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Posts about Affordable Housing

Housing


See all of DC's new affordable housing in one map

Over 2,000 new affordable housing units have gone up in DC since 2015, and another 8,000 are under construction or in the pipeline. Check out this map to explore the most up-to-date data on the last two years' worth of completed, under construction, and planned affordable housing in DC.

The data in the map is courtesy of the District's Department of Housing and Community Development (DHCD) and the Office of the Deputy Mayor for Planning and Economic Development (DMPED). New housing production and preserved units are both on the map, including units created through the Inclusionary Zoning (IZ) program.

You may notice that there are far fewer affordable housing units northwest of 16th Street, and that the projects with lots of units are often grouped in the same area.

Here is a layout of the units broken down by Area Median Income:

Most of the units, whether on the way or already completed, fall above the 50% AMI range, which does not target the people most in need. However, there is a big increase in the number of units that are in the pipeline is for income range below 50% AMI.

Affordable housing is funded in several different ways. For new and preserved units that aren't inclusionary housing, projects secure some private funding and the city's role is to provide money to close the financing gap via both federal funds and the city's Housing Protection Trust Fund. IZ units, on the other hand, are 100% privately funded.

The map's data does not parse out which units are funded by the federal government, DC, or private funding.

For more data visualizations, check out DMPED's Affordable Housing Tracker.

What does this data say to you?

Housing


The Area Median Income (AMI), explained

There are a number of programs used to create affordable housing in the region, including housing vouchers, inclusionary zoning, low-income housing tax credits and public housing.


Photo by Images Money on Flickr.

Each of these programs use a central statistic—the area median income, or AMI—to determine whether families are eligible for the program.

In this explainer, I focus on how the AMI is calculated and what it means for affordable housing in the region.

The area median income (AMI) is the household income for the median—or middle—household in a region.

As a quick refresher, if you were to line up each household in the area from the poorest to the wealthiest, the household in the middle would be the median household.

Each year, the Department of Housing and Urban Development (HUD) calculates the median income for every metropolitan region in the country. HUD focuses on the region—rather than just the city—because families searching for housing are likely to look beyond the city itself to find a place to live.


A rendering of the Channing E. Phillips Homes, which will go up next to the Shaw Metro and will be affordable to families making 60% of the area median income. Image from AHC Inc.

In DC, the region includes more than twenty nearby cities and counties, including Prince George's County, the city of Alexandria, and Fairfax County. Families in these suburbs tend to be wealthier than those in the District, so the AMI is higher than it would be if HUD calculated the AMI for the city alone.

HUD uses the five-year estimates of the American Community Survey—a national survey similar to the Census—to measure household income. They begin with the median income for a family of four.

In the Washington region, the AMI is $109,200 for a family of four.

Because the metropolitan region includes some of the country's wealthiest suburbs, this is among the highest AMIs in the country.

The table below reports the median income for families of various sizes in our metropolitan region. Because family incomes differ by the number of people in the household, HUD uses a formula to adjust the AMI for families of different sizes.

These adjusted AMIs are used to calculate affordability throughout the region, including Prince George's County, Alexandria and the District itself.

Table 1: The AMI in the DC Metropolitan Region, by Household Size:

Household SizeMedian Household Income
1$76,020
2$86,880
3$97,740
4$108,600
5$117,290
6$125,980

To determine whether a family is eligible for various housing programs we compare a family's income to a percentage of the AMI.

We typically distinguish between three types of households. Households earning less than 80 percent of the AMI are considered low-income households by HUD. Very low-income households earn less than 50 percent of the AMI and extremely low-income households earn less than 30 percent of the AMI.

Other eligibility standards, including 60 percent AMI or 110 percent AMI, are occasionally used to determine affordability.

In Table 2, I report the income associated with each affordability threshold. In our region, a four-person households earning 80 percent of the AMI earns about $87,360 each year. A four-person household earning 30 percent of the AMI earns about $32,760 each year.

