New Insights Into Housing (In)security for DC’s Lowest-Income Residents

July 24, 2014

Nobody who lives in the District of Columbia — or follows housing issues — needs to be told that rents are too damn high here. Nor that they consume an inordinate portion of low-income residents’ budgets.

A just-released study by the Urban Institute is nonetheless newsworthy because it provides many and diverse figures on our affordable housing situation, along with details on our homeless population and its needs — met and unmet.

The full study covers not only the District, but other jurisdictions in the Washington metro area. So we get comprehensive figures and interesting opportunities for comparisons.

As is always the case, however, the figures for the District understate affordability problems because they’re based on the median income for the entire area.

For the 2009-11 period covered by the housing portion of the study, that was $106,100 for a family of four. By way of rough comparison, the median income for four-person D.C. families was $84,400 last year.

But we’ve got to go with what we’ve got. So here are a few of the many things one can extract about what the study labels housing security in the District. As you’ll see, it might more appropriately be labeled housing insecurity for the lowest-income residents.

Housing Burdens

The Urban Institute, like most analysts, uses the U.S. Department of Housing and Urban Development’s affordability measures.

HUD sets 30% of household income as the affordability cut-off. A household that pays more is said to have a housing-cost burden. A household that pays more than half its income has a severe housing-cost burden.

Slightly more than half of all District households were, to some degree, cost-burdened — and 28% severely so. But housing-cost burdens were vastly more common for the District’s 63,700 or so extremely low-income households, i.e., those with incomes at or below 30% of the area median.

All but 16% of them paid more than 30% of their income for housing — generally rent, plus basic utilities, though 18% were classified as homeowners.

And nearly two-thirds (66%) had a severe housing-cost burden. This is nearly three times greater than the percent for very low-income households, i.e., those in the next income tier.

Rental Housing Availability

The rental housing market was — and still is — extremely tight. Of the total rent units the Urban Institute identified, only 8% were vacant during the 2009-11 period.

So the old law of supply and demand helps explain the housing-cost burdens for lower-income residents, as well as the cost burdens for some much better-off households.

Only 26% of the units rented for less than $800 a month — roughly what an extremely low-income family of four could afford.

But the story is more complicated. About a third of these units were occupied by higher-income households. And only 0.9% of them were vacant.

So the rental housing market was shy 22,100 units that extremely low-income families could have lived in without a cost burden.

More units affordable for very low-income households were occupied by those with higher incomes. But because the District has more such units — and because more were vacant — the Urban Institute finds no shortage.

Subsidized Housing

In 2012, HUD subsidized roughly 33,900 housing units in the District. Housing Choice (formerly Section 8) vouchers accounted for 41% — some of them vouchers awarded to developers so they could charge affordable rents and some given directly to eligible households, which could then rent on the open market.

Public housing accounted for an additional 25% of the affordable units. Subsidies for the remaining 11,600 units came from a mix of programs. It’s not clear that all these units were affordable for the District’s lowest-income households.

What is clear is that there were far more extremely-low income households than HUD-subsidized units — and that the District’s own voucher program fell far short of closing the gap.

Looking only at renter households, the Urban Institute reports 43 subsidized units for every 100 extremely low-income households during the 2009-11 period. This, recall, is before HUD’s budget got hit by sequestration.

What’s Missing

As informative — and depressing — as all these numbers are, they tell only part of the story. We need also to consider where the affordable units were.

As the Urban Institute says, “they may not be in neighborhoods of opportunity that were transit accessible, close to jobs, or had amenities like grocery stores.” For the District, this is probably more apt now as gentrification has spread.

We need also to consider whether the affordable units were livable. The recent Washington Post exposé of conditions at Park Southern tells us that some surely weren’t. Leaks, mold, rotting dead birds on the stairwell, etc.

Not a unique case, by any means, as a recent NPR story indicates.

What Now?

It would be nice to end this long post with a policy solution. The best I can do isn’t good enough.

Clearly, as the DC Fiscal Policy Institute says, we need to invest more in affordable housing. Like the Urban Institute, it also says we should increase the total number of housing units, since this could relieve the demand pressures that are driving up costs.

The”we” here ought to be the federal government, as well as our local government and private sources. But it almost surely won’t be any time soon — even if the House doesn’t altogether get its way on what the HUD budget should be.

We need also to help extremely and very low-income households join the higher income tiers. An obviously large and varied agenda here.

 


Should DC Support More Affordable Housing … or Less?

July 7, 2014

The DC Council has two bills pending that force decisions on how — and to what extent — local taxpayer dollars should be used to create and preserve affordable housing in our increasingly unaffordable market.

One bill quite clearly would increase the stock of housing affordable to low and moderate-income residents. The other would, over time, have the opposite effect, though it’s doubtful that’s what the sponsors intend.

