Housing Trust Funds

Revenue Sources

The key characteristic of a housing trust fund is that it receives ongoing revenues dedicated by ordinance or legislation. These public sources of revenue are typically generated through a tax or fee, but they could also be bond revenues or other funds that generate income. As many as two dozen different revenue sources have been committed to city, county, or state housing trust funds. Typically, a tax or fee is increased, and the additional revenue generated is committed to the trust fund. But it is also possible to use existing revenues or the growth in revenue from a particular tax or fee or other source. Revenue sources for local and state housing trust funds are generally not federal sources of housing dollars or private contributions, although these sources are often used in combination with housing trust fund dollars to support affordable housing activities. On average, housing trust funds will leverage additional funds by a $1 to $7 ratio. All interest and income earned within the trust fund is usually returned to the trust fund, along with any loan repayments. Thus, the housing trust funds are generating new revenue to support affordable housing, and the ongoing nature of the committed revenue stream makes housing trust funds unique.

Cities, counties, and states are able to commit different revenue sources, based on the fiscal powers each exercises. Cities often use developer fees, property tax, hotel and motel taxes, demolition fees, tax increment district revenues, or fees collected from the conversion of condominiums, among others. Counties are most likely to use document recording fees but may also use other revenue sources. The most common revenue source for states is the real estate transfer tax, but states may use document recording fees, interest from real estate or title escrow accounts, escheat funds, and many others. Revenues collected range from less than $500,000 a year to more than $50 million a year. In total, housing trust funds in the United States have been able to collect close to $1 billion a year, when the economy is healthy.

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