Chairwoman Bowser and members of the Committee, thank you for the opportunity to testify today. My name is Jenny Reed, and I am the Policy Director at 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 broadly supports PR20-47, the “Sense of the Council regarding the Need for An Affordable Housing Policy at the Washington Metropolitan Area Transit Authority Resolution of 2013.“ This resolution would encourage the Washington Metropolitan Area Transit Authority (WMATA) to formally develop an affordable housing policy that would apply to the development of any WMATA land. It also provides several guidelines for the policy. Today, I want to explain why such a policy is needed, highlight an additional guideline we hope WMATA would adopt within its new affordable housing policy, and suggest two changes to the current guidelines laid out in the resolution.
The District and the entire metro region have significant affordable housing needs. From 2000 to 2010, the typical residential rent in DC rose by more than 50 percent and home prices nearly doubled. Largely as a result, DC lost more than half of its low-cost rental units and more than 70 percent of its low-value homes. Yet, at the same time, the incomes of DC households did not keep pace’ in fact the bottom 40 percent of DC households’ incomes showed no statistically significant growth.
As a result, more and more households now pay more than half of their income on housing’a severe housing burden. This is especially concerning for low-income families. Research shows that severely burdened low-income families spend less of food, clothing, retirement savings and transportation than their unburdened counterparts. It also makes low-income families more likely to be one economic shock’such as a job loss or illness’away from homelessness.
As the region continues to add residential development, we should look for opportunities to build affordable housing ‘ which the private market typically does not build on its own without some kind of subsidy. WMATA land holdings present an excellent opportunity to incorporate more affordable housing into its development. WMATA can use the value of the land to create the subsidy needed to support affordable housing. By selling the land somewhat below market level, WMATA can require developers to set aside a portion of the new housing as below-market.
WMATA land tends to be located right at or near Metro stations, so that affordable housing developed on that land would be close to transit and would help cut down on the transportation costs that can place a large burden on low-and moderate-income residents. As transit-oriented development continues to be a major focus of DC and other jurisdictions, locating affordable housing near Metro stations also can help low- and moderate-income residents live near amenities and jobs that are often found close to metro stations.
DCFPI largely supports the guidelines for WMATA’s affordable housing policy laid out in the resolution, yet we recommend that two guidelines be altered:
- Develop housing affordable to persons earning less than 80 percent of area median income, with the greatest share of support going to persons earning less than 50 percent of area median income. The proposed resolution sets forth guidelines that WMATA’s affordable housing policy should limits its assistance to households earning 120 percent of area median income, but predominately focus on households earning less than 80 percent of area median income. DCFPI believes that with limited resources, WMATA should focus its affordable housing policy on the large number of households with severe housing burdens, or those paying more than half of their income on housing. This largely means low- and moderate income individuals and families’or those with incomes below 80 percent of the area median.
More than one-third of DC families with income between 30 percent ($32,000 for a family of four) and half the area median ($58,000 for a family of four) spend at least half their income on housing, and a growing number of families with incomes up to 80 percent of the area median ($83,000 for a family of four) are severely burdened. However, the incidence of severe housing burdens drops off significantly above that income level (see figure 1).
These families range from the working poor ‘ such as janitors, security guards, and cashiers ‘ for whom low-wages are not pay enough to afford the fair market rent for a two-bedroom apartment in the District ‘ to teachers, firefighters, and police just starting their careers.
- Require a minimum 20 percent affordable housing set-aside for each development. The proposed resolution suggests that WMATA’s affordable housing strategy should include clear targets for the number of affordable units produced. DCFPI very much supports this guideline. Including specific targets for affordable housing as part of Metro land development will help ensure that our region continues to emphasize the need to support create mixed-income communities. DCFPI suggests that this specific target be 20 percent which can help ensure each development includes affordable housing, but that there is also room for WMATA to use some of the land value for infrastructure improvements that it may also need to make in order to make the land more usable.
In addition to the suggested changes, DCFPI believes that WMATA should take into account the following additional guideline when developing their overall affordable housing policy for WMATA land holdings:
- Provide preferences and/or Incentives for Housing that serves residents earning less than 30 percent of area median income. In addition to DCFPI’s support for guidelines in the current resolution that suggest WMATA should give preferences and other incentives to developers who exceed affordability requirements in the solicitation process, we also suggest that WMATA take the same approach to developers who build housing for very low-income households.
These households ‘ with incomes under $32,000 for a family of four ‘ have the highest incidence of severe housing burdens and are most likely to be living one economic shock away from homelessness. In 2010, the typical very low low-income household spent nearly two-thirds of their income on housing which leaves them little left over for other basic necessities. Developments that include this very low-income housing should therefore get preferences or bonuses during the application process in order to encourage development of very low-income housing.
Lastly, DCFPI supports the remaining guidelines included the resolution that would ask WMATA’s housing policy to include strategies for WMATA to coordinate their development with jurisdictions that are signatories to the WMATA Compact and non-profit affordable housing developers, and that WMATA make reasonable efforts to seek all available affordable housing subsidies to help maximize their ability to create affordable housing.
Thank you for the opportunity to offer testimony, I am happy to answer any questions you may have.