Published March 9th, 2022 at 6:00 AM5 minute read
Kansas City has seen a surge in the number of luxury apartments either available to renters or in development, partially due to tax incentives approved by the City Council.
Recently, however, the council has started to scrutinize these developments more closely in the face of pushback from local community organizers. In January, the council voted to divert a $10.5 million incentive for a MAC Properties apartment project at Main Street and Armour Boulevard into a city housing trust fund.
The council’s decision effectively scuttled MAC Properties’ proposed $100 million, 385-unit project, which would have included 77 apartments that would have met the city’s recently adopted affordable housing mandate.
The council’s decision also left many observers wondering how a housing trust fund might work in Kansas City. Although Kansas City established a housing trust fund to support affordable housing in 2018, it didn’t have any funding until recently.
“Housing trust funds are distinct funds established by city, council, or state governments that receive ongoing dedicated sources of public funding to support the preservation and production of affordable housing and increase opportunities for families and individuals to access decent affordable homes,” according to the National Housing Trust Fund Project.
In short, housing trust funds are publicly funded, permanent investments into affordable housing. In total, 605 city housing trust funds have been established in 36 states across the country.
No two housing trust funds are exactly the same, as they are designed to flexibly fit the needs of each community.
Tenant union and community organizing group KC Tenants has proposed a People’s Housing Trust Fund in Kansas City that would draw its funding from a 9% reduction in the Kansas City Police Department’s annual budget and from property taxes on “agents of gentrification.”
The proposed taxes on gentrifiers would include commercial linkage fees, a 15-20% tax on speculative properties, a real estate transfer tax on non-owner occupied residential properties, an excise tax on properties valued at over $500,000, assessed property value tax on properties allotted to the trust, and a portion of revenue from parking garages allotted to the trust, according to KC Tenants. This plan would result in an annual revenue of at least $22 million, not including the unknown amount of income from the proposed gentrification taxes, allotted to pay for affordable housing.
Apart from an ambitious funding plan, the proposed People’s Housing Trust Fund is similar to other city housing trust funds in that its creators hope to promote greater housing equality in their community. The People’s Housing Trust Fund is designed to provide accessible housing to lower income families, narrow the housing gap for people of color, incentivize long-term home ownership and create more community value.
Other city housing trust funds are funded differently and serve different purposes, but they all create public funding for affordable housing. Here’s a look at three of the existing housing trust funds in cities across the country.
The Boston Neighborhood Housing Trust Fund in Boston, Massachusetts, is one of the oldest existing city housing trust funds. Established in 1983 by Boston’s Department of Neighborhood Development, this program aims to house the houseless and create affordable, family-friendly housing near public transportation.
The program is completely funded by commercial linkage fees, which are fees paid by commercial developers for every new project in excess of 100,000 square feet at a rate of $8.34 per square foot. Projects funded by the trust fund are awarded a maximum of $750,000 in gap financing, which is an interim loan given to cover the cost of construction.
Applicants for each loan awarded by the trust fund are prioritized based on how many families they can serve and their proximity to public transportation. Additionally, at least 10% of units on rental properties of over 10 units must be allotted for houseless individuals or households.
This program differs from the proposed Kansas City housing trust fund in that it relies completely on a single source of income from private developers. The Boston housing trust fund raised nearly $12 million in 2015 to fund 14 new housing projects, which predominantly served low to moderate income families. More recently, the Neighborhood Housing Trust Fund helped fund the development of 47 “affordable, transit-oriented” new rental units, which opened in July 2021.
Denver’s Affordable Housing Fund is a more recent program. Established in 2016 by the Denver City Council, the program relies on a funding plan that derives its income from two sources. According to the city’s website, the housing trust fund is designed to “create or preserve 6,000 affordable homes for low- to moderate-income families.”
The program’s funding comes from a sliding scale of property taxes on residential and commercial properties and a “one-time fee on development.” The property taxes are a fee that differs based on the type of property. For example, the highest fee is placed on commercial properties that fall into the “Hotel/Office/Retail/Other” category, at $1.70 per square foot.
The program is expected to raise $150 million by the year 2026. According to a July 2021 article in the Denverite, the program generates about $30 million annually. At that pace the fund should far surpass its 10-year goal, raising a total of $300 million. In addition, the program recently received an additional $28 million in federal money from the Biden administration’s American Rescue Plan.
Compared to the Boston and proposed Kansas City programs, the Denver Affordable Housing Fund is more lucrative in its funding structure, but carries more cost for the average homeowner, regardless of income.
The Denver Housing Advisory committee reports that the annual burden on the average homeowner will be $12 for a median home valued at about $300,000. In contrast, commercial property owners should expect to pay $145 per year for every $1 million dollars of property value.
Denver Mayor Michael Hancock promised in July 2021 to make affordable housing a higher priority as the rate of homelessness rises in the city. In addition to committing federal money from the American Rescue Plan to the fund, the mayor stated the city will soon create a “specialized team” to speed up the construction of affordable housing in order to address homelessness.
San Francisco is unique in that it currently has two active housing trust funds: the San Francisco City Housing Trust Fund, established in 1987, and the San Francisco County Housing Trust Fund, which was established in 2012 and covers the entire San Francisco County area.
The newer county housing trust fund was established to replace San Francisco’s defunct Redevelopment Agency, and now provides about $50 million annually to subsidized housing projects across the entire San Francisco County area.
The newer San Francisco County trust fund aims to invest $1.5 billion into the county’s housing infrastructure by 2042. Part of the reason why this housing trust fund has more funding than others is due to prior taxes under the defunct Redevelopment Agency. In its first year, the 2012 county trust fund absorbed $20 million in leftover revenue from old redevelopment taxes, giving the trust fund a head start over other new housing trust funds.
Since its establishment, the county housing trust fund has created and funded a housing stabilization program for low and moderate income people and a grant program targeted at neighborhood infrastructure. The housing trust fund has also invested $15 million into a downpayment assistance program aimed at new homebuyers and has endeavored to develop 9,000 “permanently affordable” housing units for low to moderate income people. The county trust fund has generally been viewed as a success due to its large budget and wide reach across San Francisco County.
As the idea of establishing a new housing trust fund in Kansas City gains momentum, looking at examples of housing trust funds in other cities can inform how this type of housing program could work in Kansas City.
The proposed People’s Housing Trust Fund has drawn both praise and criticism for prioritizing the needs of low income BIPOC families and building its funding plan on the basis of reparative justice. Some critics may view the explicitly anti-racist language and goals in KC Tenant’s proposal as needlessly political for a housing trust fund, but this type of language isn’t unique among housing trust funds.
According to the San Francisco Mayor’s Office of Housing and Community Development, San Francisco’s city housing trust fund explicitly targets “households experiencing a legacy of exclusion (and) … destabilized by systemic trauma.”
Regardless, housing trust funds have sprouted across the country, creating publicly funded programs focused on closing housing gaps for low- and moderate-income families. If Kansas City aggressively pursues a housing trust fund, it won’t be venturing into uncharted waters.
Park Zebley is a journalism student at the University of Missouri-Kansas City and a reporting intern at Kansas City PBS.