WASHINGTON, DC - A special account the District government uses to pay for affordable housing has been caught in the national economic slowdown and is projected to generate $29 million next year, the lowest amount in six years and only half of what it raised last year, according to a report released today. In 2002, city leaders, fearful that affordable housing would be forgotten amid rising real estate values, passed a law stipulating that 15 percent of the deed taxes on property sales go to the city's Housing Production Trust Fund.
As the city underwent a boom in property sales over the past half-decade, so did the trust fund's revenue, skyrocketing from $30 million in 2003 to $58.7 million last year. But as the market has slowed, following a national trend, the trust fund's revenue has dropped. This year, the account took in just $34 million in new funds, and next year will be worse, according to the report from the nonprofit D.C. Fiscal Policy Institute.
"The limited funding has forced the District to scale back affordable housing projects," the report stated. "This funding instability is not healthy for the Housing Production Trust Fund."
The report came as the D.C. Council held a public hearing on a new bill offered by Marion Barry (D-Ward 8) that would strengthen funding for affordable housing by granting the trust fund a guarantee of at least $100 million per year.
The report recommended tying the fund to more stable revenue sources or granting it dedicated funds from the city's budget. However, that might be difficult. Mayor Adrian M. Fenty (D) and the council are currently trying to close a $131 million revenue gap for fiscal 2009, and some officials said the financial problems could grow worse.
The trust fund has helped build 4,000 units of affordable housing, with another 1,600 under construction and 3,300 in development.
Source: WashingtonPost.com