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affordable housing

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Council Budget Office releases Economic and Policy Impact Statement: Approaches and Strategies for Providing a Minimum Income in the District of Columbia

On Tuesday February 27, 2018, the Council of the District of Columbia's Office of the Budget Director released a report on the feasibility of a public program which would guarantee that every resident has enough resources to meet their basic needs entitled Economic and Policy Impact Statement: Approaches and Strategies for Providing a Minimum Income in the District of Columbia.  This report was prepared at the request of Councilmember David Grosso and Chairman Phil Mendelson and is the second report that the Budget Office has prepared under D.C. Council Rule 308. The first such report was on the Universal Paid Leave Amendment Act, which is now law.

Four documents are linked below and can be found on the Council’s website:

From the Council's Budget Office:

This report offers the Council an evidence-based resource for weighing this proposal’s policy implications and economic costs and benefits.   The study is divided into three sections:

  1. An analysis of D.C.’s cost of living versus the social safety net benefits available to low-income households.
  2. A discussion of three methods for providing a minimum income: a negative income tax, a guaranteed minimum income, or a universal basic income.
  3. An economic analysis of a minimum income program’s impact on the D.C. economy using REMI, a widely used economic forecasting model.

The report confirms that it is very difficult for low-income households living in the District to make ends meet. The public social safety net provides enough resources for some, but not most, low-income households to meet their basic needs. 

  • The estimated level of income that three, typical households in the District would need to pay for their basic necessities absent government benefit programs is higher than the current minimum hourly wage of $12.50.   The income levels are as follows:
    • Single adult:  Annual income of approximately $36,988 or an hourly wage of $17.78. 
    • Single parent with one child: Annual income of about $66,113 or an hourly wage of $31.79.
    • Single parent with two children: Annual income of roughly $96,885 or an hourly wage of $46.58.
  • A prototypical single, working age adult without a disability whose earned income falls below the Federal Poverty Level would not be able to meet their basic needs even if they received all the public social safety net supports to which they are eligible.
  • The existing social safety net is robust enough to allow a prototypical extremely low-income single parent with one or two children to meet their families’ needs, assuming they can access all the public benefit programs to which they are eligible (including a housing voucher). It is important to note that eligibility for a safety net program does not guarantee receipt of the benefit.  

The study forecasts economic conditions under four possible minimum income scenarios relative to a projection of the conditions if there was no change in policy. The study predicts that a minimum income program would negatively impact economic growth, although the magnitude varies greatly depending upon the program’s design.

  • Raising households’ income to 100% of the Federal Poverty Level is likely to have a relatively small negative impact on the District’s economy and labor force. It would cause the D.C. economy to add 1,600 to 3,000 fewer jobs and increase GDP by $99 million to $185 million less over the next ten years than otherwise projected.
  • Raising households’ income to 450% of the Federal Poverty Level—roughly D.C.’s cost of living—could have major implications for the District’s economy and tax base. It would reduce the number of jobs in D.C. held by residents by 101,000 to 138,000 over ten years. The District would likely forgo about $2.6 billion each year in federal payments and grants. Such a program could increase local expenditures by $7 billion to $9 billion per year, essentially doubling the District’s current local funds budget.

 

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Grosso proposes tax credit to expand affordable housing

For Immediate Release: 
May 16, 2017
 
Contact:
Matthew Nocella, (202) 724-8105

Grosso proposes tax credit to expand affordable housing

Washington, D.C. – Councilmember David Grosso today introduced the Community Impact Investment Tax Credit Act of 2017 to spur the creation and preservation of more affordable housing in the District of Columbia.

The legislation encourages impact investments—investments made to solve social, environmental, or infrastructural challenges while yielding a financial return—in affordable housing through community development financial institutions (CDFIs) by providing to investors an income tax credit of up to 33 percent.

 “The affordable housing crisis will not be solved overnight, nor by any singular entity. Using every financing tool and partner is essential,” Grosso said.  “Through this legislation, we will continue the city’s affordable housing initiatives and multiply our public resources by promoting private investment to create more homes that D.C. residents can afford.”

While the city has made historic investment into the Housing Production Trust Fund, additional dollars are harder to come by as D.C. balances investments in other priorities such as education and city services. The bill would leverage public investment of up to $1 million in tax credits to provide $3 million for affordable housing.

“It is clear investors want to support affordable housing,” Grosso said.  “In just the last year, a local CDFI, Enterprise Community Partners, has been able to raise $11 million in impact capital to finance the preservation and production of local affordable homes. We can make that impact even greater by incentivizing this type of investment.”

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Community Impact Investment Tax Credit Act of 2017

Community Impact Investment Tax Credit Act of 2017

Introduced: May 16, 2017

Co-introducers: Councilmembers Anita Bonds, Elissa Silverman, Robert White, and Charles Allen

Summary: To amend Title 47 of the District of Columbia Official Code to establish a tax credit program for local community development financial institutions to spur the creation of more affordable housing.

Two-Pager

Councilmember Grosso's Introduction Statement:

Across the country, the shortage of affordable housing serves as a significant impediment to the improvement of quality of life and economic competitiveness.  According to a report published by the National Low-Income Housing Coalition last year, there is not a single state in the U.S. where a minimum wage employee working full-time can reasonably afford a one-bedroom apartment at fair market rent.

Here in the District of Columbia, rents have risen by almost 30 percent over the past 10 years.  While the city has made historic investments into the Housing Production Trust Fund, meeting the actual affordable housing demand would require an investment of around $5 billion according to the D.C. Fiscal Policy Institute; a figure that is untenable to achieve while still investing in other needs and priorities.

That is why today along with my colleagues, Councilmembers Robert White, Elissa Silverman, and Charles Allen, I am introducing the Community Impact Investment Tax Credit Act of 2017.

This legislation establishes a tax credit program for taxpayers making an impact investment through a community development financial institution or CDFI, to spur the creation and preservation of more affordable housing.  

Under the bill, individuals, corporations and foundations—stakeholders that may not otherwise directly invest in affordable housing efforts, will be eligible to claim as a credit against their District income taxes, unincorporated business franchise taxes or corporation franchise taxes, 33 percent of their investment up to $1 million.

Impact investments serve to encourage responsible investing by mobilizing capital into mission-oriented entities that strive to make a positive impact in areas presenting social, environmental or infrastructural challenges while yielding a financial return. 

Through this legislation we will accomplish the public policy goal of expanding affordable housing across the city by leveraging the private market to seed investments in affordable housing production and preservation.  

Since just last year, Enterprise Community Partners, a local CDFI has been able to raise $11 million in impact capital to finance the preservation and production of local affordable homes.

Their ability to raise this amount of capital in less than a year demonstrates investor demand to support affordable housing.  Unfortunately, we currently lack tax benefits and incentives for this sort of investment, which serves as a barrier to attracting many people that may be interested in making an investment of this kind.

Solving the affordable housing crisis is not something that will occur overnight and is not something that can be accomplished by any one entity or organization; however, through this legislation we will add another financing tool to the arsenal and partner with the private market to expand the amount of debt capital available for affordable housing projects.
 

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