Trust Fund Cut Would Affect AHA Projects

Reprinted with permission of the Catholic Northwest Progress

In addition to reductions in state funding, banking crisis poses threat to future low-income housing plans

As the state tries to deal with a projected $8-billion budget deficit, advocates for Catholic Community Services of Western Washington and the Archdiocesan Housing Authority are warning that Gov. Christine Gregoire’s proposed cuts to the Washington State Housing Trust Fund could have dire effects on the state’s poor.

The Housing Trust Fund, established in 1987, is a major source of funding for agencies, like AHA, that work to provide affordable housing for low-income individuals and families. The fund has grown considerably in recent years, but Gov. Gregoire has proposed cutting the fund from $200 million to $100 million for the next budget period, said Josephine Tamayo Murray, CCS’ King County agency director.

Villa Santa Maria in Mount Vernon is one of the farmworker housing projects managed by AHA. Archbishop Alex J. Brunett blessed the facility in April 2008. Gloria Burton, director of AHA’s Farmworker Housing Initiative, said the farmworker community is always grateful for new AHA housing projects. “You cannot describe how they react, especially on opening day when they can move in,” she said. “It’s like they won the lottery.”   Photo: Armando Machado

Such a drastic cut would significantly limit AHA’s ability to build more units of affordable housing, AHA officials said, especially when combined with other economic factors.

“It’s really unfortunate that, in an economic downturn and with state budget cuts, programs and services that work with people who are poor are disproportionately affected,” said Murray.

A devastating effect’
Through its 39 programs, AHA provides more than 1,850 units of affordable housing throughout Western Washington.

“Our mission is to work with the marginalized, the poorest of the poor,” said Rob Van Tassell, AHA’s director of housing and community development. “So we’re working a lot with families and individuals that are coming out of homelessness,” including farmworkers, low-income seniors and adults with mental or physical disabilities.

La Casa de la Familia Santa in Centralia is one of AHA’s farmworker housing projects. The state budget deficit and the global economic crisis may limit AHA’s ability to build similar affordable housing units for low-income families and individuals in the future.  Photo courtesy AHA

The housing units go to people with incomes between 30 and 50 percent of the median income level, “which is considered very low income, or extremely low” said John Hickman, AHA’s director of finance and operations. Tenants pay no more than 30 percent of their monthly income in rent.

Funding for AHA’s housing projects comes from federal, state, county and local government sources, and “the Housing Trust Fund is a critical element of our financing package for any new affordable housing project that we do,” said Hickman.

Since 1992, the Housing Trust Fund has provided more than $17 million toward 19 AHA projects, nearly 22 percent of the total costs, Hickman said. But the proposed cut to the fund could mean the loss of an even larger chunk of funding.

Cutting the fund in half “would have a devastating effect on what we do,” explained Van Tassell, “because we take those dollars that we get from them and leverage them and bring in another four or five dollars for each dollar that we get from the Housing Trust Fund. Without that money, we would find ourselves in a real situation where it would also be difficult to get the rest of the funding.”

Though cuts to the Housing Trust Fund would not affect the 130 units of affordable housing that AHA currently has under construction, it would certainly affect future plans.

“We project to do a number of projects with the Trust Fund each year,” said Van Tassell, “and we would have to cut that back … proportionately, probably.”
A one-night count by the Seattle/King County Coalition for the Homeless on Jan. 30 identified 2,826 people living on the streets in King County alone.

A perfect economic storm
AHA faces several other financial challenges that make the potential cut to the Housing Trust Fund all the more ominous. Another important source of funding for AHA is federal tax credits, which are distributed by the state and provide investors with a credit against their income tax liability for a set number of years. Traditionally, banks have been AHA’s major tax credit investors, Hickman said, but with the crisis in the banking industry, “our source of investors is drying up.”

As a result, “we expect that we will need even more from state and local funding,” said Hickman, “so any cut in the Housing Trust Fund is certainly going to reduce our ability to build affordable housing units anywhere in the state.”

AHA and its tenants are also under pressure from another of the harsh realities of the current economic crisis, Hickman said.

“Our residents are low-income people, and many of them are at risk to lose their jobs, so as they lose their jobs, we’re going to begin to see downward pressure on rent, and we’re going to see people who will be unable to pay their rent,” he said. “We will have to move to evict, because we can’t afford to totally subsidize our buildings. And these are folks who will become homeless … So we’re very concerned, and we’re beginning to see slower payment of rent by tenants because they are having difficulty keeping their incomes up.”

Van Tassell noted that maintaining the Housing Trust Fund at its current level could serve as a form of economic stimulus.

“One of the things that people really like about it, regardless of their political party affiliation and how that might affect their judgment of the Trust Fund, is that it does create a lot of jobs,” he said. “The construction creates several hundred jobs.”

But fundamentally, he said, it is a matter of justice and solidarity.

“As we’re all feeling the pain of the current economic times, (we need to) make sure we don’t forget about those who are less fortunate.”