apartment building

New DC Grant Offers Help for Small Rental, Co-op, Condo Buildings

A new pilot program from the District’s Department of Housing and Community Development offers grant money for needed rehab work at small rental, co-op, and condo buildings.

The Small Buildings Grant Program offers an important opportunity to preserve affordable ownership and rental housing as more affordable homes are lost each year in DC.

More than 1,000 affordable homes disappeared in the District between 2006 and 2014, and another 1,750 are in danger. Keeping affordable homeowners and renters in place helps stabilize changing neighborhoods and is more cost effective than constructing new affordable homes.

To be eligible, a building must have between 5 and 20 units, with a portion of households earning less than 50 or 80% of the Area Median Income. The grant offers $25,000 per unit for repairs, with a maximum award of $200,000.

Full details and the application can be found here.

The program is similar to the Common Interest Communities legislation attached to the budget for FY2019. That legislation establishes a fund for low- and moderate-income co-op and condo associations to repair common elements of their buildings, such as roofs, plumbing, or electrical systems.
small apt building

Since that legislation was crafted with community input, it avoids several pitfalls of the new Small Buildings Grant Program. One important difference is that the Common Interest Communities program allows residents to submit an independent assessment of their buildings’ needs, rather than relying on a DCRA inspection report.

Unfortunately, the requirements of the Small Buildings initiative may coerce buildings into seeking out a fine from DCRA just in order to be eligible for the needed grant funds. That could discourage participation and work counter to the stated goals of the program.

The Common Interest Communities legislation also imposes no cap on the number of units an eligible association can have. Although the Small Buildings Grant Program may have found such limitations necessary while working within the parameters of a limited pilot budget, Common Interest Communities has legal access to funds from the sale of city-owned property—a sufficient pot to have a much larger impact.

We hope to see both the Small Buildings Grant Program and the Common Interest Communities legislation fully implemented and expanded!

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Trump Admin Moves to Weaken CRA, Lessen Bank Lending in Low-Income Areas

On Tuesday, the Trump Administration formally started work towards a long-held goal: weakening the Community Reinvestment Act (CRA).

The Office of the Comptroller of the Currency, one of the federal entities in charge of enforcing the CRA, announced that it is seeking input about how to “modernize” the legislation and reduce the “burden” imposed by its requirement to lend to low- and moderate-income borrowers.

Here’s a quick refresher on the CRA from an earlier post. Feel free to skip down if you’re already familiar.

The CRA was written after several decades of growing pressure for Congress to reverse damage done by the legalized racism of the mid-20th century. Between 1934 and 1968, the Federal Housing Authority effectively required that private mortgage institutions avoid lending to non-white communities by refusing to back loans that did not comply with their rules.

In the practice known as “redlining,” detailed city maps were distributed by the Authority to mortgage companies with neighborhoods color-coded to determine their desirability for lending based on how homogenously white the neighborhood was.

A map of redlining in Philadelphia

A map of redlining in Philadelphia

This policy and others like it are in large part responsible for our present day racial wealth gap. The CRA attempts to correct this by monitoring the volume of loans banks make to low- and moderate-income communities, as well as the number of branches and ATMs they have in these areas.

Financial institutions that do significant lending in low- and moderate-income neighborhoods are more likely to be approved to open new branches and merge with other banks, whereas noncompliant institutions may be denied or required to make a plan for investment with community groups before being given approval.

But all that could be a thing of the past if the Trump Administration gets its way. The public request for comment includes a number of softball questions offered up for the banking lobby to knock out of the park. Based on these questions, we can gather a picture of the chances the Trump Administration has in mind.

One of their key goals seems to be to weaken the importance of assessment areas and physical bank branches.

Since the CRA’s primary purpose is the undo the effects of redlining, it places a heavy emphasis on the location of bank branches and the neighborhoods that banks are lending in. Having more banks and making more loans in low- and moderate-income neighborhoods gets banks more CRA credit.
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The Administration (and, coincidentally, the banking lobby) have argued that online banking services have made physical bank branches irrelevant for serving low-income communities.

But that’s clearly not true.

Residents in low-income communities are less likely to have high-speed internet or own a smartphone, making online banking harder for them to access.

Additionally, the relevance of bank branches is evidenced by their continued existence and expansion in more affluent neighborhoods. Many large banks still make more than half of their loans through traditional brick-and-mortar locations, and they’re not closing “irrelevant” branches in these wealthier locales.

