D.C. Council approves Public Housing Credit Building Pilot Program Act

Can you help the poor by allowing them to build credit with their rent payments?

The D.C. Council thinks so, having unanimously approved the Public Housing Credit Building Pilot Program Act of 2017.

Housing activists cheered the bill’s passage Tuesday but also warned that it will take more to truly help the city’s lowest income residents.

The bill would work like this: Public housing residents could opt-in to a D.C. Housing Authority (DCHA) program that reports monthly rent payments to a credit bureau. Rent paid on time can translate into good credit scores for people who can’t afford other ways to build credit, like getting loans or credits cards.

Sarah Chenven, deputy director of the D.C.-based nonprofit Credit Builders Alliance (CBA), that her group because building credit is “not always an obvious solution for people experiencing immediate financial stress,” even though it can reduce high interest rates on loans and create more job and housing opportunities.

Parisa Norouzi, director of housing advocacy group Empower D.C., said this is especially important in the District because “residents who are being displaced from public housing communities undergoing redevelopment often cannot take advantage of the Section 8 voucher program because landlords turn them away due to their credit history.”

Councilmember Anita Bonds, at-large Democrat and chair of the Housing Committee, introduced the legislation.

CBA worked with Ms. Bonds to draft the bill based on the success of its own 2012 nationwide pilot program to build credit via rent payments.

The program tested “rent building” among 1,250 tenants in public housing. After two years, 79 percent of the participants saw an average 23-point improvement in their credit scores, 14 percent saw no change and 7 percent saw a decrease.

According to a CBA report, all participants who began with no credit score ended the program with a number in the high 600s.

Activists like Ms. Norouzi support testing the program in the District but have some concerns. She worries the bill’s requirement that the DCHA explain to tenants how credit works is not enough and that participants will need ongoing counseling to build financial stability. Additionally, she has called for oversight on DCHA as it manages the program.

“We are most interested to see whether the D.C. Council will hold the D.C. Housing Authority accountable to faithfully implementing the program, and whether the oversight role of the DC Council over DCHA will improve,” Ms. Norouzi said, referring to her clashes with the city over managing affordable housing in places like Barry Farm in Anacostia, which suffered from neglect.

The DCHA has said it is “uniquely positioned” to help the city’s low-income residents and “looks forward to studying [rent building] and will further review and refine existing initiatives so that we can expand our efforts to create more opportunities to empower residents.”

Shavannie Braham, a housing attorney at Legal Aid of the District of Columbia, also supports the bill but with reservations.

“In particular, the Bill fails to protect — and may affirmatively harm — tenant participants who may not make timely payments, including because they are exercising their right under DC law to withhold rent due to housing conditions,” Ms. Braham said Wednesday in an email.

She echoed Ms. Norouzi’s concern about whether credit reporting would be adequately taught to program participants.

The Committee on Housing and Neighborhood Revitalization estimated the bill would cost taxpayers $156,755 — $116,118 for a full-time DCHA manager, $15,000 for a consultant and $17,500 for outreach and education, plus fees to the credit bureaus.

However, the council’s fiscal 2019 budget does not allocate any money for the program. A Housing Committee staffer told The Times that he is confident the funding will be provided in next budget cycle, meaning the program would not operate before next spring.