Pennsylvania Nonprofits Advocate to Fund State’s Housing Trust Fund

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November 14, 2013; Pittsburgh Post-Gazette

What is a housing trust fund that has little or no money? It is a resource that can’t deliver for the needs of lower-income people who need improvements in housing conditions and housing affordability. In 2010, the Pennsylvania legislature created the Pennsylvania Housing Trust Fund, but didn’t put any money into it.

According to Post-Gazette writer Kate Giammarise, the Trust Fund was meant to support rental assistance for families in danger of becoming homeless, the rehabilitation of rental housing for low-income families, modifications of housing to accommodate the elderly and people with disabilities, and demolition of blighted properties.

Advocates are pushing for a $25 million appropriation for the fund. So far, the state legislature has authorized only $5 million annually from the Marcellus Shale Impact Fee, but for use only in counties with shale drilling, which would omit 30 of the state’s 67 counties from access to the Trust Fund.

Liz Hersh, the executive director of the Housing Alliance of Pennsylvania, is one of the leaders of a campaign launched this week to  “fund the fund”.  Hersh said that the $25 million would be on top of the $5 million anticipated from the shale fee. The key to a trust fund, however, is dedicated sources of revenue, so that the fund isn’t dependent on year-to-year legislative appropriations. Hersh said that the Alliance is reviewing various potential revenue sources, though she wouldn’t say which ones.

Hersh and her allies have a number of models of state and even local housing trust funds to draw on. In Darien, Connecticut, a housing trust fund is being created, capitalized by funds from private developers who in lieu of providing inclusionary affordable units in their developments can make a cash payment to the fund. Jersey City has a trust fund to which developers contribute in exchange for their access to tax incentives for their developments. Longtime affordable housing advocates Mark Schwartz of Regional Housing Legal Services and John Paone, the former executive director of the Philadelphia Housing Authority, have proposed the capitalization of the Philadelphia Housing Trust Fund with 10 years of annual contributions by the winning bidder of the city’s new casino gambling license.

The Housing Trust Fund Project of the Center for Community Change identifies 47 states and the District of Columbia as having created 57 state trust funds (some states have more than one). Hersh and the Alliance have a number of models of dedicated revenue to consider based on these other state housing trust funds: interest on real estate escrow accounts (WI, MN, CT), real estate transfer taxes or fees (WV, VT, SC, NJ, IA, IL, HW, DC), document recording fees (CT, DE, IL, WA, VA, OR, FL, NE, MA, KY, DC), national mortgage settlement funds (VA, NE, MI, CO), unclaimed personal property funds (AZ, SD), interest on tenant security deposits (OR), and smokeless tobacco tax  revenues (IN), in addition to revenues dedicated from general obligation bonds.

In each instance of a state housing trust fund, it was nonprofit housing advocates who mobilized to press the states to do more for low-income households in need of decent, affordable housing. Pennsylvania’s shale fee is a unique dedicated revenue source, but small and geographically limited. Whatever decision the Pennsylvania state legislature makes on the Keystone State’s housing trust fund, the advocacy of the state’s nonprofit housing groups will be key.—Rick Cohen

  • Liz Hersh

    Pennsylvania’s State Housing Trust Fund is already at work on a small scale in the state’s rural part counties where “fracking” for natural gas has had an impact on the housing market. What’s exciting, and what’s fueling this new campaign, is that the trust fund is working. As a result of the $16M investment to date, over 1800 affordable homes are in production (mostly rehab either with or without the Low Income Housing Tax Credit) and it is leveraging over $160M in new funds – 10X its initial investment. A 2009 economic impact study by Econsult Corporation found that multifamily rehab through a trust fund produces 20 jobs for every $1M spent meaning that the investment so far results in a projected 334 jobs. And housing in PA results in demand for goods and products manufactured here.

    The success of this “pilot” is fueling expansion of the program – it is proven, accountable, transparent and locally driven. It enables local communities to tackle blight, reduce homelessness and bolster the rental market which has been battered by the recession. It is producing jobs and helping the most vulnerable people who have suffered the most in the economic downturn. PA still has a nearly 8% unemployment rate and is 47th in job creation.

    The trust fund is a win-win, worth the investment and a promising approach for families, communities and the local economy. Stay tuned.