The Districts Dime

A Double Win for DC’s Affordable Housing: Investing in Project-Based Rental Assistance

March 23rd, 2017 | by Claire Zippel

Most affordable housing built in DC—such as with the Housing Production Trust Fund—also need monthly rental subsidies to be accessible to the lowest-income residents. That’s one key reason Mayor Bowser’s budget for 2018 should invest more in DC’s Local Rent Supplement Program (LRSP) to tie rental aid to new housing. Doing this will bring a second important benefit, too, since some of the funds will help repair public housing, a critical but dilapidated source of affordable homes.

Here’s how upping the investment in project-based LRSP is a double win for DC.

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LRSP helps the Housing Production Trust Fund create housing affordable to extremely low-income residents. Fully 80 percent of recent Trust Fund units that are affordable to DC’s lowest-income households needed project-based rental subsidies[1]—which cover ongoing costs like maintenance and utilities not covered by the Trust Fund. This means that LRSP is key to ensuring that the Trust Fund serves the DC residents who have borne the brunt of the city’s affordable housing crisis. That’s why it’s important to include enough LRSP assistance in the upcoming budget.

Some LRSP funds ends up repairing DC’s distressed public housing. More money for LRSP would have an added benefit for DC’s public housing. Project-based LRSP funds should be allocated when affordable housing projects are planned, but the actual LRSP subsidy payments cannot begin until after the project is complete and tenants have moved in. This means that some LRSP funds are not ready to be spent for several years after they are allocated.

Those interim funds are put to another important purpose—improving the safety and quality of life of public housing residents. The funds go into a fund to help the DC Housing Authority repair and maintain public housing, per legislation adopted last year. This is a smart move, since DC’s public housing stock is in poor condition—over $1 billion in deferred needs—after years of underfunding by the federal government. At the end of FY 2016, the public housing repair fund received $15 million from LRSP, which the DC Housing Authority will use to replace roofs, plumbing, and an elevator, and bring 14 vacant units back online.[2]

Local funds for repairs are likely to be even more critical in the coming years: the Trump administration has proposed draconian cuts to public housing authorities, which would reduce DCHA’s federal budget for capital repairs from $14 million to less than $5 million.

DCFPI testified about this issue this week. You can read the full testimony here.

 

[1] For projects closed or in underwriting 2010 to present. Some project-based subsidies received by projects are federally funded through the Section 8 program, rather than LRSP. For more on methodology, see the endnotes of DCFPI’s report, A Broken Foundation: Affordable Housing Crisis Threatens DC’s Lowest-Income Residents.

[2] DC Housing Authority, performance oversight documents for fiscal year 2017.

 

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Let’s Make Thoughtful Improvements To Strengthen the Housing Production Trust Fund

March 22nd, 2017 | by Claire Zippel

The Housing Production Trust Fund is DC’s main affordable housing tool, so it’s disconcerting that a recent DC Auditor report revealed that improvements are needed in how Trust Fund projects are overseen. As DC steps up its investment in the Trust Fund, it’s important to get this housing tool right. The good news is that problems identified in the audit are fixable. The Bowser Administration should move quickly to address these problems, which may predate the mayor’s term, but are now her responsibility.

The audit found several lapses in the Department of Housing and Community Development’s (DHCD) oversight in a sample of 14 affordable housing projects that received loans from the Housing Production Trust Fund. Among the findings:

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  • Projects didn’t share a consistent method of certifying that residents had qualifying incomes, and they sometimes charged rents above the maximum allowed. Some property managers weren’t clear on what the rules were, and some seemed to have disregarded them. DHCD didn’t catch these instances of non-compliance.
  • DHCD didn’t keep its own records on Trust Fund project payments and outstanding balances. Instead, it counted on a contractor who wasn’t always reliable. As a result, DHCD didn’t fully collect funds from several projects that were behind on their loans.

With so many DC residents struggling to pay to keep a roof overhead, every dollar dedicated to affordable housing counts. It’s troubling that projects that received public dollars were able to slip through the cracks and not provide affordable housing in accordance with the rules.

There problems are very serious, yet there’s reason to believe they may not be widespread: the audit notes that the 14 projects sampled are “higher risk” because they did not also receive federal funds or housing tax credits, as many Trust Fund projects do. Federal funding and tax credits come with clear and well-established monitoring procedures. That, of course, does not lessen the urgency to address the issues at projects that receive only Trust Fund assistance.

