March 28, 2023
RE: MWCOG Attn: Fair Housing Plan
To Whom it May Concern:
The National Community Reinvestment Coalition (NCRC) appreciates the opportunity to comment on the Metropolitan Washington Regional Fair Housing Plan. The region is to be commended for developing the first regional plan in 25 years. The plan provides an important opportunity for local jurisdictions to collaborate in promoting integration and access to affordable housing, job opportunities and improved quality of life for people of color.
NCRC is an association of over 600 community-based organizations around the country and in the District-Maryland-Virginia (DMV) area whose mission is to increase access to credit and capital for revitalizing communities of color and modest income neighborhoods. We are thus excited about this regional plan and hope opportunities present themselves to help you achieve the objectives described in the plan. This comment will focus on the regional housing plan and those of Montgomery County and the District of Columbia.
The regional plan and those of the participating jurisdictions have several commendable aspects, programs and approaches for achieving fair housing objectives. The programs and approaches of the various jurisdictions are innovative and long standing. At the same time, NCRC encourages you to describe more specific actions, commit to reporting outcomes of the actions and to use the Community Reinvestment Act (CRA) as a means to promoting affordable housing and fair lending.
In addition, the region should consider some region-wide approaches to achieving fair housing and improved quality of life for people of color. One such approach could be working with banks to establish regional Special Purpose Credit Programs (SPCP) and enlisting banks to partner with regionwide first time homeownership programs and rental housing development and preservation. Although we are commenting on fair housing plans, we also encourage the jurisdictions to work with banks to create small business lending programs targeted to women- and minority-owned small businesses that provide employment opportunities and basic necessities (including quality food, child care and health care) for people of color residing in economically disadvantaged neighborhoods.
In a region that is less than 50% White, segregation has been increasing. Your plan documented that the more segregated a region is, the fewer opportunities people of color have to advance economically. Segregation also increases racial inequality. In the DMV, African Americans were one quarter of the population but 80% of the residents of racially or ethnically impoverished neighborhoods. Over 50% of African Americans and almost 42% of Hispanics confronted housing problems (physically inadequate housing or cost burden) compared to 25% of whites.
In response to barriers experienced by people of color, the regional plan outlined sensible policy approaches. If they are implemented in an aggressive fashion, they could lessen the disparities the plan identified. Among the policies and approaches the plan listed were these:
- Create new rental units to focus on lower income tenants at 60% of area median income (AMI) instead of 80% of AMI.
- Provide low-interest loans to homeowners that want to build accessory dwelling units (ADUs) that can offer opportunities for modest income renters to reside in less segregated neighborhoods.
- Increase inclusionary zoning initiatives. Local suburban jurisdictions should follow Arlington County’s lead in creating multi-unit zoning.
- Establish a loan fund to help tenants, nonprofit organizations and local government agencies to buy apartments and manufactured home parks for sale in an attempt to preserve affordable housing.
- Expand resources for low fare or free bus service (following the District of Columbia’s anticipated program of free bus service) in order to improve access to jobs in the DMV.
- Expand local resources for housing vouchers.
- Reduce appraisal bias and increase resources for housing testing.
- Engage in housing equity analyses when considering changes in zoning.
- Increase allowable density and provide affordable housing units in new developments.
NCRC supports each of these proposals and urges the region to document progress. We hope that HUD’s forthcoming Affirmatively Furthering Fair Housing (AFFH) rule will require annual reporting (as currently proposed) and in that case recommend that the region and its component jurisdictions publicly report annually on progress toward concrete metrics. The 2022-2026 plan should record how many new units for tenants at or below 60% of AMI are created. The next plan should then commit to a realistic yet aggressive increase in that number. Further, the region should set metrics for unit location and should document where the units are located and whether they are in less segregated neighborhoods. In addition, any publicly subsidized loan program to support ADUs should provide similar documentation.
