Category Archives: Housing news

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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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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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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.
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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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Advocates Lose Tax War, Win Battle: Affordable Housing Bonds Saved

The disastrous conflagration that was 2017 ended with a major gut punch to social advocates across the country. The Republican tax bill, with its massive handouts to corporations and the wealthy, squeaked through Congress and into law. But private activity bonds, a key instrument for the funding of affordable housing, were saved at the last minute.

The fundamental realities of the tax bill are still grim. It will add over $1.5 trillion in a decade to the national debt and is likely to hamstring numerous social programs in the coming years—perhaps by design.

While the impact that this bill will have for families depending on affordable housing isn’t entirely clear yet, it’s almost certain to be negative. In a climate where the Trump Administration already tried to cut $6 billion from HUD as a money saving move, officials are likely to identify less money coming in as another point for their argument.

Furthermore, the Low-Income Housing Tax Credit (LIHTC), which builds most of the affordable housing in the US, has a funding model that varies significantly based on the corporate tax rate. When that rate falls, less funding exists for the credit. Cutting the corporate rate from 35 percent to 21 percent, as Republicans just did, is projected to result in 200,000 fewer affordable homes being built in the coming decade.

But the rest of LIHTC funding comes from private activity bonds. This form of funding depends on its tax-exempt status to keep projects affordable. The House version of the tax bill would have eliminated these bonds, leading to an almost unimaginable 800,000 fewer affordable homes over the next decade.

Locally, the prospect was dire enough—about 9,000 affordable homes have been produced in DC through private activity bonds since 2010—that District officials quickly crafted a plan to at least preserve most of the affordable homes already in DC’s pipeline. The Mayor, citing “DC values,” announced early last month that DC’s Housing Finance Agency would issue $500 million worth of its own tax-exempt bonds before the tool disappeared completely.

Thankfully, that move has proven unnecessary. Advocates won big in ensuring that private activity bonds were untouched in the bill’s final version. Now those same advocates go back to work, pushing for local budgets to cover the federal government’s affordable housing hole.

Hopefully DC values will once again lead the way.

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Affordable Housing: Mayor Announces $500 Million to Offset GOP Bond Cuts

“Like most Americans, we were sleeping last Friday at 2am when Senate Republicans passed what they call the ‘Tax Cuts and Jobs bill,’” said Mayor Bowser, at a press conference in DC this morning.

And like most Americans, the Mayor was not happy. The tax bill would decimate the country’s ability to fund its necessary social services going forward, adding around $1.5 trillion to the federal debt. But most specifically to the work of the Housing Advocacy Team, the bill cuts a key tool for funding affordable housing: private activity bonds created through the Low-Income Housing Tax Credit.

These tax-exempt bonds leverage private investment with public subsidy to create affordable housing. Many affordable homes currently in the works in DC are counting on having access to this financing. But under the version of the bill the Senate passed these bonds would be severely weakened, and under the House’s bill they would disappear entirely.

MANNA, Inc. just finished two apartment rehabs in Brightwood—a total of 60 homes—that wouldn’t have been possible without this program. And there are another 230 homes in MANNA’s pipeline that depend on private activity bond financing.

Those numbers are reflected in the city as a whole, too. Since 2010, 9,000 affordable homes have been produced or preserved thanks to private activity bonds. And it’s exactly the kind of innovative market-led program that Republicans claim to love. $1.3 billion in public funding have produced an additional $650 million in investment from the private market.

bowser press conferenceMayor Bowser at Monday morning’s press conference

The importance of private activity bonds led the Mayor to decide DC couldn’t wait to see what happens before acting. “While we call on Congress to go back to the drawing board on taxes, we are not going to wait to act on housing,” declared Mayor Bowser.

That’s why she announced that DC’s Housing Finance Agency will be issuing $500 million of its own tax-free bonds to preserve most of what the District might lose under the federal bill.

That will allow DC to produce or preserve an additional 4,000 affordable homes—most of which are already in the works. The Mayor noted that as large as this investment is, it doesn’t even meet everything that’s in the current affordable housing pipeline. Getting funds quickly to projects that are furthest along will be crucial for keeping DC’s affordable housing development on track.

But the bond funding also serves as an important statement of what DC stands for—what Mayor Bowser often cites as “DC values.” As Councilmember Anita Bonds (At-large), the chair of the City Council’s housing committee put it, “It is important that in our own way we send a message that we will stand against these cuts.”

