Louisville Metro Council members are generally in agreement that the city should provide more funding to the Louisville Affordable Housing Trust Fund this year, but they’ve made no headway on how to continue funding the trust fund in the future.
“I think it is time to fund the trust fund at $10 million,” Councilman Bill Hollander, D-9, said at a council meeting Monday, later noting: “What we are talking about is a short-term solution, but we have a big problem, and we need to address it.”
After years of no city investment, Louisville Mayor Greg Fischer included a $2.5 million allocation to LAHTF in the fiscal year 2017 budget. In the mayor’s fiscal year 2018 budget, which is still being debated by Metro Council, Fischer allocated another $2.5 million to the trust fund.
However, multiple council members have said that it’s not enough, given the fact that a 2008 Metro Council resolution pledged to give $10 million annually to the LAHTF. The trust fund has never received an allocation greater than $2.5 million.
A couple of council members have proposed taking a portion of the $12 million allocated to the revolving loan fund Louisville CARES and giving it to the trust fund.
Back in May, Councilman Brent Ackerson, D-26, called on fellow council members to move $3 million from Louisville CARES to LAHTF, and Hollander suggested at the meeting that the city fully fund the trust fund with a $10 million allocation, leaving Louisville CARES with a $4.5 million allocation during fiscal year 2018.
Hollander called it “a more appropriate balance” because otherwise Louisville CARES would have received 83 percent of the $29 million dedicated to affordable and workforce housing in the last three years.
Both have similar missions, but the trust fund focuses on providing housing for the city’s lowest income residents, those who earn 50 percent or less of the area median income. Louisville CARES focuses on residents who earn 80 percent or less of the area median income; that includes an estimated 60,000 households.
“The need is so great,” said Mary Ellen Wiederwohl, chief of Louisville Forward. “Until we can find a viable revenue stream, we will have these debates about who to serve.”
While Louisville CARES requires that its loan funds be repaid, LAHTF Executive Director Christie McCravy said about 20 percent of the money the trust fund had paid out would be repaid.
The cost of providing affordable housing to low-income residents is high and requires offering developers forgivable loans as an incentive, she said. Unlike Louisville CARES, she added, LAHTF can invest some of the money in existing affordable housing to make sure it remains affordable rather than changing to market-rate housing.
Roughly 35,000 families in Jefferson County earn less than 50 percent of the area median income, or less than $32,050 a year, McCravy said.
Several other council members voiced support for fully funding LAHTF.
“I am ready to give you all the $10 million that was promised years ago,” said Councilwoman Mary Woolridge, D-3.
Councilwoman Angela Leet, R-17, said she was thrilled with the work the LAHTF had done with the resources it had been given. Last year, it funded the creation or preservation of 326 affordable housing units.
“I look forward to helping you all get toward the $10 million number,” she said.
Councilwoman Jessica Green, D-1, noted that investing in affordable housing could help fight violence. Louisville saw record-breaking violence last year, which seems to have continued in 2017 based on current statistics.
“One way we can do it is by getting people off the street and in good solid stable housing,” she said.
McCravy said LAHTF has capped its administration fees at 5 percent, meaning it would use $9.5 million of a $10 million allocation to invest in projects that create or preserve affordable housing units and $500,000 on administrative costs.
She added that there were already projects in the pipeline that could move forward once funding from LAHTF comes available.
“We had to turn down eight deals last year because we did not have the funding, and they were good projects,” McCravy said.
Although multiple council members indicated that they are in favor of providing more funding to the trust fund this year, they stated that a more permanent funding stream must be found. When the trust fund was first started in 2008, there was discussion of increasing in the insurance premium tax by 1 percent, but there was not enough support for it.
“We cannot float this kind of bond every year,” Hollander said. “We have not solved the problem of funding the Affordable Housing Trust Fund.”
The bond Hollander referred to is a low-interest municipal bond that the mayor included in his budget, which would fund Louisville CARES at $12 million. The money that Metro Council is expected to shift from Louisville CARES to LAHTF will be funds from the bond, which is repaid by the city over time.