Federal agencies including the Department of Housing and Urban Development have clarified that the Fair Housing Act allows for SPCP programs as ways to narrow racial inequities in lending. If a bank documents with data analysis that a group of borrowers or neighborhoods are underserved, the bank can design a SPCP that targets people of color including a home purchase program or a program to lend to small businesses. The jurisdictions should work with banks to develop SPCP programs and then document their progress.
The jurisdictions should employ the Community Reinvestment Act (CRA) to offer loans to people of color and traditionally underserved communities. Montgomery County mentions CRA in its fair housing plan but in a cursory manner. While we commend this mention of CRA, the plan for the DMV region as a whole and for individual jurisdictions should elaborate on using CRA to increase access to credit. CRA requires federal bank agencies to measure and rate bank lending, investing and service to low- and moderate-income (LMI) borrowers and communities. Within the LMI community, there is a significant segment of people of color that CRA can directly benefit.
A regional program featuring downpayment assistance and home purchase loans to modest income first time homebuyers is likely to also serve considerable numbers of people of color. The DMV region should establish this type of program either jointly or the individual jurisdictions ought to establish similar programs. Documentation of program outcomes should include income levels of borrowers and their race/ethnicity and gender. Documentation should also include neighborhoods in which the borrowers reside and whether the program is promoting choice and increasing integration at a neighborhood level.
Recommendations for Montgomery County’s Plan
A major component of the county’s plan is employing its Moderately Priced Dwelling Unit Program (MPDU) program. Under the MPDU program, developers of 20 or more units of housing must include affordable housing. As one of the first of its kind in the country, Montgomery County has operated the MPDU program for decades. This program has a statutory objective of assisting minority households, young families, older adults and female-headed households. A report in 2004 documented that over 30 years, the county provided 11,000 MPDU rental and homeownership units.
Because segregation is increasing in Montgomery County, the county should build on its MPDU experience to develop or expand methods for marketing the program in an affirmative manner to people of color and to increase neighborhood-level integration. The county should commit to reporting data on the demographics of MPDU occupants, including race and ethnicity, and should report on the demographics of neighborhoods in which MPDU occupants reside. A report issued in 2004 on the 30-year history of MPDU reported unit production by town such as Bethesda-Chevy Chase, suggesting that a county-maintained database could accommodate census tract reporting or at least reporting by town and indicating the demographics of the town. Furthermore, a county website indicates that annual MPDU data collection includes “demographic information which will assist staff to assess the program’s racial equity going forward.”
The draft plan reported that concentrations of renters correlate with racially segregated areas. The county should work on providing more rental MPDU opportunities in less segregated areas and affirmatively marketing these units to people of color.
If results are not up to expectations, the county should increase its affirmative marketing and other actions to promote fair housing. The county should list the community organizations that help market the MPDU program, including how many and which organizations are controlled by people of color. The county should also document other means of affirmative marketing such as the use of minority-owned media.
Other policies and programs that Montgomery has committed to include in its plan include:
- Eviction prevention – The County’s plan mentioned partnerships with nonprofit organizations to provide counseling and eviction prevention services. The state recently passed a law to fund the right to counsel for tenants facing eviction. The state, county, and nonprofit organizations should partner to collect data on tenants receiving counseling and those represented by a lawyer in court. The demographics of clients and outcomes such as eviction prevention or moving to alternative affordable housing should be recorded and presented in annual updates to the fair housing plan.
- Identifying landlords with inclusive screening procedures – The draft plan stated that the county would identify landlords that waive customary screening procedures regarding criminal and credit history. The county should maintain a publicly available list of these landlords.
- Lowering income targeting to 60% of AMI in new affordable rental developments and expand locally funded housing voucher programs – About 20% of African American and Hispanic residents face severe cost burden as opposed to 10% of white residents in the County. Overall more than 50% of Hispanic households and 45% of African American households experience housing problems (physical inadequacy or cost burden) compared to 25% of white households in the County. Affirmative marketing should include aggressive outreach to African Americans and Hispanics regarding new affordable rental developments and any additional vouchers funded by local governments. Montgomery County should commit to reporting on the demographic characteristics of households served by new rental units and vouchers to determine whether racial disparities are being narrowed.
