With the city facing a $65 million budget shortfall, advocates are worried about the future of funding for affordable housing, just a year after Louisville Metro Government provided close to the $10 million it’d promised a decade ago.
“I think everybody is concerned,” said Christie McCravy, executive director of the Louisville Affordable Housing Trust Fund. McCravy said Mayor Greg Fischer’s administration has not given her an idea of what type of funding, if any, the trust fund could receive in the next budget.
In fiscal year 2018, the city gave $9.57 million to LAHTF, which invests in the development of new affordable housing and helps existing affordable housing stay that way. It was the first year the city got close to $10 million since Metro Council pledged in 2008 to find a way to allocate that amount annually to the trust fund. Before that, LAHTF received $2.5 million in fiscal year 2017, roughly 25 times the total it had received in all of the previous years combined.
Last week, Fischer pitched a proposal that would raise insurance premiums tax to cover the budget gap, saying that without increased revenue, the city would face cuts, including a reduction of capital project funding for sidewalk repairs, road paving and affordable housing. Though, some have questioned Fischer’s one-or-the-other presentation.
Five Democratic Metro Council members jointly filed an ordinance Monday to approve the insurance premiums tax hike.
Not only would LAHTF possibly face a decline in funding with cuts, but an increase to the insurance premium tax has also long been discussed as a potential revenue source for the trust fund, which currently has no dedicated funding source outside annual allocations from Louisville Metro Government.
“We definitely need to dedicate a source of funding for the trust fund. We need to be even more aggressive for those households that are left out,” McCravy said.
While a 1 percent rise in the insurance premium tax was one possible option, McCravy said that LAHTF is currently conducting a study to identify a range of sustained revenue sources that could fund its mission. The insurance premium tax was top of the list, “but we will see what Metro will decide to do,” she said.
The mayor has said that the budget shortfall is a result of mandated increases in state pension allocations the city must pay. The city’s pension obligation is slated to increase 12 percent each year through the fiscal year 2023.
Cathy Hinko, of the Metropolitan Housing Coalition, also raised the alarm that cuts would impact funding for affordable housing at a time when LAHTF is just starting to see results of larger-scale investments.
“Are we making some progress? Yes, but we are running as fast as we can to fall behind as slowly as possible,” Hinko said, adding that “It isn’t that (LAHTF and other affordable housing funders) aren’t useful tools; it’s just that they haven’t been given enough time.”
The cut, she said, also would reduce the number of code enforcement officers who, among other duties, help enforce building standards for rentals.
“There probably isn’t a legislation issue more important than resolving the pension crisis,” Hinko said.
Last fiscal year, LAHTF allocated $9.2 million to 22 project with total developments costs of $164 million. The money funded 1,306 affordable housing units, mostly apartments. More than two dozen were formerly vacant single-family homes.
Still, Louisville is lacking more than 31,400 rental units that are affordable to people earning 30 percent of the average median income. The average median income for a family in the Louisville MSA, which includes surrounding counties, is $71,500 a year.
McCravy said the full impact of the trust fund’s investments will take time to materialize. Once initial loans from LAHTF are paid back, they can be recycled to fund more projects.
“We have a lot of work today,” she said, “but if we keep working away at it and scratching it, we will be able to see a significant impact in the future.”