Another Trump Administration goal appears to be expanding the categories of loans that count for CRA credit to the point that they are meaningless. Providing financing for the construction of a new hospital, for instance, has been floated as a possible expansion.

While financing a new hospital in Ward 8 is a worthy goal, adding yet another hospital to Northwest DC is not.

There are meaningful updates and expansions to the CRA that could be helpful, and many good ideas have been proposed by the National Community Reinvestment Coalition. But with the Trump Administration’s list of questions released yesterday, it’s clear that their only goal is to satisfy the banking lobby.

MANNA and other DC nonprofits depend on funding incentivized by the CRA to offer affordable housing and homeownership counseling services. So do low- and moderate income families looking to buy a home.

If the incentive goes away, that funding won’t last long. A recent review of changes to CRA designations in Philadelphia found that lending to lower income borrowers fell a whopping 20% when a neighborhood no longer qualified for CRA credit.

Now is the time to weigh in. Click here for information about how your organization can submit a comment in support of the CRA’s low- and moderate-income lending requirements.

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Why Won’t Residents Trust Return Guarantees? History

Residents of DC General and Barry Farms share a lot of common concerns. Their homes are crumbling. Their environments are toxic. And they don’t trust DC’s plan to fix it.

At DC General, the District’s shelter for homeless families, residents are dealing with hazardous dust from the demolition of other buildings on the shelter’s campus. Ambulances arrive regularly to take away residents with breathing problems exacerbated by the pollution, and Washington City Paper recently reported that lead had been found at the site.

Even before this latest health hazard, residents had to deal with vermin, problems with the hot water, and infections spread by unsanitary conditions.

At Barry Farms, a public housing complex just south of the Anacostia neighborhood in Ward 8, conditions are equally dire. A majority of the 444 homes now sit empty. Those boarded up units have become breeding grounds for rats and bed bugs, and residents contend that the Housing Authority has stopped performing routine maintenance.

But in both cases, residents and activists are fighting District plans to move residents out.

Residents at DC General have made headlines with their protests against the continued demolition work while they still live there, calling for the end of the asthma-exacerbating dust. But some residents and advocates have also called for the closing of the shelter to be postponed indefinitely, until replacement shelters are complete.
DC general
At Barry Farms, residents recently won a court challenge against the redevelopment plan for their homes, and the families that remain have now managed to stay for years longer than the District’s original relocation plans called for.

District officials have promised that residents at Barry Farms will be able to return to the shiny, new development when it is completed, and DC General is scheduled to be replaced by brand new smaller shelters across the District, better suited to meet families’ needs.

So why have residents fought so hard to stay when their homes are in such unlivable conditions?

In a word, history.

The New Communities Initiative, under which Barry Farms is being redeveloped, has a poor track record of delivering on promises. The Temple Courts community near Union Station, demolished over a decade ago, is only now in motion to begin constructing replacement units. Because of that gap, most of the community’s original residents will never exercise their right to return.

At Barry Farms, the number of affordable and family-sized units is significantly reduced under redevelopment plans, falling from 444 affordable units to just 344. A significant number of multi-bedroom apartments will also be lost.

Although the community has now been winnowed down to just over 100 families, advocates and residents have argued that loss of affordable units changes the culture and demographics of the neighborhood.

And a District judge agrees. The redevelopment is now on hold, as the judge has ordered the District to reconsider how their plans can better accommodate current residents.

At DC General, there’s a general consensus among the residents that demolition should wait until after all the families have moved out. But some are also pushing for that move-out date to be extended past September, even though it means staying in the shelter’s substandard conditions.

They fear that DC’s replacement shelters won’t be ready, in which case their families could be moved to hotels in Maryland. And there’s good reason to think their fears are correct.

Washington City Paper recently reported that despite official reassurances, several replacement shelters are significantly behind schedule—likely by about a year.

At both DC General and Barry Farms, residents have a straight-forward take: they want their new homes to be ready before they move out of their old ones, and they don’t trust officials asking them to move out on faith. Given DC’s history, it’s hard to blame them.

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“Opportunity Zones” May Hold Most Opportunity for Gentrification

Advocates across the country worked tirelessly last November and December in a failed attempt to stop the Trump Administration’s tax cuts for the wealthy. As the dust settled after the fight, some advocates took comfort in the law’s creation of Opportunity Zones, low-income areas that offer tax breaks for investment.

