The Housing Production Trust Fund (HPTF) is the major tool used to produce and preserve affordable housing in the District of Columbia. It is a special revenue fund administered by DHCD’s Development and Finance Division (DFD) that provides gap financing for projects affordable to low and moderate income households.
The HPFT was created by the Housing Production Trust Fund Act of 1988, which requires that each fiscal year:
- At least 40 percent of HPTF spending serves households with incomes below 30 percent of the area median income (AMI).
- At least another 40 percent of expenditures serve households with incomes between 30 percent and 50 percent AMI.
- The balance of funds can serve households with incomes up to 80 percent AMI.
Generally, at least 50 percent of the funds disbursed are dedicated toward providing rental housing.
The law also established the HPFT Board, which advises the Mayor on the HPTF’s development, financing, and operation, as well as other matters related to housing production for low to moderate-income households.
How Has the HPTF Helped Produce and Preserve Affordable Housing?
Over 9,000 affordable housing units have been produced using the HPTF since 2001.
In addition, the HPTF requires covenants be placed on properties that keep them affordable for a certain period of time. Typically, homeownership units must remain affordable for 15 years, compared to 40 years for rental units.
How Is the HPTF Funded?
The program is funded through 15 percent of revenue from deed recordation and transfer taxes, as well as through the District’s general fund. Mayor Muriel Bowser has committed $100 million annually to the fund each year of her administration – more than any city per capita in the country. A report issued by Center for Community Change shows that the District’s $100 million fund more than tripled the next highest fund amount for a U.S. city. Compared to states, DC’s trust fund is the country’s second largest. For three straight years, Mayor Bowser has exceeded her annual commitment of $100 million to the HPTF, from $58.6 million in FY15 to $106.89 million in FY16 to $138.59 million in FY17 to $167.6 million in FY18.
How Does the HPTF Work?
The HPTF provides financing in a variety of ways, to include:
- pre-development loans for nonprofit housing developers;
- financing for site acquisition, construction loan guarantees, collateral, or operating capital;
- bridge loans and gap financing to reduce up-front costs and costs of residential development and to keep a housing project in operation, if circumstances change adversely during development;
- outreach and housing production counseling and technical assistance to individuals or groups interested in producing affordable housing, such as tenants groups who want to buy their buildings under the Tenant Opportunity to Purchase Act (TOPA).
- loans to develop housing and provide housing services for low- and very low-income elderly persons with special needs;
- loans or grants to finance on-site child development facilities for proposed housing or commercial facilities; and
- grants for architectural designs for adaptive re-use of previously nonresidential structures;
How Do Developers Receive HPTF Financing?
Generally, DFD issues a notice of funding availability (NOFA)/Request for Proposals. Beginning in 2015, DFD moved the application process to an online platform and committed to holding two solicitations annually. Both for-profit and nonprofit developers can apply for financing, but priority is given to nonprofit developers.
Proposals must are assessed based upon how they meet the HPFT affordability and other criteria, to include preferences for family-sized units; Permanent Supportive Housing (PSH) units; senior housing, mixed-income projects; TOPA projects, and projects near transit.
The application process also allows developers to seek gap financing from local and federal sources beyond the HPTF, such as federal Low-Income Housing Tax Credits (LIHTC) and the Local Rent Supplement Program (LRSP). For every dollar invested in affordable housing from the HPTF, another $2.50 is invested from private and federal financing.