Table 2: Affordable Housing Standards in the Region:

Percent AMIHousehold Income
30%$32,600
50%$54,300
60%$65,160
80%$70,150
100%$108,600
110%$130,320

Every affordable housing program in the region uses these AMI calculations to determine eligibility

Housing vouchers are generally available for families earning 30 percent AMI. This means that families earning $32,760 or less are eligible for vouchers.

The mandatory inclusionary zoning program in the District requires builders include units available at mostly 80 percent AMI, but also some at 50 percent. Families of four earning up to $70,150 would be eligible for these units.

And affordable housing developments cap rents below market rate to ensure that families can live in these units without spending more than 30 percent of their income on rent. In the Channing Phillips Homes, a new affordable housing development in Shaw, apartments will be targeted at households earning up to 60 percent AMI. This means that a four-person household earning $65,520 or less would be eligible to live in the development. Rents would be capped to ensure that households can afford the rent without paying more than 30 percent of their income.

Critics of these affordability standards argue that poor families in the city are disadvantaged by the AMI calculation

By including the entire region in the AMI calculation, HUD includes many wealthy suburbs of the District. Since these suburbs have a higher median income than the city, the AMI for the region is higher than it would be for the city alone.

As a result, the poorest families in a region, who typically live in the city, earn substantially below 30% of the AMI in the region. There is virtually no housing assistance designed specifically for those families.

Correction: The original version of this post reported median income and housing income requirements that were different from the 2016 rules. The post has been updated to with accurate numbers.

Housing


The biggest beneficiaries of housing subsidies? The wealthy.

It's almost the first of the month, and that means rent's due. That rent or mortgage check is the single biggest expense in most Americans' budgets, so it's no wonder that Congress directs a ton of federal dollars to housing. But what should be surprising—and infuriating—is that a lot of this support goes to housing the wealthy, while very little goes to those who need help landing a stable home.


Photo by Peter on Flickr.

These policies aren't accidents—they're bad choices that we should simply stop making.

We're in the middle of an affordable housing crisis

The United States is in the midst of an affordable housing crisis. Nearly 1 in 3 households with a mortgage devotes more than 30 percent of their income to their home. The situation is even worse for renters—more than half of the United States' 38 million rental households are shouldering a cost burden.

Some of this crisis is fallout from the Great Recession, which brought homeownership rates to historic lows. African-American and Latino households were hit particularly hard, because of predatory lending practices that targeted racially segregated communities .

Congress spends a lot on housing, mostly through tax programs

Given these crises in housing affordability and homeownership, congressional strategies to support housing deserve special scrutiny.

Congress supports housing in two main ways: rental assistance programs and homeownership tax programs. In 2015, the price tag for federal rental assistance programs—which includes Section 8 housing vouchers, public housing, Homeless Assistance Grants, and other programs—was $51 billion. In contrast, two of the largest homeownership tax programs—the Mortgage Interest Deduction and the Property Tax Deduction—cost $90 billion in 2015. That's nearly double the amount spent on public benefit housing programs.

The biggest beneficiary of the billions spent on homeownership tax programs? The wealthy.

There's nothing wrong with providing support through the tax code—benefits are benefits, whether you get them from your local HUD office or on your tax return. The important question is: who benefits? Rental assistance programs are designed to help those who will benefit most—primarily individuals and families with less income and less stable housing. But this isn't how Congress designed homeownership tax programs. All told, households making over $100,000 a year received nearly 90 percent of the $90 billion spent on the two tax programs discussed above. Households making less than $50,000 got a little more than 1 percent of those benefits.

It gets uglier. There are nearly eight million low-income homeowners that struggle to pay for housing from month to month. On average, low-income households get about eight cents per month from these two homeownership tax programs. Eight cents. There are also about four million middle-income households paying more than 30 percent of their income on housing. The average monthly benefit from these tax programs for middle-income earners? Twelve bucks. Don't spend it all in one place.

In contrast, the top 0.1 percent of earners—folks with an average annual income of more than $9 million—get an average of $1,236 per month (nearly $15,000 per year) from just these two homeownership tax programs. That federal benefit is much more than the typical cost of rent in most American cities, and it's going to wealthy households who really don't need help keeping a roof over their heads.