At least, thought these advocates, here was something for our communities. But upon closer inspection, it becomes clear that much of the “opportunity” here is the opportunity for gentrification.

The Opportunity Zones are low-income census tracts chosen by local governments (more on that later) for this special status. They allow tax-free investments in real estate and businesses within the designated areas. According to the Brookings Institute, investors can avoid $7.50 in taxes for every $100 they invest. That’s a pretty big incentive.

Certainly our low-income communities are in need of investment. After decades of neglect from both the private and public sectors, Opportunity Zones sound like the solution that these communities deserve—a governmental program to pull in reluctant businesses and investors.

And there could be some good. Affordable housing projects will be eligible for these tax breaks, too, meaning that some low-income communities will see some benefit.

But the problem is that these investors have no stipulations that their investments be for the good of the people who already live there. A new luxury condo building would receive the same subsidy as an affordable development. New businesses could flourish with the subsidy coming their way, while long-time community institutions will be largely left out in the cold.

As Peter Moskowitz documents in his book How to Kill a City, a blanket subsidy for a low-income area almost always ends of benefiting newcomers at the expense of those who already live there. Private investment without stipulations for the public good naturally seeks the highest profit, and that almost always means a displacement of the lower-income community that already called the neighborhood home.

What’s more, only one in every four low-income census tracts can be chosen by local governments. There’s some evidence that local jurisdictions have been targeting census tracts where public-private deals are already in place, meaning that there will be additional government subsidy for private investment that was already going to happen anyway. That completely misses the ostensible point of the program, which is to incentivize new investment in underserved areas.

Hopefully Opportunity Zones can help more affordable housing move forward in vulnerable communities. But without more direction towards public benefit, this program could all too easily turn into another governmental subsidy for gentrification.

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New Report Details What It Takes to Afford DC Housing

Most people realize that 9 to 5 jobs are not the norm for DC’s working class, many of whom have irregular hours in the service industry. But no one expects those irregular days to add up to 91 hours per week.

Unfortunately, if you’re only making the minimum wage, that’s exactly what it takes to afford an average 1-bedroom apartment in DC. A new report from the National Low Income Housing Coalition looks at what it would take for a minimum wage worker to spend only the recommended 30% of their income on an average 1-bedroom apartment.

The results are discouraging. If a minimum wage worker is “only” working 40 hours a week in DC, they’re likely spending about 70% of their income on rent. And although the situation in DC is particularly dire, there are only 22 counties across the entire country where a full-time minimum wage worker can afford an average 1-bedroom apartment.

The numbers are even worse for DC families who need bigger apartments. A 3-bedroom apartment, if you can find it, would take a full-time minimum wage worker’s entire paycheck, with nothing left over for other bills and groceries.

All of these calculations are actually based on a minimum wage of $13.25, which won’t go into effect until July 1st. That means things have been even worse for minimum wage workers who have been earning the current rate of $12.50.

But solutions exist. DC’s Local Rent Supplement Program (LRSP) provides rent vouchers to some low-income families, ensuring that they pay no more than 30% of their income on rent. Close to 4,000 households either already receive assistance through that program or will soon with recent investments.

The Council needs to keep expanding LRSP to cover more households, alongside continual increases to the minimum wage. DC depends on people who do working class jobs to keep the city running, and if the District forces out its working class, it might just stop working.

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DC 2018 Voter Guide: Chairman and Democratic At-Large Councilmember

“Didn’t we just do that?” is the normal refrain from an election-weary public as mid-terms roll around. In liberal DC, however, there’s been an uncommon amount of energy and anticipation for change to come in November.

But before the Senate and the House are decided, the DC Council will largely be set by the local Democratic primary on June 19th. Check out our guide below to learn where candidates in the two District-wide races stand on housing issues.

Chairman

Phil Mendelson (Incumbent)
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As the DC Council Chairman, Phil Mendelson has used his position to act as a self-described check against the Mayor. He commands significant influence over final decisions in the budget as well as legislation before the full Council, and he is an effective whip in lining up votes for his priorities.

