The Louisville Affordable Housing Trust Fund: A solution to our housing crisis

The Affordable Housing Trust Fund was established by the Louisville Metro Council to invest public and private funds in the development and preservation of affordable housing, and into programs that enhance housing success for vulnerable populations like seniors on fixed incomes, people with serious disabilities, working people not earning enough to afford housing, and single parent families. The need for housing relief is clear and immediate. The Louisville Affordable Housing Trust Funds 2012 Needs Assessment indicates about half of all Louisville renters live in housing they cannot afford. Louisville Affordable Housing Trust Fund believes that: Every child deserves a safe place to call home A place to call home offers seniors an opportunity to live and grow with independence and dignity Our veterans should have access to safe, affordable housing Hardworking people should be able to afford a home and still have enough money for groceries and child care

A snapshot of other housing need data: 91,999 Louisville families cant afford their rent or mortgage the equivalent of filling the YUM! Center to capacity more than four times. 1 in 8 Jefferson County Public School children were homeless in the last school year, indicating a 44% increase in homeless families in Louisville. Louisville Metro needs to develop nearly 58,000 new affordable units in order to meet market demand according to the Louisville Metro Governments Five Year Strategic Plan. 114,870 people now live in poverty in Louisville, an increase to 15.5% (U.S. Census Bureau, 2011). Many of these families have so little income that the market cannot provide any housing that is affordable to them. 37% of Louisvilles workforce has a median income below what is needed to afford rent and utilities for a two-bedroom apartment at market rate in Louisville. That is 218,000 Louisville workers who need affordable housing. The number of households on the waiting list for subsidized housing has doubled in the past two years to 24,394. Homeownership rates in Louisville have declined to the lowest rate in five years, 63.4%. Louisville has seen a 17% increase in orders of sale for home foreclosures in the past year, on top of the 700% increase in the past 14 years, devastating neighborhoods with vacant, uncaredfor properties.

For a copy of the Needs Assessment, to learn more, or to get involved, please contact Rachel M. Hurst, Executive Director, Louisville Affordable Housing Trust Fund, at rachelmhurst@gmail.com or 502-637-5372

The Louisville Affordable Housing Trust Fund: A solution to our housing crisis
Income and affordable housing segregation has continued; affordable housing that does exist in Louisville is concentrated in just 7 of 26 districts (Districts 1-6 and 15), not all three rings of the city (Louisville Metro Housing Authority, 2011).

The Louisville Affordable Housing Trust Fund is a tool that can help turn things around and create housing opportunity. Unfortunately, The Louisville Affordable Housing Trust Fund still lacks the key component that defines all housing trust funds a source of dedicated ongoing public revenue. The Board of Directors recommends an increase to the insurance premium tax as that dedicated source. The Louisville Affordable Housing Trust Fund (LAHTF) was established by the Louisville Metro Council in 2008 to invest public funds in the kind of housing our community needs: housing for people on fixed incomes like seniors and people with serious disabilities; for young families starting out; for veterans; and for working people whose wages are not enough to live in Metro Louisville. The Housing Trust Fund is founded on the principal that a place to call home opens the door to opportunity, and that the whole community does better when everyone has a decent place to call home. Louisville Metro County Ordinance 40.41- 45 allowed for the creation of the Louisville Affordable Housing Trust Fund as a private nonprofit agency authorized to receive and disburse monies to organizations dedicated to addressing the housing needs of individuals and families of low and moderate income households. How Will the Funds Be Spent? The LAHTF is designed to be flexible and respond to evolving community needs by giving grants and/or loans for affordable housing-related activities including: homeownership and rental housing acquisition, new construction, rehabilitation, emergency repair, down payment assistance, temporary rental assistance, technical assistance and training for developers and low-income housing consumers, support services designed to keep special at-risk people stably housed, foreclosure intervention, and housing-related asset-building. Currently the LAHTF is focusing on the rehabilitation of vacant and abandoned properties for affordable housing re-use. Who Will Benefit from the LAHTF? The whole city benefits when everyone has stable, decent housing, including: businesses that require a stable workforce and workforce housing; neighborhoods that have been devastated by the foreclosure and vacant property crisis; working families that need decent affordable housing and basic economic security; and the community as a whole, due to the economic impact of the LAHTF and reduced crisiscare expenses related to unaffordable housing. Every $1 million invested in affordable housing in Louisville creates as many as 84 units of affordable housing, supports 112 jobs, and generates more than $6.4 million in local revenue. On an annual ongoing basis, the economic impact of having these units of affordable housing occupied includes 44 jobs supported and more than $3 million generated in local revenue. The LAHTF is intended to be a
For a copy of the Needs Assessment, to learn more, or to get involved, please contact Rachel M. Hurst, Executive Director, Louisville Affordable Housing Trust Fund, at rachelmhurst@gmail.com or 502-637-5372