DHCD should implement the audit’s recommendations, including providing clear instructions about certifying incomes and setting rents, and holding projects accountable through more rigorous monitoring and enforcement. DHCD has indicated it’ll start to use the procedures that are applied to federally funded projects as a template to revamp its oversight of Trust Fund projects. That’s a great start.

In addition to implementing the auditor’s recommendations, DCFPI also encourages DHCD to dedicate more staff to tracking and monitoring Trust Fund investments. The audit repeatedly cites inadequate staffing levels as a factor in why projects slipped through the cracks. Mayor Bowser should include any needed additional funding in her fiscal year 2018 budget.

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Mayor Bowser Should Put DC Students Ahead of Tax Cuts

March 21st, 2017 | by Marlana Wallace

Every child deserves a good education. It’s a sound investment in the promise of individual students and in the future of our community. DC Public Schools and public charters need more funding to better serve their students, according to a report released in January from an expert working group convened by the Office of State Superintendent of Education (OSSE).  Mayor Bowser should follow the report’s recommendation—a 3.5 percent increase in per-pupil funding—and she should delay some or all of the scheduled tax cuts if that is needed to adequately support schools.

DC schools will need more funding next year simply because of rising student enrollment in both DCPS and public charter schools. That’s a good thing, a sign of DC’s growing population and increased trust in DC schools!

But DC schools also need more money to serve each student well. The current school funding formula is 15 percent[1] below what the latest ‘Adequacy Study’ determined is necessary to ensure schools can meet high standards, and equip students with the skills to succeed in life.

schools tax cuts

The recommended 3.5 percent increase in per-pupil funding—the Uniform Per Student Funding Formula—would bring school funding closer to an adequate level and meet important goals in both DCPS and public charter schools.

DC Public Schools: This year, nearly half of the dedicated ‘at-risk funding’ in DCPS is going to pay for core functions, like science supplies or athletics coordinators, instead of driving new, targeted resources towards those students most at risk of falling behind academically, like afterschool programs and evening credit recovery. Forcing schools to resolve budget pressures and meet basic needs by tapping the funds intended to serve the most vulnerable students is not a sustainable solution. Increasing base funding for all schools will help ensure at-risk funds can serve their intended purpose.

Public Charter Schools: Increasing the base rate of the school funding formula would help public charter schools that lost out when summer school funding was eliminated in 2014. Charter schools got new at-risk funds, like DCPS, but many charters had to use the new funds to replace lost summer school funds

Raising the base rate of the Uniform Per Student Formula Funding is the surest way to invest in all DC students, and give both DCPS and public charters the flexibility they need to meet the particular challenges they face. That’s why we urge Mayor Bowser to follow the recommendations of the OSSE working group and increase per-pupil funding 3.5 percent.

Every year counts in a student’s education. The District is financially thriving, and yet our most vulnerable students aren’t getting the resources we have promised. This is a question of choices, not resources. Mayor Bowser and the Council can choose to #UntieDC from its current fiscally restrictive policies that put tax cuts ahead of schools.  Pausing the tax cuts would put students ahead of tax cuts and help them get the education they deserve.

 

[1] The current base rate of the Uniform Per Student Formula Funding ($9,682) would need to increase 15 percent to reach the Adequacy Study level, adjusted for inflation in fiscal year 2018 dollars ($11,174)

 

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You Can Take Control of the DC Budget: Take the “DC Budget Challenge”

March 8th, 2017 | by Chaz Rotenberg

Did you ever think that you could do a better job deciding how to spend DC’s money than our elected leaders can? Well, here’s your chance! Mayor Bowser recently released the DC Budget Challenge—an online tool that allows DC residents to share their priorities by showing how they would make the tough decisions to allocate the DC budget between various programs and services. And it’s not just a game: your “final” budget choices can be sent to the Mayor, so that she can hear directly from DC residents about their priorities.

I just went through the budget challenge and added money for housing, education, and homeless services. I paid for these important increases and balanced my DC budget by delaying “tax triggers,” automatic tax cuts adopted by the DC Council three years ago.

It turns out many DC residents share my priorities. So far, 63 percent of participants in the DC Budget Challenge increased funding for affordable housing and 57 percent added to education. The next most popular increases were for safety net/homelessness and job training. Economic development and Public Safety were the least valued expenditures, with more than 80 percent of participants choosing to either maintain or decrease funding. The other spending categories in the Budget Challenge are arts and humanities, environment, healthy city, infrastructure, and transportation.

