Initial HTF Awards to Be Distributed to Qualifying Recipients This Summer
In anticipation of funding from the National Housing Trust Fund (HTF) this year, housing agencies have been developing allocation plans and seeking input from constituents. The HTF is the newest source of affordable housing funding. It is a new rental housing program for extremely low- and very low-income households that was created by the Housing and Economic Recovery Act (HERA) of 2008.
HERA required Fannie Mae and Freddie Mac to transfer a percentage of their new business to finance the HTF, but before any contributions were made, Fannie Mae and Freddie Mac were placed in conservatorship and their conservator suspended contributions to the HTF. On Dec. 11, 2014, FHFA announced that it was directing Fannie Mae and Freddie Mac to begin setting aside funds for the HTF beginning Jan. 1, 2015.
Each state will decide whether its housing finance agency or another state entity will receive these grants, which will be allocated according to a needs-based formula developed by HUD. HTF funds may be used for the production or preservation of affordable housing through the acquisition, new construction, reconstruction, and/or rehabilitation of non-luxury housing with suitable amenities. All HTF-assisted units will be required to have a minimum affordability period of 30 years. Eligible activities and expenses include real property acquisition; site improvements and development hard costs; related soft costs; demolition; financing costs; relocation assistance; operating cost assistance for rental housing; and reasonable administrative and planning costs. And eligible forms of assistance include equity investments; interest-bearing loans or advances; non-interest-bearing loans or advances; interest subsidies; deferred payment loans; grants; and other forms of assistance approved by HUD.
The HTF statute requires that at least 75 percent of the funds for rental housing benefit extremely low income (ELI) households or households with incomes below the federal poverty line. Up to 25 percent of the funds for rental housing may benefit very low-income (VLI) households (those earning less than 50 percent of area median income). Many of the compliance provisions for HTF are modeled around those of the HOME and Low-Income Housing Tax Credit (LIHTC) programs.
HTF implementation is expected to start when HUD publishes formula allocations in the Federal Register in March or April. HUD Secretary Julián Castro anticipates that states will receive their HTF allocations by summer 2016.