The city of Winston-Salem will soon be pursuing a new avenue for increasing affordable housing in the city.
During a Sept. 25 council meeting, Interim City Manager Patrice Toney gave the council a look into the city’s future Housing Trust Fund, or HTF.
According to Investopedia.com, HTFs are publicly financed programs specifically designed to increase affordable housing, often operated at the state or local level and aimed at creating low-income and extremely low-income housing.
Toney said that the fund will be created within this fiscal year, which runs from this July to the end of June 2024.
According to the Housing Trust Fund Project, HTF revenues generated by cities across the country exceeded $1 billion in 2018. There are a total of 608 city HTFs nationwide according to the project.
Nearby municipalities such as Asheville, Charlotte and Raleigh are already involved in some form of trust fund dedicated toward housing.
The housing developed from Winston-Salem’s trust fund would serve households making less than 80 percent of the area median income, or AMI. According to the city, the median family income in Winston-Salem is $68,900. A family of four with an annual income of $55,100 would qualify.
The types of housing developed by Winston-Salem’s HTF would be multi-family rental, single-family homeownership and rehabilitation/preservation. The affordability period would be 15 years for single-family homes and 30 years for multi-family dwellings.
Both for-profit and nonprofit housing developers would be eligible to apply. The funding cap per project would be $50,000 per door for single-family homes, $30,000 for multi-family dwellings and $3 million for total gap financing.
Toney said that they haven’t yet had a session with developers who are interested in learning more, but that “it’s been really one-on-one” because they range in size from individuals to full companies.
Where does the money come from?
The city could start their fund with around $11 million in seed money using nearly $6 million in unspent housing funds while receiving $5 million from a community donor that, according to Toney, Mayor Allen Joines has been in contact with. In the future, the city could use sales tax, property tax and a potential bond referendum to generate revenue for the fund.
The city needs to choose how funds would be managed: an internal fund managed by the city, or an external legal trust fund managed by a third party on behalf of the city. With the second option funds would be permanently earmarked for affordable housing and unable to be unwound, for example, in the case of a crisis.
Toney proposed the first option with city staff managing the program internally and city council overseeing funding decisions. However, Councilmember Jeff MacIntosh said that an outside organization managing the funds may be a better option because they would have more expertise in this specific type of work.
“The speed at which an outside organization could react is much faster than ours,” MacIntosh said.
Toney noted that if they use an outside entity to manage the funds, they could be more “restricted to their rules,” she said.
“We could manage it in-house, the projects can come before the city council to vote the same way we do now for gap funding — developers come, they apply, fill out an application, internal staff assess the application and then we bring it to the city council,” Toney added.
Councilmember Robert C. Clark requested that each council member be individually interviewed to get their input, and then council members would be “prepared to see a specific item” at the community development/housing/general government committee meeting on Oct. 9.
The HTF “could be done so many different ways,” Toney said.
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