Lawmakers tap housing trust funds to plug deficit

TALLAHASSEE, Fla. – Jan. 12, 2009 – In a plan to plug Florida’s $2.6 billion budget deficit, Florida’s legislative leaders decided to sweep $190 million from the state’s affordable housing trust funds. The Legislature is expected to vote on the budget package on Wednesday.

The William E. Sadowski Affordable Housing Trust Fund, established by the Legislature in 1992, is funded entirely by a portion of documentary stamp taxes. The funds are used to build new single-family homes and multi-family housing projects, and for financial assistance programs.

Prior to the start of the special session of the Legislature, lawmakers acknowledged they were eyeing housing trust funds as a potential revenue source. The 2008 Legislature appropriated $303 million for the housing trust funds for the current year. The House suggested sweeping $284 million of this.

However, when state economists predicted that real estate transactions would produce no more than $170 million for the housing trust funds, lawmakers agreed on the lower $190 million figure. Part of the monies will come from funds appropriated in previous years but not spent.

Lawmakers specified that monies be removed first from funds earmarked for construction of new rental units. They also redirected $29.8 million to provide down payment and closing cost assistance to prospective homebuyers. “Down payment assistance will go much further in this current climate than ever before given the lower home prices and historically low interest rates,” says John Sebree, vice president of public policy at the Florida Association of Realtors®.

In setting the $190 million level, lawmakers also took into account the $450 million in federal funds earmarked in the Housing and Economic Stimulus Act (HERA) for local government programs. In addition, the Florida Department of Community Affairs (DCA) will receive $91 million through the Community Development Block Grant program to distribute to local governments that don’t qualify for HERA funds. These monies are to be put toward foreclosure recovery efforts and neighborhood stabilization.  

The HERA initiative, which was signed into law last summer, also includes $571 million of additional bond authority for Florida.

© 2009 FLORIDA ASSOCIATION OF REALTORS®

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