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Housing trust funds are established by city, county, or state governments to financially support the preservation and production of affordable housing, and to increase opportunities for low-income families and individuals to access decent homes. Local housing trust funds are established by elected government bodies when a source or sources of public revenue are dedicated, by ordinance or law, to a distinct fund with the express and limited purpose of providing affordable housing.
Local housing trust funds are flexible and can be used to support innovative methods of addressing many types of housing needs. Generally local housing trust funds rely on more than one source of revenue to generate income, including taxes, interest on government assets, and/or developer fees. Once the housing trust fund generates a sizable income pool, revenue may be used for a variety of housing programs, including new construction, rehabilitation, down-payment assistance, special needs housing, or homeless programs. The key is to have a clear set of goals and then tailor the procedures and programs that flow from the trust in a way that assures that housing needs are met while retaining enough flexibility so the fund can adapt to changes in the market.
The model can work in virtually any situation. Housing trust funds have been created to serve small towns of about 1,000 people as well as large cities and counties. These funds are also very efficient due to their ability to leverage other funding sources, including the Local Housing Trust Fund (Matching Grant) Program (LHTFP) administered by the California Department of Housing and Community Development. Many housing trust funds report highly successful track records and, as a whole, have generated more than $1 billion annually to support affordable housing throughout the country.