A number of for-profit developers have approached the DC government, hat in hand, seeking public subsidies to support projects stalled due to the economic downturn. The requests for help include condo projects, a four-star boutique hotel, and most recently, a convention center hotel. They seem to be getting a positive reception in the Wilson Building.
But we have not seen much attention paid to another group of stalled projects – millions of dollars of affordable housing projects. Helping these projects move forward would not only create jobs and stimulate the DC economy but also would address a huge need in the city.
The biggest challenge facing the housing development community is a recent drop in funds available from DC’s Housing Production Trust Fund. Right now, the city has resources to support only one-fourth of the affordable housing projects that are ready to move ahead.
The Housing Production Trust Fund (HPTF) is the District’s primary source for affordable housing construction and rehabilitation, and is funded by collecting a percentage of DC’s deed recordation and transfer taxes. The slowdown in the real estate market has caused revenues into the HPTF to take a nose dive – falling by 57 percent in the last two years – from $42 million in FY 2008 to just $18 million expected for FY 2010.
But the drop doesn’t mean that there is less need for – or willingness to build – affordable housing in the District.
In fact, that willingness is evident by just how much is stuck in the development pipeline. The Department of Housing and Community Development, who manage the HPTF, recently announced that they had $200 million worth of affordable housing projects (about 80-85 projects) in the pipeline. However, the HPTF only has about $52 million in resources – leaving nearly $150 million in stuck projects. Considering that these projects use public funding to leverage private financing, the missed opportunity is even larger.
Last fall, the DC Council recognized that the lack of revenue for the HPTF was a problem and adopted legislation with a goal of setting a $70 million funding floor for the HPTF in FY 2010 and an $80 million funding floor in future years. Yet, the recently enacted FY 2010 budget did not provide a new funding mechanism or meet the funding goal.
So, why are we now offering to bail out stalled commercial projects when there are millions of dollars worth of stalled affordable housing projects that we can’t move? It’s a question every Council member should have to answer.