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HOTH 2017 2

HAT, Partners Work Against Racial Wealth Gap with Town Hall; Trump Administration Exacerbates It

One-sixteenth.

That’s the average wealth of a black family compared to a white family in America. It’s the result of centuries of racist policy in education, employment, and especially homeownership.

MANNA’s Housing Advocacy Team has long had an explicit focus on closing the racial wealth gap in our communities, and along with our partners at the Coalition for Nonprofit Housing and Economic Development and the Latino Economic Development Center, this past Saturday we hosted a Homeownership Town Hall aimed at connecting low-income families, especially families of color, to homeownership opportunities.

HAT and our partners are proud of the work we do, and we can see the impact that it has in DC. At the same time, however, we realize that there needs to be national progress in order to achieve justice in our country. The Trump Administration, on the other hand, is looking for a massive transfer of wealth from the bottom to the top; one that’s sure to widen America’s racial wealth divide.

The Town Hall

Close to 200 people came on Saturday for a series of workshops, vendor tables, and presenters covering every step of the affordable homebuying and ownership process. Participants learned about how to improve their credit scores, how to connect with organizations like MANNA that can help them find a home, and the wide variety of city programs that can help make affordable homeownership possible.

Current homeowners were able to learn about city property tax laws and legal estate planning, helping to ensure that their homes will be passed on to their children.

MANNA’s Director of Homebuyer Education, TC Caviness, started off the strong lineup of speakers by articulating the extent to which a gap in homeownership holds back wealth building for black families. Even other areas that are typically thought of as wealth builders, like education level, pale in comparison to the impact that homeownership has.

Despite having worked around housing for years, said TC, “I was shocked when I saw these charts.”

RacialWealthGap_1.pdf college RacialWealthGap_1.pdf

A college education, while important for many, many reasons beyond money, does almost nothing to close the racial wealth gap, explained TC. Homeownership, on the other hand, shrinks that gap by more than a third.

Polly Donaldson, Director of the DC Department of Housing and Community Development, and Councilmember Anita Bonds, Chair of the Council’s housing committee, both spoke about the importance of affordable homeownership for building a city where all residents can thrive.

Councilmember Bonds, reflecting on the positive impact of recent increases to DC’s Home Purchase Assistance Program for first time low- and moderate-income homebuyers, told the crowd, “Next year, I want to increase it again!”

Trump Administration’s Reverse Robin Hood

That was in stark contrast to the ideas that are coming out of the White House. The Trump Administration has released a series of tax cuts for the wealthy that would collectively cost around $6.2 trillion over the next decade.

To pay for them, the President has introduced a budget plan that would drastically cut many programs targeting poor families, among which families of color are disproportionately represented.

Here are a few of his proposed tax and budget cuts, juxtaposed for context.

  • $192 billion cut to food stamps pays for $174 billion giveaway by abolishing the Estate Tax
  • $143 billion in cuts to student loans helps pay for $158 billion lost by repealing a tax on the unearned income of the wealthy (interest, dividends, capital gains, etc.)
  • $40 billion in cuts to EITC and the child tax credit vs. $400 billion lost by abolishing the Alternative Minimum Tax (AMT is often the only tax paid by billionaires)

(from Americans for Tax Fairness)

While HAT and others are prepared to continue our push for fair funding in the District, we need help from our national partners and from people all around the country to stop the Trump Administration’s disastrous and immoral plan to take from the poor and give to the rich. We know that the impact of this theft will disproportionately fall on communities of color, causing the racial wealth gap to grow wider and wider.

Looking at our country’s history, it’s certainly not unprecedented. But as MANNA’s work in DC has proven, it’s not inevitable, either.

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As Budget Holes Abound, Council Approves Tax Break for Millionaires

Councilmember Davd Grosso (At-Large)

In front of a packed hearing room, as many held signs in silent protest, the DC Council Tuesday morning rejected an effort by Councilmember David Grosso (At-Large) to delay a cut in the District’s estate tax. The tax cut, which would raise the threshold for the estate tax from $2 million to $5 million, will go into effect in January 2018 unless the Council acts before then.

Some have estimated that the proposed cut in the estate tax would affect only a hundred families in the District.

Alongside a reduction in the business franchise tax that Councilmember Grosso and advocates also unsuccessfully opposed, these cuts come against the backdrop of a tight and stressful budget season.

