Testimony of Eliana Golding, Policy Analyst at the Budget Oversight Hearing on the Department of Housing and Community Development, Committee on Housing and Neighborhood Revitalization

Good morning, Chairperson Bonds and members of the Committee. Thank you for the opportunity to speak today. My name is Eliana Golding, and I am a policy analyst at the DC Fiscal Policy Institute (DCFPI). DCFPI is a non-profit organization that promotes budget choices to address DC’s racial and economic inequities in the District of Columbia, through independent research and policy recommendations. DCFPI is a member of the Fair Budget Coalition, and we fully support their fiscal year (FY) 2022 budget priorities and recommendations.

Today I would like to focus my testimony on:

  • Maximizing a historic investment in the Housing Production Trust Fund by ensuring there is sufficient funding for operating subsidies to support the production of deeply affordable housing;
  • Maintaining strong investment in innovative and effective tools, such as the Affordable Housing Preservation Fund and the Douglass Community Land Trust;
  • Ensuring funding for the Implementation of the Voluntary Agreement Moratorium Amendment Act of 2020; and,
  • Adopting a bold -revenue strategy to maintain strong investments.

Maximize Strong Investment in HPTF by Meeting Required Income Targeting

The Mayor’s proposed $250 million for the Housing Production Trust Fund (HPTF) in FY 2022 is historic and, if targeted well, could help the District make great strides in alleviating its affordable housing crisis. The Department of Housing and Community Development (DHCD) must ensure that these resources are deployed according to statutory requirement in order to address DC’s most urgent housing needs.

Creating and preserving truly affordable housing is critical to advancing racial equity in the District. The enduring legacies of structural and individualized racism—racist zoning and residential segregation, redlining, restrictive covenants, practices barring Black people from federal employment, and access to Homestead and New Deal programs, among others—denied Black families equitable access to housing and employment and continue to impact all communities of color today. Nearly 90 percent of extremely low-income, severely rent-burdened households in the District are headed by a person of color and most of them are Black.[1] Addressing housing instability for these families is particularly important as rapid gentrification and the alarming rate of displacement puts at risk the culture of historically Black neighborhoods.

One proven way to prevent displacement is to use District dollars to produce and preserve deeply affordable housing, defined as housing that’s affordable for households earning between zero and 30 percent of the area median income (or $37,800 for a household of four). As of 2020, the District requires by law that 50 percent of HPTF resources support housing for these extremely low-income residents. In the preceding six years, that requirement was 40 percent and DHCD met it just once. Projections for the current fiscal year show DHCD on track to dedicate just 27 percent of HPTF funds to produce deeply affordable housing, far below what’s required and needed. DHCD must do better.

One key driver behind the failure to meet statutory targets is the under-resourcing of operating subsidies through the Project Based Local Rent Supplement Program (LRSP) that allows developers to offer much more affordable rents. The Mayor proposed a $2.9 million investment designated for projects that have received HPTF funding and will be coming online in FY 2022. Based on industry standard, each deeply affordable unit requires an annual subsidy of roughly $20,000. This means that the amount allocated for this program in FY 2022 would yield just 145 deeply affordable units.

The Mayor’s budget office has indicated that an additional $42 million allocated over the course of FY 2023 through FY 2025 will allow DHCD to create roughly 1,100 additional deeply affordable units using Project Based LRSP. Based on industry standard, $42 million should yield closer to 2,100 units. I urge the Committee to seek clarity from DMPED and DHCD about how these funds will be used to meet the District’s great need for deeply affordable units.

It is encouraging that the funding for this program in future years is significantly higher than for FY22. However, the lack of transparency about the scoring and selection process for projects applying for HPTF funds, and the enormous variability in those projects, means that neither the Council nor the public can be confident that DHCD has a reliable plan to leverage these LRSP dollars to meet the statutory requirements.

DCFPI urges the Committee to ask DHCD to publish a plan demonstrating how the agency will meet the statutory requirement to use 50 percent of HPTF funds for deeply affordable housing in FY 2022. For the sake of accountability and to ensure that HPTF dollars are meeting the District’s most urgent needs, we also urge the Committee to propose and enact legislation similar to the HPTF Transparency Amendment Act of 2019, which did not pass, requiring public justification of decisions made during the consolidated request for proposal selection process.

Maintain the Mayor’s Strong Investment in Innovative Affordable Housing Preservation Tools

In the wake of the pandemic, the District must be prepared with powerful tools to preserve affordability where it exists and stave off a new wave of gentrification that could hit our city. DCFPI is glad to see the Mayor’s proposal of $17 million for the Affordable Housing Preservation Fund (AHPF), $5 million of which will be set aside for Tenant Opportunity to Purchase Act deals and for Limited Equity Co-ops. This investment in the AHPF, along with the Mayor’s proposal of $2 million for the Douglass Community Land Trust, will allow the District to leverage these innovative and effective tools for preserving affordability and keeping communities together.

Provide Funding to Ensure Implementation of the Voluntary Agreement Moratorium Act of 2020

Last year, this Committee, led by you, Councilmember Bonds, took action to enact the Voluntary Agreement Moratorium Act of 2020. This act put a two-year moratorium on a manipulative practice that leads to dramatic rent increases and displaces tenants. The Mayor has not included the $191,000 needed in the four-year financial plan to enact this bill. We urge the Council to fund this bill and put a stop to the harmful practice of voluntary agreements.

Adopt a Bold Revenue Strategy to Protect Investments in Affordable Housing

Finally, we also know that these historic investments proposed by the Mayor are made possible with American Rescue Plan Act (ARPA) dollars. These federal funds are substantial, and also time-limited.  We urge the Council to raise additional sources of revenue to continue these and other important investments for the longer-term. We will not stem the tide of displacement of low-income communities, especially Black and brown communities, without ongoing, bold investment from the District. Specifically, we urge the Council to adopt the recommendations found in the Fair Budget Coalition’s Tax Platform, which I will attach to my written testimony.

Thank you for the opportunity to testify and I am happy to answer any questions.

[1] Claire Zippel, Building the Foundation: A Blueprint for Creating Affordable Housing for DC’s Lowest-Income Residents, DC Fiscal Policy Institute, April 4, 2018.