National Housing Trust Fund could have amplified recent MN Housing awards

The record $162 million awarded for housing development last month by Minnesota Housing Finance Agency (MHFA) will touch thousands of Minnesota households, ensuring that housing is created and preserved for people who need a place to call home. As MHP reported in a recent post, for every dollar awarded there were almost two dollars’ worth of requests that were left unfunded.

Despite the historic nature of the award package, many households in need of housing that they can afford will not benefit from this round of funding. So it seems reasonable to ask: what might the award package have looked like if Congress found a way to fund the National Housing Trust Fund (NHTF)?

The National Low Income Housing Coalition (NLIHC) estimates that Minnesota would receive $77,500,000 for every $5 billion invested in the NHTF. The funds from this new, permanent affordable housing production program are meant to increase and preserve the supply of decent, safe affordable housing for extremely low- (ELI) and very low- (VLI) income households. Under the best case scenario, MHP estimates that Minnesota developers could have constructed and rehabbed an additional 836 multifamily units – without leveraging additional dollars.

Unfortunately, the NHTF has remained unfunded since it was established by law in 2008. The law originally identified Fannie Mae and Freddie Mac as the sources of funding, but the entities were relieved of this obligation when they went under government conservatorship in 2008. Congress has yet to designate an alternate source of funding for the trust.

There are several ways that the NHTF could have been funded.

  • Last year, Minnesota Congressman Keith Ellison introduced H.R. 1213, the Common Sense Housing Investment Act of 2013, as a solution to our nation’s housing crisis. H.R. 1213 proposes a reform to the mortgage interest deduction that would create almost $200 billion in government revenue over the next ten years, directing about $109 billion to the NHTF and $86 billion to other housing programs. If this bill passed, Minnesota would receive approximately $155 million annually from the NHTF.
  • President Obama included $1 billion in funding for the NHTF his budget proposals for FY10, FY11, FY12, FY13 and FY14. However, Congress has yet to agree on a funding source. If Congress had found a way to generate $1 billion for the NHTF in FY14, Minnesota would have received $15.5 million.
  • Had Fannie and Freddie been required to pay into the NHTF, the entities would have deposited an estimated $382 million into the trust fund by the end of  2012.  MHFA could have awarded roughly $6 million more to developers and agencies across the state.

Any of these scenarios would have created or rehabbed additional housing, as the table below shows.

What funding the National Housing Trust Fund could produce in Minnesota in one year

Proposed Funding Source

H.R. 1213

Fannie and Freddie

President’s Budget

Total Amount

$155,000,000 $5,921,000 $15,500,000

Amount to be used for multifamily

$124,000,000 $4,736,800 $12,400,000

Amount to be used for single-family

$15,500,000 $592,100 $1,550,000

Amount to be used for administrative activities

$15,500,000 $592,000 $1,550,000

New Multifamily construction (non LIHTC)

322 units 12 units 32 units

Multifamily rehab (non LIHTC)

514 units 20 units 51 units

 Total Units Produced

836 total 32 units 83 units

* *According to National Housing Trust fund statute, 80% of funds must be used for the construction, preservation, rehabilitation and operation of multifamily units for ELI and VLI renters. Up to 10% of funds can be used for homeownership activities and administrative purposes, respectively.

* *MHP calculations are based on average costs of multifamily new construction and rehab 2013 for projects funded by Minnesota Housing. Averages for multifamily new construction (without LIHTC/tax credit funding) are $202,842 in the Twin Cities metro and $183,501 in Greater MN. Multifamily rehab without LIHTC averages are $123,891 for the metro and $117,403 non-metro. Assumes 50% of housing in Greater MN. Numbers assume that tenants rents cover all operating costs.


If the Federal government could come together to fund the NHTF, Minnesota developers and agencies could have done even more to prevent and end homelessness, preserve housing stock and assist current and future homeowners. In addition to the money for the NHTF, H.R. 1213 would also direct money to the Low Income Housing Tax Credit (LIHTC) program, Section 8 and the Public Housing Capital Fund. Developers could rehab and build more affordable housing, public housing agencies could modernize properties, and more low-income families could receive scarce vouchers.

To learn more about funding the NHTF, contact Libby Murphy.