Insufficient Support 

The perennially underfunded Tucson Housing Trust Fund is about to go broke

It seemed so simple in the economically flush times of 2006: Once the City Council established the Tucson Housing Trust Fund (THTF), millions of dollars of revenue would flow in annually, creating a pot of money to assist thousands of homeowners, renters and homebuyers in need.

"The THTF is devised to be sustaining within five years by recycling the majority of its funding," the city enthusiastically declared about the program.

However, more than halfway through that five-year timeframe, the fund has raised only a little more than $500,000—and nothing in the last year. After existing commitments are completed, it will essentially be broke unless more revenue is secured.

"I'm really upset," comments westside Councilmember Regina Romero about the lack of city support for the trust fund.

At first, the fund was slated to receive between $3 million and $5 million a year from City Hall. This money was to come from a variety of possible sources, including a real-estate transfer tax and a residential rental tax.

But last fall, Arizona voters outlawed the transfer tax, and the City Council recently killed off the rental-tax idea.

"I'm not very happy about it," Romero says about the council's rental-tax decision. "We had $2 million (a year for the trust fund) if the rental tax had passed."

Romero points specifically at the Tucson Association of Realtors for opposing the rental tax. "I don't think they care (about affordable housing)," she says.

"That's absolutely untrue," responds Colin Zimmerman, director of public affairs for the Realtors. "We do more for the trust fund than anyone else in town."

In an e-mail message, Zimmerman elaborated by listing several educational and volunteer programs concerning affordable homeownership with which the association is involved.

"We don't like the idea of the rental tax," Zimmerman continues, "because it runs counter to affordable housing. We feel it's the most anti-affordable-housing thing the council has ever (considered)."

After the defeat of the rental tax, the trust fund will apparently have to limp along until it completely runs out of money in about a year. However, limping along has been the status quo: The trust fund has been short of cash from the beginning.

Initially, $2 million from a city legal settlement was considered for the trust fund, but that money was spent elsewhere.

Then, according to Stephen Young, chair of the THTF Citizens Advisory Committee, another possible funding source emerged: a voluntary 1 percent "point of sale" contribution from builders entering into development agreements with City Hall.

As an example of this approach, Young points to the proposed Gadsden Project, a mixed-use development on the westside (See "Pricing Developments," July 31, 2008), which will eventually contribute to the trust fund as a result of a special agreement with the city.

However, the funding concept was attacked with what Young calls "mischaracterization" by opponents in the real estate industry. As a result, he says, the idea was killed before the City Council even discussed it publicly.

"We met with some of the council offices," Young remembers, "and realized they didn't have the political will to push it through." But, he adds hopefully: "There's some potential there."

Lacking a major funding source, the trust fund has generated about $540,000 in total revenues, not the millions originally discussed.

Much of this money came from funds left over from the city's garbage-fee assistance program, but that revenue stream has dried up. Other money obtained includes a $75,000 grant from the Tohono O'odham Nation; $37,400 from a fundraiser sponsored by former Councilmember Carol West; and $30,000 from a rental-conversion fee.

To date, these funds have been spent on four primary projects. One is a program that will help about 50 families with down-payment assistance and homeownership counseling.

The Tohono O'odham grant allowed nine homes owned by Native Americans in the city to be rehabilitated. The trust fund will use other money to repair 50 rental units, and an employer-assistance housing-challenge grant could result in as many as 30 new homes.

Thus, instead of helping thousands of households annually, the trust fund will have aided about 140 in its first three years—and unless more money becomes available, that will be it.

Because of the lack of money, the trust fund's original goal of splitting its financial resources evenly between home improvements, rental programs and homeownership assistance has been altered.

"With homeownership, we get the most bang for the buck," Young explains. "So it's our first priority initially. ... It enables the city to help working people who make just a little too much to qualify for federal assistance."

This effort also directly addresses a long-term Tucson embarrassment. Homeownership inside the city limits has hovered around 50 percent for decades, while the state average at the time of the last U.S. Census was almost 70 percent.

However, with a rapidly dwindling supply of money, the trust fund won't be able to do much about that situation—or anything else, for that matter.

"How to fund the fund?" Romero wonders as she considers its future. "That's the most important question. ... Without a community conversation first, I don't think we can make (progress). ... The community should ask the council to fund the trust fund."

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