The Housing Production Trust Fund: A Critical Tool for Preserving and Creating Affordable Housing in DC
Dedicating resources to the creation and preservation of affordable housing is critical to creating communities in which everyone – everywhere – can be proud of where they live. In D.C., those resources are made available through the Housing Production Trust Fund (HPTF), which provides financial assistance to affordable housing providers to build affordable rental housing, preserve expiring federally-assisted housing, and help provide affordable homeownership opportunities for low-income families.
In April, the D.C. Tax Revision Commission convened a stakeholder meeting of some real estate industry representatives, where they heard a proposal to sunset the Deed and Recordation Tax, of which 15% of its revenues flow to the HPTF. Eliminating this dedicated source of funding would greatly impede nonprofit and for-profit developers’ ability to pursue affordable housing preservation or development projects in D.C. with the same level of success and impact seen today. HPTF has been a critical source for our own development projects, assisting in the preservation and construction of six NHT properties, totaling 805 apartments, in the last ten years alone. In four of these projects, the tenant association assigned their development rights to NHT, and as part of that agreement, residents provided input into the renovation's scope and set a ceiling on rent increases for residents. The projects that NHT has undertaken using HPTF resources have resulted in greatly improved living conditions for the District’s low-income residents.
To share our support of the Deed and Recordation Tax, which serves as a dedicated source of funding for the HPTF, NHT was invited to provide written and oral testimony to the D.C. Tax Revision Committee during a June 14 stakeholder meeting. You can read our full written testimony below. We urge the Commission to join NHT in our commitment to affordable housing and maintain this critical source of resources.
Good afternoon, Chairman Williams and Members of the Commission:
On behalf of National Housing Trust (NHT), thank you for the opportunity to provide testimony to the D.C. Tax Revision Commission. My name is Carrie Fischer, Director of Real Estate Development at National Housing Trust.
For over 35 years, National Housing Trust has been dedicated to creating and preserving affordable homes to provide opportunity, advance racial equity, reduce economic disparities and strengthen community resilience through practice and policy. At NHT, we equip people and communities for a sustainable, equitable future by preserving and modernizing existing homes - and building new ones that stand the test of time. Our team brings policy, lending, real estate, sustainability, and community services under one roof, giving us the tools to make real change possible for the people we serve. We want everyone - everywhere - to be proud of where they live.
While our work spans a number of states, we are particularly active in our home community of Washington, D.C., where we work to ensure families and individuals in every neighborhood have access to an affordable, healthy and resilient home. The residents we serve are working families for whom affordable housing is a lifeline. In D.C. we serve over 1,300 extremely low-income and low-income residents, where, according to property-collected data, more than 75% of households earn less than $10,000 annually. Our properties are located across Wards 1, 2, 6, 7 and 8, serving a majority of Black and Latino/a/e households.
Today, I will speak to the positive impact of the Housing Production Trust Fund (HPTF or Trust Fund) to support our real estate development and lending work on behalf of the District’s low-income residents, and the critical role the Deed and Recordation Tax serves in creating a dedicated source of funding.
The HPTF provides critical financial assistance to affordable housing providers in D.C. like NHT, allowing us to build affordable rental housing, preserve expiring federally-assisted housing, and help provide affordable homeownership opportunities for low-income families. NHT’s preservation and development of affordable housing has been facilitated by HPTF, using these funds to fill funding gaps on our affordable housing preservation and new construction deals. Since 2013, HPTF has assisted in the preservation and construction of six NHTC properties, totaling 805 apartments. In four of these projects, the tenant association assigned their development rights to NHT, and as part of that agreement, residents provided input into the renovation's scope and set a ceiling on rent increases for residents. The preservation projects that NHT has undertaken using HPTF resources have resulted in greatly improved living conditions for the District’s low-income residents.
