Florida Housing Trust Fund raided to balance state budget

The Orlando Sentinel reports that the Florida Legislature raided the Florida Housing Trust Fund to cope with the state’s budget shortage. The Florida HTF is the largest and most successful state housing trust fund in the nation.

The article is worth reading.

Also worth reading is the profile of House Financial Services Committee Chair Barney Frank in The New Yorker. In the article Congressman Frank describes why he sought “off budget” sources of funding for the National Housing Trust Fund.

In 2001, Frank embraced a new approach. That year, Bernie Sanders, then a representative from Vermont, sponsored a bill to create a government trust fund that would be used for building and renovating low-income housing. Sanders’s legislation didn’t pass, but the idea was later reintroduced, and Frank backed a proposal for funding the trust with a portion of the annual revenue of Fannie Mae and Freddie Mac-the Federal National Mortgage Association and the Federal Home Mortgage Corporation, the two giant, government-backed mortgage companies. The funding for the trust would be automatic-not subject to annual congressional approval. “I realized, because housing has been a backwater, getting appropriations for housing is going to be tough,” Frank told me. “First of all, if you want to build housing, it can’t be year by year. You know, it’s construction. But, two, I’m finding money outside the appropriations process, money from Fannie Mae and Freddie Mac. So I can do a lot of units without directly competing for the appropriations.”

The idea was based on a variety of similar programs at the state and local levels. In the past few decades, governments across the country have set up nearly six hundred trust funds to build low-income housing, typically by collecting small taxes or fees from real-estate transactions. “There was positive buzz for what was happening with state and local trust funds, but the amounts were really a drop in the bucket,” Barbara Sard, the director of housing policy at the left-leaning Center on Budget and Policy Priorities, said. “But the dream for making a real difference in low-income rental housing has been to do it at the federal level, and that’s what Barney has been trying to do.”

In 2007, Frank used his influence as committee chairman to insure that the housing trust-fund bill finally passed the House. In 2008, a similar measure made it through the Senate as part of a larger bill, which President Bush signed. By that time, however, Fannie and Freddie were mired in debt, and the value of their shares was collapsing.