September 30, 2024
Dear Members of the Council of the District of Columbia,
We, the undersigned community development finance institutions (CDFIs), support the emergency consideration of the Emergency Rental Assistance Reform Emergency Amendment Act of 2024, as introduced, to protect the District’s critical stock of affordable housing.
In these times of transition and tumult, affordable housing is the foundation of our neighborhoods, and is foundational to the stability of families as they pursue their lives in the face of gentrification and displacement. The District’s rent arrears crisis threatens that foundation, and without sensible policy reforms, we fear imminent consequence: affordable housing will fail and fall, and it will become nearly impossible to bring new investment to inclusive development in Washington, D.C.
We are the catalytic investors whose purpose was initially to draw investment into communities that had been by-passed for decades due to prejudice, both institutional and informal, and due to redlining and other policies and practices. Our organizations support initiative and enterprise, we bring investment for impact, and we have placed our money where our missions are, creating affordable housing in every ward in DC for decades. Together, we have invested more than a billion dollars, the kinds of investments that leveraged tens of billions more once deals became bankable and traditional lenders learned the potential at hand. Over 20,000 Washingtonians live in homes that have we have helped finance, fund, or facilitate.
As affordable housing lenders, we have been directly aware and impacted by the rent arrears crisis that emerged during the pandemic. It has snowballed since then. Our borrower-partners were on the front lines of the pandemic, providing and maintaining affordable housing so that their residents could shelter in the safety of home. For us, this meant deferring loan payments, restructuring terms, foregoing fees, and working with the partners to bring new financial tools into community.
Our borrowers have spent down reserves that they’d set aside for repairs and rainy-day funds. We have heard stories of borrowers unable to afford to repaint vacant units so those critical housing resources sit empty when they could be home to low-income families. This is unacceptable when so many District residents need affordable homes. At this point, without signs of change, borrowers are looking for exits, in some cases selling their District portfolios of affordable rental homes or, in worst case scenarios, declaring bankruptcy, handing back the keys and shutting down operations. It’s not just private developers, but nonprofits who have been working on the ground for decades now wondering how to survive. When these purpose-driven operators close up shop, they leave behind lost hope for equity and dignity, and abandoned plans for safe, decent, affordable housing. Thousands of affordable homes are at risk of being, lost, sold or converted to market rate- displacing the very residents we’ve worked so hard to keep in place.
Today’s rental arrears crisis has grown to a scale of existential threat. Even for the most mission-driven community lenders, it is not possible to invest in rental housing when rent collections are so unreliable. It is imperative that CDFIs are good stewards of capital so that we may advance our missions of investing for impact in underestimated communities for generations to come, and it is fiscally irresponsible to make loans when the source of repayment is so compromised. We are on the verge of a new redlining, encompassing the entire District of Columbia, where investors, both nonprofits and private capital, are bypassing investing in affordable housing in the nation’s capital.
We cannot let that happen. The residents that we are all concerned about will not be well served by allowing the current crisis to erase all the hard-won victories and the thousands of affordable housing units that have been produced and preserved by leveraging public dollars.
We believe in the vision for an inclusive, equitable DC. We urge members of the Council to support the Emergency Rental Assistance Reform Emergency Amendment Act of 2024, as introduced. We also acknowledge that this legislation reform is the first step, in a series of actions needed to right-side our affordable housing industry. Beyond this emergency legislation, more reforms of the ERAP program are needed to prioritize at-risk households, prioritize affordable housing, and prioritize timely processing. These would further stabilize the ecosystem long-term. As CDFIs committed to Washington, DC, we pledge our cooperation and assistance in contributing to these solutions.
Signed,
Capital Impact Partners (CIP)
City First Enterprises (CFE)
Enterprise Community Partners
National Housing Trust (NHT)
Local Initiatives Support Corporation DC (LISC DC)
Low Income Investment Fund (LIIF)