Will Tenant Purchases Continue?
It's that time of year again: When various interest groups cycle through the Wilson Building to justify their spending priorities, especially if they're being cut in this year's budget. Most of them actually got off okay, given that Mayor Vince Gray decided to raise some taxes (or "revenue enhancements") rather than taking the entire $322 million shortfall out of programs and services; the budget overall grew by 1.7 percent.
One of the bigger exceptions, however, is housing and homelessness programs. For the last couple of years, the Housing Production Trust Fund—which is used for loans to help tenants purchase and renovate their buildings when they come up for sale—sank to almost nothing after the tanked real estate market cut off the deed transfer taxes that supply the Fund. Since sales are on the rise again, advocates hoped that the fund might be substantially restored. Again, they've been disappointed, and voiced their dissatisfaction to Councilmember Michael Brown at a roundtable on tenant purchases yesterday.
Here are the numbers: On the budget, it looks like the Fund has $65 million in it, which isn't too shabby. But according to the Coalition for Nonprofit Housing and Economic Development, $29 million of that is a fund balance left from 2011 that will be used to cover projects that have already been approved, another $4 million is loan repayments and interest for 2012, and $5.4 million is for the Department of Housing and Community Development's administration of the fund.
On top of that, $18 million is being transferred to the D.C. Housing Authority to cover the cost of existing Local Rent Supplement Program vouchers (a kind of local Section 8 program that helps low-income tenants pay rent). That leaves a grand total of $8.9 million for housing preservation and tenant purchases in 2012–which doesn't go very far in this business.
Why is leaving the Trust Fund mostly empty a problem? Part of the reason: Timing is important. There's only so much affordable housing in the city, and once it goes up for sale, tenants have between 30 and 45 days to indicate interest in exercising their right of first refusal under the Tenant Opportunity to Purchase Act (TOPA). According to the Latino Economic Development Corporation, 72 apartment buildings with 2566 units have received offers of sale since September 2010. Many of them are still affordably priced, given that the real estate market is still coming out of recession—but they won't be for long. So literally every day that money isn't available in the Trust Fund, D.C. loses a chance to help long-term residents stay in the city. Banks and non-profit lenders are willing to make bridge loans, but only if they know that Trust Fund money will be available to pay them back.
The current situation will likely change somewhat in the budget the council sends back to the mayor. In the mean time, at yesterday's legislative meeting, Brown attempted to circumvent the process and move $24.16 million in increased deed transfer taxes as an emergency to help fund four projects—including Shaw's already-underway Progression Place, Trinity Plaza in Ward 8, and new rental housing on the already-demolished Parkside Additions—plus $9.2 million for the Deputy Mayor for Planning and Economic Development to do as he sees fit. But other councilmembers on the dais threw a fit that they hadn't heard about the appropriation (though Councilmembers Jim Graham and Muriel Bowser asked if part of DMPED's money could go to projects in their wards) and Brown withdrew it for further discussion.
So anyway, we'll see how all this shakes out.
UPDATE, 12:50 p.m. - Councilmember Brown had this to add:
As you are aware, by your mention of the demolished Parkside Addition, these projects have already been approved. Their approval came during the Fenty administration and went through the standard Housing Production Trust Fund pipeline RFP. Yesterday’s emergency bill was done at the request of the Mayor and the funding came from unexpected additional deed and recordation taxes collected. I gladly submitted the bill because I do not want pre-approved projects to be delayed by governmental red tape.