Affordable housing in DC is hard to come by. So it’s really not surprising that affordable housing emerged as the top priority for residents at Mayor Gray’s recent One City Citizens’ Summit. However, the mayor’s proposed budget for next year would cut by half DC’s Housing Production Trust Fund, the main tool DC has to renovate and build affordable housing.
In fact, this is the second year in a row Gray has chosen to cut by half the trust fund. What this means is that the District could have just $9 million in FY 2013 to support housing construction and renovation, compared with close to $60 million per year in the mid-2000s. 
DC’s Housing Production Trust Fund provides financing to for-profit and non-profit developers and tenants to acquire, construct and renovate affordable housing. After its expansion in 2002, the trust fund has helped develop thousands of affordable units across DC and leveraged millions of private dollars. The Housing Production Trust Fund has a dedicated funding stream, which is 15 percent of DC’s deed recordation and transfer taxes. So money into the trust fund rose significantly after 2002 as DC experienced a real estate boom, but then fell sharply after 2008 as a result of the Great Recession and a slump in DC’s real estate market (see Figure 1). Starting in FY 2011, DC’s property market began to heat up again, leading to potential increases in money for the trust fund.
Yet Mayor Gray has decided to use the trust fund as a way to pay for other programs, leaving this critical affordable housing tool without resources. The mayor’s Fiscal Year 2013 budget proposes to cut half of the new resources into the trust fund, much like he did in 2012. While dedicated taxes to the fund will total $37 million next year, the mayor would take $20 million and devote it to other housing purposes.
Moreover, due to a variety of factors, the trust fund will be left with even fewer resources for construction and renovation:
- New Communities Funding. DC uses a portion of the Housing Production Trust Fund to borrow funding to support DC’s New Communities housing initiatives. The New Communities program tears down existing subsidized housing complexes and replaces them with mixed-income housing. Last year, DC utilized approximately $7 million from the trust fund for New Communities.
- Administrative Costs. A portion of the trust fund is also set aside for administrative costs to run the program. In FY 2013, approximately $8 million will be utilized from the trust fund for administrative purposes.
In the end, the Housing Production Trust Fund could be left with just $9 million for core purposes in 2013. If adopted by the DC Council, DC’s capacity to support new affordable housing construction, renovation or acquisition would be significantly restricted for the second year in a row.
DCFPI urges the DC Council to restore money to the trust fund. Raiding the trust fund to find money in the short term will lead to a long-term shortage of affordable housing. DC residents disagree with that approach.
