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Just what is a housing trust fund and how might it work in Hburg?

Many families have been affected by Harrisonburg’s tight housing market. Here, in this photo from 2019, Brandon Banks with children Zoe and Zamari stand on the front porch of the duplex the Banks family rents with the assistance of the Harrisonburg Redevelopment and Housing Authority. Photo by Randi B. Hagi

By Sky Wilson, contributor

As city leaders, organizations and advocates have debated ways to address Harrisonburg’s housing crunch, the concept of establishing a housing trust fund kept popping up. 

Establishing such a fund, in fact, was the 15th out of the 17 suggested priorities that representatives from Pennsylvania-based firm Mullin & Lonergan Associates, Inc., presented Tuesday to the council. But for such a low ranking, it played an outsized role in the discussion, prompting Mayor Deanna Reed at one point to ask why it wasn’t ranked higher. (The answer? Money. Cities like Harrisonburg aren’t exactly flush with extra tax revenue at the moment.) 

Still, the consultants said it’s one potential tool to help provide more affordable housing for families in a city that doesn’t have much available, whether it’s rental units for families or homes that cost less than $200,000.

Reed told The Citizen earlier this month she believes the city should pursue setting up such a trust fund. 

“But how we’re going to do that is what I’m eager to see,” she said. 

And that’s the challenge. 

Marjorie Willow, a principal with Mullin & Lonergan, said city leaders and residents shouldn’t get too hung up on the trust fund concept being 15th because she said it could be a valuable part of the solution, just not a quick one.

“Establishing a housing trust fund is a critical priority, but it will take time to capitalize that fund and deploy those resources. The list of recommendations is a prioritization for implementation and should not be interpreted as downplaying the importance of a HTF,” Willow told The Citizen. 

So how exactly does it work?

Housing trust funds are established by a government — either a city, county or state — and receive public funding on an ongoing basis. This money is used to create new affordable housing, preserve or renovate that which already exists, and to remove boundaries or otherwise make that housing more accessible to residents.

A key element of housing trust funds is their flexibility. 

There are more than 800 housing trust funds throughout the country, according to the Housing Trust Fund Project, a progressive group which advocates for this type of funding across the country. Each of these housing trust funds responds uniquely to the needs of its own city, county,or state.

Common ways municipal housing trust funds are used include: 

  • establishing rental housing for low income families;
  • funding new construction or repair of existing construction;
  • improving energy efficiency;
  • giving assistance to homebuyers on making down payments;
  • and addressing the needs of the homeless, elderly or other special populations.

It is unclear what focus Harrisonburg might take if the council moves forward with establishing a housing trust fund. In November, Mullin & Lonergan reported that the biggest barrier to housing in Harrisonburg was its cost burden to lower income households. In 2020, the Harrisonburg Redevelopment & Housing Authority counted 125 homeless or unhoused people living in city limits. 

Mullin & Lonergan also identified Harrisonburg as needing a greater number of affordable housing options and smaller units.

The firm’s report described Harrisonburg’s housing market as comparable to other big college towns in the region, including Morgantown, West Virginia, and State College, Pennsylvania, which are characterized by a “very strong market with a very, very low, a too-low vacancy rate, especially among rentals.” Neither State College nor Morgantown has a city-level housing trust fund. 

Where does the money come from?

While housing trust funds aim to provide a steady and continuous stream of money to offer more affordable housing, they aren’t endowments that rely on investment interest or other earnings. They also aren’t public-private partnerships, although they can sometimes accept private donations.

The dedicated revenue for other cities’ housing trust funds comes from varied sources, including property taxes, or specific taxes like what people pay on their hotel/motel bills, as well as developer fees, proceeds on public land sales and bond revenues. The most common source of city funding for housing trust funds are taxes and fees connected to properties and developments.

“Most, but not all, [housing trust funds] receive dedicated sources of funding that provide extremely flexible options to support innovative ways to address many housing needs,” Amanda Love, spokeswoman for the Virginia Department of Housing and Community Development told The Citizen.

Most cities start their funds with an initial investment of public dollars. That’s part of why Mullin & Lonergan Associates didn’t rank it higher: 2021 would be a tough year to start one amid a pandemic-induced budget crunch. 

What other places use them?

Local housing trust funds exist in many places, from large cities such as Philadelphia (population of 1.5 million) to small towns like Hood River, Oregon, (population 8,000).

Six Virginia cities have such trust funds: Alexandria, Arlington, Charlottesville, Fairfax, Norfolk and Richmond. 

Virginia also has a state housing trust fund administered by the Virginia Department of Housing and Community Development. The state housing agency doesn’t oversee the local  trust funds in any way or restrict localities from using state funds in addition to local money, Love said. 

“Since the cost of living, cost of construction, and cost of housing and housing affordability varies from locality to locality, state resources are often combined with local resources,” she said. 

Charlottesville established its housing trust fund in 2007. 

The Charlottesville Affordable Housing Fund focuses on “promoting, preserving and producing quality, long-term affordable housing options,” as well as related services to help low-income and moderate-income households, according to the program’s site

The amount of money the city puts into the fund has varied over the years. Since 2007, the city has allocated more than $20 million to it. 

Both Harrisonburg and the city of Charlottesville are small — fewer than 55,000 people each (although the wider Albemarle County area is more populous than Harrisonburg’s surrounding area).  

So “what is the advantage of a small community doing this? The trust fund fuels a positive feedback loop by attaching money to local priorities,” said Michael Anderson of the Housing Trust Fund Project, an initiative by the Oregon-based Center for Community Change. “It becomes a magnet for bringing in other state, federal, and philanthropic resources.” 

According to a 2016 Housing Trust Fund Project survey, cities leveraged an average of $6 for every dollar invested in a trust fund — an effect that ripples through a local economy when more families have secure and affordable housing.  

“Many housing trust funds report highly successful records of accomplishment addressing a wide range of critical housing needs,” said Love of the Virginia housing department.

What’s next for Harrisonburg?

The city council would need to vote to approve creating a trust fund — a move that doesn’t appear imminent after Tuesday’s meeting. 

Although the Harrisonburg Housing Trust Fund is not first on the city’s immediate “to-do list,” it appears to be firmly on city leaders’ radar. 

That’s why it was included in the consultants’ report, presented to the council Tuesday. The report also called for the city to hire a city housing coordinator and to provide incentives and zoning changes to encourage more developments for middle-income households. Representatives of local service agencies and grassroots organizations dealing with housing needs also expressed their interest last fall in establishing a housing trust fund

“I think the outlook for the city establishing a housing trust fund is very good,” said Willow of the consulting firm that did the study for the council. “Several of the recommendations…[are] either generating new sources of revenue or re-allocating existing funds…These initiatives are necessary to lay the foundation for the establishment of the” trust fund.


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