Why these tax programs are so upside down

So why are these tax programs so out of whack? It's no accident—it's how the programs are designed. Most low-income families don't even qualify because they don't itemize deductions. Even among those that do qualify, every dollar they deduct is worth less than a dollar that a high-income earner deducts. As nonsensical as it sounds, the value of homeownership tax support goes up as your income goes up. In addition, higher-income households get bigger deductions when they buy bigger houses (or bigger yachts, which qualify for the same tax benefits).

If we ran the Food Stamp (SNAP) program the same way we run our housing tax programs, low-income parents buying a simple, nutritious meal for their kids would get somewhere around zero dollars in federal support. Millionaires charging their MasterCard with a $5,000 FleurBurger with seared foie gras, truffle sauce, and bottle of 1995 Château Petrus would get a few thousand dollars in federal benefits.

Clearly, this would be a crazy way to run a social program—but this really is how we structure billions in support for wealthy homeowners through the tax code. Even worse, study after study shows that the Mortgage Interest Deduction doesn't even succeed in boosting homeownership.

How we can get away from this upside-down system

It's not hard to think up a better way to spend $90 billion. We could redirect this spending to help lower-income Americans save for a down payment, or use some of these funds to create a first-time homebuyer credit, or create a simple refundable credit for all homeowners. Or all of the above. That's the focus of the Turn it Right-Side Up campaign, which zeroes in on reforming unfair tax programs like these homeownership credits.

A version of this post first ran at Talk Poverty.

Development


DC's Edgewood neighborhood is set to get more affordable housing and connections to the Met Branch Trail

Plans for a massive new development planned along Rhode Island Avenue NE include affordable housing, new connections to a large nearby apartment complex, and links to an important bike trail.


An elevation showing the first phase (completed, on the right) and later phases (outlined in white) of the planned Rhode Island Center development. Image by MRP Realty.

Rhode Island Center is a roughly 1,600-residential unit mixed-use development that will rise on the site of the Big Lots and Forman Mills between the Metropolitan Branch Trail and 4th Street NE.

This is the ideal transit-oriented development for the region: lots of housing, both affordable and market rate, a block from the Metro on a site that is currently a suburban-style strip mall. To top it off, it includes needed pedestrian and cycling improvements to the surrounding area.

Developer MRP Realty plans to include about 128 units in the District's Inclusionary Zoning program, build new stairways up to Edgewood Commons on the hill above it, make improvements to the MBT, install two new Capital Bikeshare docks and provide residents $225 in incentives towards alternative transportation options, like a bikeshare or carshare membership, a benefits package submitted to the DC Planning Commission on 1 August shows.

Affordable housing

The project will be built in phases, with the first two buildings fronting the MBT scheduled to open in 2019, confirms MRP's vice-president of development Michael Skena in an email. Phase one will include about 450 units, with 8%, or about 36 units, set aside for affordable housing.


Looking south at the first phase of Rhode Island Center from the MBT. Image by MRP Realty.

Half of the affordable units will be for households of four earning up to $54,300 a year, or 50% of the DC region's area median income (AMI), and half for similarly sized households earning up to $86,880, the DC Department of Housing and Community Development's (DHCD) 2016 inclusionary zoning schedule shows. Rents for two-bedroom apartments are capped at $1,222 a month and $1,955 a month, respectively, for the two income groups.

The affordable housing in Rhode Island Center's later phases will see slightly more units going to needier families, with 5% for those in the lower income bucket and 3% in the higher one.

The income levels for both the first and later phases of the development will be set if they are approved by the Zoning Commission on September 12, says Skena, even if the DC Council passes a pending change to the IZ program lowering the maximum household income level to 60% of AMI.

However, commissioners from ANC 5E, which oversees the area including Rhode Island Center, declined to support the development unless MRP includes nearly double the number of units, 14% of the total, in the IZ program at 60% of AMI, in a letter to the Planning Commission dated July 7.

While further changes to the affordable housing component in the development are possible before the September hearing, they are unlikely to include any units at the lower household income level sought by the ANC.

