What is a Housing Trust Fund?

Alex Tree
Alex Tree
Businessman with a briefcase
Businessman with a briefcase

A housing trust fund is a fund established by a regional or local government that mandates the utilization of public revenues to fund affordable housing initiatives. Such housing projects may include new construction of housing facilities, preservation of existing ones, and emergency repairs. Projects can also include construction of homeless shelters, multi-family buildings, and other housing-related government services. Housing trust funds are created by virtue of regional legislation or a city, county, or town ordinance.

With a housing trust fund, a government can allocate a portion of its annual budget for the purpose of funding affordable housing projects. This type of fund is open to private donations, but this does not entail a certain public-private partnership. No one profits from the funds, not even the government itself. Any earnings derived from an affordable housing project are used for the establishment of new housing facilities and the improvement of existing housing projects.

Once established, a housing trust fund is aided in its operation by using its own revenue to support affordable housing projects in a certain locality. Unlike charitable, educational, or retirement trust funds, it does not have a fixed source of funding from corporations, foundations, or financial institutions. It is a regionally or locally funded initiative, but it is completely independent.

As of June 2009, there are about 600 housing trust funds operating in states, cities, and counties in the United States. Among these, 38 are state housing trust funds. All of these combined earn a total of $1.6 billion US Dollars (USD) annually, which is used to support housing needs in many parts of the country. The number of housing trust funds in the United States has doubled from 2004 to 2009.

In most cases, housing trust funds are flexible enough to support various ways of addressing a particular housing need. These trust funds may be used depending on how the government wishes to make use of the money that originally established the fund. The trust fund may provide critical housing funding that could serve a small town with a population of 1,000 or a metropolitan city in the largest state in the country.

Creating affordable housing projects funded by a housing trust fund is merely one of the many ways to address critical housing problems in a community. Governments have a stake in ensuring that their citizens live in decent homes. In the US, legislators have even been compelled to attempt to create a national housing trust fund.

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