For the third consecutive year, Mayor Anthony Williams is proposing to balance his budget by, in part, redirecting monies designated for the Housing Production Trust Fund. And for the third consecutive year, affordable housing advocates are trying to stop him.
His proposal, which advocates said amounts to a dismantling of the Trust Fun, would have a permanent revenue cap of $20 million and would be used over the next two decades to securitize a $275 billion bond for housing projects. And, according to the proposal, any amount over the cap – which is $20.5 million for fiscal year 2005 – would be redirected into the General Fund.
Additionally, supporting legislation for the Mayor’s budget does not actually obligate the administration to spend the bond, which is not even guaranteed to be issued at $275 million, on projects currently allocated through the Trust Fund. In fact, it gives the Mayor discretion on when and whether to initiate bonds and on how, as well as on the use of the money.
Tobe sure, the changes to the Trust Fund are one of many means by which Mayor Williams plans to fund his $4.2 billion budget, which includes a 8.9% increase from 2004. Other changes include reducing spending in other areas, increasing permit fees and fines, raising selected taxes, and using tobacco trust funds.
But affordable housing is a pressing need in the District. According to the federal House Price Index released on March 1, DC ranked in U.S. in rise in housing prices between the fourth quarter of 2002 and the fourth quarter of 2003. During that period, housing prices rose an average of 7.97% throughout the United States, but in DC, prices rose an average of 13.6%.
T.J. Sutcliff, advocacy director at So Others Might Eat, said that with the soaring real estate costs and the Mayor’s initiative bringing 100,000 new residents into the District, affordable housing is needed now “so that many longtime District residents can reap the benefits of the city’s economic revitalization.”
And Sutcliff said that only with full and accessible funding would the Trust Fund be effective in providing this, particularly in area like Show and Columbia Heights, where vacant land and older buildings are quickly being built into housing for middle- and upper income residents.
“Full funding for the Housing Production Trust Fund is needed now, while there are still opportunities to create affordable housing in ways that preservice economic diversity and opportunities with the District’s communities,” Sutcliff said.
Robert Pohlman, executive director of the Coalition for Nonprofit Housing & Economic Development, also said that the Trust Fund needs full funding and characterized the proposed contribution cap of $20 million per year as a shortsighted action that would dramatically shortchange the Trust Fund.
For the first time in the history of the Districts of Columbia, the Housing Trust Fund has begun to offer affordable housing producers, tenants trying to buy their building, {and} special needs housing providers…a reliable source of funding, available annually, to help them finance their projects,” he said, during his public testimony. It would be devastating to eliminate the source of the funding.”
Pohlman was one of the many housing advocates who commented during the public hearing held soon after the budget proposal was announced on March 29. Twenty-five homeless families from the DC Village and Community Hope shelters and other low-income residents also testified in support of full funding for the Trust Fund.
The Fund was established in 1988 to provide funding for affordable housing projects in the city. It was revitalized in December 2000 with $25 million after the sale of the District’s Department of Employments Services building to the Newseum. In March 2002, Mayor Williams signed into law the Housing Act of 2002, which among other initiatives, dedicated 15% of the deed recordation and transfer taxes paid when property is sold to the Trust Fund.
In 2004 the Trust Fund received full funding of about $37 million only after intensive lobbying efforts.
Public hearings on the current proposal will continue through April 23, followed by committee markup and committee reports from April 26 to April 30. The committee of the Whole is scheduled to vote on the 2005 budget on Tuesday, May 11.
The underlying legislation for the mayor’s budget, the Budget Support Act of Fiscal Year 2005, will be discussed in public hearings by the Committee of the Whole on Monday, April 19.