The Louisville Affordable Housing Trust Fund: A solution to our housing crisis
catalyst, helping generate participation by other lenders, investors, and partners, further leveraging the impact of each LAHTF dollar. The Trust directs its resources to affordable housing developers and service providers to promote, produce, and preserve housing for working families and low-income households who need housing that is affordable; they are the real beneficiaries of the Trust. Eligible applicants for the funding will include non-profit or for-profit housing developers, public housing authorities, and housing and homeless service providers. Funds will be awarded through a competitive application process. By ordinance, at least half of any public funds supporting the LAHTF must serve households at or below 50% of the area median income ($19,814 for an individual). The remaining funds are to serve households earning no more than 80% of median income ($31,702 for an individual). Any private funds received by the trust fund may serve households earning as much as 110% of the area median income ($43,590 for an individual). Who Makes Decisions about the Trust Fund? The Affordable Housing Trust Fund is be governed by a 13-member Board representative of the community, appointed by the Mayor and approved by Metro Council. The Board members include: A member of the banking community an affordable housing consumer a low income housing advocate a neighborhood association representative a nonprofit developer a social service provider a representative of the Homebuilders Association of Louisville a representative of the Apartment Association of Louisville homeless individuals a representative of the Greater Louisville Association of Realtors a member at-large a Metro Council member a member from the Metro Government directly reporting to the Mayor

The Board is responsible for establishing policies and procedures for operation of the Trust, monitoring the Funds activities, and making funding decisions. The Board is also responsible for identifying and pursuing additional sources of revenue. The LAHTF reports annually to the Metro Council and Mayor. Where Will the Revenue Come From? Unfortunately, The Louisville Affordable Housing Trust Fund still lacks the key component that defines all housing trust funds a source of dedicated ongoing public revenue. The LAHTF was awarded $1 million in 2006 to capitalize the fund until dedicated ongoing public revenue could be established by further ordinance. In 2008, Metro Council established by ordinance a goal of $10 million annually in dedicated ongoing public revenue for the LAHTF. In 2011, Mayor Greg Fischer allocated an additional $100,000 in matching funds for the LAHTF, and directed $250,000 in National Mortgage Settlement funds to the LAHTF.
For a copy of the Needs Assessment, to learn more, or to get involved, please contact Rachel M. Hurst, Executive Director, Louisville Affordable Housing Trust Fund, at rachelmhurst@gmail.com or 502-637-5372

The Louisville Affordable Housing Trust Fund: A solution to our housing crisis
Though this initial funding is a positive step, to effectively address housing need in Louisville Metro the LAHTF requires a dedicated revenue source. The Board of Directors recommends an increase to the insurance premium tax as that dedicated source. With a 1% increase in the insurance premium tax,

Louisville will establish an estimated $9.7 million annually in dedicated public revenue for the LAHTF to help struggling families and individuals. Hardworking families deserve the opportunity to afford a home and still have enough money for groceries and child care. But 91,999 Louisville families cant afford their rent or mortgage the equivalent of filling the YUM! Center to capacity more than four times. And 13,000 children in public schools will be homeless this year, or one in every eight students! Every child deserves the opportunity to succeed in school and in life, and that begins with a place to call home. The Louisville Affordable Housing Trust Fund is a proven-to-work way to solve this crisis. The city of Louisville may take action now to help hardworking families by enacting a 1% insurance premium tax increase by March 14, 2013 as the source of ongoing dedicated public revenue for the LAHTF. By doing so, Louisville establishes an estimated $9.7 million annually1 in dedicated public revenue for the LAHTF to help struggling families.2 Increasing this rate simply helps to catch Louisville up to other cities. In fact, Louisvilles 5% insurance premium tax3 is lower than other urban areas in Kentucky4, and would remain so even after the 1% increase.

