A ‘clerical error’ could cost D.C. 65 new units of affordable housing

In 2021, the D.C. Council approved the mayor’s proposed $2 million for the Douglass Community Land Trust, a nonprofit based in Anacostia that preserves and creates generational affordable housing, as part of the fiscal 2022 budget.

To provide permanent affordable housing, the trust acquires homes at a below-market rate and sells them to households earning 80 percent or below the median family income, Executive Director Ginger Rumph said. The trust also creates affordable homes by purchasing land and leasing it to developers, establishing co-op housing and partnering with construction companies. Using these methods, Rumph said, the council’s $2 million award would have financed the creation of 65 affordable units.

With Douglass’s mission in mind, Ed Lazere, a former D.C. Council chair candidate, and his wife went to the trust in September 2022 to sell it the Brookland home they purchased in 1992. “We wanted to pass our home to someone that was like we were — people early in their career, moderate income — rather than be a part of gentrification in Brookland,” Lazere said.

But the city didn’t disburse the $2 million as promised in March, Rumph said, and the land trust couldn’t immediately complete the sale.

“It wasn’t clear to us that [the sale] was going to happen,” Lazere said. “We were prepared to sell the house at market rate.”

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The trust ended up taking out a loan to finance the purchase, Rumph said, on top of another loan it took out to buy a property in Northwest Washington. The sellers in that case were also private citizens who agreed to a sale price well below market rate because they wanted to help preserve affordable housing. The two purchases left the trust $1.2 million in debt.

In April, the trust and some D.C. Council members, including Robert C. White Jr. (D-At Large) and Christina Henderson (I-At Large), made an effort to get the missing funds, Rumph said.

Their efforts appeared successful at first. According to records from the Office of the Chief Financial Officer, the council reallocated $2 million from the local budget to the trust for fiscal 2023. The deputy mayor for planning and economic development was in charge of getting the funds to the trust, said Jennifer Budoff, the council’s budget director. The council relied on budget figures that the Office of the Chief Financial Officer signed, Council Chairman Phil Mendelson (D) said in an emailed statement.

In June, the mayor signed off on the budget, Budoff said, and the funds were still in the city’s financial system.

Natalie Wilson, public affairs officer at the Office of the Chief Financial Officer, said Wednesday that the money is there. “No clerical error occurred,” she said. The $2 million was allocated to a “non-departmental agency,” she said, and the money “remains in the agency.”

But the deputy mayor’s office said the council siphoned $2 million from a defunct project by the Department of Housing and Community Development that never had funding. And on Sept. 20, the deputy mayor’s office notified the trust that it did not have the $2 million.

“Each year, the Council makes changes to the Mayor’s submitted budget, including earmarking funding to certain programs. Importantly, how the Council makes these changes matters,” Benjamin Fritsch, director of communications at deputy mayor’s office, said in a statement. The amount the council earmarked for the Douglass Community Land Trust was taken “from a budget account that had no funding. As a result, there are no funds to be transferred” from the mayor’s office to the trust.

The city faces a tight deadline to come to a consensus on the location of the funds and disburse them. If it doesn’t, the authority to issue the grant will expire, said Budoff.

Mendelson said the council was not at fault. “The mayor is free to not spend money on anything the council budgets, but that is her choice,” he said. “To disguise it as a clerical mistake that she has to fix is false.”

How the city could lose track of $2 million dumbfounds Terry Lynch, executive director of the Downtown Cluster of Congregations, an advocacy group. “I am not aware of any clerical error that cannot be fixed whether it be through the chief financial officer’s office or through the deputy mayor,” he said. “Clerical errors can and should be fixed when they’re of this magnitude and seriousness, given the tremendous shortage of affordable, safe housing we are facing.”

In 2019, the city set a goal of creating 36,000 new housing units by 2025, 12,000 of which should be affordable to households earning below 80 percent of the median family income. The District has met two-thirds of its six-year affordable housing goal, according to data from the deputy mayor’s office.

The 65 units the land trust was planning to create would have added to the much-needed affordable housing stock, Rumph noted. And given the trust’s goal to make homes affordable for generations, “that’s 65 times many, many, many generations of households who would be living in those units.”

Beyond the debt, the missing D.C. funds have left the trust in the lurch in other ways, Rumph said. The money was “leverage” for additional grants from philanthropic sources. The $2 million “would enable us to do more,” she said.

As for the two properties bought with loans, the trust can only sit on them for now. The trust will only sell the properties to households that make at most 80 percent of the region’s median income. The trust can only do that without losing money by combining government aid with low-income first-time buyer benefits, Rumph said.

“We thought we were going to be able to pay off the debt,” Rumph said. “Instead we’re racking up more interest charges and utility costs.”

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“It is heartbreaking to see that [the funding] is getting caught up in a policy fight when the money is so desperately needed to be brought directly into communities and people that deserve a safe and affordable place to live in this city,” said Kyla Dixon, who along with her husband, Greg, sold their Northwest Washington home to the trust in October.

The deputy mayor’s office says it cannot do much but wait until the next fiscal year — which starts Sunday — to move on the $2 million, Fritsch said, after which the council can explore alternate options such as emergency legislation to pass the funds to the trust.

Vaughn Perry, the trust’s president, said if his group had mismanaged or misplaced $2 million, it would face civil and possibly criminal penalties, but the city, in this case, has faced no consequences for its mistake. “They made us a promise and didn’t act on it,” he said. Instead, the trust and D.C. residents “are being penalized.”