Testimony at the DC Council Committee of the Whole Budget Oversight Hearing on Housing and Homelessness

Good morning, Chairperson Mendelson and members of the Council. 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 shapes racially-just tax, budget, and policy decisions by centering Black and brown communities in our research and analysis, community partnerships, and advocacy efforts to advance an antiracist, equitable future.

Today, I will focus my testimony on the need to make essential investments in the Fiscal Year 2023 budget to both end homelessness and to ensure that the District is on a path to creating and preserving truly affordable housing.

To that end, in the area of homelessness, I will ask the DC Council to:

• Pause family Rapid ReHousing (RRH) terminations in FYs 2022 and FY 2023;
• Fund Targeted Affordable Housing (TAH) for 1,040 families;
• Ensure Pandemic Emergency Program for Medically Vulnerable People (PEP-V) sites are fully utilized and fund 24-hour shelter access in the fiscal year (FY) 2022 supplemental and FY 2023 budgets;
• Investigate the need estimates for Emergency Rental Assistance Program (ERAP) and add funding if needed; and
• Add funding to end youth homelessness.

In the area of affordable housing production and preservation, I will ask the DC Council to:

• Prioritize transparency and standardized reporting in order to maximize the historic $500 million investment in the Housing Production Trust Fund (HPTF);
• Ensure that DHCD deploys FY 2022 funding for the Affordable Housing Preservation Fund (HPF); and,
• Invest in an enhancement for the Housing Purchase Assistance Program (HPAP).

Council Should Pause Family RRH Terminations

DHS has reported that up to 913 families will be terminated from RRH due to time limits in FY 2022. It is unclear how many families will be terminated in FY 2023 Although both the proposed FY 2022 supplemental and FY 2023 budget adds funding to the family RRH budget, the budget is still not sufficient to delay these terminations. We ask the Council to add the funding needed to delay these terminations, which can lead to evictions, through the end of FY 2023. With evictions comes trauma, disruption of education and employment, and poorer health outcomes. They’ll also likely cause a surge in family homelessness, interfering with the progress towards DC’s goals of ending homelessness and preventing community spread of COVID-19. RRH extensions also promote a racially equitable recovery as people of color, especially Black people and immigrants, have faced higher risk of coronavirus infection, unemployment, and eviction during the pandemic.

Council Should Add Funding for TAH

The Mayor’s FY 2023 budget proposal offers no new funding for TAH for families, which combines a permanent tenant voucher with light touch services. TAH helps families who do not have high service needs but struggle to afford DC’s high rents. DCFPI and our partners ask the Council to add $27.7 million to end homelessness for 1,040 families with TAH.

Council Should Ensure PEP-V Sites and 24-Hour Shelters Are Utilized and Funded in FY 2022 and FY 2023

As we face the possibility of another COVID variant, the Council should ensure that the District is fully utilizing PEP-V motel sites to serve all those deemed high risk for COVID-19. These sites act as non-congregate shelter to reduce exposure to COVID-19. In addition to protecting individuals from COVID, the program has made it easier to connect high-need individuals with services and has made it much easier to help individuals move into housing. Providers have reported they spend much less time trying to find individuals who are matched to housing.

DHS has limited these beds to only individuals who have been matched to a housing resource. This excludes many high-risk individuals who should be placed. DCPFI asks the Council to ensure these beds are used and that they are adequately funded. The Federal Emergency Management Agency will pay 96 percent of the costs associated with PEP-V sites through September 30^th so funds should be sufficient in FY 2022, but the Council should add funding if needed to the FY 2023 budget.

The Council should also ensure that DHS can continue to offer 24-hour shelter access. Prior to this policy change, individuals had to leave shelter in the morning, dragging their belongings with them, spending the day trying to meet their needs for food, showers, and services. Individuals would have to line up to access a shelter bed each evening, often spending hours in line. Allowing individuals to remain at shelter sites for 24 hours reduces these stresses and makes it easier to connect individuals with services. Additionally, like with PEP-V, providers have reported they spend much less time trying to find individuals who are matched to housing. The agency has announced it does not have the funding to continue 24-hour shelter operations. We ask the Council to add the needed funding.

Council Should Consider Adding More Funding for ERAP

ERAP helps residents facing eviction pay for overdue rent and related legal costs. The program also provides security deposits and first month’s rent for residents moving into new homes. Preventing evictions is a key to avoiding significant socioeconomic setbacks for adults and children and preventing community spread of COVID-19. DCFPI thanks the Mayor for making large investments in ERAP: adding nearly $74 million to the proposed FY 2022 supplemental budget and including $42.7 million in the proposed FY 2023 budget. While these investments are significant, they will likely fall short of the need. Approximately 20,000 DC households were behind on rent between December 2021 and early February 2022.^[1] The Council should ask the agency how they identified the need for ERAP in FYs 2022 and 2023 and add more funding if the budget does not seem sufficient.

