Housing trust funds

Housing trust funds (HTFs) are a suggested strategy to increase affordable, quality housing options^{1, 2} and minimize the displacement of residents with low incomes that can follow such neighborhood improvements³. Housing improvements have been shown to positively affect health outcomes, especially when improvements address warmth and energy efficiency⁴. HTFs may help meet the housing needs of families with low incomes, including the needs of those with the lowest incomes⁵; program funds are typically designated for these families⁶. In a Florida-based study, HTFs appear to increase affordable housing initiatives across the state, from rural counties to large urban centers⁷. A Washington, D.C.-based study suggests that HTFs in conjunction with other programs and policies can support affordable housing options⁸. However, additional evidence is needed to confirm effects.

HTFs can prioritize energy efficiency improvements for affordable housing units, which can reduce energy use and expenditures^{9, 10}. Many households with low incomes spend 20% or more of their income on energy costs⁹; heating is usually the largest household energy expense, often comprising 35% to 50% of annual energy bills¹⁰. Experts suggest HTFs that help households reduce energy use for heating can substantially reduce household greenhouse gas pollution that contributes to climate change, improve rent stability, and improve residents’ quality of life^{9, 10}.

Households experiencing energy insecurity usually include children, racial or ethnic minorities, and long-term residents of neighborhoods with homes in poor condition¹¹. Black households experience the most severe energy insecurity, which experts suggest may be a product of residential segregation and housing discrimination^{11, 12}. HTFs that are part of multi-component initiatives that include weatherization assistance and energy efficient home improvements may improve the quality and value of homes, which supports potential wealth accumulation, addresses the disproportionate burden of energy insecurity on Black households, and helps reduce the racial wealth divide¹². HTFs that increase paths to homeownership and support homeowners with low incomes may help reduce the racial wealth divide, since a significant part of the racial wealth divide at all income levels relates to lower homeownership rates and lower home values for people of color^{13, 14, 15}.

HTFs can be used to create and support mixed-use and mixed-income housing developments⁵. Local agencies or governments may allocate funds from HTFs to serve groups that are not eligible for other forms of housing support and close funding stream gaps¹⁶. HTFs can also partner with other housing development funds to expand their reach; such partnerships can create jobs in housing development and new homes have economic benefits such as increasing local revenue from property taxes, income taxes, and sales taxes⁵. HTFs may be more successful when established with dedicated funding from multiple sources, managed within the context of other affordable housing programs, and provided with data on local housing needs and feasibility reports¹⁷.

As of 2022, there are more than 800 housing trust funds (HTFs) in cities, counties, and 49 states, which generate nearly $3 billion annually to support affordable homes¹⁸. Washington, D.C.’s Housing Production Trust Fund is an example of a fund focused on a metropolitan area; since 2015, it has produced more than 6,000 units of affordable housing¹⁹. Non-profit organizations may manage HTFs on a larger scale: the National Housing Trust (NHT) preserves and improves affordable housing in communities across 13 states and Washington, D.C. The NHT also works to promote energy efficiency and sustainability for residents with low incomes; the NHT approaches energy efficiency with a combination of policy advocacy, green lending, renewable energy, and sustainable development initiatives to reduce housing costs, improve housing quality, and reduce environmental impacts²⁰. State-level HTFs are often administered by governmental housing finance agencies⁶.

The National Housing Trust Fund (NHTF) is permanently authorized by the Housing and Economic Recovery Act of 2008²¹. The U.S. Department of Housing and Urban Development (U.S. HUD) allocates HTF funds annually to states and state-designated entities; all HTF-assisted housing units have a mandated minimum affordability period of 30 years²².