As the need for affordable housing increases, and state and city budgets steadily decrease, creative solutions are needed to address affordable housing issues. One way that states are tackling their challenges is by establishing Housing Trust Funds.
The Pennsylvania State Senate, for example, recently voted on legislation to create an affordable housing fund. The bill, which established the framework for setting up the Fund, has already passed the State House.
The purpose of the Fund is to give the Pennsylvania Housing Finance Agency a way to respond to the state's shifting housing demands. The recession, along with a drilling boom in the Marcellus Shale area, has led to a reduction in available housing and simultaneous caused rental rates to rise sharply.
One benefit of a Housing Fund is that it typically does not divert money from other state programs, but is instead funded through federal grants and private debts. Pennsylvania is already expecting to receive about $ 35 million in funding once the 2010-11 federal budget is approved.
The federal grant money, if awarded, would have been distributed through a National Housing Trust Fund, which was established by 2008 Congressional legislation. Although it was established in 2008, the recession and financial crisis pretended the Trust Fund from being activated. President Obama has, however, included $ 1 billion for the Fund in his proposed FY 2011 federal budget.
The Pennsylvania Affordable Housing Trust Fund could equate to additional financing for affordable housing developers. Although Pennsylvania's State and House have adjourned for the year, developers are encouraged to weigh in on the proposed Fund, and to explore possible funding opportunities through Trust Funds in other states as well.