Metro funding, investments in education, looming federal cuts, and an on-going affordable housing crisis have made for a lot of hard discussions about what should be funded and at what levels. Yet as we’ve covered before, the Council has made things unnecessarily harder for themselves with tax cuts that do little to help the city move forward.

Councilmember Grosso laid out in plain terms the reasons for his opposition. When the District was struggling, he said, the Council bent over backwards to try to attract new businesses. But that effort was with an explicit goal in mind: to lift up all the city’s residents, especially those that had been left behind by a changing economy.

Now, said the councilmember, the District is thriving—but the boom times aren’t being shared by all. Not giving away the revenue from multi-million dollar estates and big businesses’ franchise expansions is a simple way to move towards fulfilling the original vision for growth.

“I’m not quite sure,” said Councilmember Grosso, “how we ended up as a Council aligning with the Trump administration’s budget priorities. We’re looking at underfunding social services and prioritizing tax cuts for big business and the wealthy.”

Councilmembers Brianne Nadeau (Ward 1) and Elissa Silverman (At-Large) joined Grosso in their opposition. Both spoke about the challenges facing the District and the impact that this money could have if directed towards community needs.

Councilmember Trayon White (Ward 8) supported the effort to postpone the estate tax cut, while joining the majority in allowing the business franchise tax cut to move forward.

The rest of the Council followed Chairman Phil Mendelson’s lead in preserving the cuts, with many speaking about a desire to grow the District’s economic output.

As Councilmember Grosso noted, however, economic output is no longer in question. It’s the original vision of inclusive growth that now is imperiled.

Poverty Politics and Profit FRONTLINE PBS

Frontline Goes for Flash Over Substance in LIHTC Report

In a recent year-long investigation, Frontline PBS and NPR delved into the affordable housing industry. The result was Poverty, Politics and Profit, an hour-long documentary on PBS, as well as several pieces on NPR and on both organization’s websites. While drawing attention to the nation’s affordable housing crisis is an important goal, in their work PBS and NPR seriously misrepresent the Low-Income Housing Tax Credit (LIHTC), a crucial tool for building affordable housing.

LIHTC works as a public-private partnership, and it was created under President Reagan as a replacement for the old system of government built public housing. It offers a tax credit to developers in exchange for building affordable housing. The developer then sells that tax credit to an investor to raise money for construction, with the resulting units required to remain affordable for 30 years.

The program has produced millions of units affordable to low-income families (14,000 in DC alone), and it enjoys widespread bipartisan support.

Over the past two decades LIHTC funding has grown considerably, from just over $4 billion in 1997 (inflation adjusted) to almost $7 billion in 2014. But during that time, the number of units produced each year has dropped from 70,000 to under 60,000. It’s a problem that’s worth looking into.

Unfortunately, this investigation was more interested in flashy anecdotes than a data driven analysis. Their work repeatedly refers to two cases of fraud found in south Florida, where developers embezzled a combined $38 million. Certainly, any level of fraud is too much, and it’s very possible that more federal oversight of LIHTC could be helpful.

But this represents a drop in the bucket of the program’s multi-billion-dollar budget. The PBS/NPR investigation found no other instances of fraud, and they uncovered no evidence pointing to wide-spread fraud in the industry.

The report also spends considerable time focusing on the commissions that investors and middle-men, called syndicators, make for their work. These payments are portrayed as a ballooning, shadowy industry, complete with images of men in suits laughing into their cocktails.

In fact, in recent decades increasing market competition has cut the rate of return for LIHTC investors by half. Since the mid-1990s, rates have gone from double digits to a more moderate 4 to 6 percent.

So why hasn’t increased money resulted in more LIHTC units? PBS and NPR actually covered all the major reasons in their reporting—albeit with significantly less gusto than the fraud and abuse angle.

Why more money is producing less units

1)      Rising construction costs: Over the same period the report considered, construction costs increased significantly faster than inflation. According to their own calculations, this alone accounts for 50 percent of the change in price per unit.

2)      Cuts in other federal funding: Affordable housing units often have multiple channels of subsidy, with more than one program helping to keep a unit affordable. Two of the biggest programs that supply this extra coverage, the federal HOME grant and the Community Development Block Grant, have been subject to painful cuts during the period in focus. This means that more LIHTC funding is needed for each unit to hit the same affordability levels.

