Bread for the City Attorney Testifies on Transparency and the Housing Production Trust Fund

Testimony of Dimitri McDaniel, Staff Attorney, Bread for the City Legal Clinic

Performance Oversight Hearing

Committee on Housing & Executive Administration

Department of Housing and Community Development & Housing Production Trust Fund

January 19, 2022

Thank you for receiving testimony today, Chairman Bonds and committee members. My name is Dimitri McDaniel. I am a staff attorney at Bread for the City, and I am pleased to offer testimony to the Committee on Housing & Executive Administration during this Performance Oversight Hearing. Among the many services that Bread for the City provides to District residents, we also offer free legal services to residents with low incomes. Our legal services include representing low income tenants during multifamily redevelopments. These tenants are regularly impacted by redevelopment projects, which oftentimes rely on gap financing from the Housing Production Trust Fund (HPTF) and are made financially viable by the Low Income Housing Tax Credit. Both resources are administered by the DC Department of Housing and Community Development (“DHCD”). As is the purpose of today’s oversight hearing, my testimony will narrowly focus on DHCD’s administration of the Housing Production Trust Fund. 

DHCD’s Failure to Meet Statutory Requirement

As has been reported widely, for years DHCD has failed to meet the statutory requirement of directing 50% of HPTF resources to the production of extremely low income housing units. Extremely low income housing units are units specifically for individuals and families at the 0-30% area median income (“AMI”) levels. Unfortunately, DHCD has not provided a concrete plan for how the agency will comply with the statutory requirement. During last year’s revision of DHCD’s Qualified Allocation Plan (“QAP”), advocates recommended that DHCD commit a greater point allocation to projects that will produce more extremely low income units. However, DHCD rejected this recommendation with no explanation or rationale for its decision. Recently, the Office of the Inspector General’s report recommended that DHCD should “[d]evelop a plan to evaluate DHCD’s current selection criteria to better align selection criteria with statutory requirements to produce and preserve more units for extremely low income households.” DHCD agreed with this recommendation, but offered no plan to accomplish this vital goal. While DHCD has made progress to meet the statutory requirement in the past three years, failure to make concrete actions, like committing to a revision of its QAP or providing a plan publicly on how it will come into compliance, remains deeply troubling. 

Additionally, the Office of the Inspector General’s report calculated that, as a result of DHCD’s misappropriation, nearly $81.7 million went to the development of higher income units rather than the production of 0-30% AMI units, in violation of DHCD’s statutory obligations. While we can all agree that the District needs greater affordable housing at all income levels, the rationale behind the statutory requirement is to address an ongoing lack of affordable housing at the 0-30% income levels. With last year’s historic HPTF investment of $400 million, approved by this Council, it is imperative that DHCD makes a commitment to comply with the law. The statutory requirement is not arbitrary and must be treated as more than a guideline.

The residents of the District of Columbia require more housing below the 50% AMI level. In a 2015 report funded by the Office of the Deputy Mayor for Planning and Economic Development, the Urban Institute predicted that by 2020 the District would have between “22,100 and 33,100 more households with extremely low incomes.” This prediction was prior to the COVID-19 public health emergency, which has exposed and exacerbated the need for housing for District residents at the extremely low income levels. In a city where the average rent for a one-bedroom apartment now tops $2,000 per month, households with low and moderate incomes — many headed by people of color — are being left behind. The result of this deepening affordability crisis is that low-income families are paying far too much of their already limited incomes for housing. 

Increase Transparency of Housing Production Trust Fund

As has been demonstrated by the continuous misappropriation of HPTF resources, greater transparency and further public engagement is necessary to ensure the allocated funds are going to the proper developments. In the Office of the Inspector General’s report, the agency boldly noted it “cannot and will not select projects simply based on a formula to achieve the statutory buckets” despite that formula being the product of public engagement, Council input, and the realities of the District’s changing demographics. DHCD continues to egregiously ask for everyone to trust the agency’s selection of projects, even though the agency has never satisfied its statutory obligation for extremely low income housing. District residents, including Black and brown residents cannot wait for the agency to comply with the law. The Office of the Inspector General’s report highlighted that DHCD promoted less highly scored projects, even though there were more highly scored projects that would have met the agency’s statutory goal. Again, this is not the first year that DHCD has supported lower ranked projects over higher ranked projects without a clear rationale for why. 

Not only should DHCD make meeting the statutory requirement a priority in the upcoming year, but also should publish a plan for how the agency intends to follow the law. If DHCD is unable to reach the statutory requirement due to inadequate project-based LRSP, then the agency should make their need clear to the Council and the public rather than leaving vague any difficulties. 

Additionally, this Council can bring the agency into compliance by passing the Housing Production Trust Fund Transparency Amendment Act of 2021, which a majority of the Council members have already signed on to. The Housing Production Trust Fund Transparency Amendment Act of 2021 would provide necessary transparency by moving away from the black box of the current DHCD evaluation process. After each request for proposal is reviewed and evaluated, the agency will issue a set of recommendations to the Director as to which proposals should receive funds. 

Unlike the current process where proposals are selected without explanation or strict consideration for the scoring criteria, if the Director were to select a non-recommended proposal, then the Director must issue a written justification explaining that decision. The written justification must provide a detailed explanation of any additional criteria the Director determined to be relevant. DHCD will also have to publicly release a comparison of the recommended and selected proposals. Additional disclosures include:

  • the planning areas served; 
  • total number of housing units; 
  • income levels served per unit; 
  • period of affordability;
  • number of bedrooms in each unit; 
  • amount of funding requested by subsidy type;
  • the final signed Decision Memorandum from the Director; and 
  • the agency’s written justification for any differences from the Department’s recommendations. 

In contrast to the current process, this legislation will require DHCD to thoroughly explain its decisions in a way that will hopefully bring the agency into compliance. Swiftly passing this piece of legislation can go a long way to holding DHCD accountable and bringing the HPTF into compliance with statutory requirements.

Conclusion

In conclusion, we are pleased that DHCD has made a commitment to working towards meeting the statutory requirement of directing 50% of HPTF resources to the production of extremely low income housing units (at the 0-30% AMI levels). DHCD should take concrete actions, like committing to a revision of its QAP or providing a plan publicly on how it will come into compliance. Additionally, working with Council on passing and implementing the Housing Production Trust Fund Transparency Amendment Act of 2021 will go a long way to demonstrating the agency’s willingness to improve. Thank you for your consideration of this testimony, and I will be happy to answer any questions of the committee.

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