By Adam Pagnucco.
In Part Two, we learned that the county’s Housing Initiative Fund (HIF) has been receiving much more money under County Executive Marc Elrich than it did during the 13 years prior to his tenure. How has that money been spent?
The comprehensive annual financial reports (CAFRs), the source of most of my information in this series, break down HIF spending into just two categories: personnel and operating. Personnel refers to the people who administer the HIF. Operating refers to money expended on affordable housing, both preservation and construction, and accounts for 95% of HIF expenditures. The chart below shows these items from FY06 through FY22.
Now let’s look more closely at operating expenditures, since this is the money that is actually spent on housing. The green line shows expenditures in nominal dollars. The red line shows expenditures in inflation-adjusted 2022 dollars using the Washington-Arlington-Alexandria CPI-U’s housing component as a deflator.
In nominal terms, FY22 had the most operating expenditures in the series at $42.9 million. But in real dollars, FY22 is similar to the levels of FY08, FY10 and FY11, right before the Great Recession clobbered county revenues. In Part Two, we showed how the HIF has been receiving more money in recent years, but that money may not have paid for a whole lot more housing.
So what happened to the money? One place it has wound up is the HIF’s fund balance, which is the money it has left over each year after its inflows and outflows. The county changed its methodology for calculating the HIF’s fund balance in FY16. The chart below shows it for each year since.
The year before Elrich took office (FY18), the HIF had a $239 million fund balance. As of FY22, the most recent year available, the HIF had a fund balance of $371 million, an increase of 55%. For purposes of comparison, Elrich’s recommended 10% property tax increase was projected to raise $223 million in FY24.
So how much housing are we actually getting for this money? We will try to find out in Part Four.