By adding funding to housing, education, and homeless services, and without cutting any other services, I was left with a $55 million deficit. Typically this would be a problem, because DC’s budget must be balanced. However, the Budget Challenge shows users how the city raises revenue, reminding us that revenue increases can help balance the budget.tax-triggers2

One line item in the Budget Challenge’s revenue list caught my eye: tax-cut triggers. It shows that tax-cut triggers will eliminate $60 million in revenue next year.[1] But by choosing to stop these tax cuts, I could use that revenue to fund the $55 million in increases I wanted.

The DC Budget Challenge reminds us that balancing the budget is not easy, that we cannot increase funding for everything we may want. And it reminds us that the choices we make on the tax side—including the decision to prioritize tax-cut triggers—limits our ability to fund the things we care about most.

I hope you’ll take the DC Budget Challenge, too. When you do, remember that you can delay tax cuts to put more towards much needed services. What are you waiting for?

 

[1] According to the OCFO’s most recent revenue forecast, tax-cut triggers will actually cause the District to lose $100.3 million—not $60 million—in additional revenue in FY 2018, due to higher than anticipated revenue growth.

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How to Ensure DC’s Housing Investments Reach the Most Vulnerable Residents

March 7th, 2017 | by Claire Zippel

Most of the DC renters facing severe affordable housing challenges are extremely low-income, yet only 15 percent of new rental housing awarded Housing Production Trust Fund dollars in 2016 will serve families with incomes this low. This continues a mismatch between housing needs and use of DC’s housing resources that DCFPI identified in a report last year. There are steps the District can take to better target housing resources to the families most in need, and those should be put in place as soon as possible.

The District is required by law to devote at least 40 percent of the resources from its main affordable housing tool, the Housing Production Trust Fund, to help extremely low-income households (those with incomes below 30 percent of the area median or $32,000 for a family of four). These are the families facing the worst affordable housing problems: most spend at least half their income for rent each month.

Yet the Trust Fund has fallen short of this goal in recent years,[1] and is anticipated to fall short again this and next fiscal year, too.[2] In 2017, for example, only 22 percent of Housing Production Trust Fund resources will reach extremely low-income households.

Not meeting the housing needs of DC’s lowest-income families has serious consequences. Paying more than half of household income for rent leaves low-income families financially on the edge, at high risk of being evicted, moving frequently, or becoming homeless. Often, these residents face hard choices between paying rent and buying enough food for their family.

So why has the Housing Production Trust Fund not met its mandate to serve the households most at risk of severe housing problems?

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The answer lies partially in the difficulty of balancing DC’s many housing priorities. The Department of Housing and Community Development (DHCD) has recently prioritized the Trust Fund to preserve existing affordable housing, most of which serves low- to moderate-income levels. This is laudable, but with limited resources in the Trust Fund, it’s difficult to intensify preservation efforts while also creating a significant amount of new housing for extremely low-income households.

This points to the need to expand the number of tools in DC’s affordable housing toolbox. The Mayor’s Housing Preservation Strike Force recommended creating a public-private fund entirely dedicated to acquiring, rehabilitating, and preserving affordable homes. DCFPI encourages DHCD to move this idea forward in 2017, and we also encourage the Mayor and Council to provide any set-up funding that may be needed in fiscal year 2018. This will free up some of the Housing Production Trust Fund to focus on building new housing.

Yet this doesn’t solve the problem, since only 15 percent of the new rental housing awarded Trust Fund dollars in 2016 will be affordable to extremely low-income households.[3] To improve this, DHCD should change its selection criteria to prioritize extremely low-income housing better. And to make sure that those projects pencil out, it’s critical that they have access to ongoing operating assistance through the Local Rent Supplement Program (LRSP). That’s why the Mayor and Council need to expand the Local Rent Supplement Program in fiscal year 2018. Ultimately, the impact of DC’s record high investments in affordable housing won’t be maximized if those resources don’t reach the families most in need.

DCFPI testified about this issue this week. You can read the full testimony here.

 

[1] Housing Production Trust Fund annual reports.

[2] DHCD performance oversight pre-hearing responses, 2017.

[3] DCFPI analysis of the DHCD Development Finance Division pipeline report.

 

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