Chairman Brown 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.
I am here today to testify for increased local funding for the Local Rent Supplement Program (LRSP), which is run by the DC Housing Authority. LRSP was created in FY 2007 following a recommendation of the city’s 2006 housing task force for nearly 15,000 new rent subsidies over 15 years to help address the growing shortage of affordable housing for DC’s very low-income residents.
Affordable housing is becoming increasingly hard to find in the District. A recent DCFPI report showed that since 2000, DC rents have risen faster than in most major cities and have outpaced the incomes of most DC households. [1] At the same time, the report showed that DC lost over one-third of its low-cost rental units. The losses of affordable units and rising rents have made it especially hard for DC’s very low-income residents. In fact, in 2007, three out of five DC households that had incomes below 30 percent of area median income ‘ or roughly $28,400 for a family of four ‘ spent more than half of their income on housing.[2] This leaves these households with very little income to support other basic necessities.
Now that a recession has hit us, and a growing number of families are experiencing unemployment and reduced income, it’s very likely that DC’s affordable housing problems have gotten even worse ‘ especially for very low-income residents.
The LRSP program is one of the District’s most valuable tools to provide housing to very low-income residents. Funding for LRSP began in FY 2007 and expanded in FY 2008, allowing the program to create roughly 1,750 affordable units that are either occupied or have funding commitments. In addition, LRSP is one of the few programs the District has to make housing affordable to those with very-low incomes. Many of the other locally funded affordable housing programs ‘ such as the Housing Production Trust Fund ‘ do not on their own provide enough assistance to make homes affordable to those with incomes below 30 percent of area median income.
Since FY 2008, funding for LRSP has been flat, and no further progress on the long-term goal of creating 15,000 subsidies in 15 years has been made. In FY 2010, funding was actually reduced, requiring Local Rent Supplement to rely in part on reserves. The FY 2011 budget continues to require the LRSP program to rely on reserves and represents the third year in a row that the program has not received an increase in funding, even for inflation.
The flat funding for the DCHA has several implications:
- No progress in reducing housing waiting lists. Some 26,000 households are on the DCHA waiting list, and Mayor Fenty has supported the goal of eliminating it. Without additional funding for LRSP, the FY 2011 budget will not make a dent in reducing the waiting list.
- Failure to make progress in the goal to fund 14,600 subsidies in 15 years. Under this goal set by the 2006 Comprehensive Housing Strategy Task Force, the city should create roughly 1,000 new subsidies each year. To date, the District has funded roughly 1,750 households under the Local Rent Supplement Program. Flat funding for DCHA in FY 2011 ‘ and no new subsidies ‘ means that the District will be nearly 3,150 units behind its goal of 4,900 units in FY 2011, five years after the Task Force report.
- Limited effectiveness of other housing programs. LRSP vouchers often are coupled with housing production subsidies, such as HPTF, in order to make housing affordable to very low-income residents. Without rent subsidies, housing supported by the HPTF typically is affordable to more moderate-income families, such as those earning 50 percent of Area Median Income ($51,350 for a family of four.) If the Local Rent Supplement is not expanded, this will make it hard to support production of affordable housing that reaches the lowest-income residents with the most severe housing affordability problems.
Therefore, DCFPI recommends that the DC Council add at least $2 million to LRSP in FY 2011. This could help create over 160 additional affordable housing units for DC’s very low-income residents.
In addition, I’d like to point out that going forward, the LRSP program will likely not be able to sustain all existing commitments if it does not receive additional funds starting in FY 2012. Since FY 2008, the LRSP program not received an adjustment for inflation and has had to rely on its own reserves to cover rent increases. Those reserves are expected to run out at the end of FY 2011. Without an increase in funding in FY 2012 and adjustments for inflation going forward, the program may not be able to continue to serve all existing voucher recipients.
Thank you again for the opportunity to testify. I am happy to answer your questions.
[1] DC Fiscal Policy Institute, Nowhere to Go: As DC Housing Costs Rise, Residents are Left with Fewer Affordable Housing Options. February 5, 2010. Available at: www.dcfpi.org
[2] Ibid