After nearly 15 years, the National Housing Trust Fund (NHTF) is slated to start dispersing funds to states. How can philanthropy support and ensure the success of the program?
This summer, The Department of Housing and Urban Development (HUD) will start to distribute National Housing Trust Fund (NHTF) dollars to states. Then in the coming months, states will start to give grants to organizations to build and operate rental homes that the poorest households can afford. In the beginning, the money will be a trickle compared to the need. But it is a start with more to come if communities can come together to make sure the NHTF succeeds.
The National Low Income Housing Coalition (NLIHC) started the NHTF campaign in 2000. Our goals were simple: rental housing affordable for the poorest people, and big new money. Many twists and turns later, President George W. Bush signed the Housing and Economic Recovery Act in 2008 and the NHTF became law. It was a new federal program with the primary purpose of expanding the supply of rental housing affordable to extremely low income (ELI) households, including people who are homeless. The NHTF had a dedicated source of revenue, 65% of an annual assessment on the volume of business of mortgage giants Fannie Mae and Freddie Mac. While not as “big” as we wanted, it was the first new money for rental housing for ELI people in a generation.
Alas, the celebration was short-lived. When the economy crashed in September 2008, Fannie and Freddie were taken over by the federal government. Their conservator, the Federal Housing Finance Agency (FHFA), suspended their obligation to fund the NHTF. The suspension was finally lifted in late 2014 when the new FHFA director Mel Watt directed Fannie and Freddie to make the first NHTF dollars available in 2016.
Now the action turns to the states, which must develop plans for how best to use the NHTF. The law requires considerable citizen input into these plans. The theory of the bill is that by providing new funds that can be used for both capital and operations (33% of the NHTF can be used for operating assistance or an operating assistance reserve) mission driven developers will be motivated to try new ideas to achieve rents that even the poorest people can afford. NLIHC is working with our state and local partners to train advocates to influence and monitor their states’ implementation of the NHTF.
The role of philanthropy in getting to this point cannot be overstated.
Frank and Allen Melville, assisted by the indomitable Bob Hohler, invested early in the NHTF campaign. They were patient philanthropists who knew it takes time and resources to achieve real change. I can say without qualification that without the generous commitment of the Melville Charitable Trust, the NHTF would not exist today. Philanthropy also can make a significant contribution to assuring successful implementation of the NHTF. NLIHC is grateful to the Kresge Foundation and the Ford Foundation, as well as Melville, for support of our work to train state and local advocates.
I also urge philanthropy to support local developers who are doing the hard work to achieve deep affordability. We know that one way the best developers are able to be successful is in partnership with foundations. The Jeanette and Harry Weinberg Foundation have supported ELI affordable units for people with special needs in projects in Maryland and Illinois, while the Home Funders Collaborative supports housing for ELI families in Massachusetts.
The tragedy is that in the years it has taken to get the NHTF underway the shortage of rental housing that ELI households can afford has become much worse. NLIHC’s latest analysis shows a gap of 7.2 million rental housing units that are available and affordable for ELI households. The gap was less than 3 million in 1999. The need for the NHTF has never been greater and it is critical this first year is a success so Congress will dedicate more revenue to the NHTF in the future.
We are pursuing two sources of revenue that will generate lots of new money. The first is reform of the housing finance reform system. Several such proposals, including one that gained bipartisan support in the Senate, would produce $3.75 billion a year. The second is through reform of the mortgage interest tax deduction (MID), which has been supported by both the Oak Foundation and Ford Foundation. Simple changes to the tax code would reduce the subsidies of million dollar homes owned by upper income households and yield $213 billion in new revenue over ten years. Both ideas will require years of hard work, but as we have learned, persistence pays off.
 Extremely low income is 30% or less of the area median income.