In July, the DHCD objected to a proposal that affordable units be available to households earning up to 60% of AMI in the Eckington Yards development. While the main objection was to a request by the developer to administer the units itself outside of the agency's IZ program, the agency emphasized a need for developers to be held to all the District's existing laws and regulations.

Current regulations require that units in the IZ program are available to households earning up to either 50% or 80% of AMI.

Stairways and connections

MRP promises to build two new stairways between Edgewood Commons and Rhode Island Center. This would provide residents of the apartment complex with a new direct connection to the MBT and Rhode Island Ave Metro station, eliminating the current about half-a-mile journey through the existing shopping center and up 4th Street.


The planned stairway connecting Edgewood Commons to the MBT. Image by MRP Realty.

The first stairway, which would be located in the northeast corner of the development adjacent to the trail, would be built with the first phase. The stairs would be closed between 1 am and 4:30 am on weekdays, and 3 am and 6:30 am on weekends.

Easier access to the Metro and trail would benefit residents of the mixed-income Edgewood Commons community. It would improve connections between the complex and the east side of the neighborhood, and potentially increase economic opportunities for residents. For example, the time it takes to walk to the shopping center with Giant Foods and Home Depot would be cut in half.

Connections to the MBT are a big part of the Rhode Island Center proposal. The central artery through the project will stretch from 4th Street NE to a new plaza where the trail and bridge to the Rhode Island Ave station meet, and include a new protected bike lane.


Looking east down the central corridor through Rhode Island Center towards the MBT. Image by MRP Realty.

The developer will realign the MBT so it passes under the stairs to the bridge to reduce pedestrian conflicts in the planned plaza, and make other signage, wayfinding, landscaping and lighting improvements.

The benefits package also includes $10,000 for the connection between the MBT and Franklin Street NE, which was included in the NoMa Business Improvement District's MBT Safety and Access Study earlier this year.

MRP will install two new bikeshare docks as part of the package. One next to the trail near the planned plaza and one on 4th Street NE between Bryant Street and Franklin Street.

Housing


How housing vouchers work, explained

Millions of Americans struggle to pay their rent each month. With rents rising and incomes stagnating, paying rent is the largest monthly expenditure for many families.


Photo by Images Money on Flickr.

Across the country, over 20 million households—more than four out of 10 renters—are rent-burdened, meaning they pay at least 30 percent of their income on rent. The share of rent-burdened households is even higher among low-income renters.

The government helps some of these low-income households pay their rent by providing vouchers through the Housing Choice Voucher Program, also known as Section 8.

The Housing Choice Voucher (HCV) Program is the largest federal program to subsidize low-income renters.

Across the country, nearly 2.2 million households receive housing vouchers to subsidize their rent. In DC, the voucher program provides assistance to 13,000 families.

There are two types of housing vouchers. Project-based vouchers are tied to a specific apartment and used by the family living there. When that family moves, the voucher stays with the unit, rather than moving with the family. Tenant-based vouchers, on the other hand, are given to a specific family. The family keeps the voucher when they move.

Because they are much more common, this explainer focuses on tenant-based vouchers in the District.


Photo by Tax Credits on Flickr.

The Housing Choice Voucher Program works by limiting the amount of their income that low-income families pay toward rent.

Voucher holders pay 30 percent of their income toward rent for an apartment on the private market. The federal government pays the rest of the rent directly to the landlord.

To be eligible to use a voucher, families typically must earn less than 50 percent of the median income in the place where they live (officially called Area Median Income, or AMI). In the Washington region, that's about $50,000 for a family of four. However, most voucher holders in the region earn less than 30 percent AMI, or about $30,000.

After securing a voucher, families are required to find an apartment—or "lease up"—within sixty days. While they search for housing like anyone else in the city, their rent must fall within the Fair Market Rent (FMR) guidelines established by the Department of Housing and Urban Development (HUD). In the District, the fair market rent for a two-bedroom apartment is $1,623. Households using a voucher can rent any apartment at (or below) that threshold.

While voucher holders are permitted to search for apartments throughout the region, in practice, they are much more likely to find affordable housing in just a handful of neighborhoods. Few apartments in wealthy neighborhoods, like Georgetown, are inexpensive enough to meet HUD guidelines, while most apartments in low-income neighborhoods, like Deanwood, rent for below the market average.

