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The Issue
Led by the National Low Income Housing Coalition and the Center for Community Change, a large number of national organizations (including Catholic Charities USA and McAuley Institute), initiated a campaign to develop a National Housing Trust Fund. The Fund, like the existing trust funds in some 150 state and municipal governments, would serve as a source of revenue for the production of new housing, and the preservation or rehabilitation of existing housing that is affordable for low income people. The initial goal of the National Housing Trust Fund is to produce, rehabilitate, and preserve 1,500,000 units of housing by 2010.
Background:
There is bi-partisan support in Congress for housing production and preservation in the form of a National Housing Trust Fund. HR 2349, introduced on June 27, 2001, has 147 cosponsors. S 1248, introduced on July 25 2001, has 19 cosponsors.
USCCB Position: The Church and Affordable Housing
The Catholic Church has long recognized housing as a basic human right. The Church--through its parishes, diocesan structures, and Catholic Charities agencies--is one of the largest providers of shelter in the nation. Since the late 1960's, the federal government through the Department of Housing and Urban Development has solicited, encouraged, and funded a variety of Church sponsored housing particularly senior housing, transitional housing, homeless shelters, and some family units.
At the January 2002 meeting of the Domestic Policy Committee of the USCCB, following a discussion by HUD Secretary Martinez, the Committee voted to support a National Housing Trust Fund.
Questions and Answers on the Proposed Legislation
What are the major goals and objectives of a National Housing Trust Fund?
A National Housing Trust Fund should be established to serve as a source of revenue for the production of new housing, and the preservation or rehabilitation of existing housing that is affordable for low income people. The initial goal of the National Housing Trust Fund should be to produce, rehabilitate, and preserve 1,500,000 units of housing by 2010.
Where would the money for the Trust Fund come from?
The Trust Fund should be capitalized with ongoing, permanent, dedicated and sufficient sources of revenue to meet the goal of 1,500,000 housing units by 2010. The initial sources should be excess FHA and Ginnie Mae revenue, above what is necessary to maintain the soundness of the FHA and Ginnie Mae programs. At a minimum, revenue produced by federal housing programs should be used to solve housing problems. Other sources of funding should be identified and dedicated to the Trust Fund and, if necessary, additional appropriations should be made to meet the goal.
What activities would be eligible for Trust Fund support?
The Trust Fund should be used for the production of new housing, preservation of existing federally assisted housing, and rehabilitation of existing private market affordable housing. The Trust Fund should be primarily used for rental housing. We support allowing between 15 and 25% of funds to be used for homeownership activities, as long as low income people are served.
What type of housing will the Trust Fund support?
At least 75% the Trust Fund dollars should be used for housing that is affordable for extremely low income households, that is, those with incomes under 30% of the area median. Within that, 30% of total Trust Fund dollars should be used for housing that is affordable to households with income at the equivalent of full time minimum wage earnings or less. The rest of the funds can be used for low income households with incomes up to 80% of the area median provided these funds are restricted to housing production, preservation, or rehabilitation in low income neighborhoods. In all cases, no one should pay more than 30% of their income for housing. Housing funded through the Trust Fund should be required to remain affordable for the useful life of the property.
Would the Trust Fund projects require operating subsidies?
Projects funded through the Trust Fund should assure that any operating subsidy needed to make the housing affordable for a range of extremely low income people is provided. That could be by using Trust Fund assistance to underwrite the operating subsidy for new or rehabilitated units for one year, after which the operating subsidy will be funded from the Housing Certificate Fund and renewed through the Section 8 program thereafter, or the applicant could devise another operating subsidy mechanism (which may be able to be applied to the match requirement).
How would the Money be distributed to the states, localities, and nonprofit organizations?
Ninety percent of Trust Fund assistance should be distributed by formula allocation. The formula should be developed by HUD, using criteria that assure distribution in proportion to the need for eligible housing. The distribution of funds should ensure that every type of community has access to funds, and should encourage regional consortia. If an eligible grantee declines to apply for Trust Fund assistance, an alternative application process should be established so that other entities in the jurisdiction can receive and distribute the Trust Fund dollars. Grantees will distribute the funds to eligible entities prepared to conduct activities that are eligible for Trust Fund support. The remaining 10% of Trust Fund assistance should be distributed through a national competition that supports eligible entities that are pursuing innovative approaches to production, preservation, and rehabilitation of affordable housing.
Will a financial match be required?
States, localities, or non-profit organizations receiving Trust Fund assistance should match the federal funds in the following manner. If the entity uses state, local, or private revenue for the match, they will receive two federal Trust Fund dollars for every dollar they provide. If an entity uses locally controlled federal dollars (HOME, CDBG, LIHTC, private activity bonds, TANF funds, project based assistance) for the match, they will receive one Trust Fund dollar for every dollar of match they provide.
What's to keep the Trust Fund from building more "slums?"
New housing production and financing should be done in a way that assures that extremely low income households are not segregated from other income groups. Trust Fund dollars should be utilized in conjunction with other funds to complete the financing for a new multifamily housing development, with the Trust Fund dollars supporting the construction of housing for extremely low income households. Trust Fund applicants that propose small projects in low-poverty neighborhoods, rural communities, or that serve special populations may be able to assure economic integration with Trust Fund dollars alone.
Will the Trust Fund be compatible with other housing programs?
The use of Trust Fund funds should be flexible to ensure its compatibility with Low Income Housing Tax Credits, private activity bonds, CDBG, HOME, Section 8, public housing, USDA rural housing programs, and other forms of assistance. Tenant Protections. Existing federal tenant protections and rights to participate in decision making about their homes should be extended to tenants in homes funded by Trust Fund dollars. Other housing funds. In addition to establishing a National Housing Trust Fund, we recommend additional investment in affordable housing with substantial increases in HOME, CDBG and USDA Rural Housing programs, as well as an examination of ways to reform the Low Income Housing Tax Credit program to improve access to the program by a wider range of non-profit, community-based housing developers. Substantial increases in the housing voucher program will also be necessary to assure affordability for the lowest income households.
For more information:
Thom Shellabarger at the USCCB, 202 541 3189 or tshellabarger@usccb.org
Lynette Engelhardt Stott at Catholic Charities USA, 703 549 1390 Ext. 130 or lstott@Catholiccharitiesusa.org