Editor’s Note: Philadelphia’s five-year plan includes $300 million in service cuts. Which departments are seeing their budgets slashed, and what are the consequences? The Follow the (lack of) Money series is not intended to bemoan any specific cuts, necessarily, or suggest they shouldn’t have been made. It’s just to take stock of the effects of the budget crisis. -DT
The Program: Housing Trust Fund
The Cut: City commitment cut from $15 million over five years to $6 million
Established in 2005 by then-Mayor John Street, the Philadelphia Housing Trust Fund provides money for affordable housing development and home repair. It’s funded mostly by fees on mortgage and deed transactions, and is part of a complicated web of city agencies and nonprofits that funnel state, federal and city dollars toward affordable housing projects and programs.
In his first budget, Mayor Nutter included a $15 million contribution to the trust fund, to be spread out over five years beginning in fiscal year 2009. Prior to that, Philadelphia had been one of the only major cities that didn’t use general fund* money for affordable housing.
But in order to close last year’s five-year, $1 billion budget hole, Nutter cut that contribution in half, allocating the trust fund $7.5 million over five years.
When the state was late in approving the city’s sales tax increase over the summer, Nutter cut the trust fund’s scheduled $1.5 million yearly appropriation for fiscal year 2010. As it stands now, the city’s projected five-year, $15 million contribution has been reduced to $6 million.
The trust fund has also suffered a sharp decline in revenue from mortgage and deed transfer fees, thanks to the recession. Between this decline and the cuts, the fund’s budget is now about half of what it was in fiscal year 2007.
The Crux: The fund doesn’t just spend the money allocated to it. Affordable housing providers leverage the cash to get matching funds from state, federal and private sources, says Nora Lichtash, executive director of the Women’s Community Revitalization Project, which develops affordable housing in Kensington and North Philadelphia.
Lichtash, who helped draft the legislation creating the trust fund and sits on the fund’s oversight board, says that every $1 million the city puts into the fund allows affordable housing providers to bring in $5.7 million in outside money. Had the trust fund used all the money Nutter initially committed, it could have built about 80 affordable homes, repaired 200 existing ones and protected more than 175 families from foreclosure a year, she says.
It’s not clear how construction will be impacted by the cut, because the fund hasn’t received bids for affordable housing contracts yet. An informational meeting held by the city about request for proposals for affordable housing contracts was attended by about 80 provider groups.
The Defense: Paul Chrystie, spokesman for the Office of Housing and Community Development, which administers the trust fund, believes the cuts will be offset by federal stimulus money — the city has received $5.75 million for affordable housing and has applied for more than $45 million more in funding. Though the money doesn’t go into the trust fund, it will be used for many of the same purposes.
“Overall, there is more money in fiscal year 2010 than was expected before the economy took its toll on the trust fund,” Chrystie says, adding that the money will be funneled to private and nonprofit housing providers in much the same way trust fund money is (stimulus dollars can also flow to for-profit institutions).
Lichtash argues, however, that the federal money can’t be used as a matching fund, so it can’t be leveraged to bring in outside money the way trust fund money can.
Human impact: A year ago, Marquita Irby, pregnant with her son Jayden, paid $350 a month to rent a room she shared with her son Hyseem.
Now she pays $37 more a month to rent a three-story rowhome built by Lichtash’s organization as part of a 40-unit development in the Fairfield section. She has her own bedroom, a new kitchen and a small backyard, and works at a local grocery store while going to school (she hopes to get a job in health care). Trust fund money helps groups like the WCRP fund developments like the one Irby lives in, Lichtash says.
Lichtash points to a 25-unit development her organization is planning on Front Street, near the Berks stop on the Market-Frankford El. She says that $500,000 from the trust fund would enable her to apply for “at least” $1 million from the Federal Home Loan Bank, helping her group pull together enough money to get the project off the ground. The WCRP is applying for trust fund money to complete the project, but the fund is still considering applications. WCRP will also apply for stimulus money for the project.
Light at the end of the tunnel: A bill has been introduced in the state House of Representatives that would allow the city to raise mortgage- and deed-recording fees to plug the hole caused by the cuts. Project HOME, which has been pushing the legislation, estimates that the new fees would bring in $3.5 million to $5.5 million a year.
The bill, sponsored by state Rep. John Taylor (R-Phila.), passed the House Urban Affairs and Rules committees in July with the support of the city and housing advocates.
It’s now sitting in the House Appropriations Committee, where it’s “moving very slowly,” according to Appropriations spokeswoman Johnna Pro. No vote has been scheduled.
Who to contact for more info: The Philadelphia Association of Community Development Corporations has been at the forefront of efforts to restore trust fund money. You can contact executive director Rick Sauer at rsauer@pacdc.org.
*This line has been corrected. It originally said Philadelphia didn't use "it's own" money for affordable housing.
Review city services on our sister site, City Howl.
The city was OK without it up to 2004, and will be OK with less going to it in 2010...— FMT- bla bla more of my hard earned tax dollars being used to support the people who didn't better themselves through education and hard work. and with free money like this, why would they want to? i'd rather see my taxes cut than see the city dump more money on this and other similar programs.— philly57
Comment removed.- Programs, programs, programs! What would we do without programs? Especially complicated ones that funnel federal and state taxpayer dollars to---to who?— Falls Ed
- Comment removed.