That’s often good news for housing advocates. In this budget cycle, he supported the late addition of $15 million for local rent vouchers and housing for people coming out of homelessness. But it’s also proven problematic at times, as he has stalled a bill increasing funding for the Housing Production Trust Fund and was the driving force behind eliminating TOPA protections for renters in single-family homes. As a result, those renters no longer have a guaranteed chance to buy their home when their landlord wants to sell.

Ed Lazere (Challenger, on leave from job as Director of DC Fiscal Policy Institute)
Lazere
As Director of DC Fiscal Policy Institute, Ed Lazere has supported many of the same priorities as HAT. Lazere has pushed for increased funding for the Housing Production Trust Fund and has talked regularly about the harmful effects of DC’s racial wealth gap. On the campaign trail, he has called for DC to significantly expand its investment in affordable housing, arguing that our current funding for housing programs is an insufficient response to the size of the problem. He also spoke out against the elimination of TOPA for single-family homes.

HAT and DCFPI have disagreed in the past, however, on long-term resale restrictions for affordable homebuyers. HAT opposes long-term restrictions because they keep affordable homebuyers, a majority of whom are people of color, from experiencing the same wealth-building that white families experienced from decades of government-backed mortgages. Proponents of the restrictions see them as the only way to keep affordable homeownership available going forward.

At-Large Councilmember

Anita Bonds (Incumbent, serves as Chair of the Council’s Housing Committee)
bonds
In her role as At-Large Councilmember and Chair of the Council’s Housing Committee, Anita Bonds has certainly made housing her top priority. She has introduced countless important pieces of legislation dealing with affordable housing, and she was a major champion in the successful fight several years ago to increase HPAP loan amounts. Our list of 5 bills to watch in 2018, written earlier this year, was comprised entirely of legislation written by Councilmember Bonds. She displayed the backbone of her leadership during this budget process, as she oversaw the late addition of $15 million for local rent vouchers and other essential programs. She was also able to attach several important pieces of legislation to the budget, including one of the aforementioned bills to watch—one that establishes a rehab fund for lower-income condo and coop communities.

However, none of the other bills to watch have been brought up for a vote in committee. Advocates have been particularly eager to get a vote on two bills designed to strengthen rent control, which Councilmember Bonds had initially said would happen in January. Councilmember Bonds was also the author of the bill exempting single-family homes from TOPA protections.

Jeremiah Lowery (Challenger, Environmental Activist)
Jeremiah Lowery DC Council At Large 2018
Jeremiah Lowery has made affordable housing one of the centerpieces of his campaign, and he prides himself on not taking contributions from developers or other corporations. Instead, he has a significant array of endorsements from local progressive organizations. Lowery opposed the elimination of TOPA rights for single-family homes, and is generally supportive of more funding for affordable housing.

Lowery has named community land trusts as his top priority for affordable housing, an interesting model in which a community organization retains permanent control over the land on which affordable housing is built. However, while community land trusts have truly innovative potential for rental housing, HAT has the same concerns listed above about their resale restrictions on ownership housing. In short, homeownership without the potential for wealth creation is not true homeownership.

Marcus Goodwin (Challenger, Commercial Real Estate Development)
goodwin
Coming from the field of commercial real estate, Marcus Goodwin certainly knows housing development. He has expressed support for the Home Purchase Assistance Program and has spoken frequently about helping renters move into homeownership. He has also proposed a deferral of property taxes for lower-income homeowners, to be repaid when the owner sells.

While this certainly represents a significant contribution to the anti-displacement conversation, Greater Greater Washington reported that in a recent interview they found Goodwin to be more focused on the details of specific developments rather than policy solutions to create affordable housing. Goodwin also supported the exemption of single-family homes from TOPA protections.

Be sure to vote on June 19th with affordable housing priorities in mind!

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Council’s budget adds $15 million to housing programs

The DC Council released its budget for a first of two votes on Tuesday, May 15th, and there’s a lot for housing advocates to be excited about. In all, the Council added $15.6 million for housing programs on top of what the Mayor had proposed. Check out the (partial) round-up below:

Local Rent Supplement Program

The Local Rent Supplement Program, or LRSP, is the District’s version of HUD’s Housing Choice Vouchers. These vouchers, which serve households making 30% or less of the Area Median Income, are a subsidy that ensures low-income households never have to pay more than 30% of their income for housing.

The vouchers can either be given directly to residents who then search for housing on the open market, called tenant-based vouchers, or they can be tied to a specific unit that remains affordable and is only available to low-income households, called a project-based voucher.

