Late Breaking: Councilmember Bonds introduces a bill to require trust fund receives at least $120M per year.
Mayor Bowser’s budget dropped yesterday, and for DC affordable housing advocates, one number popped out immediately. The Housing Production Trust Fund (HPTF), DC’s biggest source of funding for affordable housing in the city, is set to stagnate at $100 million.
That would be problematic in a normal year, but 2017 (in so many ways) is not normal. Uncertainty at the federal level has caused the bottom to fall out for many affordable housing projects. The trust fund increase is needed now more than ever.
What the Trust Fund Does
MANNA and HAT, along with our coalition partners at CNHED, have been pushing for at least $125 million for the fund. As of 2015, the HPTF had produced or preserved over 8500 units of affordable housing in a city drowning in an affordability crisis. HPTF money is often the only thing that keeps lifelong Washingtonian families from being pushed out of their city.
That alone would be enough reason to justify an increase, but it’s no longer clear that $125 million in the coming year would have a bigger impact than $100 million for this past year. Outside forces are threatening even more pain for DC’s affordable housing scene. In fact, the 25 percent increase may be needed just to keep many projects on track.
The problem DC faces (and communities across the country) is the falling value of the Low-Income Housing Tax Credit, or LIHTC. LIHTC gives real estate developers a tax credit for building affordable units. Developers can then sell that credit to investors to raise the money they need for an affordable housing project. The program has been wildly successful—over the past three decades, it’s helped fund almost 2.5 million affordable units across the country.
Initially enacted under President Reagan, LIHTC enjoys strong bipartisan support. It’s especially popular because of the way it amplifies the power of federal dollars: when it’s healthy, it can gain millions more in investment than what the government gives up in lost taxes.
But President Trump’s promise to drop corporate taxes from 35 percent to 15 percent has put LIHTC’s value in free fall. Investors aren’t sure what their tax burden will be next year, so they aren’t buying as many tax credits.
To put it another way, because investors think their taxes are likely to go down in the future, they don’t want to spend money lowering their taxes now. That money they aren’t spending would normally go to affordable housing projects.
These investors are like the parents who don’t want to buy any candy until the day after Halloween, and it’s causing problems for everyone.
What DC (and You) Can Do
Ultimately LIHTC problems will need to be solved at the federal level. (There’s currently a bipartisan bill that would increase LITHC’s value by 50 percent over the next five years.) But in the meantime, DC needs to plug the hole to keep affordable housing projects from stagnating. That’s why it’s so crucial that Mayor Bowser and the Council move to increase the HPTF’s allotment to at least $125 million.
As a resident of the Great American Colony, you may not have a federal representative to call, but you do have thirteen councilmembers and a mayor who are just waiting to hear from you. As this post was being written, At-Large Councilmember Anita Bonds introduced a bill that would guarantee at least $120 million to the trust fund each year. Call your representatives offices and tell them that you support Councilmember Bonds’ bill and at least $125 million for the Housing Production Trust Fund this year!