jonetta rose barras: Is Mayor Bowser winning in the affordable housing fight?

Earlier this year, Mayor Muriel Bowser snatched money from the city’s contingency reserve fund. By June 30, the account was down from $279.7 million to $194.7 million, according to a report released by the Office of the Chief Financial Officer.

The mayor spent $13.6 million for the Kids Ride Free program; its budget has ballooned from $9.4 million to $22.9 million in fiscal year 2019. She paid $1.7 million for a summer youth program in wards 7 and 8 and $5.2 million to complete demolition of DC General Hospital, which had served as a shelter for homeless families. Bowser took another $94.3 million for an advance to charter schools. In some instances, the money has already been repaid as a result of the approval of a revised 2019 budget and the submission of the 2020 budget to Congress, said a CFO spokesperson, adding the rest will be returned to the contingency fund from the expected surplus for fiscal year 2019.

Most curious, Bowser withdrew $7.2 million for an “affordable rental housing project” at 3500 East Capitol St. SE. Why would she pull money from the reserve account when $100 million was allocated for the city’s Housing Production Trust Fund (HPTF) in fiscal year 2019? Shouldn’t that be enough?

Polly Donaldson, executive director of the Department of Housing and Community Development, which oversees the HPTF, told me last week that “the mayor and the council supported the East Capitol project. It was in Ward 7, in its second phase and included family-size units.” 

It was “a $16 million contract, $7 million was unobligated,” said Donaldson, explaining why the contingency draw-down was needed. She said the CFO, as per DC law, requires that a project be fully funded before it can be sent for approval to the DC Council. “When we got down to the calculation of the [HPTF] fund balance, it was pretty darn close,” she said.

All the money in the trust fund is “spoken for until [the] infusion that comes on Oct. 1,” the start of the government’s 2020 fiscal year, continued Donaldson. When she came to the agency in 2015, she said, there were $250 million worth of projects in the HPTF pipeline; all of that money has since been obligated. “We have cleared the pipeline.”

Donaldson said she would submit three new projects for council action by the end of the week. She shared with me a list of 37 projects, totaling 2,800 units, that should be ready to move forward by the end of fiscal year 2019 or within the first two quarters of 2020.

“The new challenge is having more funds available to obligate,” Donaldson added, seeming to paint a picture of her agency as dealing effectively with DC’s affordable housing crisis — despite thousands of people living on the streets, young professionals increasingly unable to find decent housing without doubling or tripling up, and families nearly priced out of the market. 

Understandably, advocates and government leaders with whom I spoke weren’t quite ready to start twirling with excitement over the new reality described by Donaldson. “I hesitate to celebrate,” said Parisa Norouzi, executive director of Empower DC, a nonprofit that has worked with low-income residents on housing issues for more than two decades.

“The city has overproduced higher-income [units] and underproduced units for the lowest income,” continued Norouzi, citing as an example the fact that Bowser’s 2020 budget proposal designated workforce housing money for people who could have made as much as 120% of the area’s median income.

“There was nothing in the project-based Section 8 pot. That’s a red flag that indicates where their priorities are,” Norouzi added. (The council subsequently nixed Bowser’s workforce housing plan.)

DC Auditor Kathleen Patterson called the Housing Production Trust Fund a “good policy.” She was the Ward 3 representative on the council when it took its current form. She praised Donaldson and her team for building “a lot of projects.” However, Patterson said, “They simply could have done a better job and the CFO could have done a better job overseeing the funds.

“It’s a mixed review,” she added.

At-large Council member Anita Bonds, whose Committee on Housing and Neighborhood Revitalization has oversight of DHCD, was more positive. “It has taken [Donaldson] some time, but she’s doing far better,” Bonds said. “She has sped up the process and she’s sensitive to what the goals are that the mayor has set.”

Ed Lazere, executive director of the DC Fiscal Policy Institute, agreed that during Bowser’s first term the administration “produced housing for folks” earning more than 30% of the area median income. The crisis is most acute, however, among those with the lowest incomes. “That’s where the energy needs to be focused,” he said.

In 2019, the Median Family Income (MFI) for the Washington metro area is $121,300. Households at 50% or below of MFI (or AMI) earn up to $42,500 for a single person and $80,100 for a family of eight; a family of four in that category earns up to $60,650 annually, according to the DC housing agency, which uses the numbers and calculations established by the U.S. Department of Housing and Urban Development..

Lazere said if Donaldson and her staff have begun to “move aggressively” to obligate trust fund dollars, that could signal to developers, particularly small developers, that “there will be a pipeline,” creating a sense of predictability. If developers are certain the money is there and isn’t going to get bogged down in bureaucratic red tape, they may be more likely to compete. That could translate to better projects and perhaps more housing.

Of course, what Donaldson has described could be a new reality or an apparition. The agency has a history of poor performance. I earlier called for her termination after a  report from Patterson’s office found massive and “chronic mismanagement” of the HPTF, including failing to collect outstanding loans, failing to ensure new construction catered to the lowest-income residents as required by law, and using some of the affordable housing money for staff salaries. There also was the news that the agency had forfeited $15.8 million in federal grant money — money that could have helped to build more low-income housing. 

Earlier this summer, the auditor reported that several projects received HPTF money despite being ranked in the bottom half of the applicant pool. A former DHCD staffer blew the whistle but declined to go on the record publicly for fear of retaliation. Those revelations raised tons of questions about the extent to which politics and favoritism drove critical housing decisions, particularly since Donaldson had the ability as director to override staff selection. 

Donaldson said she and her team have transformed the agency. “We are in no way resting on our laurels.” She cited examples of improvement such as new online capabilities for applications and reviews, and a “vastly improved” federal funding track record. However, she acknowledged, “We need to do more.”

On that point, everyone agreed. One area of focus, said Norouzi, should be preserving existing affordable housing units, including assisting tenants with renovating their buildings or purchasing them when they come up for sale. “Funding [deals under the Tenant Opportunity to Purchase Act] is a high priority,” added Norouzi.

DHCD has a $30 million preservation fund, with a 3-to-1 match requirement. That means there could be almost $100 million for that purpose, said Donaldson, adding that the agency has connected with nonprofit organizations and others to ensure not only production of new units but also protection of rental units that are currently considered affordable.  

“We need some new tools,” argued Bonds, a strong advocate of preservation. She has created a “working committee” that is looking at how to reduce rent increases that automatically occur when a unit is vacated, among other things. She also has been considering how to establish multigenerational communal apartment communities where neighbors trade services to help reduce living costs. 

With an eye toward the possibility of a recession and how it could adversely affect efforts to protect and build affordable housing, Bonds said she would like the mayor to take $50 million from any end-of-year surplus and place it in a special account; that money could help ensure the city doesn’t lose momentum in the battle to create low-cost housing.

“What do you think she would say to that?” Bonds asked me.

It’s not going to happen — at least not this year. Bowser has to repay all that money she took from the reserve fund. The surplus is her cookie jar.

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jonetta rose barras is an author, a freelance journalist and host of The Barras Report television show. She can be reached at thebarrasreport@gmail.com.