- Expand access to low fare or free bus service – The draft plan described a desire for additional funding for discounted fares. It also mentioned that Hispanics overall tend to have lower access to jobs in the county. In addition, Asians and African Americans below the poverty line fare poorly in terms of job access. The county should explore free or reduced fares for bus routes serving neighborhoods with concentrations of these populations and then conduct follow-up surveys to see if access to jobs has improved.
Lastly, Montgomery County’s draft plan presented lending disparities by race but then did not indicate what policies or programs could reduce these disparities. The draft plan documented that the average interest rates for Whites and African American borrowers were 4.21% and 5.29%, respectively. Over the life of the loan, these price disparities can cost borrowers several thousands of dollars. African American borrowers start out with much lower wealth, on average than whites. The price disparities only exacerbate the wealth disparities by making it harder for African American borrowers to accumulate as much equity as Whites.
In addition, African American applicants experienced considerably lower origination rates that whites. About 68% of White applicants received loans in contrast to 55.6% of African American applicants according to Montgomery County’s plan.
Together, the higher interest rates and lower origination rates for African Americans suggest that Montgomery County should work with lending institutions to create SPCP programs for African Americans that would help lower their interest rates and increase their origination rates. Further analysis can also document neighborhoods where these disparities and particularly high. As part of SPCP programs, marketing and homeownership counseling can be targeted to the neighborhoods with high disparities.
Finally, the county should work with banks to create CRA home purchase lending programs focusing on LMI people of color that increase their homeownership rates. These programs can also increase the affordability and physical adequacy of their housing via home improvement loans that can finance repair and energy efficiency upgrades. It is rare that CRA exams document this type of collaboration between public jurisdictions and banks. If Montgomery County pursues these recommendations, it would be lessening income and racial disparities and also helping banks score better on their CRA exams.
Recommendations for the District of Columbia’s Plan
The District of Columbia (the District) described commendable programs for remediating racial disparities and providing affordable housing in its draft plan. In order to determine if the programs and approaches are commensurate with the housing shortage in the city, the District of Columbia should commit to robust data collection and dissemination regarding the demographics of program recipients.
Between 2000 and 2010, an astounding one third of the District’s rental stock was lost. Such a dramatic loss of housing stock contributed to 25% of the District’s residents paying more than 50% of their monthly income on rent, a proportion that is not sustainable because it leaves too little for other basic necessities. In response, the Mayor announced a program that would add 36,000 housing units, 12,000 of which would be affordable for LMI populations, by 2025. The District also announced that it allocated about $100 million annually to a housing production trust fund and that this initiative produced 1,000 units in FY 2021.
A major District homeownership program is the Home Purchase Assistance Program (HPAP) which features a second lien loan of up to $200,000. Loan repayments are modest for moderate-income households and are deferred for low-income households. In FY 2021 according to the District, the HPAP program assisted 328 households become homeowners, all of which were first-time homeowners.
Data collection and dissemination are essential if the District is to achieve its equity goals for these programs. Data on the race, ethnicity, gender and income levels of the households assisted make it possible for the District and stakeholders to determine if these programs are reducing inequalities. Moreover, data regarding the neighborhoods in which these households reside will help determine if the programs are achieving goals of integration and moving to opportunities.
In the District, about 23% of African Americans and Hispanics experienced severe cost housing cost burdens (paying more than 50% of monthly income for housing) compared to about 11% for Whites. In addition, the homeownership rate for African American households in the City was 34% compared to 49% for White households. The only way to know if the fair housing programs have a realistic chance of reducing these disparities is if the District collects and reports demographic data on the program’s clients.
The City should use the Community Reinvestment Act (CRA) as an encouragement for banks to participate in the housing programs. The fair housing plan refers to City financing of these programs but does not describe bank or other private sector financing of them. The final plan should include data on bank financing and indications of whether banks will increase their financing in future years. Moreover, it is our understanding that banks are not regular partners in the HPAP programs. HPAP data should include information on which institutions are making first lien loans under the program. Banks should be encouraged to report HPAP data to their CRA examiners in order to boost their ratings on CRA exams.
