In June 2019, the Kansas City, Missouri, City Council unanimously approved an ordinance establishing a Five-Year Housing Plan for Kansas City.
Part of the plan: a $75 million housing development trust fund to create or preserve 5,000 single-family homes and apartments, support for developers on these projects, and establishing dedicated money for minor home repairs.
But two years later, that fund has $12.5 million — from pandemic relief money allocated in May. City officials are currently working on a plan for how to spend the funds, said John Wood, director of neighborhood and housing services in Kansas City.
In response to the slow progress, housing justice advocacy group KC Tenants has proposed its own program, called a People’s Housing Trust Fund, which calls for a minimum of $30 million in annual funding for a program administered by the city government.
Housing trust funds are a distinct funding source established by local or state governments with the overall goal of preserving and producing affordable housing for residents. Unlike other housing programs that may have similar goals, housing trust funds often have dedicated funding sources to support programs around affordable housing.
KC Tenants’ housing trust fund proposal outlines that funding should support social housing, which are housing options owned by local governments or nonprofit entities that do not make a profit. KC Tenants points to housing co-ops and community land trusts as examples of social housing. The proposed trust fund would also help residents rehabilitate their homes to make them more energy efficient or more accessible for people with disabilities.
The city could choose to adopt some or all of KC Tenants’ proposal for a local housing trust fund, but it’s unclear if the city will do that.
Members of KC Tenants began working on their plan last summer. Any housing property or project that receives funding from the People’s Housing Trust Fund would have to prioritize affordability, according to the proposal. The properties must be affordable for people earning 50% or less than the area median income, and residents should not pay more than 30% of their income toward rent.
“If we create a People’s Housing Trust Fund — that is funded the way that the people have decided, that is governed by the people and that funds programs that are made for the people — we can change this entire system,” said Jenay Manley, a leader with KC Tenants. “We can create a Kansas City that is affordable forever.”
What’s happening with KC’s original trust fund plan?
So far, the city has committed to $25 million for a trust fund using American Rescue Plan money over the next two years, Wood said. Because it’s pandemic relief money, those funds must be spent by 2026, Wood said.
Where will the other $50 million approved by the council in 2019 come from? Wood said the city is exploring different ideas.
“This is going to be a constant search of staff and elected officials to seek resources to think about ways to raise dollars to fund housing,” he said.
Councilmember Melissa Robinson represents Kansas City’s Third District, which encompasses neighborhoods east of Troost Avenue, an economic and racial dividing line in Kansas City caused by past segregationist housing policies.
This is going to be a constant search of staff and elected officials to seek resources to think about ways to raise dollars to fund housing
John Wood, director of neighborhood and housing services in Kansas City
Robinson said the city needs to determine how to fund the trust over time to reach $75 million.
“I believe that we have to get a lot of voices around the table as it relates to how we spend this money,” Robinson said. “But we need to expedite utilizing these funds ASAP.”
She said she’s also looked at KC Tenants’ proposal for ideas.
“There’s a lot of things that are in there that I think are promising that we need to look at,” she said.
Housing trust fund models in other cities
KC Tenants looked at existing housing trust funds across the U.S. as models.
In Baltimore, the Affordable Housing Trust Fund is overseen by the city’s Department of Housing Community Development. It was created in 2016 and had more than $12 million as of June 2020. The fund requires that all the money be directed toward households with incomes at or below 50% of the area median income — in 2021, that’s $52,550 for a household of four.
Program funds are allocated to a community land trust program for the construction of new rental housing, preserving existing housing and more.
“We’re serving the most vulnerable population, people who are at the most risk of being housing insecure,” said Kate Edwards, acting deputy commissioner for development in Baltimore.
Money for Baltimore’s housing trust fund is generated through a yield excise tax on the transfer of property valued at or above $1 million and another excise tax on the recordation tax for property valued at or above $1 million. The city also allocates additional funding to the program — for fiscal year 2021, the city provided $3.5 million.
Edwards said the money generated through those taxes can fluctuate, which can impact the overall funding for the housing trust fund. She said a challenge of operating the trust fund is identifying additional funds to support the program.
