Chairperson Bonds and members of the Committee, thank you for the opportunity to testify today. My name is Claire Zippel and I am a policy analyst at the DC Fiscal Policy Institute. DCFPI promotes budget and policy choices to expand economic opportunity and reduce income inequality in the District of Columbia, through independent research and policy recommendations.
I would like to speak today about the Local Rent Supplement Program (LRSP). LRSP is the best tool to address the urgent housing needs of the District’s lowest-income residents, and works in tandem with DC’s main housing tool, the Housing Production Trust Fund. LRSP provides monthly rental subsidies that cover the difference between the rent a family can afford to pay, and the cost of renting or operating the unit.
Given the importance of LRSP to the city’s most vulnerable residents, it is no doubt concerning to see that of $48 million allocated to the program in fiscal year (FY) 2016, less than $30 million was spent. Yet a closer look reveals that the vast majority of the underspending is unrelated to performance or capacity issues at the DC Housing Authority (DCHA). That said, a portion of the underspending falls under DCHA’s control, and they are working closely with stakeholders to address this.
The large majority of the unspent funds are attributable to the project-based component of LRSP, which provides ongoing operating cost assistance to affordable buildings—usually those built or renovated with assistance from the Housing Production Trust Fund. The underspending occurred because in recent years, the District has allocated project-based LRSP funds in the year when affordable housing projects are planned and selected for financing—while the actual subsidy payments cannot begin until after the project has been built or rehabilitated and tenants have moved in. Consequently, project-based LRSP funds have not been ready to be spent for several years after they are allocated. The DCHA under-spending in FY 2016 in large part reflected LRSP subsidies that had been awarded prior to2016, for projects that had been approved but are not yet online.
Due to legislation incorporated into the FY 2017 Budget Support Act, until project-based LRSP are ready to be spent on rental assistance for affordable housing projects, they will serve another important purpose—rehabilitating DC’s public housing stock, which is in poor condition after years of underfunding by the federal government. Unspent project-based LRSP dollars are now directed into a new fund to help the DC Housing Authority perform repairs and maintenance public housing. At the end of FY 2016, the fund received $15 million, which the DC Housing Authority will use to replace roofs, plumbing, and an elevator, and bring 14 vacant units back online. 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.
Yet a portion of the FY 2016 underspending is due to the tenant-based portion of LRSP, which funds vouchers that help families on the DCHA waiting list pay the rent at private-market apartments. The voucher portion of LRSP should not be affected by the funding delays that affect the project-based portion. Ideally, the large majority of LRSP tenant-based voucher funds should be spent each year (though spending will ramp up over the fiscal year as families with vouchers locate and rent apartments). While the underspending thus raises concerns, I am encouraged by steps DCHA has taken to improve their processes. Since the fall of 2016, DCHA has met several times with advocates including myself, and has shared steps the agency will take to reduce the time it takes to issue allocated LRSP vouchers:
- Clearer guidance will be provided to staff on how eligibility criteria differ among the various voucher programs DCHA administers—including tenant-based LRSP, Targeted Affordable Housing, and federal vouchers—so that DCHA staff can quickly determine households eligible for voucher assistance using the appropriate programmatic criteria.
- DCHA will reach out to households at the top of the DCHA waiting list prior to the start of the fiscal year, so that immediately after new tenant-based LRSP funds become available, they can screen those households and issue vouchers.
- Households on the DCHA waiting list who are offered tenant-based vouchers will receive clearer guidance on the documents they need to provide to certify their eligibility, and which criteria they must meet to be issued a voucher. This will increase the ability of households to provide DCHA the complete and correct eligibility documents more quickly.
I encourage DCHA to continue working with stakeholders to streamline and strengthen the program, so that DC’s future investments in tenant-based LRSP go to work quickly to provide low-income families access to an affordable home. Finally, I encourage the Mayor and Council to expand the Local Rent Supplement Program in FY 2018.
Thank you, and I am happy to answer any questions.
 DC Housing Authority, performance oversight documents for fiscal year 2017.
 Washington City Paper, “DC Public Housing May Get Major Funding Cuts Under Trump,” March 14, 2017.