D.C. Council members are responding to a new report released from the Office of the D.C. Auditor, which raises concerns about the integrity of the competitive application process for the city’s Housing Production Trust Fund (HPTF).
The report found that the D.C. Department of Housing and Community Development (DHCD) often deviated from its own scoring system to select lower-ranked projects for the fund, which provides critical gap financing to developers of affordable housing.
“Transparency around how we spend taxpayer dollars — especially dollars dedicated to increasing our affordable housing stock — is essential” said Councilwoman Elissa Silverman (I-At-Large) in a press release. “How is it a competitive process if you ignore the scoring when awarding dollars?
“The auditor’s findings raise troubling red flags about why these projects received money,” she said.
Silverman said concerns about how trust fund dollars have been awarded prompted her to introduce the Housing Production Trust Fund Transparency Act, which would require DHCD to release the scoring of applicants to the fund.
DHCD has refused to provide information on how trust fund applicants were assessed and selected for funding despite requests from both the council and the auditor, Silverman said.
Five out of nine proposals awarded HPTF money last year were ranked by District staff evaluators in the bottom half of applications and their selection meant a loss of 353 affordable housing units and 95 units designed for the poorest District households, according to the new report by the Office of the D.C. Auditor (ODCA).
The report said the procurement decisions last year raise red flags about the procedures followed at the DHCD, show a lack of “commitment to program integrity” and a need for “greater controls and transparency.”
D.C. Auditor Kathy Patterson recommended Council action to require written justification when the agency director overrides recommendations made by staff evaluators following their lengthy and deliberative scoring process, according to a release from ODCA.
The report’s findings came initially from confidential documents provided to ODCA, but the evaluation information was corroborated by ODCA as genuine DHCD products.
Efforts to get the documents directly from DHCD were rebuffed in a series of letters that led to issuance of a subpoena by the auditor, ODCA said.
The final letter in a series, included as an appendix to the report, informed DHCD that the auditor would not seek to enforce the subpoena because the information had been corroborated by other means, officials said.
“We are aware that the Council is considering legislation to require greater transparency in the decisions made by DHCD in awarding HPTF projects and believe the pending legislation must be strengthened to provide greater assurance that our affordable housing goals can be achieved,” Patterson said in the news release.
The five higher-ranked projects with more total units and more units for poorer households that were not chosen last year did receive HPTF awards in March of this year, Patterson said.
The report also comes at a time when other concerns about affordable housing in the District have reached a critical point.
“There has been a growing concern about the lack of affordable housing for larger families in D.C., which is why I prioritized funding study — so we have the data to make informed policy decisions,” said Councilman Kenyan R. McDuffie (D-Ward 5), who chairs the council’s Committee on Business and Economic Development.
As for HPTF, since its inception, the trust fund has invested hundreds of millions of dollars in affordable housing projects.
The fund reportedly will have $116 million in the fiscal 2020 budget.
The auditor’s report, titled “Low-Ranked Secure Affordable Housing Funds,” also raises concerns about whether the District has developed less affordable housing units due to the selection process, Silverman said.
“The method/procedures by which DHCD management selected nine projects for the Fall 2017 Request for Proposal awards of $103 million, $78 million of which was HPTF funding, raises serious questions about the effectiveness and transparency of DHCD’s selection process,” Silverman said.
“Between staff recommendations and the final selection by the director there was a net loss of 353 affordable units, including a reduction by 95 units of those targeting the District’s most vulnerable households earning up to 30 percent of the Area Median Income,” she said.