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D.C.’s affordable housing fund has been mismanaged, according to audit

Millions of dollars has likely been wasted, according to the Office of the District of Columbia Auditor

Washington, D.C., is in dire need of affordable housing. According to a newly published audit by the Office of the District of Columbia Auditor, more than 38 percent of all D.C. households spend more than 30 percent of their income on housing costs and approximately 7,500 D.C. residents are homeless. Thankfully, the Housing Production Trust Fund (HPTF) was created to address the critical need for affordable housing, authorized in 1988. Unfortunately, the D.C. auditor has reported in the audit that the HPTF has been mismanaged by the D.C. Department of Housing and Community Development (DHCD) and the Office of the Chief Financial Officer (OCFO) and has experienced a lack of rigorous oversight.

As first reported by Washington City Paper, this is the first ever comprehensive audit of the city’s HPTF, which provides loans and grants to build or preserve affordable housing in Washington, D.C. The approximately 50-page report argues that the DHCD has likely wasted millions of dollars, concluding that the auditor “cannot rule out the possibility that fraud could have occurred during the scope of the audit.”

One of the many issues cited in the audit is that the HPTF paid for a significant and growing portion of salaries and benefits for DHCD employees, who continue to fail to publish timely HPTF annual and quarterly reports. Other egregious errors include that “the vast majority of future trust fund payments [are] potentially uncollectible.” This is a result of 75 percent of all funds being deferred and the “weaknesses in DHCD’s assessment of borrowers’ ability to pay back loans, and a lack of rigorous monitoring regarding loan compliance and collection,” according to the audit.

In a statement, D.C. Auditor Kathy Patterson said, “We have made huge investments of taxpayer dollars in affordable housing through the Housing Production Trust Fund, but we haven’t gotten our money’s worth.”

In response to the audit and Patterson’s statement, DHCD Director Polly Donaldson told Washington City Paper that Patterson’s “intentions are not really about residents and affordable housing,” while Office of the Chief Financial Officer (OCFO) spokesman David Umansky said, “Many of the findings and conclusions of the audit and the press release are not supported by the facts and the analysis contained within the audit itself.”

The analysis by the audit further confirmed that D.C. law requires that 40 percent of the funds assist households making less than 30 percent of the area median income (AMI), 40 percent be for households making between 31 and 50 percent AMI, and 20 percent be for those making 51 to 80 percent AMI. Despite this, 29.4 percent of funds went to those making less than 30 percent AMI, 37.4 percent went to those making 31 to 50 percent AMI, and 33.2 percent went to those making 51 to 80 percent AMI.

Other prominent issues found include the agencies’ tendency to misplace or discard loan and grant agreements as well as the DHCD exceeding the mandated cap to use the funds for administrative costs by more than $10 million, which could have been invested in affordable housing projects.

Washington City Paper reports, “With that money, the auditor’s office calculated that DHCD could have produced or preserved an additional 167 units, removed lead from 133 households, repaired the roofs of 667 homes, or improved accessibility in 333 units with seniors or disabled people.”

To read the full audit, find it below.

Stronger Management of the Housing Production Trust Fund Could Build More Affordable Housing [Office of the District of Columbia Auditor]

Auditor Publishes Damning Report Alleging Chronic Mismanagement of D.C.’s $1 Billion Affordable Housing Fund [Washington City Paper]