CNHED staunchly supports the DC Housing Production Trust Fund (HPTF)
Washington, D.C. – As a staunch supporter of and longtime advocate for the District of Columbia’s Housing Production Trust Fund (HPTF), the Coalition for Nonprofit Housing & Economic Development (CNHED) appreciates the Office of the DC Auditor’s efforts to undertake a thorough review of the HPTF program. While the audit released today, March 20, 2018, contains useful data and information, its conclusions do not adequately reflect the context of affordable housing development in the District, including specifics around housing financing, development costs, and use of additional subsidies.
To understand the purpose and achievements of the HPTF, one must understand the context of affordable housing development in the District:
- The audit clearly demonstrates that the HPTF has resulted in more than 10,000 affordable homes built and preserved. The audit categorized an overwhelming majority of the HPTF’s expenditures as “verified” and helping to create and preserve both affordable rental housing and home-ownership.
- A quick reading of the audit may lead to oversimplified conclusions about the nature of the HPTF as a funding source. The intent of the HPTF is to fill a gap in project funding and to help secure private market debt that otherwise would not be invested into the project.
- The project data within the audit substantiates the HPTF’s design to support long-term affordability. The vast majority of multi-family rental housing projects are structured with deferred loans that have a requirement to keep the housing affordable for up to 40 years.
- The repayment of such deferred loans may be structured as due upon expiration of the covenants, as cash-flow contingent, or have other terms. Each particular loan has its repayment requirements detailed in its loan agreement. One limitation of the newly compiled ODCA data, as well as publicly-available DHCD data, is that they do not include the repayment terms.
- The audit’s conclusions about income levels served by HPTF projects do not necessarily reflect the actual affordability levels of the particular units in the HPTF-funded projects; rather the audit reflects only what is contained in the HPTF covenants themselves. The audit does not reflect the complex layers of financing and subsidies necessary to produce units for extremely low-income tenants. In practice, deep affordability (serving households at 0-30% AMI) is achieved by combining a HPTF loan with other subsidies, including Local Rent Supplement (LRSP) and Permanent Supportive Housing (PSH). Looking at only the HPTF covenants does not provide a full picture, and therefore may leave a misunderstanding about whom the HPTF units are serving.
- While the audit brings to light concerning practices from the 2001-2016 period, the Auditor’s public statements and summary documents do not adequately differentiate between bad practices that occurred during particular administrations and long-term institutional problems with DHCD’s oversight of the HPTF that have carried over into the current administration without efforts to correct them.
Having stated these concerns with the audit, CNHED thanks the Auditor for the valuable service they have provided in gathering the data on HPTF projects from 2001-2016 and in putting that data into a publicly available database.
CNHED strongly encourages DHCD to continue to improve their data collection and reporting systems, to incorporate the verified data from ODCA as a foundation for their ongoing oversight, and to make publicly available the contextual data that we recommended to the auditor above. Doing so will increase the transparency of HPTF spending and engender greater trust for its operations from the Council and the public.
We also want to commend DHCD’s efforts to improve their oversight of the HPTF, and for awarding and closing a record number of projects in the past several years that will provide District residents with stable housing they can afford. Further, DHCD’s recent dedication of several staff members to HPTF operations and oversight is an institutional improvement that must be maintained through this administration and those that follow it. As noted by the audit, HPTF commitments during the 30-40 year covenants require dedicated staff who can not only process new HPTF applications but also conduct the annual oversight needed to verify compliance with past awardees.
The Housing Production Trust Fund continues to be the primary tool that enables non-profit housing providers, mission-driven for profit developers, and renters wishing to exercise their Tenant Opportunity to Purchase Act rights to preserve and develop affordable housing across all eight wards of the District. CNHED appreciates the Bowser Administration’s and the Council’s continuing support of the HPTF and their commitment of substantial resources to address the serious crisis of housing affordability in the District. Given its critical value to addressing these serious concerns, CNHED supports an examination of and refinement to the HPTF program.
“CNHED strongly supports robust oversight of public programs and expenditures,” said Steve Glaude, President & CEO of CNHED. “In this way, the audit, as well as the public conversation it engenders, is truly beneficial to our collective efforts to help ensure all District residents, particularly those who are low-income, are well-served by the publicly-funded programs and ultimately can thrive.”