While families mostly search for housing in the region, their vouchers are portable. If a family moves from Washington, DC to Mississippi, for example, they can take their voucher with them. Critically, housing vouchers do not expire. Households can continue to use their voucher as long as they remain eligible for the program and abide by program rules.

Local public housing authorities (PHAs) distribute housing vouchers through lotteries.

In DC, the District of Columbia Housing Authority (DCHA) runs the city's voucher program. There are other public housing authorities in the region, including the Alexandria Redevelopment and Housing Authority and the Housing Authority of Prince George's County, which also administer housing vouchers.


Photo by Bill Dickinson on Flickr.

With guidance from HUD, PHAs often prioritize certain types of households in distributing vouchers. For example, a PHA can give priority to homeless households, families living in extreme poverty, or those displaced by substandard housing conditions. In DC, the housing authority gives preference to homeless families above other households needing assistance.

To distribute the limited supply of vouchers, PHAs create waitlists for eligible families. This can be an open waitlist, where families join at any time, or a closed waitlist, where the housing authority opens the waitlist for limit periods of time. At the moment, the voucher waitlist in DC is closed.

Although new vouchers are rarely allocated by Congress, vouchers do become available when existing families leave the program. PHAs use the waitlist to select new voucher holders, either by holding a voucher lottery or simply selecting the next applicant on the list.

Housing voucher programs were created in the 1970s with the dual goals of de-concentrating poverty and empowering families to pick their own neighborhood.

Until the 1970s, nearly all federal housing assistance was provided through public housing developments. However, policymakers realized that these developments concentrated poor families in certain neighborhoods. They also contributed to racial segregation in cities.

The first voucher programs were proposed in 1970 and formalized through the Housing and Community Development Act of 1974. The Act amended Section 8 of the National Housing Act of 1937 to create the voucher program. As a result, the program became known as Section 8 vouchers. In 1998, Congress passed the Quality Housing and Work Responsibility Act, which formally changed the program name to the Housing Choice Voucher Program. Housing Choice vouchers and Section 8 vouchers refer to the same program, but Housing Choice vouchers are the preferred (and correct) terminology.

By giving households an opportunity to pick their own apartment, rather than living in public housing, policymakers expect vouchers to lead people to improved housing units in better neighborhoods. Voucher holders can move away from communities of concentrated poverty and live in high-quality housing.


Photo by anaxila on Flickr.

There is substantial evidence that when low-income families move into mixed-income neighborhoods, they do benefit. For example, people are often healthier and safer in these high opportunity neighborhoods. Children attend better schools and more regularly interact with middle-class neighbors.

However, critics argue that the benefits of the voucher program are overstated. Voucher holders typically cannot move to wealthy neighborhoods because the rents are too high. Many landlords refuse to accept housing vouchers. And even when they do move into a high-opportunity neighborhood, low-income households often find it difficult to stay there.

Perhaps most importantly, critics of the voucher programs note that housing assistance is not an entitlement. Unlike other government assistance programs, like Medicaid or TANF, most eligible households do not receive a voucher. In fact, only one-quarter of households who are eligible for a voucher actually receive one.

Housing


Affordable housing agency surprises everyone by opposing more-affordable housing at one Eckington development

A large new development in Eckington will go up with fewer "deeply affordable" units than developers planned thanks to an unexpected objection from DC's Department of Housing and Community Development. The agency didn't want to have units doled out outside its existing system, even at the expense of some affordability.


Eckington Yards seen from Eckington Place NE. Image by JBG and Boundary.

At Eckington Yards, a 695-unit mixed-use development that will rise on a three-acre site stretching from Eckington Place NE to Harry Thomas Way NE in Eckington, developers JBG and Boundary wanted to offer more deeply affordable units—units for people who make well under the Area Median Income (AMI)—than what DHCD requires.

But the developer also wanted to manage the units on their own, with residents applying directly to them rather than to the agency's program.

