Housing group, mayor share differing visions on a housing trust fund for Kansas City

This story was originally published by the Kansas City Beacon.

As Kansas City grapples with an affordable housing crisis, three proposals could guide the city’s first housing trust fund — a program that uses ongoing fees and dedicated funds to preserve and produce affordable housing.

But each proposal is different. There’s one from local tenant union and advocacy group KC Tenants, one from a coalition of local nonprofits and, most recently, one from Kansas City Mayor Quinton Lucas.

The nonprofit coalition — called the Promoting Equitable Neighborhoods action group — includes the Urban Neighborhood Initiative and the Greater Kansas City Local Initiative Support Corp. (LISC).  

In Missouri, the need for affordable housing is high: There’s a shortage of more than 122,000 affordable homes, according to the National Low Income Housing Coalition.

To address these housing needs, the Kansas City Council approved a Five-Year Housing Policy in 2018 that included the creation of a $75 million housing trust fund.

But that program was not funded until this May, when the city allocated $12.5 million in temporary federal COVID relief money from the American Rescue Plan Act for a housing trust fund.

AJ Herman, director of policy for the mayor’s office, said the federal money was the catalyst for the office to draft a housing trust fund proposal.

“But once there’s money in it, then … you start asking questions like, ‘What do we mean by affordable housing?’ ” Herman said. “What should be eligible to receive funding? And how should the city choose which projects or entities to disperse funds to? And how should those decisions be made?”

The Kansas City Beacon compared the proposals and how they would be implemented in Kansas City.

KC Tenants’ housing trust fund prioritizes social housing 

KC Tenants released its policy for a People’s Housing Trust Fund this summer and drafted an ordinance in August. The group sent a copy of the ordinance to Lucas that same month, according to emails provided to The Beacon. Jenay Manley, a leader with KC Tenants, said the mayor did not respond.

KC Tenants’ housing trust fund calls for minimum annual funding of $30 million, generated by implementing new taxes — such as linkage fees, anti-speculation taxes and real estate transfer taxes on developers — and taking $22 million from the Kansas City Police Department. The Police Department money would come from the crime-free multifamily housing program, the narcotics and vice division, the youth services unit and overtime pay, among others.

“We want public dollars for public good,” Manley said. “And we want that to go directly to tenants empowering themselves.”

The program would support the creation of social housing — options that are separate from the private housing market and do not make a profit, like community land trusts and housing cooperatives. Under the proposal, nonprofits, tenant unions or neighborhood groups could receive grants to build projects that fit the program’s requirements.

KC Tenants calls for housing trust fund projects to be “affordable for 99 years.” Affordability is defined as a cost point at which residents who earn at or below 50% of area median income — $43,300 for a family of four and $34,650 for a two-person household in Kansas City — pay no more than 30% of their income toward rent.

The trust fund would be overseen by a nine-member board that includes KC Tenants members, representatives from local tenant unions, a City Council member and a representative from a local service provider or community organization focused on housing, such as a local shelter for unhoused people. The policy would bar any party with a “profit motive related to housing” — such as  banks, property management companies or for-profit developers — from joining the board.

The board would establish program policies and determine how funds are used. Daily administration of the fund would fall to a new housing trust fund office under Kansas City’s housing department.

Mayor Quinton Lucas’ housing trust fund proposal

Lucas introduced his housing trust fund ordinance to the City Council in September. It was referred to the Neighborhood Planning and Development Committee.

Lucas’ proposal would guide the city on how to spend the $12.5 million it allocated for a housing trust fund in May. About $4 million from that fund has since been directed to development projects approved by the committee, the mayor’s office said.

While Lucas’ proposal does not specify sources for ongoing revenue, the mayor’s office said it’s exploring what continual funding mechanisms could look like.

“​​We wanted to make sure that if (the city) council was going to be making future decisions around allocating funds, that at least we had some rough guidelines in place that laid out what we expected the funds to be used for,” Herman said.