3)      Deeper affordability: At the same time that other funding has been disappearing, officials have been making a push to make units affordable to lower-income families. That’s a great goal, but it costs more money, meaning that fewer units get built overall.

4)      Neighborhood choice: Similarly, in an effort to avoid creating concentrated pockets of poverty, more LIHTC buildings are being built in wealthier areas. It’s another worthy goal that, again, costs more money.

While Poverty, Politics and Profit seems to love the idea of a shadow network of affordable housing political bosses, what emerges instead is the picture of a program that’s consistently producing in the face of rising costs and changing priorities.

Then again, Bipartisan Program Provides Affordable Homes for Millions just doesn’t have the same ring to it.

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The Post Misleads on DHCD Grant Givebacks

From its opening line and its title alone, a recent Washington Post article’s message is clear: Mayor Bowser’s administration is responsible for losing almost $16 million in federal funds for affordable housing. Yet the facts behind the Post’s recent article do little to support this conjecture.

The Facts

The article, entitled “The D.C. Housing Department forfeited millions as families waited for help,” details how DC’s Department of Housing and Community Development (DHCD) was forced to return millions of dollars between 2014 and 2016.

These returns, representing a significant portion of the District’s HOME block grant for affordable housing, were compelled because of mismanagement. Some of the $16 million represented money that was never allocated for specific projects and ran into a deadline for use, while the rest came from projects that DHCD approved, but that the federal government later determined did not meet their standards.

This giveback was undoubtedly a tragedy in a city starved for affordable housing, and a preventable one. However, it’s not a reflection of DHCD’s capacity under Mayor Bowser and DHCD Director Polly Donaldson.

The Mislead

In fact, the Post is careful never to specifically fault the Mayor or her administration for the givebacks, preferring instead to lay blame with DHCD. It’s a fair claim—an indisputable one, actually. DHCD mismanagement under the past administration is undoubtedly the reason these funds were lost. But by weaving the facts with repeated references to Mayor Bowser and Director Donaldson, the Post attempts to imply a connection where none exists.

It’s the same game the Bush administration played in going to war in Iraq—say “9/11” and “Saddam Hussein” enough times in the same sentence, and the result is over half the population believing that Hussein was personally responsible for the attacks.

The Post additionally misleads readers with its talk of using the $16 million for local rental vouchers under the city’s Local Rent Supplement Program (LRSP). The article claims that the $16 million “could have provided rent vouchers for a year to roughly 1,000 of the city’s poorest families.”

As the administration noted in a rebuttal it circulated earlier this week, the funds in question were spread over multiple years—no single year had $16 million left over. Furthermore, rent supplements are not a one-time expense. The city is required to cover that supplement for as long as the family lives in their subsidized unit. The “1,000 families,” then, is nothing but hyperbole.

The Forgotten

The most important piece left out of the Post article is the most damning to their tenuous connection. All of the money forfeited, both because of deadlines for use or projects that didn’t meet federal standards, was the result of decisions DHCD made before the Bowser administration took over.

The administration’s statement notes that “the over $15 million in HOME funds referenced in the Post’s story actually expired prior to 2015. These projects were funded and approved by the prior administration and were subsequently found to be ineligible for HOME funds during the first six months of the Bowser Administration…”

What’s more, the Post fails to identify that the former DHCD employees it quotes were in fact responsible themselves for underwriting several of the projects that were denied by the federal government.

Whether through an intentional omission or an accidental oversight, this irony is lost for the reader.

While DHCD undeniably had major problems in the past, under Director Donaldson’s leadership it has become a major asset in DC’s work to build and preserve affordable housing. A piece like this one from the Post, with its misleading ties and hyperbolic claims, serves only to endanger funding for the families it ostensibly wants to help.

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Councilmembers Call for Divestment from Wells Fargo

Councilmember David Grosso, whose office wrote the resolution

The City Council wants DC to reconsider its relationship with Wells Fargo Bank. That’s according to a resolution introduced by Councilmembers David Grosso (AL), Anita Bonds (AL), Elissa Silverman (AL), Brianne Nadeau (Ward 1), and Charles Allen (Ward 6) last month.

