Housing Trust Funds

This approach has achieved wide popularity and may signal renewed local attention to housing need. To date, fourteen states and four cities have enacted laws to enable the establishment of a housing trust fund, or are considering doing so. A housing trust fund is simply a pool of funds set aside for housing development. The pool is usually capitalized from a special source apart from the normal tax base, and fund revenues may be used to create new programs or to supplement existing ones.

San Francisco's Office/Housing Production Program (ohpp) was the first U.S. example of a housing trust fund. Established in 1980, it was based on the principle that newly constructed office space draws new workers to the city and intensifies the demand for housing. As pressure on the housing market increases, the price of housing is driven beyond affordable levels. The ohpp program requires office developers to build additional housing units or to make contributions to a trust fund for that purpose.

Three years after the San Francisco fund was established, Boston developed its "linkage" program based on the San Francisco model. Like San Francisco, Boston linked downtown commercial development to housing affordability and required developers to make a contribution of five dollars for every new square foot of office space constructed. The use of these funds is limited to low-income housing development.

Since 1981, $28.9 million has been contributed to the San Francisco fund, and the program has been responsible for the development of nearly 5,300 units. The Boston fund, enacted in December 1983, has raised $43 million for low-income housing projects. There is no evidence in either San Francisco or Boston that the trust fund "fee" has damaged the real estate market or slowed the development of new office space. Following implementation of the San Francisco and Boston programs, the California state legislature enacted a statewide housing trust fund that would draw on revenues from off-shore oil leases. From $10 million to $20 million flowed into the California fund in fiscal years 1986 and 1987, with revenues reserved exclusively for low- and very low-income housing programs.

Community Loan Funds

Community loan funds for housing and economic development have attracted attention throughout the country. Although the earliest loan funds date from the mid-1970s, they have grown dramatically since 1983.