The blog of the Urban Institute
February 14, 2013

Yes, Mayor Gray, It’s time for a Prosperity Dividend for the District

February 14, 2013

Homeless man sleeping in John Marshall Park, NW Washington, DC.Homeless man sleeping in John Marshall Park, NW Washington, DC. Photo by: Flickr users rjs 1322 used under a Creative Commons License (cc-by-sa 2.0)


It is difficult to reconcile the recent reports of 600 children living in improvised shelters in abandoned DC General Hospital buildings with the District’s year-end surplus of $400 million.  As someone who has studied the lack of affordable housing in DC for more than a decade, I agree with Mayor Gray: it’s time to pay out a "prosperity dividend."

Living in a resilient, booming city has meant great things for middle- and upper-income DC residents: ramen on H Street, oysters at Union Market, ice-skating at Canal Park, and events at Living Social. New amenities like these have made the city more attractive. People want to live and play in DC, and they are buying houses in Bloomingdale, Hill East, Trinidad, and along H Street.

At the same time, the city’s prosperity has put pressure—in the form of rising rents—on its poorest families. Most are rent burdened, so even a minor fluctuation in salary or benefits puts their housing at risk. The result: homelessness among families in DC has steadily risen every year for the past five (increasing 72 percent during that time). Stimulus programs that helped slow the rise, like the Homelessness Prevention and Rapid Rehousing Program (HPRP), are long gone.

The Washington Post’s picture of two adorable babies sharing a stroller to keep warm is likely to pull on some heartstrings—and it should. However, budget-minded policymakers should also know that the temporary option isn’t necessarily the cheapest option.  Shelters can cost significantly more than subsidizing rent. (See this HUD study.) Some homeless families languish in shelter and transitional housing for months, or even years, a very costly response. So the lack of action is not only morally repugnant; it is bad policy.

In his state of the city address, Mayor Gray announced a $100 million commitment to affordable housing. It is unclear what he plans to do with those funds, since his office has yet to share any formal strategy. If the mayor wants to help the 600 children and their families living in DC General, along with other homeless families throughout the city, here is where he should put the money:

  • $10 million for a new Homelessness Prevention and Rapid Rehousing Program (HPRP). During the recession, HPRP provided DC $7.5 million from the federal government to fund housing and supportive services. The program ended in September 2012, leaving an enormous gap to fill. This model is critical for helping families pay the rent and avoid long, costly stays in the shelter system.
  • $40 million for the Local Rent Supplement Program. This established program, which operates similarly to the housing voucher program, is ready to provide subsidies to families so they can rent housing in the private market. All it needs is more money. For the past several years, funding for local rent supplements has hovered between $12 and $19 million and has served only a fraction of the need.
  • $50 million for the Housing Production Trust Fund. In recent years, the Housing Trust Fund has been an unstable source for affordable housing preservation and production. It is time to shore up resources, set preservation and production goals, and build capacity among nonprofit housing developers, especially ones that develop permanent supportive housing for poor, disabled families and veterans.

A surplus of this size leaves no excuse. It is time to act.


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Unfortunately, the Mayor won’t use the $100 million as you recommend. His budget director has made very clear that it is a one-time commitment, contingent on a revenue forecast that indicates another surplus year. LRSP vouchers are viewed as an ongoing commitment—as they should be. I suspect that an investment to create a new HPRP would be as well. So we may have more funds for affordable housing construction and preservation. But at this point, it’s unclear where the operating subsidies will come from without a totally separate commitment to funding more LRSP vouchers. I should add that both the budget director and another administration spokesperson are on record as opposing a continuation of the LRSP vouchers that low-income recipients can use to rent in the private market. This may change when the Comprehensive Housing Strategy Task Force issues its recommendations. But I wouldn’t bet on it.