Wells Fargo handles the city government’s banking needs as the city’s bank of record, with billions of dollars in its account.  But in their statement, the councilmembers expressed skepticism that Wells Fargo was meeting its obligations to the communities it serves and called for the District to “reassess its existing relationship with Wells Fargo and consider greater investment in local banks to support community growth.”

Their statement listed concerns about Wells Fargo’s history of racially discriminatory lending practices, its funding of private prisons, and its role in financing the Dakota Access Pipeline. That pipeline was rerouted through the drinking water of the Standing Rock Sioux Tribe in part because it was deemed by the EPA to be too dangerous to pass through predominantly-white Bismark, ND’s water supply.

Wells Fargo has also made news in the past year with revelations that thousands of their employees opened millions of false accounts using customers’ information. According to past employees, this was driven by unrealistic sales requirements and a toxic corporate culture. In September of last year Wells Fargo settled with federal regulators for $185 million.

In part because of this, Wells Fargo’s score under the Community Reinvestment Act (CRA), a piece of legislation designed to monitor and encourage responsible banking in low- and-moderate-income communities, was recently downgraded to a “needs to improve.” This is a failing grade under the CRA ratings, a rare occurrence under a system some advocates have described as being too lenient.

Between 1990 and 2007, an average of only 4 percent of banks each year received a failing grade on their CRA exam.

In their report, federal regulators also referenced Wells Fargo’s history of racial discrimination in lending and other improper lending techniques.

Wells Fargo, for its part, claims its problems are now in the past and that it has taken concrete steps to improve its community services. In a statement after their federal settlement, CEO Tim Sloan declared that Wells Fargo is on a “journey to make things right with customers and rebuild trust.”

DC councilmembers, however, remain unconvinced.

DC License Plate

Happy Tax Day from the Great American Colony

As Americans across the country scramble to get their taxes filed, Washingtonians have an extra reason to be bitter. That’s because DC residents, who lack Congressional representation, pay the highest per capita federal taxes in the nation.

And it’s not even close.

Taxes who pays the most

DC residents pay on average over $36,000 in federal taxes, four-and-a-half times the national average. The next highest paying jurisdiction, Delaware, shells out just $16,000 per person.

While some like to point out that the District gets more than it gives in federal dollars, that’s only true because of the high number of federal employees living in DC—their salaries are counted in that total.

Budget Autonomy

In fact, federal discretionary spending makes up only 1 percent of DC’s budget. But that hasn’t stopped Congress from fighting to micromanage DC’s use of all funds, both federal and local.

Last year was the first time that the District government could spend its local dollars with only a 30-day Congressional review, during which Congress has the opportunity to hold an up-or-down vote. And even that was only achieved after years of court battles.

Prior to DC’s legal win last year, Congress had often delayed approving the District’s budget for weeks or months, creating headaches and manufactured crises for city leaders.

Congressional Representation

The unfairness of the situation is magnified by the fact that Washingtonians have no voting member of Congress. Not a single vote has been cast by District residents for the men and women who will be deciding how that $36,000 per person will be spent.

And in a city with no elected Republican officials—in a city where just 4 percent of last November’s vote went to President Trump—a Republican controlled House and Senate will be making decisions on how to use the money of these unrepresented American citizens.

To quote the old Schoolhouse Rock line, “That’s called taxation without representation, and it’s not fair.”

HPAP Success for Retired 1st Time Homeowner

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On Monday, April 10th, Ms. Evans day had finally arrived. At last, after years of working and waiting, the retiree could close on her condo with the help of DC’s Home Purchase Assistance Program (HPAP). “Being a homeowner means a lot,” said Ms. Evans. “This was my first time. [It’s] an accomplishment.”

Her journey began two years ago, when she started the process of trying to buy a unit in a newly converted apartment building. Amazingly, Ms. Evans had lived in this apartment building a decade before and was looking at buying the exact unit she had previously rented. But funding issues emerged, and her dream of homeownership seemed like it might slip away.

Thankfully, the developer arranged for Ms. Evans to have a one year lease on her unit before purchasing. This allowed her time to save money and get outside funding sources in order.

One of the most important pieces to Ms. Evans is what this could mean for her family. “If something were to happen to me,” she said, “[my home] would go to my daughter, which would help her in so many ways.”

None of this would have been possible, said Ms. Evans, without HPAP. “They helped me a lot,” she said. “[Without HPAP,] I don’t think I would have done it.”

