Memo for fiscal year 2019, updated 2018-03-08

[Archived] Question #08: Why are Affordable Housing projects not considered as part of the Capital Improvement Program (CIP)?


Why are Affordable Housing projects not considered as part of the Capital Improvement Program (CIP)?


There is no prohibition to allocating funds to Housing Trust Fund projects through the Capital Improvement program. In fact, in the FY 2018 Unfunded CIP projects list “Affordable Housing” was one of the capital projects listed. Affordable housing projects have been historically funded similarly to CIP projects through a combination of City cash contributions, City borrowing and other sources such as state and federal funding and developer contributions. If affordable housing is transferred to the CIP, or made a new ongoing CIP program category without the addition of new revenue sources, affordable housing related projects would need to compete directly against other capital program areas experiencing significant growth in need and that predominantly use City unrestricted capital funding sources (i.e. cash capital). These other capital areas include, but are not limited to, funding for school capacity and maintenance projects, maintenance and renovation of City facilities, investments in information technology infrastructure, and capital contributions to WMATA. Over the past several fiscal years, Council has increased funding to the capital improvement program to meet City and School facility maintenance needs. Affordable housing as part of the CIP would compete with these capital priority areas for the limited CIP resources.

In terms of including affordable housing with other projects as part of the overall CIP funding package, depending on the nature of individual affordable housing projects, borrowing for the project may not be eligible for tax exempt bond status and would then need to be issued at what are sometimes higher taxable rates. It should be noted that such an issuance of general obligation bonds for affordable housing would add to the City’s debt ratios and overall debt burden. 

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