Mayor Muriel Bowser And The Housing Fund She Mismanaged
Image; Washington Socialist
This article was originally published in the Washington Socialist.
DC Mayor Muriel Bowser is often compared to the men who preceded her. Mayor Vincent Gray, her predecessor, was not only accused of giving a competitor a job for badmouthing someone on the campaign trail but faced a federal probe into his campaign finances throughout his time in office. Some two decades earlier, Mayor Marion Barry would be mocked across the country for being involved in an FBI sting operation. Even Adrian Fenty, who has often been linked to Bowser, was perceived by many as out of touch and imperial.
Muriel Bowser has not been wrapped up in a federal probe on her finances or an FBI sting operation, but this low bar does not mean that her tenure as mayor has been free from mistakes. From ICE raids to increasing gentrification, there have been plenty of red marks on her two-term track record.
Nowhere do we see this more prominently than in her administration’s handling of the Housing Production Trust Fund (HPTF) — a trust meant to increase affordable housing in the district. The amount of money she has raised for it is arguably one of Bowser’s most significant achievements. Just as sadly, her mismanagement of this fund is one of her administration’s biggest mistakes.
The HPTF was created by the Housing Production Trust Fund Act of 1988 to build and preserve affordable housing in DC. It works by subsidizing projects — such as new building developments — preserving existing stock and more. HPTF projects usually provide “gap funding” when developers need additional funds to complete a project.
It was signed into law under the administration of Mayor Barry. Like many laws in the District, it would take a while for it to be adequately financed. The HPTF was not funded regularly until the early 2000s, when the District passed the Housing Act of 2002 to replenish it annually.
However, this new funding mechanism came with a problem. The HPTF is partially funded through deed recordation and deed transfer taxes, which typically occur through the sale of commercial and residential properties. According to the Fiscal Policy Institute, “[this] means that funding for the HPTF is heavily tied to the real estate market,” with the 2008 recession having had a predictably negative impact on the funds given to the HPTF.
This fund is clearly not set up to serve the District in lean times, yet because it is the primary mechanism for providing affordable housing, Bowser has aggressively allocated $1 billion to the HPTF since 2015. Her 2019 goal of adding 12,000 affordable units to DC by 2025 is nowhere close to being met, and she has consistently opined that these investments into the HPTF will get DC closer to reaching it.
These units are badly needed because the District is in the midst of an affordable housing crisis — one that has been exacerbated by the pandemic but long preceded it. The unhoused population has skyrocketed, and for over half a decade now, Black and low-income residents have increasingly found themselves being ousted to the city’s periphery. All the while luxury-branded condos have popped up that many DC natives cannot afford (note: over 10,000 units in the District remain unoccupied). Under Bowser, there is more money to play with than ever before, but it does not seem to be going to the people who need it most.
Even with this $1 billion investment, the HPTF has still struggled to achieve its function of providing low-income housing, and part of that conversation has to do with who we consider low-income. An important requirement of the 1988 law is for 50% of the funds spent in a fiscal year to be directed toward “Extremely Low-Income” households, or ELIs for short. For reference, the National Low Income Housing Coalition defines ELIs in the District as households “whose incomes are at or below the poverty guideline or 30% of their area median income (AMI).” (A lot of terms thrown at you right there, but just know that half of all funds the HPTF spends on projects in a year should be going to this group of people.)
Numerous reports from DC’s Office of the Inspector General have indicated that affordable housing projects under the Bowser administration have often prioritized projects that support households above the 30% AMI. This means that those in the bottom income brackets are not getting enough of the HPTF’s dollars for housing projects, a goal that administration spokespeople have referred to as “aspirational.” As a spokesperson for the Department of Housing and Community Development (DHCD) said during the fallout of a scathing Inspector General report released in 2021:
“… the Administration desires both to comply with the letter and spirit of the law and to help residents most in need, but housing those at [ELI] levels is a lot tougher and more complicated to implement than just setting a big goal.”
This deflection, however, doesn’t change the fact that the law still requires this 50% threshold to be met. In the words of Councilmember Elissa Silverman in response to this claim: “The goals aren’t aspirational, they’re essential. If there’s an issue with [meeting them], then DHCD needs to inform all of us that there’s a problem, and we all need to get together to try to come up with a solution.”
The District is in desperate need of affordable housing for ELI residents, and this problem requires more work than debating the semantics of a law. The Bowser administration has not managed this trust well. In 2017, an audit of the HPTF by the Inspector General found that it was poorly managed, often “neglecting to ensure that developers offer the prescribed mix of housing for people in various income ranges.”
Several years later in 2019, another audit found that of nine housing projects totaling $103 million, Bowser’s administration awarded five to applicants that were ranked poorly by evaluators. In the process, this effort potentially reduced the number of affordable units by a projected 353. According to the Washington Post, the explanation that was given by the then-head of the DHCD, Polly Donaldson, was that evaluators did not have a “bird’s-eye view of the whole portfolio” and therefore missed some of the larger context on why the lower-ranked contracts were accepted. However, Donaldson failed to provide auditors with what that context was, forcing auditors to issue a subpoena, which does not inspire much confidence in this explanation.
The Washington Post further noted that “All five development firms [who were ranked poorly by evaluators] or their executives have given campaign contributions to Bowser.” These five firms ranged from the NHP Foundation, a nonprofit with holdings in 16 states, to Northern Real Estate Urban Ventures, LLC, a community developer focused on the greater DC area.
This problem of rewarding lower-ranked applicants has not gone away. A 2021 audit by the Office of the Inspector General noted that nearly $82 million allocated for projects serving low-income residents was not well monitored. Contracts once again went to “lower-scoring applicants,” some of which were overpaid for their services. The Washington Post noted that many officials could not ensure that the “deals backed by DC loans specifically created to underwrite affordable-housing projects … actually built or preserved affordable housing units.”
Overall, Bowser has made big promises to make the city’s housing more affordable, and some projects are getting completed (see Parcel 42), but they are certainly not enough. The vehicle (HPTF) she is using to build more affordable units is not well managed, and her administration has a history of using it to reward developers that do not perform the best.
Either through neglect, willful collaboration, or some combination of the two, Bowser’s administration has used a soft touch when dealing with the District’s developers. Given the affordable housing crisis afflicting DC, we have to question whether this approach is a good one.