In seeking to establish city and county housing trust funds, advocates may encounter state restrictions that limit what a city or county can do with regard to creating a housing trust fund. They may or may not need authorization for establishing a housing trust fund, but they are more likely to encounter limitations on what they can do with regard to taxing and other fiscal authority.
While it is necessary to research what the possibilities and limitations are, they are likely to depend on the class of city, whether a city has home rule powers or not, and other constitutional restrictions on the powers of local jurisdictions—cities and counties. Some states have constitutional limitations on dedicating public revenue for express purposes or for affordable housing at the local level. In at least one instance, Georgia, the revenue options for local jurisdictions to create housing trust funds has been well-researched.
In response to these limitations, some states have enacted legislation that make explicit the ability of jurisdictions to create a local housing trust fund. Others have opened the door by enabling local jurisdictions to access a revenue source for the express purpose of supporting affordable housing.
South Carolina: South Carolina passed legislation enabling municipalities or counties throughout the state to create and operate a local or regional housing trust fund. Local governments are authorized to create an affordable housing trust fund, jointly form a regional housing trust fund, or join an existing trust fund.
Legislation Enabling Jurisdictions to Access a Specific Revenue Source
Missouri: The Missouri Legislature passed legislation enabling the three most populous counties in the state to increase their document recording fees to support homeless programs within these three counties.
Pennsylvania: Act 137 was passed by the Pennsylvania legislature and enables counties to as much as double their document recording fee if the funds are used to support certain affordable housing activities.
The Pennsylvania Housing Finance Agency just released a 2005 report on the progress of Act 137.
Washington: Washington legislation enables jurisdictions to pass property tax levies approved by the voters for affordable housing. The City of Seattle has utilized this law to successfully pass a housing levy in 1995, 2002 and 2009. In 2012, the City of Bellingham became the second Washington jurisdiction to pass a housing levy.
Indiana: Indiana passed legislation that funded their state fund and enables counties to increase document recording fees, if they establish housing trust funds. Indianapolis/Marion County has done so. Revenues are shared between the local housing trust funds and the state housing trust fund.
Massachusetts: Massachusetts allows jurisdictions to increase their property tax (by a vote of the public) for affordable housing, historic preservation, and open space. These local funds can apply for state matching funds (available from an increase in the document recording fee). Information is available here.
For more information, download the 2013 Housing Trust Fund Project report State Legislation to Promote Local Housing Trust Funds.