New investments in LRSP are a big deal—taking vouchers away from residents who need them would be a disaster, so funding for more vouchers is seen as a semi-permanent commitment. Mayor Bowser recommended no new funding for LRSP in her budget, proposing that DC only fund the vouchers it had already issued.

The Council, however, heard calls from advocates to expand LRSP and responded by placing $1.5 million in new tenant-based vouchers and $3.2 million in new project-based vouchers. That’s projected to create a total of 238 newly affordable homes.

Other Programs

The rest of the housing funding added and reshuffled by the Council largely went to housing for residents coming out of homelessness. The Way Home Campaign, a local initiative dedicated to ending chronic homelessness, noted that the Council’s investments were exciting and important, but cautioned that the funding still fell well short of the need.

Among the programs with increased funding were Permanent Supportive Housing, which provides social services as well as housing to residents coming out of homelessness, and Targeted Affordable Housing, often used by residents in PSH who no longer need social services. In all, 616 new units for ending homelessness will be created above and beyond the Mayor’s proposal.
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A meeting of MANNA’s Homebuyers Club

Housing Counseling Funds

Another issue that we wrote about previously was the proposed cut to housing counseling funds. These funds are the backbone of programs like MANNA’s Homebuyers Club, which offers a range of services to low- and moderate-income residents getting ready to become first-time homebuyers.

That issue was also resolved, although neither local advocates nor the Council can take credit—Congress passed a budget with full funding for the grant program that makes housing counseling and a whole host of other local programs possible. Advocates must now work to make sure that the local housing department uses those funds for their intended purpose.

Budget Support Act Legislation

Several pieces of housing legislation are also passing with the budget in the Budget Support Act. The Housing Advocacy Team has testified in support of several of these bills, and their inclusion in the BSA is a cause for celebration.

One such bill is the Common Interest Community Repairs Funding Amendment Act, which sets up a rehab fund for condominium and cooperative associations where 2/3rds of residents make less than 60% AMI. Eligible communities will be able to receive up to $100,000 for repair work on common elements like roofs, piping, and electrical systems.

Another housing bill in the BSA aims to keep seniors with reverse mortgages from losing their homes. This bill aims to help low- and moderate-income seniors who fall behind on property tax or insurance payments after taking out a home equity loan (also called a reverse mortgage). Seniors who qualify can receive up to $25,000 in assistance. The bill was prompted by reports of older Washingtonians losing their homes over fees of several thousand dollars or less.

It’s important to remember that the Mayor also had many great factors in her proposed budget, including a big increase for the Home Purchase Assistance Program. The Council preserved that increase, and HPAP looks set to be fully funded through the end of 2019.

Thanks to all the advocates for their hard work this budget season! Feel free to comment with any questions about housing programs in the budget, and we’ll do our best to answer quickly.

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DC Close to Cutting Housing Counseling Funds

Advocates cheered this spring when Mayor Muriel Bowser’s proposed budget showed a $9 million increase for the Home Purchase Assistance Program, enough to keep the program fully funded through 2019. Not as readily obvious, however, was the deep cut proposed for the housing counseling that makes HPAP purchases possible.

Kept under the Department of Housing and Community Development, the Neighborhood Based Activities budget contains funds for homeownership and tenant counseling services. That budget is proposed to be cut from $9.5 million for the current year to just $6.1 million next year—a drop of more than a third for these vital programs.

The housing counseling funds allow MANNA and other groups to offer guidance to residents working through the difficult demands of the homebuying process. A 2016 report from the Department of Housing and Urban Development found that homebuying counseling and education increases participants credit scores, encourages better communication with lenders, and improves their understanding of how their mortgage works.

Members of MANNA’s Homebuyers Club typically need help managing their credit score, setting a financial plan, and navigating the lengthy HPAP process, but they also need assistance getting through the typical barriers that arise while trying to buy in DC.

A meeting of the MANNA Homebuyers Club

A meeting of the MANNA Homebuyers Club

Erin Skinner, a lifelong Washingtonian, as well as HPAP buyer and former member of MANNA’s Homebuyers Club, can attest to that firsthand. She recounts having a first deal fall through and countless hours of work in the two-year process that finally landed her a home. (Read her full story here!)

The Council and the Mayor have shown a great commitment to homeownership in recent years through their increases in the budget and loan amounts for HPAP. Indeed, Councilmembers regularly cite affordable homeownership as a top priority, and the HPAP budget looks set to sail through Council.

