund, the Orange County Housing Finance Trust, the Skid Row Housing Trust, the Santa Monica Citywide Housing Trust Fund, the County of Ventura Housing Trust Fund, the newly formed San Gabriel Valley Regional Housing Trust, and others.
How would a city or county join a regional housing trust fund? A local government would take formal action to join the housing trust fund JPA by adopting a resolution at the local level. Following local approval, the administrating agency, potentially SBCOG, would approve their membership and certify that the jurisdiction has paid membership dues and is compliant with other membership requirements.
Are jurisdictions required to participate in the housing trust fund? No. Participation in the housing trust fund is optional. The trust will require a minimum threshold for membership. If jurisdictions decide to join after the initial opt-in period, they will pay an additional joining fee, equal to the administrative fee. If a jurisdiction does not participate in the trust, it would not be eligible to receive any funding or program services the trust offers.
Can a local government opt out of the housing trust after it joins? If so, how does that work?
Yes. A participating member jurisdiction would have the ability to opt out of the housing trust and could do so by adopting a new resolution rescinding membership at the local level. The jurisdiction would be required to provide written notice of exit six months prior to start of a new fiscal year. If there is an existing project in that city, it would become responsible for administrative fees to manage that project.
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What are the costs of participating in a regional housing trust fund? Based on research into successful programs across the state, SBCOG estimates that an affordable housing trust fund will require approximately $230,000 in annual contributions from participating jurisdictions for the first five to ten years of operation until the fund achieves financial independence.
Member dues will be based on a combination of factors, such as the jurisdiction’s population, jobs, and anticipated growth and may range from $1,500 to $50,000, depending on which factors are selected, how many jurisdictions choose to participate, and local characteristics.
What funding source would local jurisdictions use to pay for member dues? Jurisdictions can use any funding source to pay for member dues. One option is to use funding allocated through State grant programs. The funding source used for member dues is ultimately up to local discretion.
What would member dues be used for?
Membership dues would ensure ongoing revenues for trust operations and cover the administrative and staffing costs of establishing and growing the housing trust fund. These efforts would be primarily focused on fundraising and administering programs established to distribute monies to support housing in the subregion.
How will the housing trust ensure that affordable housing does not negatively impact home values or quality of life in the communities where it is constructed?
Just as poorly implemented developments can negatively impact communities, well-designed and well-managed affordable housing can have positive impacts on the surrounding community. SBCOG will work closely with experienced developers and agencies to make sure the program funding supports projects following best practices and planning for locally-appropriate housing solutions.
Well-designed and well-managed
affordable housing can have positive
impacts on the surrounding community.
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What kinds of programs and activities do
housing trust funds operate?
Operations of the housing trust is determined through the development of an Administrative Plan which would establish a board of directors responsible for managing housing trust fund activities and goals. These approved activities could include new construction of affordable housing, predevelopment activities for affordable housing, down payment assistance for first-time homebuyers, preservation or rehabilitation of existing affordable housing, support for community land trusts, and establishment of housing and supportive services for people experiencing homelessness.
Are nonprofit organizations eligible for funding from housing trust fund programs?
Typically, nonprofit organizations are eligible for funding from the housing trust. Depending on the program, funding would likely be made available on a competitive basis, prioritizing funding for applicants demonstrating an ability to make best use of the funds, meaning that they are used to support the housing needs of the greatest number of households and/or households with the highest needs.
How long will it take for the housing trust to generate community benefits? Housing trusts can serve as sustainable and reliable long-term solutions to housing issues. Based on existing housing trusts the regional housing trust is gleaning best practices from, the program is anticipated to achieve full stability in the first five to ten years of operation. However, depending on the availability of funding, stability may be achieved much sooner.
Are there restrictions to sources of funding?
Some State and local funding sources may have restrictions that require the funds to go towards affordable housing creation while limiting allowable administrative costs, requiring prevailing wage in development costs, or applying other conditions. These funding sources are often sizable so the trust would pursue them, but the program will also layer funding sources from unrestricted sources to cover program costs.
How will housing trust funds be allocated across the region? Through the development of the Administrative Plan, the housing trust bylaws can establish a methodology for reinvesting allocations across the region. Allocation methodologies generally look to leverage funds to their greatest potential without posing absolute geographic restrictions on housing trust fund expenditures.
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Why join a regional affordable housing trust fund instead of creating local funds?
Cities and counties can form their own housing trusts. However, most jurisdictions have limited staff, time, and funding to administer a housing trust fund. Similar to a regional approach to transportation, a regional housing fund will avoid unnecessary strain on the limited resources of local jurisdictions while leveraging the region’s collaborative strengths, relieving the pressure of local housing needs through a regional approach to housing. It is anticipated that a regional housing trust will secure more funding to invest in the region than the aggregate of any individually managed local programs.
What is the Administrative Plan?
The Administrative Plan, to be developed in consultation with participating member jurisdictions, will establish protocols for the trust fund, including determining the types of projects and programs it will fund, setting goals to guide the Trust’s activities, stipulating membership requirements for participating jurisdictions, establishing first preferences for reinvesting allocations within the jurisdiction or sub-area of origin without posing absolute geographic restrictions on housing trust fund expenditures, outlining SBCOG’s administrative responsibilities, and creating a Board of Directors.
How can I support the affordable housing trust fund?
We need strong support from local government, elected leaders, and the business community to launch and grow a successful program. Let SBCOG know if you would like to help us grow support for the program.
What is the difference between a housing trust fund and community land trust?
A housing trust fund is similar to a community land trust (CLT), though they serve complementary, rather than duplicative purposes. CLTs are typically structured as nonprofit organizations that work to preserve housing affordability and support lower income families’ ability to build wealth. A housing trust, by contrast, primarily serves to meet the gap funding needs of affordable housing. Housing trust activities can include support for CLTs through the acquisition and dedication of land or the production of housing.
Are all cities within the region eligible for Permanent Local Housing Allocation Funds?
No. County of San Bernardino PLHA allocation includes cities with populations smaller than 50,000 as well as unincorporated areas of San Bernardino County. It is the County’s responsibility to utilize those funds.
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