Lucas’ proposal calls for projects approved by a housing trust fund to be affordable for at least 20 years. Affordability is defined as a cost point at which a household at or below 60% of the area median family income, as defined by the U.S. Department of Housing and Urban Development, spends no more than 30% of their income on mortgage or rent, including utilities.

A four-person household at 60% of area median family income would make no more than $51,960. For two people, that number is $41,580.

Under the proposal, for-profit developers and nonprofit organizations alike could receive grants from the city. Priority would be given to projects that have longer periods of affordability, offer units suitable for families and build social housing, such as a community land trust.

Lucas’ proposal would give the City Council power to approve applications from companies or nonprofits developing housing through the trust fund. The program would be administered by the Housing and Community Development Department. The proposal also calls for an advisory board established by the city manager, with board members chosen by the mayor.

Local nonprofits collaborate on a housing trust fund plan 

The Promoting Equitable Neighborhoods action group calculated the cost of a housing trust fund that supports 5,000 new and existing units in Kansas City over five years at close to $906 million.

To fund its proposed policy, it recommends a combination of public and private dollars. Recommended revenue streams include linkage fees — which are charged to developers and then earmarked for construction of affordable housing — or developer permit fees, along with grants from foundations and other philanthropic organizations.

The group recommends that a housing trust fund preserve existing rental housing and create new affordable housing. Affordability is defined as a price point at which people earning at or below 30% of the area median income — $26,000 for a family of four — spend no more than 30% of their income on rent. It supports mixed-income projects that include some units renting for less than 30% of the median family income and some renting for 50% of the median family income.

Nonprofits respond to mayor’s proposal

Dianne Cleaver, president and CEO of the Urban Neighborhood Initiative who is married to U.S. Rep. Emanuel Cleaver, representing Missouri’s 5th Congressional District, said the organization supports Lucas’ ordinance but has several recommendations.

These include establishing a diverse governing board that includes people involved with and affected by affordable housing issues, such as low-income residents and social service providers.

Michael Anderson, director of the Housing Trust Fund Project, a national group that advocates for housing trust fund programs, said community oversight is important.

“The reason you have this accountability is to put that other firewall, so that covenant with the community — the taxpayers, the people who are footing the bill — they know that their resources are being used in the way that the ordinance specified,” Anderson said.

The Promoting Equitable Neighborhoods group wants the current affordability period of 20 years in the mayor’s ordinance increased to 99 years, or at least 75 years.

“We are already at a deficit of over 16,000 units for extremely low-income residents,” Cleaver said. “That’s a huge deficit that will cost hundreds of millions of dollars to dig us out of that hole. And if we are just saying that it’s only a minimum of 20 years for projects, we will never get ahead of the curve.”

Disagreements about for-profit developers’ role in trust fund

KC Tenants has criticized Lucas’ trust fund proposal because it allows for-profit developers to receive incentives. The group sees that as a continuation of the status quo.

“It’s the same thing we have always gotten in Kansas City, which is money for developers to continue to build in Kansas City, while we are constantly being pushed out,” Manley said.

Herman with the mayor’s office said the ordinance does not mandate that funds go to for-profit developers. A tenants union or community land trust could also receive funding.

When asked why the mayor chose not to adopt KC Tenants’ proposal, Herman said parts of it violate state law barring the removal of funds from the KCPD. It also conflicts with a recent court ruling that Kansas City cannot make changes to the police budget in the middle of the fiscal year. The ruling came after the mayor and City Council approved a plan in May to gain more local control over a portion of police funding.

KC Tenants also proposed new taxes to generate revenue for the fund, but the mayor’s office said Missouri’s Hancock Amendment means the state General Assembly cannot raise taxes without voter approval.

“That’s not something that’s impossible,” Herman said. “But that’s not something we can include in an ordinance until it has been approved.”

Anderson at the Housing Trust Fund Project said the main question of a housing trust fund is who the program is meant to help, and how they reflect the needs of the community.

“They’re set up by people locally to address the local priorities,” Anderson said. “So the fact that there is a political debate about what those priorities would be, in some ways, is part of the process of finding out what a trust fund needs to be.”

The Kansas City Beacon is an online news outlet focused on local, in-depth journalism in the public interest.