Leveraging Public Land

A bill introduced by Councilmember Kenyan McDuffie would require private-sector developers that buy or lease District-owned land for multi-family housing to make a specific portion of units affordable for specific categories of low-income residents.

The requirements would apply to both rental housing and condos, but in both cases, only those with 10 or more units.

For housing near a Metro station, major bus route or streetcar line, at least 30% of the units would have to be affordable. A 20% minimum would apply to housing less convenient to public transit.

Those who know how dicey affordable housing requirements can be will be pleased to know that the bill sets quotas. These are all based on the customary 30% of household income and, as is also customary, the Washington-area median income, adjusted for family size.

The affordable unit requirements differ according to the type of housing, as well as where it’s located.

For rental housing, 25% of the set-aside units would have to be affordable for what the bill defines as very low-income households — those whose incomes are no greater than 30% of the AMI. (Those familiar with U.S. Department of Housing standards know them as extremely low-income households.)

The rest of the units would have to be affordable for households in the next tier — 31-50% of the AMI. For a four-person household, this would currently mean a maximum monthly cost of about $1,338 a month.

Half the set-aside for ownership units would have to be affordable for households in this tier. The remainder would have to be affordable for households with incomes between 51% and 80% of the AMI.

These restrictions would remain in place “for the life of the building,” which I assume means for as long as it’s used for housing. (Keep reading to see why this is so important.)

The District would subsidize the affordable units by selling or leasing the land at less than its appraised value. Developers could request waivers from the affordable unit requirements if that, plus other subsidies wasn’t enough.

Cutting Back of Affordability Requirements

A bill introduced by Councilmember Anita Bonds would change rules designed to ensure that condos and single-family dwellings developed with Housing Production Trust Fund subsidies remain affordable for a goodly number of years.

As things stand now, owners of subsidized units generally must sell them at a price that’s affordable to other people in the same income bracket until 15 years have passed — or longer if their purchase agreement says so.

Once the time limit expires, they can sell to anyone at any price. But they must reimburse the Trust Fund for the subsidy that made the home affordable for them. The time limit drops to 10 years if the home is in a high-poverty neighborhood. The repayment requirement remains the same.

The Bonds bill would cap the affordability limit at 15 years, making some types of homeowner affordability programs ineligible.

More importantly, it would reduce the affordability requirement to five years for homes in “distressed neighborhoods.” Owners could then sell at whatever price they could get.

They’d still have to repay the Trust Fund. So it might seem that the subsidy were merely being recycled — repaid by one owner, available for the next.

But in a housing market like the District’s, the second subsidy would often have to be larger. And the cost of subsidizing the creation of a new affordable unit would generally have to be larger yet.

So the repayment wouldn’t fund a replacement in either case — or at least not in the same neighborhood as the unit that got sold at market rate. At best, the Trust Fund would be re-creating affordable homeownership units, rather than expanding the shrunken stock.

Which brings us to the second big problem with the Bonds bill — the definition of “distressed neighborhoods.” It would reduce the definition used for the current 10-year time limit from a 30% to a 20 % poverty rate.

For technical reasons, the rate wouldn’t reflect the current poverty rate, as the DC Fiscal Policy Institute’s Jenny Reed has explained. So we’d have many “distressed neighborhoods” that haven’t been distressed for some time, e.g., Columbia Heights, Logan Circle, parts of Penn Quarter.

The five-year limit would also apply to neighborhoods that will soon be wholly redeveloped — and pricey. I see condos sprouting up near the Navy Yard every time I walk down that way.

The end result would be affordable housing losses in nearly 40% of the District’s Census tracts — the technical definition of “neighborhoods.”

And as housing advocate Angie Rodgers points out, it’s not only prospective homeowners who’d be affected. Any new Trust Fund money invested on their behalf would mean less to subsidize affordable rental housing, which we’re already so short on.

Preserving the current affordability requirements wouldn’t deny homeowners the opportunity to build wealth, as homeownership is said to do. It would merely ensure that future homeowners can benefit from subsidies we’ve paid for to preserve some modicum of diversity and opportunity in our community.

The current law probably isn’t the best way to do this, as Urban Institute housing and community policy expert Brett Theodos (and others) have explained.

But it’s a whole lot better than shrinking the time limits — and over-defining neighborhoods that prospective homeowners might shy away from if they couldn’t turn a maximum profit for 15 years.


HUD Budget Bill Shortchanges Homeless and Affordable Housing Programs

May 29, 2014

The DC Housing Authority figures it will need $1.3 billion to preserve all the public housing units it operates. It’s not expecting anything like that any time soon, as Dena Levitz at The Atlantic reports.

In fact, its share of what Congress provides for public housing development and maintenance is currently about $11 million less than in 2000. And it’s short on funds for operating costs too.

At the same time, DCHA has an affordable housing waiting list so long that it decided to close it somewhat over a year ago.

This reflects an acute shortage of federal funds not only for public housing, but for vouchers, including the kind that extremely low-income people can use to help pay market rate rents.

