Credit: Darrow Montgomery

Mayor Muriel Bowser’s proposed $15.5 billion budget invests $55 million more in affordable housing by declining a tax cut for the business sector and raising taxes on sales of commercial properties.

The mayor’s fiscal year 2020 spending plan released Wednesday morning would increase the tax on sales and transfers of commercial properties worth over $2 million from 1.45 percent to 2.5 percent, raising roughly $90 million in revenue.

A showdown may loom at the D.C. Council over that decision and Bowser’s plan to forgo cutting the commercial property tax rate, keeping it at 1.89 percent for properties assessed at over $10 million. Eight council members voted last December to lower the rate to 1.85 percent, but the Bowser administration wants to carry the current rate to raise more money for housing.

The budget makes $129 million in cuts across District agencies, although officials said no major programs would be entirely lost. 

She presented the plan to councilmembers on Wednesday morning, fielding several questions about transportation and affordable housing.

Council Chair Phil Mendelson, a top proponent of a lower commercial property tax rate, did not press Bowser on the matter but the discussion is likely to surface when Bowser officials formally testify about the budget before the D.C. Council on Friday.

At a press conference, Bowser defended the tax rate proposals, saying investments in housing and transportation “don’t happen without the revenues we identified.”

Bowser’s budget makes investments in affordable housing through three funds: the Housing Production Trust Fund, the Housing Preservation Fund, and a new Workforce Housing Fund. The largest, the Housing Production Trust Fund, will automatically gain $12.8 million in new revenue from the tax hike on commercial property transfers, and will be topped off to equal $130 million, a 30 percent increase from last year.

In total, all three funds would get $165 million in public dollars. The Housing Preservation Fund increases from $10 million to $15 million under the proposed plan, while the Workforce Housing Fund has a dedicated $20 million budget. D.C. Auditor Kathy Patterson has dinged the Department of Housing and Community Development for failing to meet statutory requirements that outline how much Housing Production Trust Fund cash needs to be diverted to build housing across multiple levels of affordability.

Bowser on Wednesday said, “We have really shifted our attention” to building more units through the HPTF for residents making less than 50 percent of area median income. Ward 8 Council member Trayon White requested a breakdown of the fund’s expenditures for units meant for the lowest-income households, which Bowser said she would release. The budget also partially restores funds cut in fiscal year 2019 from neighborhood-based activities, the community organizations that provide critical housing counseling services to renters and homeowners across the income spectrum. 

Bowser said in her State of the District Address on Monday that she anticipates both the Housing Production Trust Fund and the Housing Preservation Fund to draw additional investments from the private sector: $180 million and $45 million, respectively.

But the budget does not come close to meeting the $330 million the DC Housing Authority says it needs to make urgent repairs at thousands of public housing units. Instead, Bowser said the administration will study the governance model of the Authority before dedicating additional funds.

“I don’t know that we know that they can spend $330 million—or how they would spend $330 million,” Bowser said, adding her focus is on “getting to a plan that examines their governance and finances and how they’re currently spending their money.”

City Administrator Rashad Young said $15 to $20 million will be available this year from the Authority’s unspent funds to make facility repairs.

City Paper has listed some of the most notable budget provisions:

Potholes watch

Over the next six years, the proposal includes $468 million to fix roads, sidewalks, and alleys. The aim is to eliminate nearly all of the poorly rated roads and alleys by fiscal year 2025, Bowser officials said.

Transit and cycling

On pedestrian and bicycling matters, $35 million is budgeted over six years to plan for the reconstruction of Dave Thomas Circle, including funds for acquiring the Wendy’s at the intersection of Florida and New York avenues NE. The money would begin planning for a pedestrian- and bicycle-friendly redesign.

There is $10 million to add 18 new Capital Bikeshare stations and $65 million in Vision Zero commitments. There is $2.8 million dedicated for 40 new traffic enforcement officers, half of whom will be dedicated to keeping bicycle lanes clear.

The proposed spending plan maintains funding for the extension of the DC Streetcar on H Street NE to the Benning Road Metro station.

Development

The District’s protracted plan to redevelop the McMillan Sand Filtration Site is retained in the budget, with $71 million in funds for the project that was blocked by the D.C. Court of Appeals in 2016. There is also $90 million for infrastructure upgrades at the St. Elizabeths campus.

New fire trucks and more police investments

Amid reports of trouble with the Fire and EMS department’s fleet, $65 million is committed over six years to purchase additional fire trucks and ambulances. The 2020 budget commits $3.5 million to hire 45 additional firefighters and paramedics to support more ambulance units, officials said.

With a rise in homicides, the plan would increase funding for grants for community based “violence interruption” programs. An additional $2.5 million would help expand the programs to new neighborhoods.

Politics

There is $3.2 million set-aside to fund the District’s program for publicly financed elections. Implementation has started off on the wrong foot, with the Office of Campaign Finance testifying last month that the technology for the e-filing system has not been procured and positions related to the Fair Elections Act remain vacant.

Homelessness

There is $37 million in the plan for the Bowser administration’s homeless services program, Homeward DC. The program launched in 2015 with the aim of making homelessness “rare, brief, and non-recurring experience” by next year. 

This post has been updated with additional information from Bowser’s budget press conference this morning, and to reflect that the mayor partially restored funds to the neighborhood based activities budget.