Chairman Brown and members of the Committee, thank you for the opportunity to speak today. My name is Jenny Reed, and I am a Policy Analyst with the DC Fiscal Policy Institute. DCFPI engages in research and public education on the fiscal and economic health of the District of Columbia, with a particular emphasis on policies that affect low- and moderate-income residents.
I am here today to testify for full local funding for the Local Rent Supplement Program (LRSP), which is run by the DC Housing Authority, and to ask the Council to reject the Mayor’s proposal to end the tenant-based side of the LRSP program and use existing LRSP vouchers to fulfill another affordable housing programs purpose.
Affordable housing is becoming increasingly hard to find in the District. A recent DCFPI report showed that since 2000, DC rents have risen faster than in most major cities and have outpaced the incomes of most DC households.  At the same time, the report showed that DC lost over one-third of its low-cost rental units. The losses of affordable units and rising rents have made it especially hard for DC’s very low-income residents, or those earning below 30 percent of area median income, roughly $30,000 for a family of four. This means that the LRSP program would serve a person making DC’s living wage’ $12 an hour, or a couple with two kids earning the minimum wage. These families have the highest incidence of severe housing affordability problems. In fact, in 2009, three out of five of these DC households spent more than half of their income on housing. This leaves these households with very little income to support other basic necessities like food, clothing and transportation.
And in the wake of the Great Recession, with a still high number of families are experiencing unemployment and reduced income, it’s very likely that DC’s affordable housing problems have gotten even worse ‘ especially for very low-income residents.
The LRSP program was created in FY 2007 following a recommendation of the city’s 2006 housing task force for nearly 15,000 new rent subsidies over 15 years to help address the growing shortage of affordable housing for DC’s very low-income residents. Funding for LRSP began in FY 2007 and expanded in FY 2008, allowing the program to create roughly 1,750 affordable units that are either occupied or have funding commitments. In addition, LRSP is one of the few programs the District has to make housing affordable to those with very-low incomes. In 2009, one out of four DC households had incomes at or below 30 percent of area median income in 2009.
The proposed DC Housing Authority subsidy for FY 2012 is $4 million, a $19 million decrease, from FY 2011. The FY 2012 budget proposes the keep the local rent supplement program whole by taking $18 million from the Housing Production Trust Fund (HPTF)’ which is intended to fund affordable housing construction, renovation, and tenant purchase’ and instead use it to cover the ongoing rental subsidy needs of the LRSP program in FY 2012 and in future years. When this is factored in, the DCHA subsidy level in 2012 would remain at the 2011 level.
In addition, the FY 2012 Budget Support Act (BSA) ‘ the legislation that accompanies the budget request in order to make any statutory changes needed to pass the budget into law’ would make several important changes to the Local Rent Supplement program that would reduce the capacity of the LRSP program to continue to serve DC’s low-income families.
- Phasing out tenant vouchers. The local rent supplement program has three major components. It provides tenant-based vouchers that recipients can use at any qualified rental unit in DC, similar to the federal Housing Choice Voucher program. LRSP also includes “project-based” and “sponsor-based” components which provide rental subsidies to housing developers ‘ usually non-profits ‘ to operate rental units and in many instances, provide supportive services. The proposed 2012 budget would phase out the tenant side of the LRSP program’ a program currently serving approximately 670 families’ by not allowing new families to enter the program once a family leaves. This change will restrict one of the main ways that DC can reduce the number of families on the DCHA waiting list, which is currently over 28,000 households.
- Using LRSP to fulfill other housing program purposes. The LRSP program is intended to serve a range of DC residents that make below 30 percent of area median income, or less than $30,000 a year. The 2012 budget proposes that 175 LRSP units that are not currently filled will be prioritized to serve chronically homeless residents that are on the Department of Human Services waiting list for Permanent Supportive Housing. Currently, the District has funded its housing program for the chronically homeless ‘ the Permanent Supportive Housing Program ‘ with separate funding. By using the Local Rent Supplement Program to fund Permanent Supportive Housing, the ability to provide rent subsidies to the thousands of other families who need help would be compromised.
To ensure that the District continues to have the capacity to help provide affordable housing to DC’s very low-income residents, DCFPI recommends that the Council restore full funding to the LRSP program, reject the Mayor’s proposal to end the tenant-based side of LRSP, and find full funding to support the PSH program instead of relying on 175 LRSP vouchers to fulfill that programs needs.
Thank you again for the opportunity to testify. I am happy to answer your questions.