These shortages help explain the very high number of homeless people in the District, though they’re certainly not the only factor. We must also look to soaring housing costs and inadequate local funding for affordable housing programs.

These aren’t problems for the District alone. New York City, for example, had more than 64,000 homeless people during last year’s one-night count. There too, low-income residents face skyrocketing rents, relatively stagnant incomes, a voucher shortage and public housing in disrepair.

A nationwide study conducted four years ago estimated a $26 billion backlog in public housing capital needs. And that was before the Budget Control Act tightened the screws on federal spending — in part through sequestration.

Well, the December 2013 budget deal provided some temporary relief from sequestration. Non-defense discretionary programs, i.e., those that depend on annual appropriations, have $9.2 billion more for the upcoming fiscal year.

Yet key programs administered by the Department of Housing and Urban Development are in trouble. Homeless assistance grants and major affordable housing programs stand to lose $510 million, in inflation-adjusted dollars, under the bill the House Appropriations Committee approved last week.

The subcommittee for HUD and Transportation Department appropriations got $1.8 billion more than it had to work with last year. But this was more than offset by a projected $3 billion or so reduction in revenues from mortgages insured by the Federal Housing Administration.

The subcommittee chairman says, “Like appropriators do, we made choices.” They’ll force some very tough choices on state and local agencies — and setbacks for the homeless and other low-income people they serve.

Here are some of the specifics, summarized from a new Center on Budget and Policy Priorities brief.

Housing Choice vouchers. The 2013 across-the-board cuts forced agencies to reduce the number of households receiving rental assistance through these vouchers by an estimated 72,000 nationwide.

This year’s budget provided enough money to restore about half. But the House appropriations bill could more than undo the improvement, leaving 12,000 fewer low-income households with vouchers than before.

The problem here is partly that vouchers issued to veterans under a separate program no longer have their own funding stream and so would have to be renewed out of the overall Housing Choice budget.

That would leave agencies without sufficient funds to cover expected rent and utility cost increases for all vouchers now in use.

So they can again cut back on vouchers for non-veterans. Or they can shift the cost increases to voucher holders by freezing the value of the subsidies. One of those tough choices.

Note that we’re talking only about preserving the rental assistance Housing Choices has recently provided — not about addressing the needs of 11.3 million households that are probably paying more than half their income for rent, including at least 50,150 in the District alone.

Public housing capital investments. The House appropriations bill cuts the under-funded public housing capital fund by $100 million, leaving DCHA and other housing authorities with only half the funds they need to cover new development and renovation needs.

Public housing operations. Not enough funding for public housing operations either — about  86% of what HUD said was needed.

Agencies can cope with the shortfall in various ways, e.g., by cutting back on routine maintenance, passing on more of their utilities costs to residents, exercising their discretion to impose a $50 minimum rent on the very poorest families. More tough choices.

Homeless assistance grants. The House bill level-funds homeless assistance grants, rejecting the Obama administration’s request for additional funds to support 37,000 new units of permanent supportive housing for chronically homeless people.

It’s not clear that the $2.1 billion in the House bill would even be enough to sustain all the PSH units supported by federal funds, since it would leave at least some grant recipients with less.

What is clear is that the House bill — in this area, as well as others — dumps responsibility for a major national problem on state and local governments and on nonprofits, whose resources are already stretched thin.

HOPWA (Housing Opportunities for People with AIDS) grants. A particular special needs population would lose out under another part of the House bill. Funds that help state and local agencies provide housing for people living with HIV/AIDS would be cut by more than 8%.

That would leave this relatively small, but vital program with less than it had after sequestration — and so less able than ever to meet the needs of more than 145,000 vulnerable people who reportedly need housing assistance.

This isn’t the whole story — and happily not the end. The Senate Appropriations Committee has just decided how to parcel out funds among its subcommittees. And Transportation-HUD has about $2.4 billion more than its House counterpart had to work with.

Now let’s see what it does.

 

 

 


Another DC Affordable Housing Bill

May 26, 2014

My last post probably should have noted that Councilmember Orange and three cosponsors also have a bill to provide $100 million a year for affordable housing, though not indefinitely.

The funds would assist with construction, renovation and/or emergency maintenance. They’d be generated by bond sales — up to $1 billion over 10 years, backed by revenues from the DC lottery and other games.

The annual $100 million would be split equally among housing for seniors, homeless people, households with annual earnings between $30,000 and $60,000 and four-person households defined as low-income, based on the area median. These would currently be households with incomes up to $68,500.

The Department of Housing and Community Development is to develop a 10-year plan to implement all this, including specified details for each proposed project. Obviously extremely complex — if for no other reason, because of the overlaps among the target groups.

The Council’s Economic Development Committee will consider the Orange bill, as well as the Bowser bill I wrote about at its hearing this Thursday.


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