Affordable Housing Crunch for Lowest-Income Renters

March 9, 2017

Another year, another report on how extraordinarily unaffordable housing is for low-income people nationwide and in every state, as well as the would-be state of the District of Columbia.

Affordability Basics

The National Low Income Housing Coalition’s overview of the “housing gap” focuses on rental units that the lowest tier in the official housing policy lexicon could afford and actually move into.

These are extremely low-income households — those whose incomes are at or below 30% of the median for the area they live in. NLIHC includes a sub-tier it introduced several years ago — deeply low-income households, whose incomes are half that.

Housing affordability for both, as generally means costing no more than 30% of income. So, for example, a family with one full-time, year round worker paid the federal minimum wage would have a gross income of $15,080 and thus could afford, at most, $377 a month for rent.

Acute Affordable Rental Shortage

As of 2014, the survey year NLIHC has used, there were roughly 10.4 million ELI households in the country — 24% of all renters. They could hope to rent, at an affordable rate only 3.2 million units. Virtually no affordable units for the DLIs — just about 700,000.

The shortage is surely greater than what NLIHC could report because the Census Bureau survey it uses doesn’t reach homeless people. So what we have instead are households that did rent, but mainly way above what they could afford.

Nearly three-quarters of the ELIs were severely cost-burdened, i.e. spent more than half their income for rent, plus basic utilities. A mere 7% of the DLIs weren’t so cost-burdened — not to say they weren’t cost-burdened at all, however.

Far From Enough Money Left Over for Other Needs

We can readily fathom what the cost burdens mean. Our minimum wage worker family would have, after payroll taxes, no more than $590 a month and change for all other expenses.

Low-income households with, at most, 50% of their income left spent, on average, 38% less for food and 55% less for health care than comparable households without cost burdens, the Harvard Joint Center for Housing Studies reports. Those most likely to face such trade-offs are households with children and seniors well past retirement age.

Not hard to see the long-term health consequences —  and others for those children, e.g., reluctance to form trusting relationships, lags in learning the basic skills schools measure.

These and others put them at higher risk for poverty as adults, perpetuating the cycle of severe cost burdens — or worse.

Many Shortage Drivers

Both NLIHC and the Joint Center cite diverse reasons for the affordable housing shortage, e.g., foreclosures during the recession, a broader preference for renting, developers’ understandable preference for units they can charge much more for.

At the same time, rental units subsidized by Housing Choice (formerly Section 8) project-based vouchers, i.e., those that cover all but 30% of rent, plus basic utilities for specific units, are disappearing far faster than they’re being replaced.

NLIHC cites a nationwide loss of 46,000 such units over the last decade — some demolished, others no longer affordable because the contracts that bound the owners to keep their rents within the limits HUD set expired.

Add to these roughly 150,000 public housing units lost — most, though not all for ELI households. The Joint Center estimates the loss at 10,000 every year.

This should come as no surprise to anyone who’s followed federal funding for major repairs and renovations. A study for HUD estimated the total funding need for such capital investments at more than $25.6 billion in 2010.

The total grows annually at roughly $3.4 billion, as costs rise, more units deteriorate and deteriorated units get worse, leading ultimately housing losses, but perhaps in the meantime units egregiously below any reasonable standard.

Since the 2013 across-the board budget cuts, funding for capital investments has remained virtually flat at about $1.9 billion. This isn’t the only reason so many units became so unlivable that public housing authorities closed them. NLIHC cites others, but the bottom line is lost units affordable for ELI and DLI households.

The supply-demand dynamic includes another factor. Higher-income households live in nearly half the units the ELIs could afford. If the ELIs could actually move into those units, the gap would shrink by about 2.6 million.

Now this is only one side of the story, of course. If you’ve got more income, you can afford more for housing. But incomes generally aren’t keeping pace with rent increases — quite the contrary. While rents rose, on average 7% between 2001 and 2014, incomes dropped 9%.

This average includes households that had plenty of money. Those in the bottom fifth, where we’d find the ELIs and DLIs had to cope with losses through at least 2015. Sparse federal housing assistance for them. Only about a quarter of low-income households get any at all.

This is perhaps especially notable because Congress has restored and supplemented the funding needed to offset the cut that caused public housing authorities to withhold or cancel nearly 60,000 unused tenant-based vouchers, i.e., the kind recipients can use to rent at market rates and still pay only 30% of their income.

We’ve got policy remedies, as well as reasons for the gap. But at this point, we can foresee threats to even sustaining current funding levels. More than I can do any justice to here.

But since this is supposed to be a policy-focused blog, I’ll return to them shortly.


