A rehab on North 17th Street is one of 577 units being created by the PHA's stimulus-funded program. It will give rise to 2,200 jobs, the agency estimates, many of them in local private industries.

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.

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