While a dedicated funding stream is highly desirable, annual appropriations from the city’s general fund can be an important source of local funding for affordable housing under certain circumstances. Annual appropriations are funds made available for specific purposes as part of annual budgets passed by locally elected representatives. Some communities have found that initial awards of discretionary appropriations, or general obligation bond revenues, can be useful as a starting point for capitalizing a housing trust fund and building momentum for the eventual transition to a dedicated funding source. Additionally, in cities with dedicated funding sources, annual contributions may offset unreliable revenue patterns, or allow the city to make much larger commitments to housing than would be available through their dedicated source. Relying on annual appropriations alone, however, can lead to uneven and unpredictable financial support for affordable housing providers, given the susceptibility of appropriations to annual budget negotiations.

Case Studies

Housing Production Trust Fund (Washington, D.C.)

The District of Columbia’s Housing Production Trust Fund was created in 1988 with no dedicated source of funding, but with the hopes that the city would find funding in coming years. In 2001, the fund received a one-time contribution of $25 million from the sale of city-owned property, and in 2002 the city established a dedicated funding source for the fund. As of 2015, the fund receives 15 percent of all deed recording fees and real estate transfer taxes collected within the city. Due to a fluctuating real estate market, these funds have been unreliable throughout the years, and the city has grown accustomed to allocating revenue from the general fund into the trust fund on an annual basis.

In 2013 and 2014 combined, the fund received approximately $193 million from the city, according to a report by the DC Fiscal Policy Institute. For fiscal year 2016, the city has allocated a total of $213 million in funding for affordable housing programs in the city ($100 million of which will go directly into the housing production fund, the remainder to rental assistance and other housing programs). The fund will also receive $50 million from dedicated revenue sources. Upcoming contributions from the city are the highest funding levels that affordable housing programs have received in D.C. The Housing Production Trust Fund allocation is projected to renovate or create up to 1,000 new homes in the city. As of 2012, the trust fund has contributed to the creation of over 8,500 affordable homes, invested $320 million in D.C. neighborhoods and leveraged an additional $794 million from outside sources.

San Francisco Housing Trust Fund (San Francisco)

The San Francisco Housing Trust Fund was established under the 2012 voter-approved Proposition C, as a response to the 2012 dissolution of redevelopment agencies in the state. The fund receives an annual allocation from the city, which started at $20 million. The city’s contribution to the 30-year fund will continue to grow annually until it reaches a cap of $50 million in annual revenue. The set-aside amount will total $1.2 billion over the fund’s 30-year lifespan.

Allocations come directly from the city’s general fund, but will draw primarily on resources that were already devoted to affordable housing, including a portion of hotel tax revenue and new revenues from a 2012 business tax reform measure.

Funding will be used to support affordable housing development, private market incentives for affordable housing and down payment assistance. The trust fund revenue is projected to support nearly 9,000 units affordable to households earning 60 percent of median family income and will invest at least $15 million over the first five years in the city’s down payment assistance program.