Chairman Barry 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 on the need for increased commitments and greater funding stability for the Local Rent Supplement Program (LRSP) within the DC Housing Authority.
Since FY 2006, the District has provided local funds to DCHA to help support a new Local Rent Supplement Program (LRSP), following a recommendation of the city’s 2006 housing task force for nearly 15,000 new rent subsidies over 15 years. Rent subsidies are particularly critical to addressing the housing needs of very low-income residents – those that make less than 30 percent of area median income – because construction-based subsidies usually are not sufficient by themselves to make housing affordable for this group.
The proposed budget in FY 2010 for LRSP is $13 million, $6 million less than the original budget of $19 million in FY 2009. DCHA is expected to be able to continue funding all current commitments in FY 2010, including some projects that are in the pipeline but haven’t been able to move forward because of financing difficulties, by using as-yet unspent funds carried over from prior years. These funds – while committed – have gone unspent because of delays in the pipeline.
While current commitments will be maintained, DCHA will not be able to issue any new contracts for affordable housing projects or new local rent supplement vouchers in FY 2010. Effectively, this means that the program will not be available for use in FY 2010 as a tool for developing and creating affordable housing for very low-income residents.
In addition, even with carryover funding, the proposed FY 2010 funding level is the same as the FY 2008 funding level, which t would make it the second year in a row that DCHA has not received an increase in funding or even an adjustment for inflation. The flat funding for the DC Housing Authority has several implications.
- Fewer families will be able to be served in future years. Because housing costs rise each year, flat funding makes it difficult to maintain adequate assistance. In fact, DCHA will be forced in FY 2010 to spend nearly $2.5 million of the carryover to pay for cost-of-living increases for the tenant- based LRSP vouchers. Without additional funding, the number of families served by these funds will actually decline in future years.
- No progress in reducing housing waiting lists. Some 26,000 households are on the DCHA waiting list, and Mayor Fenty has supported the goal of eliminating it. Without additional funding for LRSP, the FY 2010 budget will not make a dent in reducing the waiting list.
- Failure to make progress in the goal to fund 14,600 subsidies in 15 years. Under this goal set by the 2006 Comprehensive Housing Strategy Task Force, the city should create roughly 1,000 new subsidies each year. To date, the District has funded or committed to roughly 1,900 subsidies under the Local Rent Supplement Program. Flat funding for DCHA in FY 2010 – and no new subsidies – means that the District will be nearly 2,000 units behind its goal of 3,900 units in FY 2010, four years after the Task Force report.
- Limited effectiveness of other housing programs. LRSP vouchers often are coupled with housing production subsidies, such as HPTF, in order to make housing affordable to very low-income residents. Without rent subsidies, housing supported by the HPTF typically is affordable to more moderate-income families, such as those earning 50 percent of Area Median Income ($51,350 for a family of four.) If the Local Rent Supplement is not expanded, this will make it hard to support production of affordable housing that reaches the lowest-income residents with the most severe housing affordability problems.
Lastly, the use of one-time funds and carry-over funds for the program raises concerns about its viability going forward. For FY 2011, the LRSP appropriation will need to be returned to at least $19 million – the FY 2009 funding level – plus an inflationary adjustment in order for the program to continue to maintain all of its current commitments to families. In addition, if we are to make any progress in creating more affordable housing for very low-income residents the subsidy will need to be increased every year.
Thank you for the opportunity to offer testimony. I am happy to answer any questions.