National Housing Trust Fund
The National Housing Trust Fund (NHTF) was established as part of HERA 2008, and will provide communities with funds to build, preserve and rehabilitate rental homes that are affordable for extremely low and very low-income households. Program funds have now been released to the states.
The NHTF is a permanent program, with a dedicated source of funding not subject to the annual Congressional appropriations process. Funding comes from the operations of Fannie Mae and Freddie Mac, and there is no requirement that states provide matching funds.
It is targeted toward rental housing. At least 90% of the funds must be used for the production, preservation, rehabilitation, or operation of rental housing. Up to 10% of the funding may be used for homeownership for first-time homebuyers.
The program is targeted to extremely low-income households. At least 75% of the funds for rental housing must benefit extremely low-income households (30% of AMGI or 30% of the poverty level, whichever is higher) and up to 75% can benefit very low-income households 50% of AMGI).
How is the money distributed and administered?
The money is distributed as block grants to states by a formula developed by HUD. 75% of the formula has been given to two factors that reflect the shortage of rental housing that is affordable and available to extremely low-income households, and that reflect the extent to which extremely low-income renter households are paying more than half of their income for rent and utilities.
The funds will be administered by state agencies. To date, nearly 40 states have named the administering agencies.
Each state must prepare an annual allocation plan showing how it will distribute NHTF resources based on prioritized housing needs. The allocation plan must give priority for funding based on the following factors:
>Geographic diversity as reflected in the state’s Consolidated Plan;
>The extent to which rents will be affordable, especially for ELI households;
>The length of time rents will remain affordable;
>The merits of an applicant’s proposed activity (e.g., housing accessible to transit or employment centers; housing that includes greenbuilding and sustainable elements; and housing that serves people with special needs);
>The use of other funding sources; and
>The applicant’s ability to obligate the NHTF dollars and undertake the funded activities in a timely manner.
States must commit funds within two years. Uncommitted funds will be recaptured by HUD and distributed to other states. All funds must be spent within five years.
HUD’s interim NHTF regulations establish maximum rents for NHTF units at no more than 30% of the greater of either 30% of the federal poverty line or 30% of the AMGI.
The interim rule requires units to be affordable for at least 30 years.
The statute considers the NHTF to be “federal financial assistance” for the purposes of federal civil rights laws, meaning that properties will be subject to Section 504 of the Rehabilitation Act of 1973, the Age Discrimination Act of 1973, and the Uniform Relocation Act. However, use of NHTF funds will apparently not trigger Davis-Bacon prevailing wage rates.
Developers interested in potential participation in the program should contact the Agency in their state that will be administering the program.