Last Monday, Durham Mayor Steve Schewel delivered his first State of the City address. The hour-long speech was wide-ranging: Schewel called on Durham residents to plant trees and help correct decades-old disparities in the city's tree canopy. He sang the words inscribed on the Statue of Liberty and welcomed, in Spanish, the families of two men taking sanctuary from deportation in Durham churches. And he announced "some important, quiet work" being done to address the city's critical lack of affordable housing.
Under the leadership of Phail Wynn, vice president for Durham and regional affairs at Duke University, the city is working to set up an affordable housing trust fund. Housing trust funds aren't uncommon, but it appears Durham's will be unique in that it will rely on private contributions, rather than primarily on governmental resources.
In an interview, Schewel stresses that plans for the fund are in the very early stages. As the Durham Housing Authority begins a massive redevelopment effort and the city gears up to deliver on its commitment to locating affordable housing around light-rail stations, Durham will need more resources to throw at the problem of affordability.
According to the Housing Trust Fund Project, an initiative of the Center for Community Change, there are ninety-eight city housing trust funds across the country, including two in North Carolina—in Asheville and Charlotte. In addition, hundreds of jurisdictions in New Jersey and Massachusetts participate in broader funds in those states. There are also state housing trust funds, including one operated by the North Carolina Housing Finance Agency. All told, these funds dedicate more than $1.2 billion annually to housing efforts.
Schewel says a trust fund would provide a more flexible addition to the city's existing Dedicated Housing Fund, a repository for the proceeds of portion of the property tax rate earmarked for housing and doled out through the annual budget.
He envisions a $15 million fund, with about 10 percent of that coming from the city and the rest from private sources, such as Duke University or financial institutions. The money would be loaned mostly to nonprofit developers.
Wynn is meeting with financial institutions, nonprofit housing developers, and city staff to bring the idea to fruition.
"The key thing would be of course the willingness of private funders to contribute. The commitment of Duke will be very, very important," Schewel says. "I think if the fund is going to work, the city is going to have to put in the top loss, that initial risk capital. The other part of the picture is the potential for a housing bond." (Schewel says he anticipates a bond issue will be needed "sooner than later," given the DHA's redevelopment plans.)
The Dedicated Housing Fund would maintain the city's regular commitments to affordable housing and the nonprofits that work to provide it, while the trust fund could be used for larger or off-budget-cycle expenditures.
"You can be more nimble and have more money at your fingertips," Schewel says.
A trust fund could have come in handy last year, when the DHA had the opportunity to buy back twenty acres of land south of N.C. 147 and sought $4 million from the city to make that happen before a deadline to purchase the property, known as Fayette Place, expired. Schewel says he could also envision the trust fund being used to renovate units that are exiting affordable-housing agreements as leverage to negotiate new affordability requirements.
Michael Anderson, director of the Housing Trust Fund project, says that what Durham is proposing to do—based on the few details available—doesn't fit the traditional definition of a housing trust fund.
"Almost every trust allows for private contributions, but having private contributions as a core part of your business model is entirely different," he says.
Generally, city trust funds are primarily backed by tax revenue, developer fees, and bonds. Three jurisdictions in Iowa report using private dollars as a funding source. Those are mostly backed by money from a state housing trust fund, but they also receive private contributions. Anderson also notes a collaboration in Ithaca, New York, where Cornell University matches what the local government contributes to a housing trust fund.
Addressing housing needs is often just too big a task for private funds alone, Anderson says. Housing trust funds that are reliant on private dollars "often never get a critical mass of funding," beyond initial contributions made to jump-start them.
"There's just not examples of philanthropy stepping up in an ongoing way for a problem that for the last four decades in our country has been really consistent," he says.
That said, there's nothing wrong with utilizing private dollars, Anderson says. "We always say leave that door open. There's great examples of private money helping, but not taking the lead over public money."
Schewel hopes to have the fund in place by the end of this year.