April 11, 2016
The Local Rent Supplement Program
The District’s Local Rent Supplement Program (LRSP) was created in 2007 to help DC residents
with extremely low incomes obtain decent housing they can afford. LRSP provides monthly rental
subsidies that cover the difference between the rent a family can afford to pay, and the cost of
renting the unit. In 2016, LRSP was expanded for the fourth year in a row, and now serves
approximately 3,300 families and individuals.
1
The program stems from the District’s 2006 Comprehensive Housing Strategy Task Force goal of
creating 14,600 locally funded rental subsidies in the District over 15 years.
2
Funding for LRSP
began in FY 2007, and has grown intermittently since then. This policy brief provides information
on the LRSP program and identifies key issues currently facing the program.
LRSP is a critical part of the District’s affordable housing toolbox because it is one of the few
programs that is guaranteed to provide housing that extremely low income families need. Other
major programs, such as the Housing Production Trust Fund, often do not produce housing that
reaches the poorest households.
LRSP Serves Extremely Low Income Families and Individuals
The Local Rent Supplement Program (LRSP) provides ongoing rental subsidies to help make
housing affordable to extremely low income families – those with incomes below 30 percent of area
median income, or $32,600 for a family of four.
3
Many families assisted by LRSP have incomes well
below this level.
The LRSP subsidy pays the difference between what the family can afford, and the monthly rent of
the unit. Assisted families pay 30 percent of household income toward rent – which is the housing
affordability threshold set by the U.S. Department of Housing and Urban Development (HUD).
The remainder of the rent is paid by the LRSP subsidy. For example, a family of four that earns
$25,000 would pay $7,500 a year, or $625 a month, towards their rent. If the rental unit cost was
$1,600 a month – the fair market rent for a two-bedroom unit in the DC metro area
4
– LRSP would
cover $975 per month or $11,700 for the year.
1
Courtesy of the DC Housing Authority, 2015. Includes anticipated increase of 450 units from funding increase
approved in FY 2016.
2
Comprehensive Housing Strategy Task Force, “Homes for an Inclusive City: A Comprehensive Housing Strategy for
Washington, DC,” 2006.
3
US Department of Housing and Urban Development, Program Income Limits, 2016.
4
US Department of Housing and Urban Development, FY 2016 Fair Market Rent Documentation System.
An Affiliate of the
Center on Budget and Policy Priorities
820 First Street NE, Suite 460
Washington, DC 20002
(202) 408-1080 Fax (202) 408-8173
www.dcfpi.org
2
How LRSP Works
LRSP is administered by the DC Housing Authority, which also manages the federal Housing
Choice Voucher program (formerly called Section 8), also a rent subsidy program. LRSP provides
three different types of rental assistance.
Tenant-based rent vouchers are provided directly to families or individuals, who can use
the voucher at a private-market apartment in the District. The vouchers can be used at any
apartment renting below a certain threshold, based on the fair market rent for the DC area
and the neighborhood housing market.
5
The voucher stays with the family, even if they
move to another rental unit in the District.
6
Tenant-based vouchers have been used to assist
families on the DC Housing Authority waiting list, and in some case residents referred by
the Department of Human Services who need immediate housing.
Project-based rental assistance is provided to for-profit or non-profit developers for a
specific unit that serves low-income families. Unlike tenant-based vouchers, these vouchers
are not portable, meaning that the household using it cannot take the voucher and use it for
another apartment elsewhere. Instead, the rental assistance stays with the unit. Although it is
not required, many project-based vouchers are awarded to developments that also provide
supportive services to residents. Project-based vouchers are often awarded to affordable
housing developments receiving gap financing from the Housing Production Trust Fund
(HPTF).
Sponsor-based rental assistance is awarded to a landlord or non-profit group for
affordable units they make available to low-income families and individuals. Unlike project-
based vouchers, these vouchers are portable in that they can be moved to another unit run
by the same non-profit or the landlord. Sponsor-based vouchers are awarded only to groups
that will provide supportive services to residents housed in the affordable units. These
vouchers can be used in tandem with Housing Production Trust Fund assistance.
Targeted affordable housing provides long term affordable housing to formerly homeless
residents. This component of LRSP was added in FY 2016. Unlike other LRSP assistance,
targeted affordable housing will work through referrals from the Department of Human
Services. The program will serve residents who had been in permanent supportive housing
(PSH) and no longer need the intensive services provided by PSH, but still need help to
afford housing. Targeted affordable housing also serves residents who received temporary
Rapid Re-Housing rental assistance, but aren’t able to afford private market rent when their
Rapid Re-Housing assistance ends.
5
The DC Housing Authority sets approved rents for each DC neighborhood for the Housing Choice Voucher Program
and the Local Rent Supplement Program, based on the DC metro area fair market rent and neighborhood market
analysis. For instance, a one-bedroom unit in Deanwood is eligible for voucher use if the rent is under $1,100, whereas a
one-bedroom unit in Kalorama, where housing costs are much higher, can rent for up to $1,600 and be eligible for
voucher use. DC Housing Authority, Housing Choice Voucher Program, Approved Rents, 2015.
6
Unlike Housing Choice Vouchers, which can be used in neighboring jurisdictions, LRSP tenant-based vouchers cannot
be used to rent an apartment outside of the District.
3
LRSP Works In Tandem with Other Affordable Housing Programs
LRSP works with other affordable housing programs in the District to deliver affordable homes to
extremely low income residents.
LRSP & DC’s Housing Production Trust Fund: LRSP project- and sponsor-based rental
assistance is often awarded to units assisted by the Housing Production Trust Fund (HPTF).
