DC’s Housing Production Trust Fund isn’t working as it should, audit finds

Back in August, I wrote about how DC's Housing Production Trust Fund (HPTF) was not doing enough to help build or preserve affordable housing in DC. A new audit now says poor management from DC's Department of Housing and Community Development (DHCD) has meant that the HPTF is spending money on all the wrong things.

Overseen and administered by DHCD, the housing trust fund is a tool the District uses to preserve and expand the amount of affordable housing in the city. The program has provided new homes or helped keep people in already affordable housing for 10,000 households in DC.

But the most recent audit, which DC Councilmember Jack Evans requested the DC Office of the Auditor perform, says that that the fund could have helped a lot more families with the money it spent from 2001 to 2016, and also that it could have done a much better job ensuring that money actually went towards the city's neediest families, which the law requires the trust fund to do.

Income requirements were not enforced consistently

The audit says that DHCD was never very consistent in screening families to make sure that they actually earned the salaries required to live in affordable housing. Those salaries are based on a calculation known as Area Median Income (AMI). The AMI for a family of four in Washington is $109,200, and families must earn an amount below a set percentage of that to qualify to live in a home that comes from the housing trust fund (for example, some properties set that percentage at 50% AMI, or around $54,000).

It turns out that in a number of projects that got trust fund backing, the process for screening families was different every time. One family may have only been asked to provide two pay stubs, while another needed to provide six months’ worth of payroll information. Bank statements (which could reveal extra sources of income) were not always required, making it easy to hide money from DHCD.

Further, some places would only check a family's total income once and never bother with it again after that. That means if a family was making $50,000 annually but somebody got a big raise (or someone who is unemployed at the time they qualify but later gets a job), it’s wasn’t hard for them to benefit from a program for low-income people when they weren’t actually low-income anymore.

One tenant had a day job that was used to verify their income, but they had a lucrative side business selling things through Etsy that could earn them an extra $1000 a month, putting them over the limits. Others, meanwhile, were told they'd be charged a market rent.

This is of course a problem, because upping the rent to market prices effectively removes a once subsidized, affordable unit from the program during a severe shortage of affordable homes in the city.

Is anyone building affordable units with DHCD money? Not always…

The other big problem concerns some of the developers that housing and community development works with when it comes to building or renovating housing. The HPTF is meant to provide “gap financing” for developers so that their projects can include affordable units; once they receive the funding, they're obviously expected to use it to build those units.

Except that some developers haven’t kept their promises. For example, one developer who agreed to provide 21 units for low-income seniors along Kennedy Street NW simply didn't do what they had agreed to.

In other cases, some units are inhabited by people making more money than the income limits allow. Some are just left vacant or used for something other than housing low income families, like offices or extra space for the city's mental health wards.

What does this all mean for the HPTF?

It's not that DC’s affordable housing tools are ineffective on their own. The District has been able to do a lot of good work when rules are clear and someone enforces them.

But DHCD simply was not doing the latter, allowing people who didn’t need the help to benefit from HPTF funding.

DHCD, for its part, has responded to the audit saying it plans or has started to comply with all of the report’s recommendations. But it will take time to get the HPTF to a place where it is more effective. The District has a long way to go to meeting its affordable housing goals.