Rental help for poor folks on chopping block

You can't point to any particular affordable housing project in Chicago, in another city in Illinois, or in any other part of the country and say it was financed by the National Housing Trust Fund. The fund does indeed exist, but its coffers have never been filled.

And now the fund--intended to help people with their housing costs, in particular, very poor renters-- could be eliminated altogether.

A little background. The National Housing Trust Fund was included in the Housing and Economic Recovery Act of 2008, a bill signed by former President George W. Bush that was supposed to assist homeowners falling behind on their mortgage obligations and soothe financial markets.

The trust, to use the language from the original legislation (PDF), is supposed to "increase and preserve the supply of rental housing for extremely low- and very low-income families, including homeless families; and to increase homeownership for extremely low- and very low-income families."

Initially, the trust was supposed to be funded with contributions from Freddie Mac and Fannie Mae, "government-sponsored enterprises" that were at the heart of the recent housing boom and bust. But the foreclosure crisis meant Freddie and Fannie never paid their obligations to the trust, said Amy Clark, a spokeswoman for the National Low Income Housing Coalition.

Other efforts from the White House and a few Democratic members of Congress to capitalize the trust have thus far failed to make it through the thicket of debate about the federal budget and government spending, according to the coalition.

Last week, on July 12, the House Financial Services Subcommittee on Capital Markets and Government Sponsored Entities passed H.R. 2441, or the Housing Trust Fund Elimination Act of 2011, with 18 Republicans voting in favor and 14 Democrats voting against.

As its title suggests, the bill terminates the existence of the fund (as well as two other others), and requires that all of their dollars instead be spent on paring down the federal government deficit.

U.S. Rep. Ed Royce (R-California), who sits on the subcommittee that passed H.R. 2441, called the trust duplicative, too expensive and criticized its "likelihood for fraud and abuse" in a press statement. Democratic and Republican members of the subcommittee also parried about the trust and the now-defunct organization ACORN, according to the National Low Income Housing Coalition.

If Congress and the White House agree to find a way to fund the trust, state housing agencies would apply for grants from it and distribute the funds to various entities to pay for costs related to affordable rental housing development. Property acquisition, site improvements and hard costs are just a few of these things allowed, according to a  list provided by the Department of Housing and Urban Affairs, which administer the trust. Eighty percent of the grants would be required to go toward affordable rental projects.

Bob Palmer policy director for Housing Action Illinois, said creating such a rental-centric trust has long been a goal of affordable housing advocates. "Basically the reason why we need a National Housing Trust Fund is there is no federal program focused on creating rental housing for extremely low-income households," he said.

The Department of Treasury's federal low-income tax credit program, Palmer said, serves people with incomes of close to 60 percent of the area median income (nearly $45,000 for a family of four in the Chicago region).

The trust, by contrast, specifically targets "extremely low-income" households with incomes at 30 percent or below the area median or "very low-income renter households," who earn incomes between 30 and 50 percent of the area median.

A household at 30 percent of the area median earns $22,440, the National Low Income Housing Coalition's 2011 rent-and-wage calculator states. Fifty-four percent of renters in the Chicago region can't afford fair market rent here, according the to the calculator.

"The housing trust fund would fill that niche," Palmer said.

But first it must avoid elimination -- H.R. 2441 now goes before the full House Financial Services Committee. And then the trust must find a funding stream.

© Community Renewal Society 2011

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