Fischer, G. & Hesen, E. (2012). Setting a Course: Louisville Metro Recommended Executive Budget FY2012/2013. Louisville, KY. 2 The appropriate and necessary level of funding to solve the problem was identified as $10 million annually by Metro Council and several Task Forces, as stated in LMCO 40.43. 3 As authorized in LMCO 122.01-99 (other ins), LMCO 38.64 (health ins), and KRS91A.080, with revenues going to the Citys general fund. Health insurance is not taxed in the non-urban services district. 4 Kentucky Department of Insurance. (2012). Commonwealth of Kentucky Local Government Premium Taxes 20122013 Schedule. Retrieved from http://insurance.ky.gov/Docs.aspx?Div_ID=13#174 For a copy of the Needs Assessment, to learn more, or to get involved, please contact Rachel M. Hurst, Executive Director, Louisville Affordable Housing Trust Fund, at rachelmhurst@gmail.com or 502-637-5372

The Louisville Affordable Housing Trust Fund: A solution to our housing crisis
Insurance Premium Tax Rate of Kentucky Metro Areas, 2012-2013

14% 12% 10% 8% 6% 4% 2% 0%

proposed increase

proposed increase

Newport

Covington

Ashland

Owensboro

Paducah

Lexington

Louisville

Lexington proposes to fund their local AHTF with a .5% increase in the insurance premium tax. In 2009, Owensboro doubled its insurance premium tax to 8%, generating $80 million, creating $1 billion in economic development, and producing thousands of jobs more than any other metropolitan area in Kentucky in the last two years. 5 Revenue from Owensboros occupational tax rose 7.8%, city government has ended the year with surpluses for the last seven years, and unemployment decreased to below the national average. Surely the citizens of Louisville deserve the same benefits. With a 1% increase in the insurance premium tax the average homeowners insurance cost would increase by $7.60 annually; the average automobile insurance would increase by $7.52.6 Thats about 63 a month for each, about the cost of a 2-liter of soda.

Schneider, K. (2011). A Kentucky city reinvents a faded downtown. The New York Times. Retrieved from http://www.nytimes.com/2011/11/16/realestate/commercial/in-owensboro-ky-a-tax-increase-helps-revitalizedowntown.html?_r=1&adxnnl=1&adxnnlx=1345400868-WKnpDkdoNC4lUQ0PseCEwQ 6 Commonwealth Economic (2010). Lexington/Fayette Affordable Housing Trust Fund Fiscal Economic and Social Impact Study. To estimate individual cost, add up the cost of your insurance and multiply it by .006.

For a copy of the Needs Assessment, to learn more, or to get involved, please contact Rachel M. Hurst, Executive Director, Louisville Affordable Housing Trust Fund, at rachelmhurst@gmail.com or 502-637-5372

The Louisville Affordable Housing Trust Fund: A solution to our housing crisis
The Board of Directors of the Louisville Metro Affordable Housing Trust Fund, appointed by the Mayor, confirmed by Metro Council, and representative of the community, calls for a 1% increase in the insurance premium tax to be dedicated to the LAHTF by March 14, 2013. In December 2006, the Mayoral Task Force appointed to study the issue also recommended this source of funding. The Task Force was comprised of bankers, realtors, apartment owners, housing advocates, developers, nonprofits, and state and local government representatives. This is the only revenue source that meets the commitment made by Metro Council, $10 million annually, and can be enacted right now without further state action.

For a copy of the Needs Assessment, to learn more, or to get involved, please contact Rachel M. Hurst, Executive Director, Louisville Affordable Housing Trust Fund, at rachelmhurst@gmail.com or 502-637-5372

The Louisville Affordable Housing Trust Fund: A solution to our housing crisis

Louisville Insurance Premium Tax Details

LMCO 122.01-99, LMCO 38.64, KRS 91A.080

When must we act?

Metro Council must enact changes by March 14 2013 100 days in advance of July 1 (March 23), the city must file notice of any change in insurance rates with the Kentucky Commissioner of Insurance. The last Metro Council meeting before March 23 is March 14 2013. The KY COI will notify insurance companies 85 days in advance (April 7) of the effective date

What does the tax apply to?

By KRS 91a.080, it applies to insurance actually collected in a calendar year, minus any premiums returned to policyholders, for: Casualty insurance Auto insurance Inland marine insurance Fire and allied perils insurance Life insurance (based on the 1st years premiums) Health insurance for Urban Services District policyholders (LMCO 38.64 (Blackwell) passed in 2007 reestablished this), except as described in Exceptions.