"DHCD vigorously objects to the premise that IZ [inclusionary zoning] requirements can or should be waived," said Polly Donaldson, director of the agency, in a July 28 letter to Zoning Commission chairman Anthony Hood. "The fundamental issue before the Zoning Commission is… whether developers should be required to comport with existing law, policy and regulations."

Donaldson repeatedly emphasized that the issue was about maintaining "uniform application" of the District's affordable housing rules, and not an objection to creating more homes for lower income resident, in the letter.

In other words, the housing authority wanted JBG and Boundary to fit the affordable housing component of Eckington Yards into its existing boxes, with no exceptions.


The Eckington Yards development in relation to the surrounding buildings. Image by JBG and Boundary.

The Eckington Yards proposal

JBG and Boundary wanted to offer the 55 affordable units in Eckington Yards at 60% of AMI, which is $106,800 for the Washington DC region this year. Households that earn up to $64,080 would have been eligible for these apartments.

That proposal did not fit with the District's existing requirements that large projects make eight percent of the floor area available to people making 50% or 80% of AMI.

In her letter, Donaldson said that DHCD "strongly agrees with and supports" efforts to "provide additional affordable housing, at levels of affordability greater than the required regulations."

She pointed to other District programs, like low-income housing tax credits, that could be used to make housing in its existing IZ categories affordable at the level proposed for Eckington Yards.

DC's AMI requirements may change

Just two days before Donaldson sent her first letter to Hood, the Zoning Commission approved a change in the inclusionary zoning regulations that would lower the top household income level to 60% of AMI.

The rule change undergo a 30-day comment period and then go to the District council for a vote before it can enter into force.

Donaldson acknowledged the change, which would bring IZ requirements in line with the affordability envisioned for Eckington Yards, in her letter. However, she said that the application must be viewed under the "current versions of the IZ statute and regulations."

A compromise with less deeply affordable housing

JBG and Boundary compromised with DHCD in order to secure final approval for Eckington Yards. The Zoning Commission approved a revised proposal with the 55 affordable units split evenly between the housing authority's two IZ buckets at its meeting yesterday.

The compromise resulted in an average maximum household income of $70,590 for the affordable component of Eckington Yards, more than $6,000 higher than under the all-60% proposal.

While not a loss in the number of affordable units, it is a blow to creating more deeply affordable units in the community. Especially in a highly sought after location like Eckington Yards, which is walking distance to the NoMa-Gallaudet Metro station and adjacent to the Metropolitan Branch Trail and future large NoMa park.


Eckington Yards seen from the planned NoMa Green. Image by JBG and Boundary.

Housing


DC's affordable housing fund isn't doing enough for low-income residents, an audit says

The District's Housing Production Trust Fund is a program run by the city to fund and build affordable housing, which helps some of DC's poorest families live in one of the country's most expensive housing markets. A recent audit, however, says that too little money is going to the lowest-income residents.


Photo by Kamesg on Flickr.

Every year, the District Department of Housing and Community Development puts all of the trust fund's money into a big pot, along with other federal and local funds earmarked for affordable housing. Then it puts out requests for proposals (RFP) to build housing using the money that detail exactly how it must be spent. Non-profit and for-profit groups alike apply for and get money from the fund.

According to DCHD, almost a billion dollars has gone into the fund since 2001, leading to the construction or renovation of almost 10,000 units dedicated to housing families whose incomes can be far below average.

The city's Office of the District of Columbia Auditor recently took a look at how HPTF money has been used since it was created, and how DCHD has accounted for that spending. The report says that while a lot of money has been spent to build or renovate housing units, far less money than what is required has gone toward housing for people who can afford the least.

Far more money was supposed to go toward housing for people who earn the least

By law, at least 80% of the fund has to be spent on helping finance construction for housing that's for households earning less than half of the Area Median Income (AMI). AMI is a tool used nationwide to decide how much a family needs to make to meet requirements for subsidized housing in a given area. The AMI for a family of four in Washington in 2016 is $108,200 a year.

Within that 80% requirement, half of money spent has to go towards housing for households making less than 30% AMI (i.e. a family in Washington that only makes 30% of $108,200 in a year, or around $32,000 for a family of four) while the other half focuses on households between 31 and 50% AMI.