With the issuance of these bonds, the District government communicates that providing safe, affordable homes for all remains a top priority.

If only the same could be said of the other government in DC.

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Republicans, Tax Cuts, and the Manufacturing of a Crisis

We have a debt crisis staring us in the face. … The problem we have is spending, not taxes. We’ve got to get our spending under control because that’s the root cause of our problem.
-Paul Ryan, speaking in 2011 on Meet the Press

On its face, the Republican tax plan working its way through Congress is not a direct assault on affordable housing. Yes, it would decimate bond funding for affordable projects. Yes, it would eliminate several tax credits that help build affordable housing. And yes, the very rumor of its existence has caused multi-million dollar holes to appear in affordable housing plans for over a year now.

But still, this does not appear to be an assault on affordable housing in the same way that this summer (and fall’s) campaign to repeal Obamacare was an assault on healthcare.

Bruce Bartlett, a former policy adviser to President Reagan, says that appearance is wrong. In a recent op-ed in the Washington Post, Bartlett says that in the minds of many congressional Republicans, the $1.5 trillion deficit resulting from tax cuts isn’t a defect—it’s a primo feature.

That deficit, caused by their tax breaks to corporations and the wealthy, will allow Republicans to double down on arguments like the one Paul Ryan makes above. “There’s only so much money coming in,” Republican leaders will explain. “The responsible thing to do is cut spending.”

Sound overly cynical? Bartlett knows first-hand that it’s not. It’s the same thing that congressional Republicans did in the 1980s after Reagan’s tax breaks. It’s the same thing that they did again in the 2010s (see: Ryan, Paul), in a crisis caused by the Bush tax breaks. And it’s the same thing Kansas Republicans have been doing for the past half-decade as Governor Sam Brownback works to create a tax-free utopia.

In each of these cases, Republicans passed massive tax cuts, then railed righteously against the resulting unbalanced budgets—demanding that social spending be cut to right the ship.

It’s a part of the “starve the beast” movement (the beast being our government and its social programs), another step along the way to making government small enough to drown in a bathtub.

And we’ve already seen what the Trump Administration’s true priorities are for affordable housing—this year they proposed throwing 200,000 low-income families off of rent vouchers, with a significant portion of those families likely to end up homeless.

Congress balked at those plans, with even many Republicans seeing the cuts as unnecessary and cruel. But that calculus could easily change when the mother of all manufactured crises hits.

If this tax bill goes through and the US is running $1 trillion per year deficits by 2020, Republicans will likely be clamoring again to balance the budget—and discretionary spending on things like affordable housing will be among the first things to go.

“The problem we have,” Paul Ryan will piously remind us, “is spending.”

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The Luxury Ship is Sinking–Could DC Developers Jump to Affordable Housing?

Across the country, more and more developers are hitting what they consider to be an unpleasant reality—the luxury housing market is flooded. With so many new luxury units coming onto the market at the same time, there’s too much supply to support the sky-high rents that these amenity-rich developments demand.

There’s at least some evidence that the same could be true in DC. As luxury units flow into neighborhoods like Shaw, Capitol Hill, and new megadevelopments like the Wharf, top rents have gone down in other neighborhoods. Anecdotally, people around the city talk about longer and longer periods to fill these new buildings, with some sitting close to half-empty.

And rents for the most desirable buildings in Columbia Heights, Logan Circle, Dupont Circle, and Mount Vernon Triangle have all declined.

Does this mean we’re moving into a new period of affordability? Is it time to celebrate the salvation of the city?

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Not even close. These drops in prices only apply to the top of the market. Average rents are still increasing, although they are finally increasing more slowly than the country as a whole.

But the crisis remains. Lifelong DC residents are still being pushed out of their homes every day.

There is opportunity, however, if for-profit developers in DC get turned off of building more luxury units. In other places across the country, developers are now looking at a new (old) way to make money: workforce and affordable housing.

Building for people of more modest means has been so neglected in recent years that there’s an enormous demand for any developer who can bring something reasonably priced to market. What’s more, developers are starting to see less expensive housing as a wiser investment—unlike those in luxury digs, average families don’t look to downsize as soon as the economy turns south.

To get for-profit developers to build truly affordable housing, however, will require a lot of subsidy. Part of that is, of course, the “profit” piece of for-profit. That extra expense, along with the rarity of a true sense of mission to their work, is the reason non-profits need to keep leading in affordable housing development—when money is the only motivator, it has a way of bulldozing even those who are supposed to be served by a project.

