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Affordable Housing Trust Fund

Highland Park, Lake County


An MPC Finance case study


The Highland Park Affordable Housing Trust Fund was created in May 2002 to provide financial support for affordable housing activities that address the needs of low-and-moderate income individuals and families. The Housing Trust Fund was one of the recommendations in Highland Park’s Affordable Housing Plan passed in January 2001 and was updated in March 2003. The fund was established to address a growing concern that housing market trends, including rising land and housing costs and the loss of affordable units, were threatening Highland Park’s diversity, changing the community’s character, and severely limiting housing options for those living and working in the community.

How it works

For a residential development to qualify for funding from the Housing Trust Fund, at least 20 percent of the units must be affordable to households whose incomes do not exceed 120 percent of the area median income (AMI). Of this 20 percent, further affordability requirements include:


Of the affordable apartments, at least 80 percent of them must be affordable to those with incomes under 80 percent of AMI, which was $57,900 for a family of four in 2014; and 10 percent of them must be priced for families with incomes below 50 percent of AMI, which was $36,200 for a family of four in 2014. These homes must remain affordable for 25 years.


Of the affordable homes, at least 75 percent of them must be affordable to those with incomes below 80 percent of AMI. These units must remain permanently affordable through an appropriate legal mechanism such as a deed restriction or ground lease for as long as “legally permissible.” There is no set number of years.

Money from the Housing Trust Fund is made available to developers, owners or operators of housing developments, as well as units of government for development activities.

Developments that provide affordable homes pursuant to the city’s Inclusionary Zoning Ordinance are not eligible for funding from the Housing Trust Fund except to the extent that the affordable housing component of such development exceeds the minimum requirements of the ordinance. For example, developers may qualify for assistance if they provide 30 percent of the apartments as affordable rentals instead of the required 20 percent in a rental development.

Activities eligible for grants from the fund include: housing production, rental assistance, weatherization, emergency repairs, homeownership assistance, preservation of existing housing, housing-related support services such as ownership and financial counseling, capacity grants for nonprofits working to advance affordable housing initiatives, and any other activity the Housing Commission determines to address the city’s affordable housing needs. The current emphasis is on using Trust Fund monies to increase the supply of affordable housing.

The Housing Trust Fund has helped finance Temple Avenue Town Homes, Hyacinth Place and the Community Partners for Affordable Housing scattered-site acquisition program. Funds also have been used for a moderate-income rehabilitation program.


Initially, the Highland Park Housing Commission granted the Trust Fund $1 million in seed money. These funds were obtained through the refinancing of a Section 8 development owned by the City. The major source of ongoing revenue for this program is the City’s Affordable Housing Demolition Tax ($10,000 per residential demolition constituting at least 50 percent of structural demolition or $3,000 per unit, whichever is more). The City’s Demolition Tax applies to all residential homes, two-thirds of which goes to the Affordable Housing Trust Fund. In addition, any fee-in-lieu that is generated under the City’s Inclusionary Housing Ordinance goes to the Trust Fund, and the City occasionally makes small donations on excess bond capacity.

Dedicated sources of public revenue for the Housing Trust Fund:

  • Affordable Housing Demolition fee revenue: Two-thirds of the $10,000 per structure (In April 2006, a Demolition Tax amendment began allocating one-third of revenue to the City’s Multi-Modal Transportation Fund).
  • Number of teardowns:
    2014 (January–June 2014): 18 = $134,587
    2013: 22 = $170,257
    2012: 16 = $129,172
    2011: 7 = $60,169
  • In-lieu fees: Any payments made in-lieu of the building of affordable homes as required by the City’s Inclusionary Zoning Ordinance.


Department of Community Development, City of Highland Park

  • Goal

    Support affordable housing activities and development.

  • Target

    Developers, owners or operators of housing developments and units of government. Community Partners for Affordable Housing (formerly the Highland Park Community Land Trust) receives priority in funding, as well as applicants who can provide the longest term affordability and/or serve the lowest income households.

  • Financing

    Initial grant of $1 million. Currently funded by demolition tax, fee-in-lieu revenues and donations from private sources. Funding for the Trust Fund supports a half-time staff member.

  • Success

    To date, funds have been used for 48 affordable homes. Funds have been used for a 14-unit townhome and rental development, a six-unit townhome development and 28 scattered-site homes. Funds have also been used for many other City housing initiatives, including emergency housing assistance and the employer-assisted housing loan program.

  • Lessons learned

    The Trust Fund has had a significant impact on the ability to leverage other public and private funding for City's affordable housing initiatives.