Shelter Shocked: Trump’s Threat to the D.C. Affordable Housing System

April 7, 2017

While public attention has recently focused on military funding, cuts in diplomatic programs, Twitter posts, and presidential golf outings, many D.C. residents are slated to potentially lose their homes if President Trump’s budget for the 2018 fiscal year is confirmed. The first draft includes $54 billion worth of cuts to a host of federal agencies and programs, including the Department of Housing and Urban Development (HUD) – the primary federal provider of policy and monetary support to address housing needs across the country.

The initial budget proposes a $6 billion cut in total HUD funding, which would leave the department with an overall budget 14 percent smaller than last year’s. If confirmed by Congress, these HUD budget cuts would pose a particularly significant threat to the District’s already underfunded affordable housing system.

“Yes, the [D.C. affordable housing] situation is bad. Yes, it’s going to get worse if the Trump budget is approved by Congress,” said Paul Brophy, lecturer at the Georgetown School of Continuing Studies Urban and Regional Planning program.

The District’s home and rent prices have skyrocketed following an influx of college-educated professionals to D.C. and an overall increase in population growth over the past decade. The number of D.C. apartments renting for less than $800 per month dropped by almost half from 2002 to 2013, according to a District of Columbia Fiscal Policy Institute (DCFPI) study. Over the same period of time, average income for the bottom 40 percent of D.C. renters did not change, according to the same study.

Because of this increase in wealthier D.C. residents, it has become more lucrative for many housing development companies to allow their affordable housing contracts with the government to expire in favor of remodeling complexes into luxury apartments.

Since 2000, 52 percent of U.S. Census tracts – neighborhood boundaries used to measure community population growth – in D.C. have been “gentrified,” as both average home prices and average education level in these neighborhoods have significantly increased. Because of this gentrification and increase in rent prices, many low-income residents in the District can no longer afford to pay market prices for housing.

According to another DCFPI study, 43,000 District residents are currently considered “extremely low-income,” meaning that their total income is below 30 percent of the average median income of the general area population. Housing is considered “affordable” by HUD when rent or mortgage, plus utilities, represents no more than 30 percent of a household’s total gross income. By this definition, 81 percent of these 43,000 extremely low-income D.C. residents do not pay an affordable price for their housing.

Many different programs help bridge the gap between what low income residents can afford to pay for housing and what is available on the market, but most of these programs would be slashed heavily if Trump’s budget proposal were approved by Congress.

The Community Development Block Grant (CDBG) program is funding disbursed from HUD that assists local governments in providing affordable housing to its residents. The money from this program is used for both housing and non-housing activities, including funding affordable housing projects, improving existing infrastructure, and providing down payment assistance to first-time homebuyers.

Some CDBG funding is given to nonprofit developers, which Brophy said is important to provide affordable housing in the District. “Nonprofits need to be able to step in and have the resources to buy housing in the District and keep it available to low-income people,” Brophy said.

The fund would be entirely eliminated under the proposed Trump budget, with the District itself losing $14 million in CDBG allocation, despite the numerous previous uses of this money.

One such nonprofit that benefits from CDBG funding is the Community Preservation and Development Corporation (CPDC), which develops 5,300 housing complexes across D.C., Maryland, and Virginia that serve renters ranging from 100 percent subsidized by the federal government to those who can pay the full market-price. J. Michael Pitchford, CEO of CPDC, explained that cuts to block grant programs like CDBG will limit what local governments can do to assist nonprofits and developers.

Efforts to provide affordable housing cannot stop simply with the construction of complexes, Pitchford said. In addition to the development of affordable housing facilities, CPDC also partners with other nonprofit organizations to supply residents with Community Impact Strategies. These services allow residents access to necessary resources and training that advance their professional skillsets and support their endeavors.

“Our belief is that doing good real estate is sort of the price of entry, but doing right by the residents includes providing them some additional support,” Pitchford said.

CPDC tailors resources to the residents of each specific complex using each community’s demographic profile. Pitchford explained that an after-school program would not be as beneficial to a community comprised almost entirely of senior citizens as it would be to a community containing a large number of single parents. However, CPDC’s decisions are more nuanced than just demographics.

There’s a certain art to this as well as science. It’s not just about the demographic profile and what they tell us they need, it’s a little bit about what we think they need,” Pitchford said.

In addition to providing organizations like CPDC with funding to purchase new complexes, the CDBG program also helps preserve existing affordable housing complexes and ensure that they are maintained to sufficient health and safety standards. Claire Zippel, a policy analyst at DCFPI, said that preserving existing facilities is a crucial solution to sustaining housing for low-income residents.

“It’s not only more effective in terms of people not losing their homes, but it’s also a lot less expensive to preserve affordable housing than it is to build new units,” Zippel said.

Trump’s budget proposal would not only impose major cuts to the CDBG program that funds private complexes, but also funding that the District’s Department of Housing and Community Development (DHCD) receives to make capital improvements to public housing buildings owned and operated by the local government. Under the current budget proposal, this District department’s funding would decrease by over 70 percent.“Really, they can’t afford to lose any dollars for repairs because the public housing in our city is in really poor condition and, honestly, many units present health and safety risks to the residents,” Zippel said. The District has previously acknowledged that it requires approximately $1.3 billion in funding to maintain, improve, and redevelop 6,500 of the 8,300 housing units it manages.

