By Adam Pagnucco.
Affordable housing. Everyone says they want it. No one believes there is enough of it. All politicians say they will build more of it. It looms larger in every succeeding election season. And it turned into a huge issue in the 2022 primary as the incumbent county executive, Marc Elrich, was targeted by a million dollars in outside negative ads for his alleged opposition to more housing. Elrich pushed back hard and vowed to redouble his efforts on housing in his inauguration speech.
Underlying the politics is an important policy issue: what is the county actually doing to preserve and construct affordable units? How much is it spending and how effective has it been? This series follows the money and tries to answer those questions by focusing on the county’s primary housing account: the Housing Initiative Fund (HIF).
The HIF is a segregated fund established in county law in 1988. According to Sec. 25B-9 of the county code, the HIF may be used to construct or acquire affordable housing units, buy and rehabilitate existing rental units that would otherwise be removed from the supply of affordable housing, and participate in housing or mixed-use developments that will include affordable housing.
Information on the HIF appears in the county’s comprehensive annual financial reports (CAFRs), which are available on the county’s website going back to FY06. The FY22 CAFR offers this comment about the HIF’s revenue sources:
This fund is used to account for the fiscal activity for financing, supplementing, and constructing affordable residential facilities for eligible participants. The Fund’s revenue sources consist of a portion of each County-owned property sold, repayments on loans, and recordation taxes. All of these revenue sources are restricted, as all funds received must be used to finance, supplement, and construct affordable residential housing for eligible participants.
It’s important to note that while the HIF receives recordation taxes, those taxes also go to the general fund, capital projects and rental assistance.
Another important revenue source for the HIF, although it’s not technically characterized as revenues, is transfers from other funds. Transfers from and to the HIF occur every year and often exceed revenues. Other revenues include investment income, property rentals and smaller sources of income. The HIF also receives mortgage repayments and proceeds from property sales.
The CAFRs list two kinds of expenditures: personnel and operating. The latter accounts for the vast majority of the HIF’s spending and is used to finance preservation and construction of housing units although – and this is critical – the CAFRs do not break those out any further. That means the HIF’s actual performance cannot be measured in the CAFRs.
We will start looking at the HIF’s finances in Part Two.