In addition to creating affordable housing (in particular in highly resourced areas), the City should invest in creating opportunities for residents of currently disinvested areas and communities. For example. the City should target job training and workforce development to the Southeast section of the City. While African Americans were about 50% of the City’s population, 95% of the residents residing in racially and ethnically concentrated areas of poverty (R/ECAPs) were African Americans. While 6.8% of District residents were impoverished, the R/ECAPs in the District experienced poverty rates above 10%, many of which were confronted with poverty rates above 30%, especially in Wards 6, 7, and 8.
The District should target and market workforce development to African Americans and other people of color in R/ECAPs. The District should conduct an inventory of nonprofit organizations and other entities that provide workforce development and determine if there is a sufficient quantity of these organizations in the wards 6 through 8 or whether capacity needs to be expanded. The City should also determine if housing developers and commercial developers have apprenticeship programs that would employ and mentor residents of Southeast Washington. The District and the region’s other jurisdictions should also explore implementing and/or expanding on small business lending programs with banks that provide financing to women- and minority-owned small businesses with an additional objective of providing jobs and workforce development for residents of R/ECPAs. Finally, the District has embarked on an innovative transit initiative to provide free or reduced fares on buses operated by the Washington Metropolitan Transit Authority (WMATA); it is also important that the District ensure adequate and equitable quality of transit service, in particular for communities that are reliant on public transportation.
The District’s report also discussed racial disparities in access to banking and credit in a section called “Contributing Factors” that highlighted barriers exacerbating inequalities and segregation. However, the plan did not include programs or initiatives that addressed several of these contributing factors such as unequal access to banking. For example, the plan noted that the District had higher racial disparities in access to banking than other local jurisdictions. It found that just 1.1% of White residents were unbanked compared to 12.7% of people of color. Perhaps the City could set aside some municipal deposits for a bank that would be willing to establish a branch in a community of color that experiences a lack of branches (NCRC has helped jurisdictions and community-based organizations identify banking deserts that have a population density which can support a branch).
The District’s plan highlighted racial disparities in the cost of loans and approval rates. For instance, Whites had a median interest rate of 3.98% while African Americans had a median rate of 4.34% during 2019. This difference of a third of a percentage point can equate to several thousands of dollars of additional payments over the term of a mortgage, draining equity from African American households and communities. Moreover, lenders approved White applicants 70% of the time whereas African Americans were approved just 50% of the time. In response, the plan should have committed to increased financial and housing counseling to African Americans and African American communities and should have indicated a plan to collect demographic data about the clients of counseling. SPCP programs can also address these disparities.
Our comment has focused on the need to commit to comprehensive and publicly available data on the fair housing programs and initiatives committed to by the jurisdictions in our region. We hope the programs and initiatives can reduce segregation. Powerful market forces and the legacy of discrimination are formidable barriers. In order to correct for this systemic discrimination, the jurisdictions must undertake aggressive and coordinated initiatives that are long lasting and are improved upon over the decades.
The private and public sectors created, enforced and exacerbated redlining and segregation spanning centuries. Long term and concerted initiatives on several fronts are necessary to counteract segregation including zoning reforms, more affordable housing production, fair lending and targeted workforce development and economic development. Central to these efforts is data collection and dissemination so that the jurisdictions and stakeholders can ensure that the programs and initiatives are benefiting people of color and modest income residents in an equitable manner.
The draft plans did not identify a core of programs and initiatives that would be offered on a regional basis. The advantages of regional programs are that the chances of using them to bolster integration increase due to a wider choice of neighborhoods that can be served by the programs. Possibilities include first time homeownership programs, affordable housing production or improved coordination of Section 8 programs.
Lastly and critically important is our recommendation to better coordinate fair housing planning with the Community Reinvestment Act (CRA) and SPCPs. In our experience, fair housing planning rarely incorporates consideration of CRA. We have reviewed numerous fair housing plans and only rarely see CRA mentioned or partnerships with banks identified, let alone any data reported from bank special affordable lending programs (home or small business loans). This is a major missed opportunity and means that a significant set of strategies to promote equity are being overlooked. We appreciate the mention of CRA in the draft Montgomery County plan but the brief mention in that plan should be elaborated upon in the manner suggested in this comment letter.
