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LOCAL GOAL:  Louisville Metro creates a local Affordable Housing Trust Fund (AHTF) funded annually by $10 million in ongoing dedicated, public revenue to help meet the housing needs of the economically vulnerable of Louisville. 

Program:  Purpose and Uses

The public, renewable, dedicated revenue of the local AHTF will target households earning less than 80% AMI and have a 50% set-aside for households earning less than 50% AMI.  The funds will be awarded by the governing board through both loans and grants.  Examples of what programs could be funded by the trust include home ownership assistance, lifetime affordable rental housing, housing counseling, or rehabilitation, support services required to receive housing grants, foreclosure intervention, Individual Development Accounts.  Funds can help develop or rehabilitate rental or home ownership housing.

All projects receiving trust fund money must be in compliance with local, state, and federal regulations, including the Disabilities Act and the Fair Housing Act.  

Trust Fund Governance and Administration 

The Louisville Metro Department of Housing and Community Development shall administer the local housing trust fund, as governed by a community-based governing board that has the following characteristics:

The board will have regulatory power, choosing which projects are to be funded, managing the fund, and establishing rules for distribution of monies. 

The board will consist of 13 members to be appointed by both the Mayor and the City Council, that will represent Metro Louisville demographically who serve no more than 2 terms of three years.  

The following constituency is the recommendation of the Mayor’s Task Force:

1 member from the banking community

1 member At-Large

1 eligible or current affordable housing consumer

1 low income housing advocate

1 Metro-Council member

1 neighborhood representative

1 member from the Metro Government directly reporting to the Mayor

1 non-profit developer

1 social service provider

1 member from the Homebuilders Association of Louisville

1 member from the Apartment Association of Louisville

1 representative of homeless individuals

I member from the Greater Louisville Association of Realtors

______Revenue Sources______

Dedicated ongoing public revenue sources that Louisville Metro can enact now, without state legislative changes, to be pursued with Metro Council immediately:

3% Rental Car Fee – KRS 68.200 states revenues from this fee must go to economic development activities.  The Revenue Committee asserts that housing is an economic development activity (see Economic Benefit analysis). 3% of gross rental charges for rentals up to 30 days.

Dedicated ongoing public revenue sources that require state legislative changes, to be pursued in the 2007 General Assembly session:

Restaurant Fee – Percentage of total sales on restaurants that serve alcohol. Change KRS 91A.400 to authorize merged governments to levy a restaurant tax for an AHTF.  Currently only fourth and fifth class cities may levy the fee, and it currently must go to tourism. Many service industry workers, including restaurant staff, do not earn enough to obtain and sustain housing for their families near the work site. The Trust will benefit restaurants by helping maintain a stable workforce through offering working families a chance for affordable housing near the work site. Precedent is Miami 1% tax with revenue to homeless services, with 15% to domestic violence services.  Implementing a restaurant fee of 3% (the cap) is estimated to generate $12 million annually in Louisville Metro. 

Increase All County Clerk Fees for merged governments by a percentage and dedicate the increase to the Trust. 

Dedicate the County Clerk Surplus to the AHTF.  Current surplus is estimated at $3 million.

Revenue sources that Louisville Metro can enact now but which require annual reauthorization (and therefore are not dedicated ongoing public revenue):

$2 million General Fund Commitment from Metro Council to capitalize the fund 

Commit Annual Arena Bond Surplus to the Trust – Metro Council has pledged to pay the difference between the revenue generated by the new arena and the $10 million/year commitment to repay the bond. A surplus is projected and has not yet been allocated.  Many service industry workers, including workers at the arena, do not earn enough to obtain and sustain housing for their families near the work site. The Trust will help maintain a stable workforce through offering working families a chance for affordable housing near the work site.

Metro Bonds Financing, if any are issued, including provisions for the Trust

______What are Housing Trust Funds?______

Housing trust funds are an exciting new model for funding critically needed affordable housing.  Housing trust funds were created as early as the mid-1970s, but they did not really become a trend until the late 1980s and into the 1990s. There are now over 400 housing trust funds in cities, counties and states. Altogether they have spent nearly $1.5 billion building and preserving hundreds of thousands of affordable housing units.

Housing trust funds provide a very flexible way for governments to commit resources to provide decent affordable housing. They have generated needed funds, addressed critical housing needs and created new partnerships to build long-term support for housing.

What makes Housing Trust Funds unique?

Housing trust funds are unique in that they benefit from a dedicated source of ongoing dedicated revenue, specifically through ordinance or legislation. That revenue is committed to producing and preserving housing affordable to lower income households. 

Housing trust funds are extremely flexible and thus can be used to support innovative ways of addressing many types of housing needs. The model can work in virtually any situation. They exist in small towns of about 1000 people as well as in the largest states in the country. These funds are also very efficient. Only two-tenths of one percent of the units funded through housing trust funds did not get built. This is a record of accomplishment that any government program would envy.

Trust funds have been used very productively. On average, each dollar spent by a housing trust fund leverages seven dollars in additional funding for housing, such as loans from banks.  These funds are usually administered by government entities, such as a city housing department, which award funds through a competitive application process.

Types of Programs Other Trust Funds Have Supported

The vast majority of housing trust funds make awards through a number of vehicles: grants, loans, forgivable or deferred loans, lines of credit or rental assistance. Very few limit the form awards can take. In this area, legislation is usually broad, allowing a range of approaches to be developed by the advisory board. 

Increasingly, housing trust funds are experimenting with creative ways to use their funds. Some are providing long-term rental assistance, while others are requiring that a certain amount of leverage be included in the applicant’s financial package. Some trust funds use resources to guarantee other funds, and others have combined funds with bond issuances to extend the reach of these funds. The success of such efforts has been primarily due to the genius of those designing the programs. But there is a growing field of experience that provides many models to consider.  The funds can be used for support services required for grants for supportive housing or for foreclosure intervention programs.