Why Housing Trust Funds Became Unifiers

Local Tools to Address Housing Affordability: A State-by-State Analysis is the fifth annual report produced in partnership with the 49 state municipal leagues. This post is part of a series highlighting findings from this new report.

When it comes to figuring out how to improve housing affordability, cities and states have often found themselves at odds with each other. Housing trust funds, however, have been the rare exception.

Established by legislation or ordinance, these funds are ongoing, public funding for the development of low-income housing. They have been a primary source of funding for affordable housing creation in this country.

Housing trust funds create a unique opportunity for state- and city-level governments to work together and support each other’s efforts to create more affordable housing. Unlike with other tools in the affordable housing toolbox, hurdles like state preemption and competing for funding sources are not an issue. While state funds are often larger, some city governments have also created very robust funds. According to the Housing Trust Fund Project, in 2018 local funds in 109 cities and the District of Columbia totaled over $1 billion.

One example of a successful city-level housing trust fund can be seen in Juneau, Alaska, a city with a population of just over 30,000.

Juneau determined that 85 percent of its residents made less than $35,000 and that, in 2010, approximately 1,200 households were rent-burdened. Many of the residents in this category were found to be youth, special needs residents, veterans and seniors.

That year, the city established a housing trust fund, seeking to fill a local need for more affordable housing options in the absence of a state-level fund. The fund seeks to expand:

  • Use of capital to develop housing units
  • The number of one-bedroom rental units for low-income residents
  • Long-term affordability

Ultimately, the city is working to ensure the trust fund remains sustainable. With over $400,000 in the fund and two years’ worth of operating costs in reserve, Juneau is tackling the need for affordable housing for its residents, with a particular focus on workforce housing to ensure that Juneau workers have affordable housing options.

Forty-seven states and the District of Columbia have state-level housing trust funds in place to bolster development of affordable housing. Local city- and county-level funds are also an extremely important part of the housing trust fund landscape. In our analysis of housing affordability tools, we found that:

  • 33 states and the District of Columbia have both state and city-level trust funds
  • 14 states have state-level housing trust funds but no city-level funds
  • 2 states do not have state-level funds but do have city-level funds
  • 1 state does not have state- or city-level funds
Source: National League of Cities

Housing trust funds provide vital funding for increasing the stock of affordable housing in cities, towns and villages across the country. State- and city-level trust funds are, in many cases, complementary funds that increase the development of affordable housing and work in tandem with other housing policies to meet the specific needs of the local population.

They’re proof that, when cities and states can work together on tried-and-true policies, all communities can benefit.

Brenna Rivett small


About the Author: Brenna Rivett is a principal research associate at NLC’s Center for City Solutions.