Update: Chairman Phil Mendelson announced Friday he will propose restoring $7.5 million to the Housing Preservation Fund, or half the cut.
Displacement and housing affordablity are serious problems for DC, as has been documented in numerous recent reports, and many residents’ own experiences. The 2020 budget as revised by the DC Council, however, will cut one tool that provides an opportunity for residents to stay in their homes with affordable rents.
That tool is the Affordable Housing Preservation Fund (AHPF), and it leverages private dollars to provide timely financing to low-income tenants who are determined to remain in Washington, DC.
What is the AHPF?
The AHPF is a revolving loan fund that serves as a key tool for residents to acquire their building and to keep rents affordable for future generations. It works in tandem with DC’s Tenant Opportunity to Purchase (TOPA) law. TOPA provides the right to tenants who organize to buy the building they live in, and the Preservation Fund provides the cash.
Under the AHPF, the District’s investment leverages private dollars at a 3:1 ratio, which currently means the AHPF has $80 million in total financing available to preserve affordable housing at risk of being lost. AHPF loans generate a 10-year affordability covenant which is typically extended to 40 years at the permanent financing stage. Another important aspect of the AHPF is the revolving nature of the fund: dollars recycle back into the fund once projects secure permanent financing.
The fund is managed by two Fund Managers: my organization, the Local Initiatives Support Corporation (LISC), and Capital Impact Partners.
One of six recommendations from Mayor Bowser’s 2016 Preservation Strike Force, the AHPF was funded with $10 million in the FY18 budget, and another $10 million in FY19. The mayor proposed $15 million in next year’s budget, but the DC Council recently voted on a version of the budget from Chairman Phil Mendelson with the funding zeroed out. The council could propose to restore funding for this critical anti-displacement tool before the final budget vote Tuesday.
Why is AHPF important?
The one shot to preserve a building with affordable rents is when it goes up for sale. Ask Jennifer from Cedar Street NW. Sometimes, tenants are offered cash to walk away or issued threats to clear out. Some sellers simply displace by neglect. The AHPF allowed Jennifer and her neighbors to preserve their homes by ensuring that they could afford to purchase the building they live in.
879 homes have been preserved since the AHPF went into effect last summer. Buildings that tenants have purchased are located city-wide, from Brightwood Park to Barry Farm to Adams Morgan. Now, over 1,000 residents of these buildings are confidently rooted, with ties to their communities and jobs, and have themselves fought to preserve affordability. The vast majority are lower-income, and many have resided in their homes for 30 to 40 years.
Leverage and recycling
Two of the first AHPF projects have secured permanent financing commitments from the Housing Production Trust Fund, and will deliver long-term affordability. The permanent financing will enable the AHPF funds to be recycled into new projects. Given the 3:1 leverage and the way that the funds revolve, the AHPF will contribute more than $80 million toward preserving affordable housing in DC. Eliminating funding for the AHPF in 2020 means, at minimum, a $60 million cut in funds to preserve affordable housing.
It’s expensive to build new affordable housing. Preserving existing housing, for existing residents, at prices they can afford, is widely acknowledged as one bulwark against displacement. The Affordable Housing Preservation Fund has, in less than a year, ensured that almost 900 units across the city will remain affordable. Should the council reinsert the mayor’s proposed $15 million to support the fund before it goes to vote on Tuesday, many more District residents will have the opportunity to stay in the city that they call home.