Weekly Briefing

State Housing Trust Fund Unifies Divergent Groups

By Rob Schofield

Quick Take:

• More and more experts are persuaded that widespread access to decent, affordable housing is one of the best measuring sticks for the health of a society.
• Today, North Carolina is failing this test.
• Fortunately, groups from across the political spectrum have begun to coalesce around a proven and under-utilized solution: the NC Housing Trust Fund.

Housing is Key

There are many key indicators for measuring the wellbeing of a community. Health and life expectancy, education, environmental quality, and crime rates are among the most frequently cited. Historically, some have also opined that the best way to truly assess the health of a society is to look at its prisons.

One key indicator that has been mentioned more and more frequently in recent years is the quality of a community’s affordable housing stock. While it is, at times, a bit of a “chicken and egg” question, experts from a variety of fields have noted the critical and preventative role played by housing in helping to promote good results for all the other indicators. A safe, decent and affordable home has obvious direct and indirect benefits for the health and life expectancies of its inhabitants. Children living in a safe and warm place that leaves their parents with the means to buy adequate food and clothing are far likelier to have success in school. Well-made or renovated, efficient housing produces obvious benefits for the environment in terms of energy consumption and pollution. And, of course, neighborhoods consisting of healthy homes are much less likely to be plagued by crime.

Notwithstanding the key role played by decent, affordable housing, the state of North Carolina has done relatively little throughout its history to address the issue – preferring, instead, to defer to the market and, to a lesser extent, the federal government. State appropriations and tax “expenditures” have been consistently meager – with annual allocations for the entire state often amounting to little more than the cost of one or two luxury homes.

The Growing Crisis

For better or worse, however, such a choice makes less and less sense in the 21^st century. The combined effect of skyrocketing housing costs, the state’s increasingly stratified economy and repeated and ongoing reductions in the federal government’s commitment to affordable housing, have taken their toll. Today in North Carolina, more than three-quarters of a million households reside in homes that are, by definition, unaffordable. More than 65% of renters earning less than $20,000 cannot afford their rent. The results are predictable: some families do without necessities like adequate food and healthcare; others live in terribly overcrowded or unsafe conditions; many find themselves on the move regularly – one step ahead of an eviction notice; still others commute long distances in older cars – further straining family relations and burning huge amounts of energy in the process.

The housing crunch affects more than just the poorest of the poor. In many areas, teachers, firefighters, police officers, sanitation workers and other civil servants find themselves priced out of the very communities they serve. In the communities surrounding North Carolina’s military installations, many military families and civilian personnel live in extremely poor conditions. And, of course, throughout North Carolina, hundreds of thousands of people turn to that old standby, mobile or manufactured homes which, in turn, are too often sold in a predatory fashion, poorly constructed, and dangerously set-up. Add to this mix the state’s growing population of fixed-income seniors and the demise of the state’s mental health facilities and it’s clear that the state desperately needs bold action.

The Housing Trust Fund Consensus

If there is a silver lining that provides cause for hope against such a daunting backdrop, it is the widespread and growing consensus that exists over what needs to be done. Unlike so many other areas of public policy in which even those who favor expanded public services and investments have difficulty agreeing upon a course of action (access to healthcare and public education are two obvious examples), there is a unique and fairly remarkable degree of agreement about what constitutes the best public response to the affordable housing shortage. The answer is the North Carolina Housing Trust Fund.

Founded in 1987 with a pot of money derived from a settlement with the oil industry and funded since 1990 with a series of modest and fluctuating state appropriations, the Housing Trust Fund is one of North Carolina’s most successful public/private partnerships. Administered by the N.C. Housing Finance Agency, a self-supporting public entity, the Trust Fund has accomplished remarkable things on a relative shoestring throughout its two decades of existence.

Between 1990 and 2006 (during which time it received an average annual appropriation of just $3.6 million), the Trust Fund financed the rehabilitation or construction of 17,000 private homes across the state (the Trust Fund does NOT build old-fashioned public housing). In the process, it generated 7,800 jobs and $67 million in new state and local tax revenues. Additionally, Trust Fund dollars have leveraged an additional $402 million in federal, nonprofit and private-sector funding for affordable housing. The Housing Finance Agency estimates that every $1 of state funding draws down $3.68 in additional funds. The Housing Trust Fund particularly benefits low-income North Carolinians. Approximately 80 percent of the housing units supported by the Trust Fund shelter very low-income households, meaning those earning less than 50 percent of median income ($26,818/year statewide). More specifically, 45 percent of the Trust Fund’s benefits flow to the lowest-income North Carolinians, those earning below 30 percent of median income ($16,090/year statewide).

In light of these accomplishments, it’s not surprising that the Trust Fund has garnered multiple, national awards for excellence. Indeed, there is reason to believe that the Trust Fund is, in many ways, a victim of its own success. Because the program is so efficient at turning public funds into “bricks and mortar,” many advocates believe the program has actually been taken for granted by policymakers who have been content with the moderate “bang” they have received for such a comparatively tiny “buck.”

In recent years, however, as the state’s housing woes have mounted, the Trust Fund has begun to escape the state of benign neglect in which it has existed. Led by the N.C. Housing Coalition and the N.C. Justice Center, Trust Fund supporters have fashioned a coalition of unprecedented breadth and diversity that represents millions of the state’s residents. The coalition includes not just progressive advocacy groups like AARP, the NAACP, the Coalition Against Domestic Violence, the Council of Churches and the Association for Retarded Citizens, but a who’s who of the state’s business community, including Bank of America, Wachovia, Progress Energy, GlaxoSmithKline, Cisco Systems and the Realtors’ and Homebuilders’ associations.

Together, these and scores of other statewide and local groups have launched the Campaign for Housing Carolina. The Campaign seeks an annual Trust Fund appropriation of $50 million that would:

• House more than 6,000 households and generate more than 3,000 jobs each year, 
• Leverage $200 million of federal housing development and preservation funds,
• Increase the NC Housing Trust Fund’s revolving loan fund through the recycling of future loan repayments, and
• Return as much as $30 million to state and local coffers each year via increased tax revenues.

Last year, lawmakers found a way to appropriate $17.1 million in recurring and one-time moneys to the Trust Fund – with approximately 60% of the funds earmarked for housing for persons with disabilities. It was a record appropriation and well in excess of what the Governor has proposed, but far short of the huge funds established in states like Florida ($200M), Washington ($80M) and Ohio ($50M). In the months ahead, members of the coalition will have their work cut out for them as Governor Easley has proposed an appropriation of only $5,000,000 for FY 2007-‘08. Their success or failure will say a lot about the kind of society North Carolina is likely to be in the years to come.  

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This entry was posted on Monday, February 26th, 2007 at 3:17 pm and is filed under Weekly Briefing. You can follow any responses to this entry through the RSS 2.0 feed.