DC Moves Forward on Affordable Housing. House Republicans Pull Back.

May 18, 2015

Here in the District of Columbia, we’re hopeful about prospects for more affordable housing, especially for our very lowest-income neighbors — both those homeless now and those at high risk because they’re paying at least half their income for rent.

The Mayor’s proposed budget largely accounts for these hopes. Meanwhile, our Republican neighbors on Capitol Hill have decided to put a damper on our progress — and the progress of communities nationwide.

National Housing Trust Fund Defunded

The Mayor’s proposed budget would dedicate $100 million to the Housing Production Trust Fund — our largest source of public financial support for projects to build and renovate affordable housing.

This would double the amount the Fund has for the current fiscal year and probably expand the District’s affordable housing stock by 1,000 or more units, the DC Fiscal Policy Institute reports.

The District could have counted on a share of the revenues that at long last were to flow to the National Housing Trust Fund. But the House subcommittee responsible for the U.S. Department of Housing and Urban Development’s appropriations raided those revenues.

A bit of budgetary legerdemain here. Basically, the subcommittee cut funds for the HOME program, which provides grants to state and local governments for a wide variety of activities related to housing and home ownership.

But it then partially offset the cut by allocating to HOME all the funds that were supposed to go to the Trust Fund. And for reasons not altogether clear to me, it tucked into its bill a provision prohibiting any other funding for the NHTF.

The defunding — and the under-funding I’ll discuss below — were approved by the full Appropriations Committee last week, on a straight party-line vote.

So much then, so far as the majority’s concerned, for funds intensively targeted to rental housing for extremely low-income households, as only 40% of the District’s Trust Fund resources must be.

Federally-Funded Housing Vouchers at Risk

The Mayor’s proposed budget would expand the Local Rent Supplement Program — the District’s locally-funded version of the federal Housing Choice (formerly Section 8) voucher program.

LRSP would get an additional $6.1 million — $3.7 million for tenant-based vouchers, which go directly to extremely low-income households so that they can afford to rent at market rates, and $2.4 million for project/sponsor-based vouchers, which help cover the operating costs of housing that’s affordable for these households.

But it’s doubtful the DC Housing Authority, which administers both LRSP and Housing Choice, will have more vouchers to award.

The House HUD appropriation reduces the funding local housing authorities will have to renew Housing Choice vouchers. They’d be shy a total of $183 million of what HUD estimates they’d need to sustain all vouchers now in use.

Here in the District, about 280 fewer families would receive Housing Choice vouchers, according to a White House fact sheet. If accurate, this means that DCHA would have to retire even more vouchers than it did after the across-the-board cuts known as sequestration.

DCHA and other housing authorities may face similar problems with the contracts they’ve awarded to affordable housing projects. The President’s proposed budget included HUD’s best estimate of the cost of renewing all such contracts. The House HUD appropriations bill falls $106 million short of that.

Further Losses in Habitable Public Housing

A nationwide study conducted for HUD five years ago found a $26 billion shortfall in the funds needed to repair and renovate public housing units. DCHA alone figured it would need $1.3 billion to preserve and redevelop all the units it manages.

That was about a year ago, not long before Congress level-funded the public housing capital fund, leaving it with $625 million less than it had when the HUD study produced its shortfall estimate. And level-funding doesn’t translate into the same level and quality of goods and services, as all of us with personal and household expenses know.

The House Appropriations Committee has nevertheless cut funding for the capital fund by $194 million. Hard to see how this wouldn’t further increase the number of public housing units left vacant — or demolished — because they’re egregiously substandard or so damaged by fire, flooding and the like that repair costs exceed available resources.

Squeeze on Homeless Services

The Mayor’s proposed budget includes a range of investments to move the District forward toward the goal of making homelessness in the District “rare, brief, and non-recurring,” as the new Interagency Council on Homelessness strategic plan envisions.

Her budget also includes a more realistic estimate of the costs of providing emergency shelter for families during the winter months — a refreshing change from the past few years, when the Gray administration minimized family shelter needs and then had to shift funds from other human services programs to cover the costs of motel rooms.

As in the past, local funds would supply most of the homeless services budget. But the District also expects a small increase in homeless assistance funding from HUD.

The House Appropriations Committee would, in fact, provide a small, increase for the grants — $50 million more than approved for this fiscal year. For all intents and purposes, however, the grants would, at best, preserve the status quo.

No additional money to help communities achieve the goals set by the U.S. Interagency Council on Homelessness — a source for the District’s own ICH goals.

