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 focus my testimony today on the importance of increasing the amount of housing affordable to extremely low-income families produced by the Housing Production Trust Fund.
Three-fourths of the DC renters who face severe housing challenges are extremely low-income, with incomes below 30 percent of the area median or $32,000 for a family of four. In total, 26,000 extremely low-income DC households spend more than half their income on rent. Many pay in excess of 80 percent of their income just to keep a roof overhead. Yet only a modest share of the city’s housing investments have gone to create affordable homes for families at this income level.
This unmet need has serious human consequences. Paying such a large share of income for housing leaves extremely low-income families financially on the edge: they face 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. Parents in extremely low-income families who lack affordable housing face higher rates of depression and often miss medical appointments, while children in such stressful environments often face developmental challenges that make it hard to succeed in school. One-fifth of all children in the District are in extremely low-income families that lack the foundation of an affordable home.[i]
The severe affordable housing crisis faced by extremely low-income households likely has fiscal consequences for the city as well. The cascading effect of housing instability through all aspects of families’ lives—and especially on the health and educational attainment of children—suggest that investments in affordable housing for extremely low-income households may over the long term reduce the need for other, more intensive interventions, such as healthcare, homeless services, special education, and child welfare involvement.
Yet in recent years DC has missed the mark on directing its housing resources to the households with the most serious affordable housing needs. Since 2014, the Housing Production Trust Fund has fallen short of the statutory requirement that it dedicate 40 percent of its resources to housing for extremely low-income households.
Balancing DC’s many affordable housing priorities can be difficult. For instance, as DHCD points out in its pre-hearing responses, prioritizing funds for preserving existing affordable housing—most of which serves somewhat higher income levels—may make it hard to also dedicate a large share of funding to extremely low-income households. Preserving existing affordable housing is an enormously important purpose, and DCFPI lauds DHCD for intensifying its engagement in affordable housing preservation, including through its service on the Mayor’s Housing Preservation Strike Force.
Yet we note that the prioritization of preserving existing affordable housing doesn’t fully account for the small amount of new housing for extremely low-income households in the pipeline. Only 15 percent of the new rental housing awarded Trust Fund dollars in the 2016 funding rounds will be affordable to extremely low-income households. We encourage DHCD to increase this ratio in future funding rounds, by intensifying its existing selection criteria to prioritize extremely low-income housing, and by requesting greater amounts of ongoing operating assistance (usually needed for Trust Fund-assisted housing to be made deeply affordable) from the Mayor and Council. DCFPI will strongly support whatever additional resources are needed to increase the ability of the Housing Production Trust Fund to reach extremely low-income households.
Ultimately, the competing priorities of preserving existing affordable housing, and creating new housing for DC’s lowest-income and most vulnerable residents, point to the need to add new tools to the city’s affordable housing toolbox, so that the Housing Production Trust Fund is not our only way to meet DC’s various housing needs. A key recommendation of the Housing Preservation Strike Force was to create a public-private fund entirely dedicated to acquiring, rehabilitating, and preserving affordable homes. DCFPI encourages DHCD to move this idea forward, and we also encourage the Mayor and Council to provide any set-up funding that may be needed in fiscal year 2018.
Thank you, and I am happy to answer any questions.
[i] DC Fiscal Policy Institute, “A Broken Foundation: Affordable Housing Crisis Threatens DC’s Lowest-Income Residents,” 2016. https://www.dcfpi.org/a-broken-foundation-affordable-housing-crisis-threatens-dcs-lowest-income-residents-2