What are the exceptions?

Certain kinds of health insurance are exempted by KRS 91A.080: o Group health insurance for state employees o Employer liability insurance o Individual health insurance policies o Kentucky Access health insurance policies o High deductible health insurance plans Debt instruments on behalf of a government (like bond insurance), unless its for a for-profit LMCO 38.64 (2007) exempts health insurance for those outside the Urban Services District Residents in incorporated cities pay an insurance premium tax, but the revenues are retained by that city, and therefore cannot be directed to the LAHTF

For a copy of the Needs Assessment, to learn more, or to get involved, please contact Rachel M. Hurst, Executive Director, Louisville Affordable Housing Trust Fund, at rachelmhurst@gmail.com or 502-637-5372

The Louisville Affordable Housing Trust Fund: A solution to our housing crisis
Revenues
Revenues from the existing 5% fee were over $48 million in FY 2010-11 for Louisville. 1% increase is projected to raise an additional $9.7 million .5% would yield $4.85 million

2% would yield $19.4 million Costs

Average homeowners insurance increases $7.60 annually (63/month) Average auto insurance increases $7.52 annually (63/month) Combined, thats about the cost of a 2-liter of soda ($1.25/month)

Comparisons
Newport: 13% Covington, Ashland: 10% Owensboro: 8%. Owensboro in 2009 raised its insurance premium tax from 4% to 8% and generated $80 million, achieving an impact of $1 billion in economic development and generating thousands of jobs more than any other metropolitan area in Kentucky in the last two years. Also, revenue from Owensboros occupational tax rose 7.8%, city government has ended the year with surpluses for the last seven years, and unemployment decreased to below the national average. Lexington is at 5% and seeking to increase it to 5.5% to fund a local AHTF Paducah: 6%

For a copy of the Needs Assessment, to learn more, or to get involved, please contact Rachel M. Hurst, Executive Director, Louisville Affordable Housing Trust Fund, at rachelmhurst@gmail.com or 502-637-5372

The Louisville Affordable Housing Trust Fund: A solution to our housing crisis
How will the 1% increase in the insurance premium tax affect incorporated cities?
Incorporated cities within Louisville Metro set their own insurance premium tax rates. Insurance companies direct to the incorporated city the revenues from this tax on policies from residents within that city.7 There are 80 incorporated cities within Louisville Metro (besides Louisville Urban and Louisville-Jefferson), all of which collect an insurance premium tax and retain the revenues. The majority of them (80%) collect an insurance premium tax at the same rate as Louisville Metro Government. About one- fifth of them (15) of them collect more, as high as 10%. Only one collects less. 8 11 cities collect at least 6% insurance premium tax: 10% Pewee Valley (District 17), Shively* (District 3), and West Buechel (Districts 10 & 2) 8.25% Audubon Park (District 10) 8% Goose Creek*(District 7), Hurstbourne* (District 18), Sycamore*(District 19), and Woodland Hills* (District 19) 7.5% Prospect (District 16) 7% Strathmoor Village (District 8) 6% Westwood (District 7, 17)

4 cities collect higher than 5%, but less than 6%, insurance premium tax: 5.8% Creekside (District 17) 5.5% Green Spring*(District 16), Maryhill Estates (District 7), and Worthington Hills (District 16 & 17)

64 cities collect the same insurance premium tax as Louisville Metro Government, 5% Only 1 city collects less than 5%: 2.5% Hillview (District 13) It is our intent to strongly encourage incorporated cities to participate in the LAHTF by contributing a portion of their insurance premium tax and dedicating that revenue to the LAHTF, just as we are asking Louisville to do. Communities contributing to the LAHTF will benefit from LAHTFs activities.

David Brown (2013). Mayor Brown is a member of the Board of Directors of the Jefferson County League of Cities; Mayor of Seneca Gardens; and a supporter of the LAHTF 1% insurance premium tax increase. 8 Brenda Smith (2013). Ms. Smith is Coordinator of the Kentucky Department of Insurance Local Government Premium Tax Program. *starred cities exclude health insurance from the tax

For a copy of the Needs Assessment, to learn more, or to get involved, please contact Rachel M. Hurst, Executive Director, Louisville Affordable Housing Trust Fund, at rachelmhurst@gmail.com or 502-637-5372