And lest I haven’t rained on this parade enough, the Mayor’s plan to expand permanent supportive housing includes an as-yet unreported number of Housing Choice vouchers supplied by DCHA. So we could be looking here at a robbing Peter to pay Paul.

Not the District’s fault. It’s what the Republican Congressional majority chose when it decided not to lift the caps imposed by the 2011 Budget Control Act, but instead to boost defense spending through another bit of budgetary legerdemain.

None of this is yet a cause for hand-wringing, though teeth-gnashing seems appropriate. A bill passed by one appropriations committee is a long way from becoming an agency’s budget.

But we’re a long, long way from a HUD budget that would meaningfully support the District’s commitments to more affordable housing and a lot less homelessness.

 

 

 


DC Affordable Housing Program Needs Funding Guarantee

May 22, 2014

So Mayor Gray kept his promise to invest $100 million a year in affordable housing — or so it seems. The DC Fiscal Policy Institute reports that his proposed Fiscal Year 2015 budget includes a total of $145 million for affordable housing programs.

This includes some that I personally wouldn’t put in the bucket, e.g., funding to help homeowners deal with lead hazards and other housing code violations, grants to support storefront improvements in disadvantaged neighborhoods.

And as the eagle-eyed DCFPI analysts note, $5 million of the total (for the Department of Behavioral Health’s subsidized housing program) is merely money that used to be in the District’s capital budget, rather than proposed additional spending.

A lot of money nevertheless. How much of it will provide housing that’s affordable for the District’s very lowest-income residents remains to be seen. Some we know won’t.

In addition to the programs I’ve cited, there’s funding for the Home Purchase Assistance Program, a similar smaller program for D.C. government employees and a bit of money to promote homeownership in the east end of the city.

Needless to say (I hope), a couple whose annual income is less than 30% of the area median — currently $25,752 — can’t conceivably afford a house (or a condo) here.

It’s also the case, as I’ve said before, that the Housing Production Trust Fund doesn’t support only development and preservation of housing affordable for the very lowest-income residents, i.e., those with incomes no higher than 30% of the AMI.

It is, however, supposed to spend at least 40% of its money each year on housing for them. And it’s generally viewed as the District’s single most important affordable housing tool.

It not only helps finance construction and renovation, but has helped tenants buy their buildings when the owners put them put for sale — even tenants at the lower end of the income scale. This typically ensures that the housing will remain affordable for 40 years, as DCFPI explains.

So the Fund’s capacity is worrisome — and has been for a long time. We see the problem in the Mayor’s proposed budget, especially as compared to District budgets over the past several years.

In 2002, the DC Council gave the Fund an ongoing revenue stream — 15% of certain taxes collected in connection with real property transactions.

That was fine until the housing bubble burst and the ensuing recession put a damper on the commercial property market.

Then, adding injury to injury, Mayor Gray, with the Council’s concurrence, shifted money from the Fund to the Local Rent Supplement Program, i.e., the District’s locally-funded equivalent to the federal Housing Choice voucher program.

Then the city was flush with cash again. And the Mayor had gotten an earful from nonprofit developers and advocates — and from residents convened for his highly-orchestrated One City Summit.

Some months later, he committed $100 million to affordable housing. Most of it went to the Trust Fund, more than doubling what it would have had from only its share of property transaction taxes.

He now wants the Council’s concurrence to put another $30.1 million into the Fund, using part of the large projected surplus for this fiscal year. It would still have only about two-thirds of what it had last fiscal year, however.

And next fiscal year, only its dedicated tax revenues, estimated at $40 million. Or at least, that’s all anyone can count on.

The Mayor has borrowed an idea from a bill pending in the Council and put it into his Budget Support Act, i.e., the package of legislation paired with the budget proper. In his version, half of any end-of-year money left over after the District has fully funded all four of its reserve accounts would go to the Trust Fund.

Better than nothing, but no substitute for funding that’s both sufficient and reliable.

Mayor-hopeful Muriel Bowser has proposed a bill that could meet both needs. It would establish a baseline for the Trust Fund, i.e., a guaranteed annual minimum, of $100 million. The Fund would still get money from the sources the current law specifies, but also from an appropriation of general revenues if needed to maintain the baseline.

This was one of the options that the executive directors of DCFPI and the Coalition for Nonprofit Housing and Economic Development teed up in 2008, when Trust Fund revenues had dwindled.

And my heavens, they cited a bill introduced by Councilmember Marion Barry that sounds rather like the Bowser bill.  Reportedly overwhelming support from advocates and low-income residents.

I suppose we’ll see something similar at the hearing on the Bowser bill late this month. Perhaps a better outcome this time round.