But in 2014 and 2015, the fund simply hasn't spent all that much on that subcategory of housing. In 2014, only 32% of the fund actually went to housing households earning 50% AMI. 2015 was a bit better at 49%, but still far below the 80% requirement.


Table from the DC Auditor.

DHCD is working to fix the problem

According the audit, DCHD has a lot of work to do to catch up and meet its goals. The report recommends that DCHD and the advisory board make up for lost time by focusing only on housing families that earn less than 50% AMI for the foreseeable future.

"DHCD should consider compensating for the loss of investment in units for households earning 0-50 percent AMI during FY 2014 and FY 2015 by focusing all available funds on those two income categories for the near future," write the auditors.

In a section of the reports for comments from DCHD, the agency says that it has already started on a plan to get things back on track, and to ensure that the right amount of money goes toward those groups: "Beginning in fiscal year 2015, [DHCD] began issuing targeted requests for proposals utilizing the Housing Production Trust Fund with a requirement that the agency will only fund new construction projects targeting households with incomes of 50% of area median income and below."

To make sure the lowest-income families keep getting the funding they need, DCHD and the Production Fund will have to keep better track of their spending and reporting to the city's oversight agencies. The audit also revealed that several key reports that are due quarterly are simply missing, and that a lot of the fund's activities were classified under a general "other" category. That makes it hard for city auditors to suss out what money goes where.

The Housing Production Trust Fund is an important tool for the city to keep some of its housing affordable for individuals and families struggling with high housing costs in Washington. And after nearly being cut away to nothing in 2012, the fund saw a big infusion of nearly $100 million dollars during last year's budget process.

But all the money in the world doesn't matter if it doesn't get to the people who are supposed to be the beneficiaries. So now its up to the city's workers and elected officials to work together to fulfill the Housing Production Trust Fund's promise.

Housing


Can anyone build affordable housing without public money?

The US has less affordable housing than it needs, and that's because of a fundamental problem: the cost of building and operating affordable units adds up to more than what those units bring in in rent. The Urban Institute launched a tool that illustrates this problem first-hand.

The tool, which uses housing data from the Denver area, summarizes the affordable housing problem while explaining the associated layers and technical terms in an intuitive, easy-to-understand manner. At the bottom right, you see a theoretical development whose cost changes based on the variables you, the theoretical developer, are facing.

The unsustainable math behind developing affordable housing

There are many costs that go into building affordable housing units. In developer speak, these costs are referred to as "uses." Uses include the cost of purchasing the land itself, the cost of construction, and future operating expenses (such as hiring and paying building staff), among other things.

How do developers cover these costs? The uses are funded through various sources such as debt (taking out a loan) and tax credits. However, there are limiting factors when it comes to both of these.

When developers go to take out a loan, the amount they get and the interest they pay is determined based on projections for how much revenue a building's rent will generate. But it can be tough to predict whether or not a building could wind up being vacant, or for how long. Obviously, if nobody is paying rent on a building a loan helped build, the lender is not going to be happy.

Tax credits can also help developers. There are variables involved in determining the amount of tax credit a builder is eligible for, such as the cost of land and rent prices. Even if a developer is eligible to receive tax credits, there's no guarantee they'll actually receive them because the funds are limited at the national, state, and local level.

Closing the gap

To close the gap between the cost of developing affordable housing and the revenue it generates, why don't developers just apply for bigger loans, increase the amount of units in a building (generating higher rental revenue as a result), or charge more for rent?

As described above, lenders determine the loan amount based on projected revenue, and for affordable housing, that revenue is low by its very nature. Building more unites would also means needing to make sure more unites are filled, and charging more for rent defeats the entire purpose of affordable housing to begin with.

The bottom line is that subsidies are the only way to close the gap between cost and revenue; they're the only way to build enough affordable housing. Such subsidies can come in varying forms, such as vouchers, more tax credits, and grants.

Emily Badger at the Washington Post sums it up pretty well:

To the extent that government should step in when the private market can't, affordable housing is a prime example. The larger problem, though, is that we hardly devote the kind of public resources to this market failure that it demands.
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