The Governor's 2017-18 budget proposes allocating $423,000 to the Department of Housing and Community Development to fund 3 permanent positions to administer recently awarded federal funds from the National Housing Trust Fund (NHTF). The department's request for 3 additional staff in 2017-18 appears justified. The need for these staff on an ongoing basis, however, is somewhat unclear due to uncertainties at the federal level. We suggest the Legislature ask HCD for its assessment of the likelihood of future NHTF allocations.
National Housing Trust Fund Background. In 2008, the federal government established the National Housing Trust Fund (NHTF) a new program to fund construction of affordable housing. The NHTF is funded by allocations from Fannie Mae and Freddie Mac—government-sponsored enterprises created to support a secondary market for home mortgages. Due to financial challenges at Fannie Mae and Freddie Mac shortly after the NHTF was created, allocations to the NHTF were suspended. In late 2014, the federal administration lifted this suspension. The first allocations from the NHTF to states were announced in the summer of 2016. California was awarded $10.1 million to be allocated by the Department of Housing and Community Development (HCD) to affordable housing projects in the state.
Some Federal Uncertainty. The federal administration’s reinstatement of allocations from Fannie Mae and Freddie Mac to the NHTF in 2014 raised some concerns from some members of the Congress. Following the change, multiple bills were introduce to eliminate funding to the NHTF or divert its funding to other federal housing programs. None of these bills were approved. Given recent transitions at the federal level, however, there appears to be a chance discussions about future NHTF funding may be revived.
Governor’s Proposal. HCD requests $423,000 for 3 positions to administer the NHTF allocation.
LAO Comments. HCD’s increase in workload to administer the NHTF allocation justifies its request for 3 additional staff in 2017-18. The need for these staff on an ongoing basis, however, is somewhat unclear given lack of certainty about future NHTF allocations. We suggest the Legislature ask HCD for its assessment of the likelihood of future NHTF allocations. Should future allocations appear unlikely, the Legislature could consider approving the $432,000 but not the 3 permanent positions. HCD instead could fill these staffing needs by filling 3 previously authorized but vacant positions.