NHT recognizes the importance of HPTF in supporting tenant associations that are looking to exercise their Tenant Opportunity to Purchase Act (“TOPA”) rights. NHT’s Community Development Loan Fund is a primary lender of a TOPA Earnest Money Deposit (EMD) loan product that enables tenant associations to explore options to pursue their rights and preserve their building's affordability. Exercising TOPA rights requires financial resources. The EMD loan product creates a risk-free way for tenants to exercise this right and participate in the TOPA process, and for tenants to seek ownership of their homes -- a key element of economic mobility. In the last year alone, NHT has provided 14 EMD loans to tenant associations who have exercised their TOPA rights in an attempt to preserve their homes. However, the EMD loan only buys tenants the time to purchase the property themselves, or assign their TOPA rights to a developer. Without additional financial support through a resource like the HPTF, the preservation of existing affordable housing is difficult. The public benefits provided by TOPA --to provide stable tenancy for a building’s existing residents and retain affordable housing opportunities in D.C. neighborhoods for long-term and working-class residents, maintaining racial and economic diversity -- are clearly maximized when combined with an affordable housing funding resource like HPTF. TOPA promotes long-term and, where possible, permanent, affordability. With funding from HPTF, low-income D.C. residents are better able to maintain housing stability.
Without resources like the HPTF, neither nonprofit nor for-profit developers would be able to pursue affordable housing preservation or development projects in D.C. with the same level of success and impact. In fact, many policy goals and initiatives would not be possible without a commitment to funding affordable housing from the City. This includes but is not limited to Mayor Bowser’s goal of creating 12,000 units of affordable housing by 2025* as well as the Metropolitan Washington Council of Government’s analysis that the region needs to add 240,000 units of affordable housing by 2030.** Both of these goals can only be achieved through both new construction and preservation. Preserving existing properties allows new units to add to the existing stock, rather than simply filling the hole left by existing units exiting the affordable stock. Therefore, increasing the District’s stock of affordable housing necessitates both preserving existing affordable units and building new -- and it is critical that the City continue to embrace this strategy. With an annual minimum commitment of $100 million since 2010 the HPTF has played an important role as a dedicated and stable resource that nonprofit affordable housing developers can rely upon to further the goals and commitment of the City, the Mayor, and the region.
Furthermore, HPTF is seen as a national best practice for policymakers. Within our region, D.C. has been held up as an example of the impact of dedicating funds to affordable housing preservation and development, spurring a similar dedicated revenue source now used in Fairfax County, VA. Nationally, cities like Aspen, CO and Los Angeles, CA have looked to the HPTF and the mechanism through which it is partly funded -- taxes on the sale of real estate properties, here in D.C. through the deed and recordation tax -- as a model for similar affordable housing funds.
The last three years of economic changes and shocks have shown us that a dedicated source of funding for much-needed affordable housing reduces the risk associated with reliance on annual appropriations decisions. The HPTF is a resilient and valuable source of funding that ensures low- and moderate-income residents of D.C. are not victims of the volatility of the D.C. real estate market. As the City continues to recover, our tax system should look to address D.C.’s racial and economic inequities and to build widespread prosperity for all residents. Affordable housing must be a part of this plan. Housing stability is foundational to a households’ capacity to flourish. Safe, stable and affordable housing is intrinsically connected to positive life outcomes such as high school performance, job retention, physical and mental health and overall economic security. The District’s goals for improved education, healthcare and workforce development outcomes will be hampered without the meaningful investment into safe, stable affordable housing.
As my fellow panelists have spoken about today, establishing a dedicated revenue source for affordable housing through the deed and recordation tax for the HPTF was a long-term effort that required strong leadership and a substantial commitment across the real estate industry, D.C. Council and the Executive. The importance of this resource to all of us should be evident in the numerous affordable housing developers represented here today, and our shared commitment to ensure that low income residents of D.C. can continue to call this city home. Dedicating sufficient resources that will be available independent of the economic climate or the whims of the elected leaders to support the acquisition and rehabilitation of affordable housing is essential if we are to preserve our existing affordable housing, build new affordable housing and continue to serve D.C.’s vulnerable populations.
National Housing Trust recognizes the responsibility of the D.C. Tax Revision Commission to balance the needs of residents and industry organizations across the City. In this changing economic landscape, we remain steadfast in our mission to expand and preserve affordable housing options for low-income families of all sizes. We hope that the Commission shares this mission and commitment to affordable housing. Affordable housing has been a signature issue of the City, and we hope that through the deed and recordation tax, and its dedicated allocation to the Housing Production Fund, affordable housing developers like NHT can continue to provide housing stability to D.C.’s most vulnerable households.
Thank you for your time.
*12,000 affordable housing units includes affordable units that are new construction as well as the preservation of naturally occurring affordable housing through a new affordability covenant. https://open.dc.gov/36000by2025/
Director of Real Estate