The HPTF provides grants and loans affordable housing developers can use to acquire,
rehabilitate, and construct low-cost homes. LRSP assistance helps cover the ongoing cost of
operating and maintaining the unit. By matching LRSP project- and sponsor-based vouchers
to HPTF-assisted units, the District can ensure the homes will be affordable to extremely
low income households for the long term.
LRSP & Permanent Supportive Housing: LRSP is used with the District’s Permanent
Supportive Housing (PSH) program, also known as Housing First, which places chronically
homeless individuals and families in affordable housing that also provides them with
supportive services. The Housing First model, in which clients don’t have to meet
prerequisites before accessing housing and services, is a recognized best practice in
combatting homelessness. Some PSH clients are placed in private apartments using LRSP
tenant based vouchers, and others are placed in buildings developed with District funding
and assisted by project- or sponsor-based LRSP.
Funding for LRSP Has Grown in Recent Years to Serve More Residents
The LRSP program is funded by local
dollars, and managed by the DC Housing
Authority (DCHA). The District also
distributes local funds to DCHA to
support the DHCA police force and some
housing assistance for families.
LRSP was initially funded in FY 2007,
and expanded in FY 2008. Program
funding then remained stagnant until FY
2013, when the DC Council added funds
for vouchers for homeless families in
emergency shelter. In the intervening
period, LRSP had to rely on its own reserves
7
and transfers from the Housing Production Trust
Fund
8
to pay for increases in rental subsidy levels due to rising rents. LRSP funding does not include
an inflation adjustment, even though its costs rise each year due to increases in market rents.
Funding was stepped up in FY 2014 and FY 2015, enabling the program to not have to pull from
reserves or the HPTF, and to add additional units. In FY 2016, both project- and sponsor-based
7
The Budget Support Act of 2009 directed the DC Housing Authority to hold $5.88 million, plus two months of
subsidy payments for all of the awarded LRSP subsidies, in reserves. This helped LRSP cover the program’s cost and
make up for the reduction of local funding.
8
$18 million was transferred from the Housing Production Trust Fund to the DC Housing Authority in FY 2012, and
$20 million in FY 2013. These funds supported DCHA’s public safety force, housing assistance (DC Local), and LRSP.
FY 2012 and FY 2013 Proposed Operating Budgets.
Table 1
LRSP Assists 3,500 Households
FY 2016
Tenant-Based Vouchers
1,500
Project/Sponsor-Based Rental Assistance
1,780
Targeted Affordable Housing
250
Total
3,530
Source: DC Housing Authority, 2015. Includes additional units anticipated to come
online as a result of FY 2016 funding increase.
4
LRSP and tenant-based LRSP were expanded, bringing the current funding level to $48 million and
the number of units funded to 3,500. The proposed FY 2017 adds some new targeted affordable
housing, but no new project- or tenant-based LRSP.
Current Issues Facing DC’s
Local Rent Supplement
Program
Slow progress toward the
Comprehensive Housing Strategy
Task Force Goal.
In 2006, this District-commissioned
Task Force set a goal of creating 14,600
locally funded rental subsidies in the
District over 15 years – approximately
1,000 new rent subsidies per year. A
decade after the task force report was
released, when the District would need
to have 9,700 subsidies to be on track
with that goal, there are 3,500 locally
subsidized apartments in 2016, 6,200
behind the goal.
Expansion of project- and sponsor-
based LRSP is needed to help the
Housing Production Trust Fund
serve extremely low income
households.
By law, the HPTF is required to allocate
40 percent of its funding each fiscal year
to housing affordable to extremely low income families – those with incomes below 30 percent of
the area median, or $32,600 for a family of four. Yet it has become increasingly hard to create
housing affordable at that level using only resources from the Trust Fund. In many cases additional
assistance through LRSP is needed to make Trust Fund-supported projects affordable to families at
this income level.
The Trust Fund provides “gap financing”— grants and loans to affordable housing developers to fill
the gap left by private financing and other sources that they need to acquire, build, and rehabilitate
low cost housing. This up-front financing assistance does not help cover ongoing operating and
maintenance costs. Thus the Trust Fund alone often is not able to reduce rents to be affordable to
the lowest income families. This challenge contributed to the fact that in FY 2014 and FY 2015, just
13 percent of Trust Fund resources went to help extremely low income families, far below the
minimum 40 percent requirement.
9
9
Department of Housing and Community Development, Performance Oversight Documents, 2015.
Figure 1
Local Rent Supplement Program
Has Expanded in Recent Years
5
One approach to addressing this problem that the District has adopted in recent years is to pair rent
subsidies from LRSP with projects developed under the Trust Fund. Ongoing rental subsidies from
LRSP help cover ongoing operating costs, so that tenant rents can be kept low. Expanding LRSP
subsidies tied to specific projects and developers of low-cost housing will help the Trust Fund assist
more extremely low income families, and help the District maximize its investment in the HPTF.
Expansion of LRSP tenant-based vouchers needed for families with urgent housing needs.
Tenant-based vouchers are often the fastest way to place families living in severely unaffordable
housing into affordable homes. The number of households in need of housing assistance has
ballooned as DC’s housing market has risen. No more affordable apartments remain in the private
market, research suggests.
10
Approximately 41,000 households are on the DC Housing Authority
waiting list.
11
Tenant-based LRSP should be expanded to meet the urgent needs of a rising number
of extremely low income DC residents.
10
Wes Rivers, DC Fiscal Policy Institute, “Going, Going, Gone: DC’s Vanishing Affordable Housing,” 2015.
11
Committee on Housing and Community Development, FY 2016 Budget Report.