In wake of disasters, legislature looks to create Rural Housing Trust Fund

More money would be appropriated to fund housing in disaster-ravaged Eastern and Western Kentucky in the latest version of a bill made public on Monday morning.

Changes made to House Bill 360 by Senate Appropriations & Revenue Chair Chris McDaniel, R-Ryland Heights, in a Senate committee substitute establish a Rural Housing Trust Fund for the state. It initially appropriates $20 million for the fund to distribute, taking that money from established recovery funds for both affected regions.

Swaths of Eastern Kentucky suffered historic flooding in the Summer of 2022 whereas much of Western Kentucky was affected by deadly tornadoes in December 2021. Both had initially received appropriations of around $200 million to address various aspects of recovery.

Lingering housing issues in both regions have been well-documented.

House Bill 360 initially dealt solely with changes to the state’s tax system. The last six pages of the 128-page bill, added by McDaniel, establish the Rural Housing Trust Fund and make changes to the Kentucky Housing Corporation (KHC), which will administer the fund.

The bill creates the Rural Housing Trust Fund Advisory Committee to consult on use of the fund, and makes the Commissioner of Agriculture the chair of the 11-member committee. Two members of the Senate and House each will sit on the committee and the remaining six members will be selected by the board of KHC.

The bill directs the advisory committee and KHC to establish criteria to rank applications for use of the Rural Housing Trust Fund. It states that KHC and the committee should prioritize projects located in a federally declared disaster area or assisting people displaced by a federally declared disaster as well as projects submitted by nonprofits or local governments for new rural housing, among other items.

The proportion of a proposed project committed to administrative cost cannot exceed a 7.5% threshold.

McDaniel said that he thinks the body could be continually funded, but that $20 million is likely all that will get allocated this session.

“I would say that the money that’s there now will go beyond any ability of people to deliver it before we come back next time,” McDaniel said.

The bill is particularly aimed at increasing housing options for “moderate income” individuals or families, meaning that their income is below 120% of the state’s median income.

One key change made to the KHC in the legislation is that it replaces the lieutenant governor’s spot on the board with the Commissioner of Agriculture. Current Lt. Gov. Jacqueline Coleman is a Democrat while Commissioner of Agriculture Ryan Quarles is a Republican. McDaniel said this change was informed by the fact that a significant portion of federal funds for the Kentucky Housing Corporation comes from the U.S. Department of Agriculture, so there’s a “more natural alignment” to placing the Commissioner of Agriculture in that role.

Eligible expenses for the Rural Housing Trust Fund include: acquisition of buildings, new construction or rehab of rural housing, grant matching funds and administrative costs.

If the bill passes the Senate, the House would need to concur with the changes introduced by McDaniel. If there are still disagreements, the chambers could hash them out in a conference committee during the final days of session before the veto break begins on Friday.