Council Should Make Progress on Ending Youth Homelessness

Many youths experience homelessness without their parents or guardians. These “unaccompanied” homeless youth fall into two broad categories: those under age 18 and ages 18 to 24. The FY 2023 budget proposal misses several key investments to support unaccompanied youth experiencing homelessness:

• $3.15 million to right-size existing youth homes program contracts. Most youth contracts have remained flat or seen decreases in the past two years. Additional funding is necessary to keep up with rising operating expenses and maintain the quality and capacity of services. This figure accounts for inflation and staffing cost increases.
• $1 million for workforce programming. DC lacks job search, job match, and job retention programs that are designed to support unaccompanied youth experiencing homelessness.
• $558,000 to create a mobile behavioral health team that can meet youth where they are. Timely access to prescriptions and regular participation in therapy can be challenging for homeless youth who often lack funds for transportation and must wait for months for appointments. A mobile behavioral unit can visit youth sites to ensure easier and regular access.

Council Must Strengthen its Oversight of Housing Production

DCFPI is thrilled to see continued, historic investment in the production and preservation of affordable housing through the HPTF. With the level of funding now being committed, it is essential that DHCD deploy these resources according to statutory requirements to address DC’s most urgent housing needs.

Creating and preserving truly affordable housing is critical to disrupting historical harm and advancing racial equity in the District. The enduring legacies of structural and individualized racism—such as 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 harm 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.^[2] Addressing housing instability for these families is particularly important as rapid gentrification and the alarming rate of displacement puts at risk the economic security and the culture of historically Black neighborhoods.

Five hundred million dollars is a groundbreaking investment and should also come with groundbreaking improvements to transparency and oversight for the District’s main housing production tool. The conversation during the FY 2022 budget oversight hearings made clear that the Council lacks access to important details about the main functions of the HPTF that are essential to informed and effective policymaking. DHCD has not yet released the FY 2021 fourth quarter report for the HPTF, and the agency has not published an annual audit on the HPTF since 2019.

The District should require the timely publication of these reports, which should include details on proposal scoring and selections made through the consolidated Request for Proposals (RFP) process. The reports should also include detailed information on how the agency calculates the appropriate amount of operating subsidy through the Project and Sponsor Based Local Rent Supplement Program (PS LRSP), and relatedly, why DHCD has been unable to meet the District’s statutorily required affordability targets.

Councilmembers and advocates should not have to scour hundreds of pages of performance oversight documents and attachments in order to assemble a table like the one that I have included with my testimony. The table shows that in FY 2021, only 25 percent of HPTF funds were obligated to deeply affordable units (those affordable to residents earning 0-30 percent of the median family income (MFI))—just half the statutory requirement. In FY 2022, the performance oversight documents indicate that, to date, we are doing no better with only 24 percent of Trust Fund dollars going to deeply affordable units.

Simply put, the Council must pass legislation to increase oversight and standardize reporting on DHCD’s progress toward meeting the District’s affordability goals. This Council can make progress toward that end by enacting bills B24-0458, the Housing Production Trust Fund Income Targeting Accountability Amendment Act of 2021, and B24-0459, the Housing Production Trust Fund Transparency Amendment Act of 2021.

Council Should Not Ignore Other Affordable Housing Tools

While DCFPI is encouraged by the Mayor’s commitment to the HPTF, we are concerned that the Mayor failed to allocate additional funding for the HPF in her FY 2023 proposed budget. During the pandemic, demand for loans via the HPF dwindled as the Tenant Opportunity to Purchase Act (TOPA) process was put on hold. Now that the hold has lifted, there is a back-log of TOPA projects contributing to a significant uptick in demand for loans from the HPF.

The Mayor’s office has indicated that they did not allocate any additional money for the HPF because the fund now pays for itself through loan repayments. However, volatile market conditions and a spike in inflation may negatively impact these repayments. Additionally, DCFPI has learned that DHCD has not yet deployed the $17.7 million allocated to the HPF in FY 2022. We ask the Council to ensure that DHCD not only promptly deploys these funds, but that they also provide loan repayment calculations and work with fund managers to ensure that the HPF has enough money to meet the need for these preservation dollars.

Council Can Support Additional Community Stabilization and Anti-displacement Measures

DCFPI is happy to see that the Mayor’s budget proposes several initiatives to prevent the displacement of longtime DC residents. As housing costs continue to rise, the District has seen an ongoing wave of displacement of Black communities who, according to a 2019 report from the Deputy Mayor for Planning and Economic Development, are three times more likely than white residents to move due to an inability to pay their housing costs.^[3]

The Mayor’s proposal to significantly increase the maximum loan amount for down payment and closing cost assistance from $80,000 to $202,000 through the HPAP is a welcome one. As the price of homes in the District continues to rise, residents who qualify for HPAP are increasingly unable to find units that they can afford, even with an HPAP loan. The increase in loan amount could be very impactful, helping prevent the displacement of DC’s Black residents who make up 75 percent of HPAP recipients.^[4]

However, the Mayor did not make a proportional enhancement to the HPAP program, which means the program will either serve significantly fewer people or require a mid-year budget revision to cover likely demand. DCFPI agrees with the Coalition For Non Profit Housing and Economic Development’s recommendation to fund HPAP at $24 million to meet the anticipated increase in demand for these funds.

Finally, DCFPI is thrilled to see the Mayor’s innovative investments in the Heirs Property Legal Services and the Black Homeownership Fund and Strikeforce. It is our understanding that these programs are funded through one-time American Rescue Plan Act dollars. We hope that if successful, these programs will receive recurring funds in future years.

Thank you for the opportunity to testify. I look forward to discussing these recommendations with you further.