Mayor's Budget Would Raid Affordable Housing and Energy Efficiency

Testimony of Jean Stewart
Sierra Club District of Columbia Chapter
Budget Hearing on the Department of Housing and Community Development
& Housing Production Trust Fund
DC Council Committee on Housing
April 22, 2024

Chairperson White, thank you for the opportunity to testify at this budget hearing on the Department of Housing and Community Development and the Housing Production Trust Fund. My name is Jean Stewart, and I am a member of the Energy Committee for the Sierra Club District of Columbia Chapter. The Sierra Club is America’s largest and most influential grassroots environmental organization, with millions of members and supporters. The DC chapter has about 3,000 dues-paying members and many thousands of supporters in DC.

The Sierra Club is deeply concerned that the mayor’s proposed FY2025 budget fails to fund several essential programs that are vital both for the District to achieve its climate change goals and to improve the quality of living and working in DC.

Our top priority is combating climate change while keeping social equity concerns at the center of our efforts. When the DC Council passed the Climate Commitment Act, it committed the District to reduce greenhouse gas emissions in the District and achieve carbon neutrality by 2045. A major reason the District is not on track to meet these commitments is our continued burning of fossil fuels, including fracked gas in residential buildings. Thanks to the tremendous decline in the cost of utility-scale solar and wind power capacity, renewable power can be procured at affordable rates. For the following reasons, the District needs to transition off burning gas in residential buildings, and the Department of Housing and Community Development (DHCD) has a central role to play in ensuring that new housing is all electric.

• Burning gas for heat pollutes both our climate and our homes. It brings documented health impacts including a 42% increased risk of asthma, aggravated respiratory symptoms and greater susceptibility to lung infections, and IQ and learning deficits in children.^[1]
• Burning gas for heat is more expensive than efficient electric heat. By ensuring that new affordable housing runs solely on clean electricity, DHCD can keep utility costs down for the low- to moderate-income renters and owners who live there. As the District transitions off gas to heat buildings, a dwindling number of District residents will have to pay the rising costs of gas delivery infrastructure; this is untenable. Gas heat will become increasingly expensive, and DHCD should act now to ensure that District residents who live in affordable housing are protected from skyrocketing costs of gas heat in the near future.

DCHD and the Housing Production Trust Fund play a key role in supporting development of affordable housing that relies on safe, clean energy. The Sierra Club is therefore concerned about proposed cuts to these programs in the mayor’s proposed budget for FY2025.

First, the Housing Production Trust Fund is the District’s largest and most important tool to create, protect, and preserve affordable housing. It provides low-interest construction loans to subsidize the preservation and construction of affordable housing. At last year’s budget hearings, the Sierra Club raised concerns that the mayor’s proposed budget for FY2024 allocated only $31 million to the Fund, drawn entirely from federal funds. This was a 91% decrease from the previous year’s allocation of $354 million to the Fund, an 81% reduction from FY22, and an 81% decrease from FY21. This year, the mayor proposes to allocate nothing whatsoever to the Fund from federal or local dollars. The council should reject this drastic move.

In 2015, Mayor Bowser committed to providing an annual $100 million appropriation to the Fund to ensure a stable source of local funding for affordable housing in the District. Until last year, the District largely met this commitment, sometimes allocating less than $100 million, but sometimes dramatically exceeding it. For instance, the District allocated $354 million in FY2023, and $166 million in FY2022, and allocated between $17 million and $38 million to the Fund from FY2019 to FY 2021. This year, the mayor proposes to abandon the Fund entirely. The slowdown in the real estate market means that the Fund can also expect declining funds from deed recordation and deed transfer taxes relative to the last few years.

The refusal to allocate anything to the Fund, on top of the sharp decline in last year’s budget, is especially significant because it undercuts the force of the Greener Government Buildings Act, which requires large new residential housing (over 10,000 square feet) to adhere to net zero energy standards if at least 15% of the total cost is District-financed.^[2] Any financing whose stated purpose is to provide for new construction or substantial rehabilitation of affordable housing qualifies as District-financed.^[3] This includes all new construction that receives at least 15% of its financing from the Fund. We ask the Housing Committee to insist on continued financial support for the Housing Production Trust Fund, including a specific allocation from the General Fund.

Second, the proposed budget drastically reduces funding to DCHD’s Affordable Housing division. The Mayor proposes an $11 million decrease in funds for development financing for affordable housing, less than 70% of last year’s allocation. The proposed budget also allocates nothing for rental assistance programs managed by the Affordable Housing division. These cuts eliminate multiple sources of support for affordable housing and green energy.

This isn’t just a raid on energy efficiency, it’s also a raid on affordable housing. Energy efficiency reduces costs to cool and heat homes, resulting in lower utility bills. Robbing affordable housing in DC of funding to comply with DC’s energy efficiency requirements and laws makes housing less affordable by robbing affordable housing residents of lower utility bills. These cuts across DHCD’s FY2025 budget are impossible to square with the council’s commitments to creating and maintaining affordable housing in the District.

Thank you, Chairperson White, for the opportunity to testify today. The Sierra Club very much appreciates your environmental and climate leadership on the DC Council, and we look forward to continuing to work with you in the coming years.