Testimony of Jenny Reed, Policy Analyst, DC Fiscal Policy Institute, for the Public Hearing onBill 18-42, the “Tenant Protection Act of 2009” & Bill 18-92, the “Omnibus Rental Housing Amendment Act of 2009,” District of Columbia Committee on Public Services and Community Affairs

Chairwoman Bowser 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.

DCFPI supports the Tenant Protection Act and the Omnibus Rental Housing Amendment Act.  The provisions in both bills- all aimed at ensuring DC residents are able to live in properties that comply with the D.C. housing and building codes – will help keep some of DC’s most vulnerable residents safe and healthy while simultaneously helping to preserve DC’s affordable housing.

Today, I’d like to focus my testimony on two points.  First, the importance of requiring proactive rental inspections to help preserve affordable housing – something the District is rapidly losing.  Second, the importance of making the special purpose funds used to address housing violations, transparent.

Proactive rental inspections can help the District stop the loss of its affordable housing stock by catching violations before they become too costly or irreparable and tenants get displaced.  In addition, such an inspection system can prevent owners from using decrepit housing as a mechanism for conversion to owner-occupied units.

The preservation of affordable housing in the District is critical since it is not only less expensive than the construction of new affordable units, but also because the District is losing affordable housing units at a startling rate.  In fact, since 2000 the District has lost more than one-third of its low-cost units while at the same time it has more than doubled its total number of high-cost units.[1]

This loss of low-cost units and the increase in high-cost units is alarming as nearly 40 percent of DC households have unaffordable housing costs, and 20 percent pay half or more of their income for housing.[2] Low-income households are the most likely to suffer from housing affordability problems. Preserving affordable units can help to stabilize communities and prevent the rapid gentrification of neighborhoods.

In addition, requiring proactive inspections of all rental units in the District can help keep properties safe and healthy for DC’s residents. The current system of relying on tenants to report violations is not effective since tenants may not be fully aware of their rights, afraid to report violations, or not trained to recognize certain violations.  On the other hand, pro-active inspections can not only help prevent buildings from falling into severe disrepair, but also would encourage owners to be pro-active in their repairs.[3]

It is laudable that DCRA is currently conducting a pilot program of proactive inspections in the District and we hope that this legislation will ensure it progresses to a fully operational program District-wide.  Proactive inspection programs have been established in both Los Angeles and New Jersey have been very successful.  In fact, since 1998 Los Angeles has issued over 1.5 million citations resulting in nearly $1.4 billion of investment back into the Los Angeles economy.

The proposed legislation would also create a new special purpose fund to fund the proactive inspections and set priorities for the use of DCRA’s Nuisance Abatement Fund – another special purpose fund – which is used to make repairs of code violations.  Special purpose funds can be a good use in this instance because they help give fees charged for certain purposes legitimacy and because they also can remain separate from the general fund and used solely for their intended purposes.

However, a major issue that needs to be addressed with special purpose funds is their lack of transparency in DC’s budget.  The budget fails to identify each special purpose fund, its source of revenue, allowable uses, or expected fund balance.  This lack of information makes it difficult to determine if the funds are being spent and if they are being spent properly.  In fact, a recent report on DCRA’s nuisance abatement fund in the Washington Post found that the fund had been under-utilized, some funds had been diverted to other programs, and that the uses of the funds often were not consistent with its purposes.[4] The limited and unclear information makes it difficult to hold DCRA accountable for the use of this important fund.

In order to ensure transparency and accountability, DCFPI suggests that all special purpose funds – including the proposed inspection fund – be reported with a greater level of detail in the DC budget.  This would include a narrative description of the fund, a listing of the sources and amounts of revenues that go into the fund, and information on how the fund is spent.  This would allow us to identify the extent to which the fund is being used and whether the fee is raising an adequate amount (or too much).  I have attached more detail and examples of potential ways to display this information from other states and the District’s Highway Trust Fund.

Thank you for the opportunity to offer testimony.  I am happy to answer any questions.

Click here for a full copy of the testimony

[1]Low-cost units are defined as no more than $750 a month for rent and utilities and are affordable to those with incomes of $30,000 or less.  Affordable is defined as having housing costs that are no more than 30 percent of your total income.  High cost units are those that cost $1,500 a month or more for rent and utilities.

[2] Affordable is defined as having housing costs that are no more than 30 percent of your total income.

[3] Centers for Disease Control-Lead Poising Prevention Brach, “Conduct Periodic Housing Code Inspections,” available at: http://www.afhh.org/buildingblocks/docs/3.pdf

[4] Debbie Cenziper and Sarah Cohen, “Fund Gives Tenants Little Relief,” Washington Post, Sunday, May 4, 2008; pg. A01.