Even to the end nothing was easy. Ms. Evans closing was originally scheduled for the week before, but a last second problem with another grant forced it to be pushed back. But after so much work and so many years of waiting, Ms. Evans was unflappable.

“To be honest, I think it bothered me more than her,” said her realtor, Bill Jackson, with a chuckle. For Ms. Evans, the end was in sight. And now, after all the work and waiting, the unit she rented more than a decade ago is finally her own.

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Why the Housing Production Trust Fund Needs $125M+

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.

LIHTC Explained

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 have 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!

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Impassioned Speakers, Energized Crowd Get Commitment for #MoreHousingNow

On Saturday morning, people began showing up at United Foundry Methodist on 16th St NW well before the appointed time. After months of preparation the big day had arrived, and hundreds of participants wanted to make sure they got a good seat.

CNHED’s yearly Housing for All Rally—this year tagged “More for Housing Now”—was another great success in a campaign of successes. Since its birth in 2010, the Housing for All Campaign has fought for and won millions and millions in increased funding for DC affordable housing. The Home Purchase Assistance Program (HPAP), the Local Rent Supplement Program, Targeted Supportive Housing, and, of course, the Housing Production Trust Fund (HPTF) have all been boosted by the campaign. The yearly rally has become such an event that it now regularly draws Mayor Bowser and councilmembers.

But on Saturday, there was no sense that the campaign was resting on its laurels. A series of speakers from all walks of life wanted to make it clear to the city officials in attendance that there was much more work to be done. Their number one priority was clear: increasing the HPTF from $100 million to a minimum of $125 million.

Without this renewed commitment, many said they feared their neighbors, families, or even they themselves could be forced out of the city they call home.

Perhaps no one made this point more forcefully than David Bowers of Enterprise Community Partners. With a fiery speech that ranged from prop comedy to powerful and emotional demands, Bowers brought the crowd to its feet countless times as he described the struggle of working families in DC.

Bowers riled up the crowd by noting that if the Council’s $8 billion budget is represented by $8, only 20 cents of that (“two dimes!”) goes to affordable housing.

He brought his time to a thundering conclusion by comparing the plight of DC families in search of housing to that of a man caught in the rain. “We’re out here every day getting rained on!” he boomed to the roaring crowd, emphasizing his point by emptying a water bottle over his head. To the Council, he said, “we ask for an umbrella. ‘Please, can I have an umbrella?’” Bowers mimed being turned away and dumped more water on his head. “But we keep getting rained on!”

Another speaker to bring down the house was Jeanette Bright, a member of MANNA’s Homebuyers Club. Although initially nervous, she found her groove and captivated the audience with the story of her mother’s struggle to support five daughters. After years of working multiple jobs, Bright’s mother was finally able to buy a home for her family. And now, Bright is closing in on the same goal—thanks to HPAP, she’ll soon be able to buy a house of her own.

Jeanette Bright

MANNA Homebuyers Club member Jeanette Bright

At times overcome by emotion, she ended her speech with a tribute to her mother. Homeownership, Bright said, has been her dream for years, just like it was her mother’s before her. But she said the city must do more. “Homeownership,” concluded Bright, “must not be a dream, but a reality.”

DC lawmakers also feature prominently in the event, with At-Large Councilmembers Anita Bonds and Elissa Silverman taking turns at the podium before Mayor Bowser.

Councilmember Bonds spoke passionately about the need that exists in DC and said that she, as Chair of the Council’s housing committee, is ready to take bold steps. “You’ve asked for at least $125 million for the trust fund,” called Councilmember Bonds. “Well, I’d like to see $200 million!”

“Although,” she concluded with a chuckle, “I’m not sure all of my colleagues are there yet.”

Councilmember Silverman, also on the housing committee, spoke about the human element that is sometimes lost in budget discussions. “What you’re doing today,” said the councilmember, “is taking letters and acronyms and putting faces to them.”

Mayor Bowser, almost the last speaker of the day, let the crowd know she had heard their request. She recounted the growth that the HPTF has seen under her leadership, then turned to the present. “You want me to expand it again?” she asked to cheers.

Like others, the mayor emphasized the importance of people staying engaged in the fight for affordable housing. “We have the resources we need for affordable housing,” she told the crowd. “Now, we need the will to execute it!”