But there’s a fundamental reality to the need for subsidy, too. To get rent prices below market rate means making them cheaper than the sum of their parts—land prices, construction costs, management fees, maintenance. All of these things are expensive (some at historic highs), and if we’re serious about keeping a diverse city, we need to invest more in making it happen.

One important first step would be quickly passing Councilmember Anita Bonds’ (At-Large) bill that would set a $120 million floor each year for DC’s Housing Production Trust Fund. That would increase the fund by $20 million over its current level, while also saving it from the yearly changes in the political winds that it is currently vulnerable to.

It might not be for the right reasons, but DC’s for-profit developers could soon be coming around to affordable housing. To make that move stick, we’ll need to invest more in housing—and fast.

Affordable Housing at The Wharf?

One of the largest developments to ever happen in DC, The Wharf, has finally revealed itself to many “Ooh’s & Ahh’s”. With progressive legislation in place, and a highly-celebrated public-private partnership, let’s see what is there for us in the affordable housing realm.

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Of the 649 apartments becoming available in Phase 1, DC’s Office of the Deputy Mayor for Planning and Economic Development (DMPED) highlights that 30% of the units will be affordable housing. But over one-third of those “affordable” units are considered workforce housing, pegged at 100% or 120% of AMI- or for those families making between $110,000 and $132,000  per year.

While it is not a problem to have “workforce housing” – it is a problem to have that included in the affordable housing calculations. It makes it confusing for the general public and forces us to scrutinize the numbers to see exactly what they’re talking about.

 The most confusing thing is DMPED spotlighting how half of the affordable housing units are for those households at 30% AMI and 60% AMI- but that is only true if the “workforce” units aren’t included in the calculation.

However, that same statement boasts how a third of the total 639 units are “affordable housing,” which can only be true if the “workforce” units ARE included in the calculation. You cannot have your cake and eat it too, DMPED.

You can't have your cake and eat it too... unless there's another cake we don't know about

You can’t have your cake and eat it too… unless there’s another cake we don’t know about

In any other situation, us housing advocates would be quite pleased to have 20% of a development’s units at less than 60% of AMI- because that’s about double what Inclusionary Zoning rules require- and us housing advocates are conditioned to accept whatever pieces of success we’re given.

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However, let us not forget that much of The Wharf came from the selling of public land by the district. WAMU’s story in 2013 revealed that the publicly-owned land valued at $95 million was sold to Paramount Development Corporation for *drumroll* $1.

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Yes, you heard that right. $1. Oh yeah, plus $200 million in public subsidies and tax breaks. That is an incredibly steep price to pay for just 131 affordable units so far, one-third of which are micro-units.

Micro-Units, between 330-360 square feet

Micro-Units, between 330-360 square feet

And so, I think we are completely in the right to develop more transparency in this process and to ask why the numbers that DC’s DMPED highlights are not quite true to reality. Also, what is the point of a high percentage of affordable housing if there isn’t much housing to begin with? For a project this large, 649 units is not very much, plus the fact that there are more hotel rooms than apartment units, and so it seems to be another aspect of this development- and future developments- worthy of scrutiny.

Phase II of The Wharf is still in process, and let us all pay attention to ANY sale of public land that does not include high amounts of truly affordable housing, with opportunities to increase the equity of those DC residents who need it most.

Who’s Got Housing?

Is housing a privilege or a right?

Regardless of your opinion (it is a right), there is a NEED for housing in DC among those in plain view most easily forgotten–and a program with financial incentives to people who open their door.

How many homeless people are here in DC? 7,473 as of January 2017.

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The District’s New Lease on Life program connects landlords with available units to families currently experiencing homelessness. Landlords receive a partial subsidy from DC, and the family pays the rest of the rent. The families also receive any necessary support services during their one-year lease.

The program has been incredibly successful, with participating landlord Thomas Batmen noting that, “Families exiting homelessness pose no greater risk than any other family applying for a lease.”

Monthly Landlord Outreach meetings organize folks to host meet and greets, establish risk mitigation funds to assuage landlords’ fears of losing money, and propose broader policy changes.

Mayor Muriel Bowser, DC Department of Human Services, DC Interagency Council on Homelessness and CNHED are holding a reception this Friday from 11:00 AM – 12:30 PM to talk about the New Lease on Life program.