Still, she said it’s important to identify funding sources up front when creating a housing trust fund. Edwards said the city has been successful in building consensus among community stakeholders.
“In addition to having that dedicated funding source, I think that’s another really key, important part that Baltimore has been successful with, is always being as inclusive as possible and having the conversation to keep it moving and having that be a collaborative program,” she said.
The Philadelphia Housing Trust Fund was established in 2005. Last month, the city council there approved a bill to mandate funding for it in all future budgets. If the bill is approved by the mayor, it will be voted on during the November general election.
That program is funded through public-private partnerships and governed by a Housing Advisory Board, a city department created by voters. Since 2006, the fund has generated $6.5 million in property taxes and helped about 47,000 households.
In Kentucky, the Louisville Metro Affordable Housing Trust Fund received $10 million in funding for the upcoming fiscal year. The program provides grants or loans to build and preserve affordable housing. Unlike the Affordable Housing Trust Fund in Baltimore and the People’s Housing Trust Fund proposed by KC Tenants, Louisville’s program does not have a dedicated source of public funding. It’s currently funded through one-time allocations from Louisville Metro Government and a combination of corporate and individual donations.
KC Tenants suggests funding from police, developers
The KC Tenants proposal calls for funding from two avenues: taxes on developers and a reallocation of funds currently going to the Kansas City, Missouri, Police Department.
The Kansas City Police Department received $256,773,275 for fiscal year 2022. KC Tenants proposes that the city cut roughly 9% of the department’s budget — around $23 million — and reallocate it to the fund. This cut would still follow Missouri law requiring the KCPD to receive at least 20% of the city’s general fund.
KC Tenants also proposes levying taxes on developers to generate funds. It comes at a time when public sentiment is souring toward the city’s practice of offering tax breaks to developers.
Proposed taxes on developers include an anti-speculation tax meant to stop investors from buying and reselling properties. KC Tenants proposes a 15-20% tax on properties transferred to a new owner within two years. Another proposed tax is a linkage fee, a development impact fee on new construction. Philadelphia currently imposes anti-speculation taxes and generates money through linkage fees.
Robinson said she thinks the linkage fee proposal is promising. She supports addressing the current incentive structure the city has in place, but does not support diverting funds from the KCPD. She thinks the city could fund the housing trust fund solely through economic development reforms.
“We have an exorbitant amount of economic development incentives that we provide for developers,” Robinson said. “I believe if we do incentive reform, and we actually ensure that developers are paying their fair share of taxes, we’ll have more than enough money to address affordable housing. I feel like we need to solely focus on economic development reform while we hold the police accountable for the funds they receive.”
Kansas City housing trust fund oversight
KC Tenants proposes that the Housing Trust Fund have oversight by a community-led board with representation from City Council, tenants, people who are unhoused, Kansas City Public Schools and a community organization that provides housing services.
The proposal stipulates that any person involved in an organization “with a profit motive related to housing” is not allowed on the Housing Trust Fund board. This includes corporations, banks, for-profit developers and any person who has received donations from or has business ties with any entity involved in for-profit housing.
The city would be responsible for administering the funds, which can include funding projects, making awards and monitoring the projects. The Board will provide the oversight, including setting priorities of the trust fund and establishing the procedures for distributing the funds.
KC Tenants proposes several ways funds could be administered. Grants could be given to non-profits, without the expectation that it gets returned to the city. Loans could be distributed at low or no interest rates for acquiring and rehabbing homes. Another proposal is establishing lines of credit for tenants whose housing is part of a Housing Trust Fund program.
The group also suggests that the housing trust fund should fall under a standalone housing department, which would be held accountable to the community board.
“The only way to make sure that happens is that we are actually the ones administering how these funds will be spent, deciding where the money is coming from and where it’s going,” Manley said. “That means that we actually do need to be taxing the gentrifiers. We need to be defunding the police because those are systems that have harmed and oppressed us.”
Disclaimer: Chase Castor took these photos on assignment for The Kansas City Beacon. Other photos by Castor have also been reproduced by KC Tenants, not on assignment for The Beacon.
