Housing Trust Funds

Housing trust funds are financing mechanisms that cities, counties, or state governments establish to support and preserve affordable housing. By financially supporting affordable housing projects, cities and counties increase opportunities for low-income families and individuals to access good homes. The funds may include support services such as: down payment assistance, interest subsidies, deferred loan payments, equity investments, new construction, rehabilitation, and homeless assistance programs. 

Housing trust funds are advantageous because they provide more flexibility than other State and Federal funding sources used for affordable housing, enabling funds to be leveraged to obtain additional funding from other sources. Further, local agencies can tailor their housing trust fund program requirements to address specific identified needs in their community, such as housing for special needs populations, housing for very low-income households, or increasing homeownership opportunities. The development of a housing trust fund should include the adoption of clear program guidelines and priorities which establish the types of projects and entities that are eligible for funding. 

Activities typically funded by housing trust funds include: 

  • Preservation/rehabilitation of existing housing. Funds can be used to purchase existing affordable housing projects where affordability is set to expire or existing multi-family projects for conversion to affordable units. 
  • Land acquisition. A local agency may use housing trust funds to purchase or assist a local nonprofit with purchasing land to develop affordable housing. 
  • New construction. New construction of affordable housing projects can be accomplished using housing trust funds in a variety of ways, including:  
    • To provide “gap” funding needed to make affordable housing projects financially feasible 
    • To provide up front funding needed for the developer to seek additional funds from other sources 
    • To provide low-interest loans to affordable housing developers to increase the financial feasibility of affordable housing projects 
  • Special needs housing. A local agency may choose to focus on housing for special needs populations, based on local needs, including supportive housing, transitional housing, senior housing, and emergency shelters.
  • Individual rental subsidies or homeowner assistance. Some agencies focus on grants to individual households. Due to the increased administrative needs of this type of program, they may sometimes be operated by a nonprofit organization. Types of programs include:
    • Subsidy of rents for lower-income individuals 
    • Grants or loans for homebuyers to assist with down payment and/or closing costs
    • Grants to lower-income homeowners to complete needed rehabilitation/maintenance on their home

There are 30 local government housing trust funds in California. All of these trust funds have been established by cities; none by counties. With the exception of Mammoth Lakes and the City of Fresno, every California city with a housing trust fund is either in the San Francisco Bay Area, Los Angeles County, or Orange County. Across the United States, 815 housing trust funds produce $2.5 billion annually to support affordable housing. 

Access to additional funding for affordable housing projects. A key benefit of implementing a housing trust fund program is the opportunity to leverage additional public and private funds for affordable housing. This opportunity exists not only for the local agency but also for private and nonprofit developers looking to pool a variety of funding sources for one project. According to the 2016 Housing Trust Fund Survey Report, local agencies were able to leverage six dollars for every one dollar invested in housing activities by the trust fund. The State’s Local Housing Trust Fund Program is one such program in California that provides matching grants to local housing trust funds for a variety of affordable housing activities. 

Revenue sources for housing trust funds. Identifying a reliable source of revenue is often the biggest challenge in creating a housing trust fund. Housing trust funds can be a key tool in attracting new affordable housing development in a community; however, these efforts can be stunted if annual revenues are not sufficient to fund the types of projects envisioned by the program. Housing trust funds should have a dedicated source of revenue that is not dependent solely on appropriations through the annual budget process. The following are typical ongoing revenue sources for housing trust funds: 

  • Local impact fees, such as commercial linkage fees or housing impact fees
  • Inclusionary housing program in-lieu fees
  • Other local discretionary revenues, such as transient occupancy tax, short-term rental fees, or a share of local sales tax
  • Loan Repayment (revolving fund): If the housing trust fund is to be used for loans to affordable housing developers, a revolving fund could be created whereby repayments from previous loans fund future loans. While a large initial deposit into the trust is necessary at the onset, annual revenues needed from other sources, if any, would only need to cover ongoing program administration costs.

Regional trust fund distribution. A particular challenge is the distribution or use of funds; how to guarantee an equitable share of the funds is used in each member jurisdiction of the trust fund. Within a region, the market conditions, development regulations, and local acceptance of affordable housing vary among jurisdictions. These differences often result in the uneven use of funds in the region and some members may not see the benefits of participation.

Establishing a housing trust fund. In establishing a housing trust fund, consider community needs and priorities to develop clear program goals and guidelines. Community needs can be informed by stakeholder input as well as existing conditions reports, such as the needs assessment component of the housing element. Agencies may also consider implementing a prioritization system to ensure that key program goals are met, such as extra review points for high-priority projects. Some agencies also set aside a portion of trust funds specifically for high-priority housing, such as housing for extremely low-income households to further incentivize development of these project types. Program guidelines should also include specific requirements related to terms of affordability and target populations (i.e., designated income category and/or special needs populations). 

Survey Results

A survey conducted for the San Joaquin Valley Regional Early Action Planning (REAP) Report asked 41 different jurisdictions about their housing trust funds. Only 3.03 percent of respondents said their jurisdiction had a housing trust fund. Another 27.27 percent of respondents thought having one would be a good tool. In another similar question, survey respondents were asked if they had completed recent projects or regulatory changes to promote housing production. Housing trust funds were one of the sample responses, and 6.9 percent of respondents said they have housing trust funds in development.  

Stakeholder Interviews

Stakeholders identified a lack of local funding capacity in the San Joaquin Valley as a major challenge to housing production. Several interviewees pointed to the difficulty of assembling financing packages without bonding, housing trust funds, or philanthropic/large foundation “soft” money. The Valley MPO Directors indicated that the Stanislaus and San Joaquin County areas are strongly considering establishing housing trust funds to improve funding.

Relevant State Law

SB-1111. Local Housing Trust Fund Matching Grant Program: Housing and Emergency Shelter Trust Fund Act of 2002 Allocation: Local Housing Trust Eligibility.


Center for Community Change. The 2016 Housing Trust Fund Survey Report. 

Institute for Local Government. Establishing a Local Housing Trust Fund: A Guide for California Officials. While outdated in some regards, this report provides detailed information on key components and considerations when developing a housing trust fund. 

California Department of Housing Community Development, National Housing Trust Fund Program. 

U.S. Department of Housing and Urban Development, About Housing Trust Funds. 

Community Change, What Are Housing Trust Funds? 

Community Change, Housing Trust Funds in the United States 2021. 

Community Change, State and Local Housing Trust Funds 2022

National Housing Trust Fund, HTF: The Housing Trust Fund (March 2020). 

Funding Resources

HCD. Local Housing Trust Fund (LHTF) Program. Provides housing trust funds dedicated to the creation, rehabilitation, or preservation of affordable housing, transitional housing, and emergency shelters. 


California cities with housing trust funds include Anaheim, Berkeley, Campbell, Citrus Heights, Cupertino, Elk Grove, Emeryville, Fremont, Fresno, Livermore, Long Beach, Los Angeles, Mammoth Lakes, Menlo Park, Morgan Hill, Mountain View, Oakland, Oxnard, Palo Alto, Pasadena, Petaluma, San Diego, San Francisco, San Jose, Santa Cruz, Santa Monica, Santa Rosa, Sunnyvale, and West Hollywood.