Written by Alan Adye, Chief Operating Officer, CNHED
Thursday on NewsTalk with Bruce DePuyt, Mayor Gray made some positive comments about affordable housing. Gray spoke about plans to use future revenues for homelessness, and stated that there needs to be a more permanent solution for homeless individuals and families. He went on to say “we’ve got to create more affordable housing opportunities in this city” (minute 6:46 in the video below). I was very enthused to hear the Mayor make this statement; however, I was having trouble reconciling it with his proposed budget, which makes massive cuts to housing programs. So I emailed the following question to NewsTalk:
“It was very refreshing to hear the Mayor talk about the need for more affordable housing in DC. However, this statement seems to directly contradict the Mayor’s proposed budget, which cuts the Housing Production Trust Fund – the key source of local funds for affordable housing production – by 18 million dollars. Is the Mayor committed to restoring full funding for the Housing Production Trust Fund?”
Near the end of the program, Brue DePuyt posed my question to the Mayor (minute 50:50). Mayor Gray responded that the $18M was being used to fund the Local Rent Supplement Program, which “would otherwise have been imperiled.” He went on to explain that the Housing Production Trust Fund is funded by a portion of the deed recordation and transfer tax, and therefore as the real estate market rebounds, more money will flow into the Trust Fund.
The Mayor is right to fund the Local Rent Supplement Program (LRSP), a critical program for many families currently living in affordable housing. However, the funds for LRSP didn’t need to come from the Trust Fund. In the history of the program, LRSP has never been funded with Housing Production Trust Fund dollars! Don’t be mislead by the Mayor’s statement that the money needed to come from the Trust Fund or else “the Local Rent Supplement Program would otherwise have been imperiled.” The Mayor fails to mention that LRSP had $18M of local funds in the budget he started with, which he cut to use elsewhere! For the Mayor to say that he needed to use the Trust Fund for LRSP or “it would otherwise have been imperiled” is like taking your friend Lisa’s lunch money and then insisting that Joe buy her lunch, because otherwise Lisa would go hungry.
The Mayor also fails to recognize that the Housing Production Trust Fund was established for a specific purpose: HOUSING PRODUCTION. By redirecting funds from the Housing Production Trust Fund for non-production purposes, the Mayor is breaking the “trust” in the Trust Fund and dramatically altering the District government’s commitment to the Fund. The Mayor directly stated “we’ve got to create more affordable housing opportunities in this city.” Well, there are affordable housing developers ready and waiting, with both the land and the capacity to “create more affordable housing opportunities in this city,” as soon as there is money available in the Housing Production Trust Fund.
Finally, the Mayor stated that as the real estate market rebounds, more money will flow into the Trust Fund. This is true… if the Mayor doesn’t take that money and use it to fund other programs! I also question whether Mayor Gray fully understands the Trust Fund’s current obligations. Trust Fund dollars are currently used to pay debt service on revenue bonds and cover DHCD’s administrative costs, and now the Mayor proposes to use an additional $18M a year to fund LRSP. After paying for these obligations, there will be less than $9M left for housing production in the Trust Fund in FY 2012, declining to less than $5M in FY 2015 (see DCFPI’s chart). If Trust Fund dollars become the source for LRSP, the Trust Fund, which once received over $60M a year, becomes a “Housing Production” Trust Fund in name only. If Mayor Gray wants to “create more affordable housing opportunities in this city,” it is critical to fully fund the Trust Fund and use it for its intended purpose!