Legislature approves $20 million for housing in disaster zones

FRANKFORT — Although it was much less than they had hoped, affordable-housing advocates in Kentucky are applauding the legislature’s decision to put $20 million into a new Rural Housing Trust Fund.

The money is not a new appropriation but comes from more than $400 million the legislature had set aside last year for disaster relief and recovery on both ends of Kentucky. 

​​Final approval for the $20 million came Thursday night as lawmakers accepted legislation hammered out in conference committees.

On Friday, Adrienne Bush, executive director of the Homeless and Housing Coalition of Kentucky, issued a statement thanking lawmakers and their leaders. 

The initial $20 million in seed money “will empower communities to scale up their housing response and finally allow Kentuckians to begin to rebuild their lives,” Bush said, while also allowing “communities to respond to current disaster housing needs, as well as respond to future needs in underserved communities.”

​​Jim King, CEO of Fahe, a Berea-based nonprofit that works with other nonprofits to finance affordable housing, thanked Senate President Robert Stivers and the General Assembly for “providing this initial funding to address the critical need for housing in the communities of East and West Kentucky still reeling from recent natural disasters. 

“We hope to continue working with state leadership to secure long-term investments in safe, stable housing that working families can afford,” King said.

Housing advocates said the state money will help bridge a gap while Eastern Kentucky waits for more federal disaster money to flow to the region.  Ten Eastern Kentucky counties will share in $300 million in disaster funding from the Department of Housing and Urban Development (HUD), Sen. Mitch McConnell announced this week.

Catastrophic housing situation

Even before tornadoes and floods wiped out thousands of homes, Kentucky suffered a shortage of almost 79,000 affordable housing units, according to an analysis of data from the American Community Survey for 2016-2020. 

After flash flooding last summer destroyed and damaged thousands of homes in Eastern Kentucky, some public officials said new housing construction had become critical to the region’s economic survival. 

“Perry County was in a housing crisis prior to the July 2022 flood disaster. Now we are in a catastrophic housing situation,” Perry County Judge-Executive Scott Alexander said in January. 

A coalition of nonprofits  asked the legislature to put $150 million this year and another $150 million next year into an Affordable Housing Emergency Action Recovery Trust Fund, dubbed AHEART, and to commit to increasing state support for affordable housing construction in future state budgets.

On Feb. 21, advocates rallying at the Capitol renewed their call for the legislature to tap the state’s record surplus, sometimes called the “rainy day fund,” to help finance housing. “Lord knows we’ve had some rainy days here in Kentucky,” Scott McReynolds,  executive director of the Housing Development Alliance in Perry County, told the February rally. The state’s rainy day fund has been projected to reach $3 billion by mid-2023.

Citing flood victims “buying storage sheds to live in because that’s all they can afford with their FEMA” assistance, McReynolds also said “you can’t start planning until you know your budget.”

Stivers told reporters that day that discussions were underway that could lead to housing legislation during this session.

The $20 million being set aside for housing comes from money the legislature last year put into State Aid Funding for Emergencies or SAFE: $200 million to recover from tornadoes in the west and $213 million after floods in the mountains. The newly-approved legislation taps the funds for $10 million each to be spent in the respective regions.

The housing provisions — added to House Bills 448 and 360 and finalized behind closed doors in free conference committees — create an 11-member Rural Housing Trust Fund Advisory Committee with the state agriculture commissioner as its presiding officer. 

The Rural Housing Trust  Fund would  be housed in the Kentucky Housing Corporation and could receive state and federal money, grants and gifts. The fund can be used to makes loans or grants for acquisition, construction or rehabilitation of rural housing units in areas impacted by the tornadoes and floods.

The Senate added a provision replacing the lieutenant governor with the commissioner of agriculture on the Kentucky Housing Corp.’s board of directions. 

Gov. Andy Beshear is expected to sign the legislation.

McConnell says $300 million coming from feds

Ten Eastern Kentucky counties also are in line for $300 million in federal assistance through a HUD disaster-assistance program, McConnell announced this week.

The Community Development Block Grant-Disaster Recovery program provides flexible funds for long-term recovery in communities affected by natural disasters, according to McConnell’s office.  The money can be used for a variety of purposes, including helping local governments cover their cost share of federal disaster recovery programs from other agencies, such as the Federal Emergency Management Agency (FEMA), the U.S. Army Corps of Engineers, the Environmental Protection Agency and the Federal Highway Administration. Communities can also use these funds to address their unique housing needs and promote economic development.

The state will oversee the HUD funding to Breathitt, Casey, Clay, Cumberland, Floyd, Harlan, Johnson, Knott, Lee, Leslie, Letcher, Lincoln, Magoffin, Martin, Owsley, Perry, Pike, Powell, Whitley and Wolfe counties.

The federal government funding bill that Congress approved in December provides an additional $3 billion in CDBG-DR funding for the country’s hardest-hit communities, according to the news release from McConnell’s office.

“Senator McConnell was the only current member of the Kentucky delegation to support this legislation, which made today’s funding possible. In addition, as a senior member of the Senate Appropriations Committee, the Senator worked to secure funding for multiple federal programs that would support Eastern Kentucky’s recovery efforts, including the CDBG-DR program,” according to McConnell’s office.

An analysis  by the Ohio River Valley Institute and Appalachian Citizens Law Center estimates the cost to rebuild and repair housing lost to last summer’s flood will be $450 million to $950 million, depending on how many homes are relocated to less flood-prone areas. The lower figure is for rebuilding in areas that flooded rather than acquiring new sites at higher elevations. The report says that the higher-cost option could prove more economical in the long-run by averting future damage and also likely saving lives during future floods. So far state and philanthropic sources have provided $159 million for rebuilding and repairing housing, according to the report.