Local Dedicated Revenue Source
Governments commonly use a dedicated revenue source to provide a regular funding source for affordable housing initiatives in their communities. Dedicated revenue sources are frequently structured to direct funds into a housing trust fund. Generally, housing trust funds serve populations earning no more than 80 % of the area median income.
Fairfax County, Virginia. In April 2005, the Fairfax County Board of Supervisors approved the One Penny for Housing Flexibility Fund. This appropriation, equal to the value of one penny of the real estate tax, created a dedicated fund that will aid in the preservation of at least 1,000 existing affordable housing units by the end of 2007. The fund is also intended to be a critical ongoing source of affordable housing. It is expected that the program will generate approximately $17.9 million in new funds.
The Fund does not replace, but supplements existing federal and state funding resources. Nonprofit and for-profit developers receive financing through the Fund to acquire, rehabilitate, replace or develop affordable housing in Fairfax County. The Fund also provides flexibility to finance a range of affordable housing needs as they change over time within the County.
Montgomery County, Maryland. Adopted in 1988, the Montgomery County Housing Initiative Fund helps to promote a broad range of housing opportunities within the County. Some of its goals are to renovate distressed properties, help create mixed income communities and work towards an equitable distribution of affordable housing units. A few of the current sources of revenue for the fund comes from 2.5% of property tax, sale of moderately priced housing and investment income. In the past, revenue sources were mainly condominium conversion tax and property rentals. Applications for the loans are reviewed by a housing loan review committee which makes their recommendation to the County’s Director of the Department of Housing and Community Affairs. The Director, not the County Council, has the authority to determine which requests will be funded, including the terms and conditions of the loan.