Department of Housing and Community Development Director Polly Donaldson Credit: Darrow Montgomery

Nearly a dozen local housing counseling providers and advocates for those facing housing instability received a destabilizing notice at the end of September: The Department of Housing and Community Development would reduce their funding by nearly 28 percent, effective at the beginning of fiscal year 2019. The new fiscal year started on Monday—just one full business day, in some cases, after the groups received their grant letters.

At least 10 organizations were hit with budget cuts of this magnitude, which range from tens of thousands to half a million dollars. They include Housing Counseling Services, Mi Casa, Central American Resource Center, AARP Legal Counsel for the Elderly, Latino Economic Development Center, Manna Inc., Greater Washington Urban League, Marshall Heights Community Development Organization, Lydia’s House Inc., and University Legal Services Inc.

The cut came from a line item in the city’s budget called Neighborhood Based Activities, which in fiscal year 2018 was funded at $9.5 million. For fiscal year 2019, that figure was reduced to about $6.1 million.

City Paper spoke with the executive directors or service providers from three of these organizations—Housing Counseling Services, CARECEN, and LEDC—who confirmed the cuts and acknowledged that they would have to either reduce services or lay off staff as a result.

The community-based organizations (CBOs) affected provide critical services to residents across all income levels, like credit counseling, renter assistance and budget management, technical assistance, home rehabilitation and lead remediation, and TOPA counseling.

Some, like Housing Counseling Services, host training sessions for the Inclusionary Zoning (IZ) renter and homeownership program that are required before residents can register for the IZ lottery. HCS also assists residents applying to DHCD-funded home purchase programs, like the Home Purchase Assistance Program (HPAP).

For Housing Counseling Services alone, a 28 percent reduction in its funding from DHCD represents $500,000. Executive Director Marian Siegel tells City Paper that the organization has already laid off one staff member as a result, and expects between six and 10 additional staffers will be laid off or moved to other program areas.

For the public, she says, it means “drastically reducing the entry point for HPAP and IZ,” which both start with group sessions hosted by Housing Counseling Services for those interested in applying. HCS will scale back those sessions, typically held once a week, by half, which she estimates will result in a two- to four-month delay in “anybody getting entry as a starting point for those programs.” HCS served about 2,500 people last year alone in its Inclusionary Zoning Orientations, a figure she says will probably be halved as well.

Though Siegel says she was aware during the budget negotiation last spring that DHCD was weighing cuts to community-based organizations, “we were assured that high-performing agencies wouldn’t see the cut. Instead they did across the board. We’re high-performing. We had lots of conversations with DHCD staff, lots of conversations with partners … we were kind of assured that we’d be able to continue serving. And we weren’t not nervous, but we were less nervous,” she says. Siegel adds that a DHCD official told her the money cut from D.C.’s CBOs would go to the redevelopment of Walter Reed; a spokesperson for DHCD did not provide a comment by press time. 

And while she says DHCD officials told her they might add money back into the HCS contract during the year, Siegel rejects the notion that she can lay off six staff members and then hire them again in six months. “We can’t operate programs like that. That’s useless. We have to set a year’s goal, a work plan,” she says. As a result of the financial insecurity, Siegel says HCS is also worried “about losing our high-performing staff.”

“There will be tenants living in buildings that are dilapidated that won’t get served, seniors living in homes that need Single Family Residential Rehabilitation that will be a longer delay to apply for. These two examples are two of many,” she says. “It’s disheartening, because we’re here in full partnership with the city and are the entry point for many of its programs.”

During a phone conversation on Monday afternoon, Marla Bilonick, the executive director of the Latino Economic Development Center, says the organization lost about $200,000 from DHCD for fiscal year 2019. While it’s doing “a numbers game” to make sure it doesn’t have to lay off any staff, she says it “absolutely will have reduced services, because we can’t support our current load with what we got from DHCD.”

Among other services, LEDC provides technical assistance to small businesses, counseling to first-time homebuyers and those facing foreclosure, and organizational muscle to help renters organize tenant associations, preventing illegal rent increases and remediating poor housing conditions.

Like Siegel, Bilonick says she was anticipating budget cuts, but not to this extent. She similarly expressed concern about the fact that cuts were made across the board and weren’t scaled to match the performance of an organization.

“Regardless of outstanding performance, there’s no reward. I think that was a flaw of the action. It basically dis-incentivizes over-performance, because regardless, everyone got the same cut,” she says. “You could’ve had an extremely poor year and gotten that cut. You could have blown it out of the water and gotten that cut. I question that approach.” 

LEDC tenant organizing manager Rob Wohl adds that, in 2017, LEDC worked on projects that received $30 million of public investment. “For less than $1 million, our department is managing to help package projects that result in millions of dollars” of public support, he says. “We’re finding places that DHCD steps in to do preservation, and we’re doing it cheaply.” The decision to kick away at that “support system,” as he calls it, “seems shortsighted and counterproductive.”

And while, Bilonick says, LEDC “isn’t going to fall apart, it’s a majorly unfortunate hand that we were dealt.”

More significant to Bilonick is the “opportunity cost” of not fully funding organizations that work with tenants on legal and technical issues around housing, which she believes will reduce the number of homeowners in D.C. Wohl echoes her point: “The poorer and more marginalized you are, the more you’re going to be locked out. Non-English speakers or low-income folks—they’re going to be the ones who suffer the most, because they depend the most on outside tenant assistance.”

In response to specific questions about why CBOs were notified so close to the new fiscal year and whether DHCD did in fact earmark these funds for the redevelopment of Walter Reed, a spokesperson for DHCD sent City Paper an emailed statement after close of business on Tuesday. It cites Mayor Muriel Bowser‘s financial commitments to DHCD’s Housing Production Trust Fund and HPAP as examples of how the administration has “help[ed] house our seniors, veterans, families and those experiencing homelessness.”

The statement continues:

“Such spending has never happened before[.] She has dedicated more local funds toward affordable housing, but federal funding through [Community Development Block Grant] has not kept up her pace. It’s that budget pressure which resulted in making the tough decisions on the funding allocations for these community-based nonprofit organizations. We explained this expected outcome earlier this year, during DHCD’s budget oversight process last spring. However, this does not diminish our support toward our CBOs to the best extent possible in light of more limited federal resources. We will closely track whether additional federal CDBG funds become available during FY 2019.” 

This story has been updated to include a statement from DHCD.