- If the Ink and DN did a better job following up on all of the housing and community development programs it has touted over the years that came to nil. I'd be more inclined to believe there was any hope for the Housing Slush Fund, any more than there has been for HOPE money that was wasted and looted, all the Point Breeze Universal Housing never built, the Universal project at the 700 block of South Broad St. that was foreclosed on, the Osun Village project (vacant lots for ten years), the Royal Theater (empty, unused) which used money from the Reinvestment Fund that Universal defaulted on, leaving the RF to try to collect at foreclosure, which it doesn't want to do, but still may have to. If the paper could report the obvious failures all around Philly that the rest of us have no problem seeing, then maybe we could trust that the journalists could really make a difference in making sure this money is accountably spent and doesn't result in a few showpiece houses built at five times the market rate, with the rest of the money unaccounted for and oh, let's not talk about the housing that's in foreclosure now that these groups built and didn't manage properly. From Hawthorne, to Point Breeze, to Germantown, to the subsidized market rate housing built by Universal, to the huge inventory of property that was used to get money that is still sitting, waiting, as government funded blight, I say that if you want housing money to do something, the writers have to start doing something.— CleanupPhilly
- When are the journalists going to have the courage to ask why the RDA is the city's top property tax delinquent? How can you have a city agency hold so much property so long that the property taxes are thousands to tens of thousands overdue per property? The whole system of this fake affordable housing groups get money for but never produce is bankrupting the city. Schools are terrible because the property tax base is decimated by years of corruption as the journalists say "isn't this great that we will build all this affordable housing" but the rate of completion, and the ratio of dollar spent per sf produced is way off. You guys need to start examining the annual reports for these groups, and get of the band wagon of assuming that this is money is doing anything in a substantive way. The private market produces way more affordable housing if you compare dollars spent to square footage produced. That is the fault of the liberals who won't criticize the obvious waste, fraud, and abuse of this money. You guys give the right wing talk radio people their talking points.— CleanupPhilly
- Raising taxes on refis also makes it harder for people to get out from under a bad mortgage. Think about it. That transfer tax is paid on every real estate transfer, including refis. D'OH! You're taxing the very avenue people use to get better rates and terms.— CleanupPhilly
- I see CDC's properties listed in the Philly mortgage sheriff sales all the time, and not one article on how that came to be that the taxpayer funded this group, and the RDA gave this property to this group, but they lost the properties at sheriff sale. Come on people. WAKE UP.— CleanupPhilly
- When are the journalists going to answer CleanupPhilly and finally let him/her know that the RDA cannot be a tax delinquent. As a government authority, the RDA cannot pay property tax. If the BRT shows outstanding property taxes on an RDA-owned property, it is simply a clerical error. RDA is exempt from real estate taxes.— Valley Twin
- Comment removed.
- The authors optimistically conclude, "A bill has been introduced in the state House of Representatives that would allow the city to raise mortgage- and deed-recording fees to plug the hole caused by the cuts." To me, this just seems like another way of gouging more money out of the middle class, a disparately-imposed tax at best. A buyer goes to the settlement table to close on a home they are already struggling to buy, and low and behold, now they have to pay higher closing costs to fund a low income housing project that has never had much accountability for where its money is going. It makes me so angry. When is enough enough!— sweeties mom
- Money does not grow on trees. Affordable housing, SEPTA subisidies, wlefare, medical care for children, unemployement compensation, social security, medicare are all flat-out giveaways. Without requiring something in return for the money you end up with the economic disaster that is Philadelphia.— PittsburghPete
- Come on everybody, this is what you voted for...redistribution of wealth-the Democratic mantra. It'll be interesting to see as the number of worker bees keeps dropping how will all of these drones handle it? We saw a bit of it this year when the state budget wasn't approved and all of these subsidized day care users and providers were screaming. I especially enjoyed reading about the father of 5 who wasn't getting paid to watch his own kids. Wake up people, the gravy days are over and as the number of takers exceed the number of givers it's gonna get ugly out there.— ir8
MONEY AND JUSTICE DON'T MIX
WILL THE NEW COUNCIL GIVE YOU A SAY?
Tips? Comments? Questions?
Contact:
Doron Taussig:
215-854-5307
doron.taussig@gmail.com
@dorontaussig
Holly Otterbein:
215-854-5809
hm.otterbein@gmail.com
@hollyotterbein
Juliana Reyes:
215-854-5855
juliana.f.reyes@gmail.com
@juliana_f_reyes
 | Follow on Twitter |
- Philly Clout
- Metropolis
- Attytood
- Heard in the Hall
- Commonwealth Confidential
- Philebrity
- Phawker
- Young Philly Politics
- OurPhiladelphia
- Capitol Ideas
- Grassroots PA
- PA Policy Blog
- Media Mobilizing Project
- The Notebook
- Dave Davies Off Mic
- Committee of Seventy
- The Independent
- Naked City
- Plan Philly
- February
- January
- December 2011
- November 2011
- October 2011
- September 2011
- August 2011
- July 2011
- June 2011
- May 2011
- April 2011
- March 2011
- February 2011
- January 2011
- December 2010
- November 2010
- October 2010
- September 2010
- August 2010
- July 2010
- June 2010
- May 2010
- April 2010
- March 2010
- February 2010
- January 2010
- December 2009
- November 2009
- October 2009
- September 2009
- August 2009
- July 2009
- June 2009
- May 2009
- April 2009
- March 2009
- February 2009
- January 2009
- December 2008
- November 2008
- October 2008
- September 2008
- News | Sports | Business | What's Happening | Restaurants & Food | Entertainment | Living | Marketplace | Jobs
