You asked for information on the Housing Trust Fund Program and its funding history.

SUMMARY

PA 05-5, June Special Session, established (1) the Housing Trust Fund Program to, among other things, encourage housing development for low- and moderate-income families and (2) the Housing Trust Fund as its funding source (CGS § 8-336m et seq.). DECD administers the program and must report on it annually to the governor and legislature. The Housing Trust Fund Program Advisory Committee advises DECD on (1) administering and managing the program; (2) its objectives; and (3) developing regulations, procedures, and rating criteria for it.

The Housing Trust Fund is a nonlapsing fund that the state treasurer holds separate from all other money, funds, and accounts. It consists of (1) proceeds from bonds authorized for the program; (2) all funds received in return for financial assistance awarded through the program; (3) private contributions; and (4) to the extent not otherwise prohibited by state or federal law, certain local, state, or federal funds DECD receives.

DECD may award program funds as loans or grants to nonprofit organizations, public housing authorities, and other eligible applicants. It must make funding available at least semiannually on a competitive basis (i.e., “funding rounds”).

The law allows the State Bond Commission to authorize up to $160 million in bonds over eight years to capitalize the Housing Trust Fund. DECD has awarded $94,917,627 since the program's inception and estimates it will award another $29,186,000 in the next funding round.

PROGRAM OVERVIEW

Goals

By law, the Housing Trust Fund Program must:

1. encourage the creation of housing for homeownership at a cost that makes it affordable for low- and moderate-income people, meaning they pay no more than 30% of their gross household income for it;

2. promote the rehabilitation, preservation, and production of quality, well-designed rental and ownership housing that is affordable for low- and moderate-income people;

3. maximize the leveraging of state and federal funds by encouraging private-sector investment in housing developments receiving public assistance;

4. encourage housing that maximizes residents' housing choices;

5. enhance economic opportunity for low- and moderate-income people and their families;

6. promote (a) efficient land use that utilizes existing infrastructure and (b) open space conservation; and

7. encourage the development of housing that aids in community revitalization.

The program defines “low- and moderate-income families and persons” as people whose income falls within income levels the commissioner sets, except she may establish income levels up to 120% of the area median income (AMI), as determined by the U. S. Department of Housing and Urban Development. (Connecticut law bases affordability on the proportion of income a family spends on housing. A unit is considered affordable if a family earning no more than the town's AMI pays no more than 30% of its income for the housing (CGS § 8-39a)).

Eligible Applicants

Housing Trust Fund financial assistance is available to:

1. nonprofit entities;

2. municipalities and municipal developers;

3. housing authorities;

4. the Connecticut Housing Finance Authority;

5. community development financial institutions;

6. businesses that have as one of their purposes the construction, financing, acquisition, rehabilitation, or operation of affordable housing, including (a) corporations incorporated or authorized to do business by law and (b) any partnership, limited partnership, limited liability company, joint venture, sole proprietorship, trust, or association; or

7. any combination of these.

Financial Assistance and Forms of Assistance

Housing Trust Fund Program funding resources (e.g., no- and low-interest loans) must be available, at least semiannually, on a competitive basis. Financial assistance may be in the form of:

1. no-interest and low-interest loans,

2. loan guarantees,

3. revolving loans,

4. grants, or

5. appraisal gap and other similar financing necessary to make rent or home prices affordable.

Any financial assistance must supplement existing loan and tax credit programs available under state and federal law and grants, loans, or financial assistance from any nonprofit or for-profit entity.

Other Requirements

In each fiscal year that the Housing Trust Fund has funds available for distribution, DECD must allocate $300,000 from it for matching grants dedicated to funding purchases of primary residences for people participating in the state's individual development account (IDA) program. (The Connecticut IDA Initiative allows certain low-income people and people with disabilities to open savings accounts and receive matching funds from the Department of Labor as an incentive for saving for specified purposes; withdrawals are limited to certain activities, including a home purchase or a lease deposit on a primary residence.)

BOND AUTHORIZATIONS AND FUNDING HISTORY

The law authorizes up to $160 million in bonds over eight years to capitalize the Housing Trust Fund. Table 1 shows the maximum bond authorization for each year.

Table 1: Housing Trust Fund Bond Authorizations

According to figures DECD provided, the agency has awarded $94,917,627 to eligible applicants through nine funding rounds and it estimates it will award another $29,186,000 in the next round, bringing the program total to $124,103,627 (see Attachment 1).

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Attachment 1: Housing Trust Fund - Use of Funds