But the housing counseling funds are an equally important part of the equation. Affordable ownership is, at best, an incredibly daunting process to work through without a counselor, and the turn-around HPAP has seen from its worst days a half a decade ago is largely due to the efforts of housing counselors.

Thankfully, even if the Council fails to act, DHCD and its Director Polly Donaldson have the power to put funding into this important program. Keep up with our blog for more information going forward!

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Town Hall, Advocacy Day, and Housing Budget Needs

Between the 3rd Annual Homeownership Town Hall & Housing Fair on Saturday and CNHED’s Advocacy Day on Monday, the Housing Advocacy Team has been busy! Here’s what you may have missed:

Town Hall

Saturday’s Town Hall and Housing Fair was a great success, with more than 200 residents coming out to Thurgood Marshall Academy in Anacostia to gain information on affordable homeownership opportunities. Robert AX Adams’ smooth electric guitar and vocals entertained the community members as they wandered through 25 tables with information from nonprofits, government agencies, financial institutions, and more.

Workshops on DC property tax relief, estate planning, an introduction to MANNA’s Homebuyers Club, and more offered information for current and prospective homebuyers alike.

The Town Hall portion of the day was led by HAT’s Tanya Morris, also a MANNA board member, who told her story of buying an Affordable Dwelling Unit in Columbia Heights. (You can hear more from Tanya below.)

Rev. Jim Dickerson spoke of MANNA’s founding over 35 years ago and the more than 1500 homes MANNA has built before turning the mic over to Don Folden, the leader of Capitol Buddy’s DC Black History Tours. Don spoke about the history of Anacostia and all of DC, expounding on its racial property covenants and government backed mortgages that kept homeownership an almost exclusively white venture.

That history is a big part of why programs like the Home Purchase Assistance Program are a matter of justice. More than 90% of HPAP borrowers are people of color, and without the program many of those families still would be locked out of homeownership.

Residents signed postcards to DC Council Chairman Phil Mendelson asking him to keep the Mayor’s proposed $8 million increase to HPAP’s budget (a total of $26 million). They also asked that he hold a hearing for Councilmember Anita Bonds’ (At-Large) bill guaranteeing funding for the Housing Production Trust Fund at a minimum of $120 million each year.

Councilmember Robert White (At-Large) spoke to the crowd about the importance of HPAP and homeownership. Himself a generations-deep Washingtonian, he highlighted the history that has kept black Washingtonians from owning homes and the responsibility of the government to correct those wrongs.
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Councilmember Robert White and DHCD Director Polly Donaldson

Polly Donaldson, Director of the Department of Housing and Community Development, also stopped by to highlight the investments that Mayor Bowser and the Housing Department have made in low- and moderate-income homeownership. HPAP helped about 300 Washingtonian families become homeowners last year, and the Mayor’s proposed increases could see even more families served next year.

Advocacy Day

The Coalition for Nonprofit Housing and Economic Development held its annual Advocacy Day on Monday, April 23, and HAT was out in force. Coucilmembers Brianne Nadeau (Ward 1), Vince Gray (Ward 7), David Grosso (At-Large), and Charles Allen (Ward 6) all stopped by to speak to the crowd of yellow shirts packed into the Council hearing room.

CNHED speakers then educated the crowd on important programs that are underfunded in the Mayors budget before residents fanned out to meetings in all 13 Council offices.
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Councilmembers Allen and Nadeau

Among the programs for which the Council to find more funds is the Local Rent Supplement Program, or LRSP. These local rent vouchers help families with very low incomes who otherwise would likely be severely rent burdened. The vouchers are either given to the tenant for them to find housing on the open market (called “tenant-based vouchers”) or given to a landlord and tied to a specific low-cost unit (“project-based vouchers”). They Mayor’s budget zeros out investments in project-based vouchers, a concerning development that could have the unintended consequence of forcing low-income families to become homeless in order to be eligible for rental assistance.

Another top concern is a proposed cut to Housing Counseling Services which could severely curtail the homebuying counseling that MANNA and other counselors are able to provide. It’s a cut that makes little sense alongside an increase to HPAP—families served by HPAP need access to strong counseling services in order to have the best chance to succeed.

