Slump Cuts Flow of Revenue to Trust Fund
Tuesday, October 21, 2008
A special account the District government uses to help pay for affordable housing has been caught in the economic downturn and is projected to generate $29 million next year, the lowest amount in six years, according to a report released yesterday.
The Housing Production Trust Fund, which receives 15 percent of deed taxes collected on property sales in the city, depends on the vitality of the real estate market. The fund, created by a 2002 city law, has helped build 4,000 units of affordable housing in the past six years, with an additional 1,600 under construction and 3,300 in development.
But as the market has slowed, part of a national trend, the trust fund's revenue has dropped. This year, the account took in just $34 million, compared with the record $59 million collected in 2007, according to the report from the nonprofit D.C. Fiscal Policy Institute.
The report was released on the same day that dozens of low-income residents and housing advocates filled the D.C. Council chambers to testify in favor of legislation to guarantee that the government put either $100 million or 15 percent of the deed taxes, whichever is higher, into the trust fund each year. Some of the testimony was tear-filled and passionate as residents said the fund helped save their apartment buildings from condominium conversions during the housing market boom.
"I'm sorry. I'm nervous. This is my first time talking to you," said Gilma Merino, who cried as she described herself as a legally blind single mother who was helped by Jubilee Housing, a nonprofit group that gets money from the fund.
Many people wore stickers reading, "Stabilize the Trust Fund," a reference to the legislation, which is called the Housing Production Trust Fund Stabilization Amendment Act.
Council member Marion Barry (D-Ward 8), who sponsored the bill, said that the city had found the money for other programs and that the trust fund should be no different. He talked about how the government rallied around the Georgetown public library and Eastern Market after they were ravaged by fire last year.
"If we could find $25 million just like that, we should find it for housing," Barry said.
In an interview, he said the city must fill the gap that is being caused by the economic downturn. "It's clear that the need is 10 times more than the money that's out there," he said.
Barry also said in the interview that he was disappointed that the administration of Mayor Adrian M. Fenty (D) had failed to provide a witness for the hearing, which drew about 85 people.
Mafara Hobson, a spokeswoman for Fenty, said the administration submitted written testimony from Leila Finucane Edmonds, director of the Department of Housing and Community Development.
"The Housing Production Trust Fund is a valuable mechanism by which we can support the production and preservation of affordable housing," Edmonds wrote. "However, due to economic times, we do not believe that the proposed [bill] is a sound alternative."
The city is facing a $131 million budget gap in the current fiscal year.
The Fenty administration and the council were at odds over the trust fund before Barry's legislation.
In December, D.C. Council Chairman Vincent C. Gray (D) blocked Fenty's plans to use part of a revenue surplus for a program for the homeless and had $30 million placed in the trust fund.
Yesterday, housing advocates said they need every dollar. According to the report, each $1 the city contributes can leverage $3 in private investment.
M. Craig Pascal, senior vice president of community development banking for PNC Bank, testified that the bank wants to invest in affordable housing projects but that nonprofits, unable to get city funding, are hesitating to participate. "We have not closed a deal since June," he said. "It's really come to a halt."
The Housing and Community Development Department has not held a request for proposals since November 2007, according to the report.