Testimony at the Budget Oversight Hearing for the Department of Housing and Community Development

Good morning, Chairperson Bonds and members of the Committee. 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 Mayor’s proposed fiscal year (FY) 2023 budget for the Department of Housing and Community Development (DHCD), in particular:

• Transparency and standardized reporting in order to maximize the historic $500 million investment in the Housing Production Trust Fund (HPTF);
• The need to allocate additional funding for the Affordable Housing Preservation Fund (HPF); and,
• The importance of an enhancement for the Housing Purchase Assistance Program (HPAP).

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.^[1] 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 report on the HPTF since 2015.

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 Committee can make progress toward that end by scheduling hearings for and 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 also very 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 and need for additional funding for 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. DCFPI encourages the Committee to request DHCD’s loan repayment calculations and work with fund managers to ensure that the HPF has enough money to meet demand.

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.^[2]

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.^[3]

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.