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Bowser Proposes Cuts To Affordable Housing, Rental Aid But More Money For Conversion Incentive

As D.C. faces falling tax revenues due to its struggling commercial real estate sector, Mayor Muriel Bowser has proposed a new budget she said reflects "tough choices."

D.C. Mayor Muriel Bowser speaks outside the Chevy Chase Community Center on Dec. 16.

Bowser's proposed Fiscal Year 2024 budget, released Wednesday morning, would bring annual funding for D.C.'s main affordable housing vehicle down from $500M to $100M.

The Housing Production Trust Fund had been given $100M annually before the pandemic, but it received huge boosts to $250M in FY2022 and $500M in FY2023 after D.C. secured billions in federal stimulus money. In March 2022, officials said HPTF requests for the prior year had reached $398M.

The budget still must be approved by the D.C. Council, which can make its own spending changes and is expected to vote on the plan in May, DCist reported. The fiscal year begins Oct. 1. 

Another pandemic-era funding beneficiary, D.C.'s Emergency Rental Assistance Program, would face significant cuts under Bowser's proposal. She called for reducing its allocation from $42M this year to $8M in FY2024. 

A coalition of housing advocacy groups called for $117M in ERAP funds in 2024 due to the need they see among renters. Council Member Brianne Nadeau called Bowser's $8M proposal "shocking," Washington City Paper reported

While these housing and rental funds would see cuts under Bowser's proposal, a plan to provide incentives to developers for converting office buildings to residential would receive a major boost, at least in a few years. Her budget calls for increasing funding for the Housing in Downtown tax abatement program from $6.8M to $41M in FY 2028.

The program requires 15% of projects to be set aside as affordable at 60% of the area median income, and developers told Bisnow last month that more financial incentives would be needed to make that math work. Another incentive that could help make deals work is a boost in density, and the mayor has begun to explore proposing a 30-foot increase to D.C.'s 130-foot height limit, governed by the federal Height of Buildings Act.

The push to spur more housing downtown, and the cuts to some funding programs, come as D.C. faces a projected $464M revenue drop over the next three years due to a plunge in the values of downtown office buildings and the property taxes they pay.

"We were faced with a budget season that included decreased revenues and increased costs, and we’ve made the tough choices that were needed to be made to both balance the budget and invest in the District’s strategic priorities that would allow us to make sure that we’re on the path to a comeback in our downtown area as well as investing in our people and growing our city," Bowser said at a press conference Wednesday. 

Bowser's budget proposal would also provide funding to some major real estate developments.

She called for $139M for redevelopments of public housing properties, including Barry Farm, Park Morton and Northwest One, as part of D.C.'s New Communities Initiative. She also proposed $79M for other projects including the redevelopment of Ward 7's Fletcher Johnson School, development of Ward 8's Popular Point area and Ward 7's East Capitol Gateway project, where she said the funding would help secure a full-service grocer.

Bowser also called for $115M to rehabilitate public housing units managed by the D.C. Housing Authority, which has been plagued with issues in recent years and received a scathing federal audit in October.