Despite this need, total federal public housing funding was cut by $1.6 billion between 2010 and 2016. “Public housing has been chronically underfunded for the past decade by the federal government, so there’s really not much left to cut from,” Zippel said.

The proposed Trump budget would levy an additional $2 billion of cuts to the national public housing program in the upcoming fiscal year. There would be no way that cuts of that magnitude could be implemented without actually terminating assistance from people who are currently receiving it,” Zippel said. “So, that would mean folks getting evicted.”

Not only are many D.C. public housing facilities in bad shape, but private complexes serving low-income residents that subsidize their rent through public programs are also in very poor condition. The main federal program that provides subsidy assistance is the Housing Choice Voucher program, also known as the Section 8 Voucher program, which directly subsidizes rent for low-income people living in private housing facilities.

Washington City Paper has reported extensively on the practices of Sanford Capital, a D.C. property management company that rents to residents subsidized under the Section 8 program. Sanford is currently being charged with housing code violations by the D.C. Attorney General. The lawsuit claims that the conditions of one Sanford complex are “deplorable” and that the company has repeatedly ignored orders from the local government to rectify the problems in its complexes. These issues with the quality of Section 8 housing in the District would only get worse under the proposed Trump budget.

For Brophy, further cuts to the Section 8 program would inhibit the D.C. government’s ability to make up the difference between what renters can afford to pay for housing and the market price.

While CDBG funding and Section 8 vouchers are appropriated to states by the federal government, the District also has its own local programs that provide developers with stipends that are used for the construction and maintenance of affordable housing facilities.

D.C.’s affordable low-income housing system relies heavily on the Housing Production Trust Fund (HPTF), a local program that provides grants and loans to affordable housing developers and assists in financing housing projects. The HPTF is funded primarily by a tax imposed on home purchases within the District, but the D.C. government can also make transfers to the HPTF from the District’s general revenue pool.

“Those funds have built up over the years because as the housing market has boomed in Washington, D.C., more money has been paid into [the HPTF],” Brophy said. “It’s still not nearly enough money to provide the kind of affordable housing that people in the District need.”

Under D.C. regulations, at least 40 percent of the HPTF’s investments must be allocated to projects benefitting extremely low-income households. An additional 40 percent of the fund’s expenditures must be designated for projects assisting households with a household income between 30 percent and 50 percent of the area’s median income.

However, a report released by the Office of the District of Columbia Auditor found that there was “a lack of oversight on loan repayments, retaining affordable units, and compliance with program requirements” on the HPTF. The report recommended an increase in oversight, compliance monitoring, and data reliability. In an email to the Voice, Gwendolyn Cofield, Communications Director at DHCD, pointed to her department’s official reply to the report, noting that it plans to hire an independent auditor and redirect staff to conduct compliance oversight on the HPTF, among other changes.

“I think the steps that DHCD has taken so far in terms of redirecting staff to do more oversight is critically important,” Zippel said. “The report noted again and again that if the agency doesn’t have the staff to conduct proper oversight, the oversight isn’t going to get done.”

Programs like the HPTF allow the D.C. government to fund affordable housing projects with local funding not appropriated by the federal government, so these programs would continue regardless of HUD budget cuts. To further improve these efforts to provide affordable housing to low-income residents without requiring federal assistance, Mayor Muriel Bowser convened a Housing Preservation Strike Force in 2015. The strike force was formed to create a plan for preserving the District’s existing affordable housing agreements that are set to expire before 2020.

In November of 2016, the strike force released its final report, recommending the creation of a new branch of the local government named the “Preservation Unit,” a department designed solely to maintain existing affordable housing units in the city. The strike force also suggested that the D.C. government create a Public-Private Preservation Fund to facilitate investments in preservation agreements.

All of these recommendations would only preserve existing public housing facilities rather than create new affordable units. According to Zippel, one of the most common policy prescriptions that can be used to alleviate the shortage of affordable housing in D.C. without investing additional public funds is inclusionary zoning.

Inclusionary zoning allows private developers to build more units on a property than zoning laws allow, provided that a portion of the additional units are priced below the market price. This practice usually assists moderate to low-income renters, as the prices rarely drop far enough below the market-rate price to benefit extremely low-income residents.

“Typically, [inclusionary zoning] can’t get rents down to the level where someone working a minimum wage job or relying on Social Security can afford the apartment,” Zippel said. Inclusionary zoning, therefore, would not address the current lack of affordable housing available to extremely low-income residents.

Between the expected continuation of population growth in the District, questions surrounding the city’s current affordable housing system, and the additional proposed cuts to funding, the local government faces an uphill battle to ensure safe, sanitary, and affordable housing for extremely low income residents. Whether it is constructing new affordable housing complexes or improving the conditions of units that already exist, developing affordable housing options for extremely low income people will directly affect the lives of District residents 43,000 of them.

Nick Gavio
Nick is the Voice's former editorial board chair. Follow him on Twitter at @nickgavio, where he primarily retweets cute puppy videos.

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