HUD Releases Housing Trust Fund Proposed Rule; Calls for Comments

On October 29, HUD published in the Federal Register a Proposed Rule establishing program rules for the Housing Trust Fund (HTF), which was authorized in the Housing and Economic Recovery Act of 2008 (HERA) but not funded to date.  A $1 billion appropriation is pending in Congress. 

The HTF allocates formula-determined grants to states to provide rental housing and homeownership opportunities for very low-income (VLI) families, defined as those with incomes equal to 50 percent of area median income (AMI) or less, and extremely low-income (ELI) families, defined as those with incomes of 30 percent of AMI or less.  On December 4, HUD published a proposed rule describing the HTF allocation formula.

States are required to notify HUD of their intent to participate in the HTF and to include in their Consolidated Plans an HTF allocation plan that meets the specifications described in the Proposed Rule.

According to the Proposed Rule, the HTF is similar in most aspects to the HOME program.  HUD asks specifically for comments on its proposed coordination of HOME and the HTF regulations as well as other ways to better coordinate the HTF with other resources.

At least 80 percent of an HTF grant must be used to produce rental housing; of that amount, at least 75 percent must be used for ELI families.  Not more than 10 percent of the annual grant can be used for homeownership activities and up to 10 percent of the annual grant may be used for administrative costs.

The Proposed Rule directs that 100 percent of HTF funds, in the first year funds are available, be used to provide rental and homeownership housing for ELI households.  HUD is interested in receiving comments from affordable rental housing developers about ways to reduce the cost of subsidizing housing for ELI households.

The Proposed Rule also limits the amount of HTF funds a grantee may use for operating cost assistance to 20 percent of each annual grant.  An HTF-assisted unit that also has a project-based Section 8 voucher attached to it cannot receive HTF operating cost assistance.

The Proposed Rule requires energy and water-efficiency features in all HTF-assisted units.  At a minimum, all new construction and gut rehabilitation units must meet ENERGY STAR guidelines.  HUD requests comments on how additional minimum property standards may be imposed to increase energy efficiency.

HERA directed Fannie Mae and Freddie Mac to provide assessment-based contributions to the HTF, but the Federal Housing Finance Agency, acting as conservator for Fannie Mae and Freddie Mac, suspended their contributions to the HTF indefinitely.  One billion dollars to capitalize the HTF and $65 million to provide project-based Section 8 vouchers for HTF-financed units is included in Job Creation and Tax Cuts Act of 2010, S. 3793, currently pending in the Senate. 

Comments on the Proposed Rule are due to HUD by December 28.  NCSHA will submit comments on behalf of all HFAs.  To inform our submission and include your comments in it, please send NCSHA’s Mindy La Branche your comments by December 6.