Congress is learning this year what more than 170 towns, counties, and states already know: that we need more housing, and housing trust funds are one of the best ways to meet the need. The Northeast Ohio Coalition for the Homeless and the Cleveland Tenants Organization have received support in its advocacy of a National Housing Trust Fund from a new study that shows a $50 billion fund would generate 1.8 million jobs and nearly $50 billion in wages. A good chunk of that impact may be felt in Ohio if Congress creates the fund.
Home Sweet Home: Why America Needs a National Housing Trust Fund by Washington, D.C.- based non-profit Center for Community Change builds the case of 1,000 grassroots groups and others who advocate creating a federal version of a more than 0-year-old affordable housing funding vehicle that has a 99.8 percent success rate and leverages on average $9 for every $1 of direct investment. More than 170 cities and towns, counties, and states have used housing trust funds to build more than 2000,000 units of affordable housing.
2% of the renters in Cleveland pay 50% or more of their income toward rent, and every year 24,000 people become homeless in Cleveland. “Housing Trust Funds are the flexible funding source that communities need to develop affordable housing, says Andy Mott, executive director of Center for Community Change, CCC, a 32 year-old- policy and action resource for community organizations. “A national fund is the best response to the disappearing federal dollars and increasing nationwide need for affordable housing.” CCC has helped create more than 50 such funds across the county since 1986.
A $5 billion National Housing Trust Fund will directly generate 184,300 construction jobs with approximately $4.9 billion in wages and will leverage an additional 1.6 million jobs paying an additional $44.6 billion in new wages, according to the Home Sweet Home analysis, which used a Department of Commerce-sanctioned statistical analysis method, RIMS II. The analysis assumes 25 percent of a $5 billion investment will help construct single-family homes, 65 percent will help construct multi-family homes, and 10 percent will fund maintenance and repairs.
Cleveland has seen a significant loss in subsidized buildings for families over the last five years. Bills now in Congress, S. 1248 and H.R. 2349, would draw on surplus finds in two housing-related federal programs, the Ginnie Mae Fund and the Federal Housing Administration’s Mutual Mortgage Insurance. MMI, Fund. Surplus is defined as the amount over what government financial managers deem necessary to insure the safety and soundness of funds.
An accounting firm hired by the FHA to monitor the MMI fund pegged its value at $17 billion at the end of fiscal year 2000. This represents about 3.51 percent of the Fund’s insurance-in-force – well above the Congressionally required minimum of 2 percent. Both Ginnie Mae and the MMI funds insure the government can pay obligations related to foreclosures on guaranteed loans. Currently surpluses in these funds go to subsidize other operations of the federal government.
The bills, sponsored by Sen. John Kerry (D-Mass.) and the U.S. Rep Bernie Sanders (Ind.-Vt.), were introduced this summer to fanfare from a national campaign that counts nearly 1,000 local, state and national organizations, elected officials, and others who have officially expressed support for the idea of a National Housing Trust Fund.
“The need is there, the solution is there, and the funding is there, as well,” says Andy Mott of CCC.
Home Sweet Home bolsters the case for a national fund in other ways besides the economic impact argument.
Housing trust funds have three characteristics: dedicated sources of ongoing funding, a commitment to production and preservation of affordable housing, and the fact that they represent money not otherwise used to address housing needs, such as federal HOME or CDBG dollars. Trust Funds exist in towns from Alexandria, VA. To West Hollywood, Calif. and everywhere in between, in more than 34 states and 100 other governmental bodies.
Typically, states fund them with real estate transfer taxes, developers’ fees, contributions, and other sources. Advocates of the idea note that governmental bodies often earmark funds for certain projects, such as using gas taxes for road and highway projects. Other factors supporting the call for a National Housing Trust including the following:
Certain households are shut out of the housing market: Low-income households seeking stable housing have not benefited from the growing U.S. economy. Inadequate wages, high living costs and housing shortages make it difficult for low-income and working families to purchase or rent a home.
Despite an overall increase, home ownership rates fall for those less well off. Today, 44 percent of American families cannot afford to purchase a home, an increase from 40 percent in 1988. The number of subsidized housing units in decreasing, as well. Another factor is the amount of poor-quality housing, which ranges from 10 to 13 percent of the housing stock in much of the country.
Children make up a third of those in substandard housing, and are more likely to suffer ill effects from that housing, such as asthma and lead poisoning. New research also points to the benefits a stable home brings to young people’s education. One report found that the more times child moves, the more likely her reading scores are to suffer.
The report finds that substandard housing, overcrowded conditions or paying over 30% of a family’s income toward housing affects one out of every four Ohio residents. Similar housing needs afflict one out every three-minority residents in Ohio.
Copyright NEOCH published 2001 Issue 50