The federal bank agencies have recently proposed reforms to the CRA regulations that seek to increase coordination among banks and local jurisdictions. This could make for a powerful combination that could exponentially increase the effectiveness of public and private financing for affordable and integrative housing. Moreover, the federal agencies are seeking to elevate the attention CRA exams place on SPCP programs. The time is right for our regional jurisdictions to reach out to banks of all sizes and see which ones would be willing to engage on efforts to increase the sustainability, affordability and integration of single- and multifamily housing.
Thank you for the opportunity to comment on these draft plans and their important mission. We are happy to answer any questions you may have. You can email me on email@example.com. Or you can consult with Megan Haberle, Senior Director of Policy, on firstname.lastname@example.org or Josh Silver, Senior Fellow, on email@example.com.
Jesse Van Tol
President and CEO
 Metropolitan Washington Fair Housing Plan, Executive Summary, Draft, January 2023, p. 7, https://www.mwcog.org/assets/1/6/Executive_Summary_Fair_Hsg_English_with_cover4.pdf
 Metro Fair Housing Plan, p. 8.
 Metro Fair Housing Plan, p. 11.
 Metro Fair Housing Plan, pp. 20-21.
 Memorandum from Demetria L. McCain, Principal Deputy Assistant Secretary for Fair Housing & Equal Opportunity, FHEO’s Statement by HUD’s Office of Fair Housing and Equal Opportunity on Special Purpose Credit Programs as a Remedy for Disparities in Access to Homeownership, December 7, 2021, https://www.hud.gov/sites/dfiles/FHEO/documents/FHEO_Statement_on_Fair_Housing_and_Special_Purpose_Programs_FINAL.pdf
 For more on CRA, see https://ncrc.org/ or https://www.ffiec.gov/cra/default.htm
Aron Trombka and Michael Faden, February 2004, Strengthening the Moderately Priced Dwelling Unit Program: A 30 Year Review, A Report to the Montgomery County Council, https://www.montgomerycountymd.gov/DHCA/Resources/Files/housing/singlefamily/mpdu/report_mpdu30yearreview.pdf, pp. 1-2.
 Draft Washington Regional Fair Housing Plan, Montgomery County, January 2023, p. 28, https://www.mwcog.org/assets/1/6/Montgomery_County_Clean_web.pdf
 Memo from Aseem K. Nigam Director, Department of Housing and Community Affairs to Gabe Albornoz, Council President, Annual Report on the Moderately Priced Dwelling Unit (MPDU) and Workforce Housing Programs Covering Calendar Year 2021, p. 6, https://www.montgomerycountymd.gov/DHCA/Resources/Files/housing/affordable/publications/mpdu/annual_report_mpdu_2021.pdf
 Draft Montgomery County Plan, p. 32.
 Draft Montgomery County Plan, pp. 14 and 155.
 Draft Montgomery County Plan, p. 14
 Draft Montgomery County Plan, pp. 152 and 159.
 Draft Montgomery County Plan, p. 104
 Ibid., p. 102.
 Ibid., p. 162.
 Ibid., p. 59.
 Ibid., p. 191.
 Ibid., p. 192
 Draft Washington Regional Fair Housing Plan, District of Columbia, January 2023, p. 13, https://www.mwcog.org/assets/1/6/District_of_Columbia_Clean_web.pdf
 District of Columbia, Department of Housing and Community Development, Home Purchase Assistance Program (HPAP) – Eligibility, How to Apply and Program Details, https://dhcd.dc.gov/page/hpap-eligibility-how-apply-and-program-details
 District of Columbia Plan, p. 11.
 Ibid., p. 114.
 District of Columbia Fair Housing Plan, p. 44.
 Ibid., p. 48.
 Ibid., p. 183.
 Ibid., p. 213.
 Ibid., p. 214.