Finally, CNHED and HAT continue to push for more funding in the Housing Production Trust Fund. While Mayor Bowser’s commitment to $100 million in the fund each year has been historic, it is no longer keeping pace with either need or capacity. DC can and must build more affordable homes in order to keep our city a place that all residents can afford, and guaranteeing a minimum of $120 million in the trust fund each year is a good place to start.

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Housing Production Trust Fund Makes for Better Homes than Headlines

When the DC Auditor’s Office released its report on the District’s Housing Production Trust Fund earlier this week, the headlines started rolling in right away. City Paper called it “damning.” Think Progress spoke of “astonishing failures.” But a deeper dig into the report’s talking points reveals that the truth in this case is a good bit less sensational than promised.

Where it misleads

The Housing Production Trust Fund is DC’s number one source of affordable housing dollars, and it has a hand in the construction of the vast majority of the District’s affordable homes—more than 10,000 such homes in the past 15 years, according to the audit. The trust fund is legally required to be used as gap financing, meaning that it can fund no more than 49% of any unit’s cost. This allows the fund to do significantly more work and touch significantly more projects than if it were the sole funding source for every unit it produced.

Given the variable level of funding each project receives, plus the fact that the size of DC’s investment in affordable housing is unrivaled in the US, it’s almost impossible to compare what the District is doing with other cities. But that’s exactly what this report tried to do.

The audit found that the trust fund’s average subsidy per unit was $61,700—a number that doesn’t seem bad compared to the District’s median home value of more than $550,000. But the report instead compared that number to Philadelphia and Seattle’s trust funds, which the auditors determined spend only $21,190 and $36,000 per unit respectively.

Even without comparing the size of the funds being managed, these numbers don’t take into account different amounts of federal funding, different income levels being served, or the vastly different markets that they’re working in (Philadelphia’s median home value is a full $400,000 lower than DC’s). Nevertheless, that $61,700 per unit and its comparison to other cities has been presented as the end-all-be-all in determining the fund’s efficiency.
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Another point that the audit and its media coverage have overblown is the state of the fund’s revolving loans. All the money that the trust fund sends out is structured as a loan, set to be repaid based on a project’s cash-flow or the expiration of its affordability covenants.

The audit notes that in the past four years, only 4% of the fund’s resources have come from loan repayment. But as the Department of Housing and Community Development’s (DHCD) Director Polly Donaldson has noted, delayed repayment is a key feature of the fund, not a flaw. Deferred loans allow smaller developers and non-profits the time they need to repay District funds. To put it another way, it’s no wonder this audit’s 15-year scope didn’t capture 40-year loans.

The revolving loans have also caused a flap with the somewhat inexplicable revelation that almost all of the fund’s long-term loans have been written off as unrecoverable. While repayment of 40-year loans on affordable housing projects may not be 100%, it’s certainly not going to be zero.

Finally, the audit causes confusion by not specifying the administrations responsible for some of its worst findings. For instance, while it’s a serious problem that DHCD had to give back $16 million in federal funds, it’s also important to note that that bungling came under a previous administration. It’s certainly not the sort of thing that should keep Councilmembers from investing more in the trust fund now.
Willowbrook
Where it shoots straight

The report is certainly helpful in some areas. It’s no secret that administrative costs for the trust fund have been too high, and the audit also points out a few instances in which small amounts of money were spent on non-housing projects, like bicycle education. Those issues are real, and they need to be addressed.

The report also points out that the trust fund hasn’t been meeting its legal requirement to spend 40% of its funds on very-low income residents, those making less than 30% of the Area Median Income. It’s an important problem to address, one that has come up frequently in Council hearings over the past few months.

The trust fund is already doing better than it seems, however, when other programs are taken into account. While trust fund income limits may not be low enough to meet requirements, those units are often cross-paired with rent supplement programs that serve residents under 30% AMI. Because those units require so much funding to produce and operate, it often requires more than one source of subsidy.

The real take-away

At the end of the day, the lede is buried, both in this post and The Washington Post. The Housing Production Trust Fund has produced or preserved more than 10,000 affordable homes over the past 15 years. That’s over 10,000 families who would otherwise almost certainly be rent burdened—if they managed to stay in DC at all.

There’s certainly room to improve the trust fund. But that improvement has to come in the context of the incredible work the fund has done and continues to do. Otherwise, this audit will cause more harm than good for the families it hopes to serve.

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